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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 2, 1999
DANKA BUSINESS SYSTEMS PLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UNITED KINGDOM 0-20828 98-0052869
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
11201 DANKA CIRCLE NORTH
ST. PETERSBURG, FLORIDA 33716
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 727-576-6003
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ITEM 5. OTHER EVENTS.
On November, 3, 1999, Danka Business Systems PLC ("Danka" or the
"Company") and The Cypress Group LLC ("Cypress"), a New York based private
equity firm, announced that they had entered into a definitive agreement (the
"Agreement") whereby equity investment funds managed by Cypress have agreed to
invest $200 million in convertible participating preference shares of Danka
("participating shares").
Danka will issue 200,000 new participating shares at a price of $1,000
per share. The new participating shares will be entitled to quarterly dividends
equal to the greater of 6.5% per annum and the deemed per annum rate of the
ordinary share dividends paid in that quarter. Dividends will be paid in the
form of additional participating shares, valued at an amount per share equal to
the liquidation preference per share in effect at that time, for the first five
years, and thereafter will be paid in cash (except that such dividends may
continue to be paid in additional participating shares to the extent that cash
dividends are not permitted under the terms of the Company's then existing
principal indebtedness). The participating shares will 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
participating shares will be entitled to vote on an as converted basis which
will give their holders voting rights initially corresponding to approximately
21% of the total voting power of Danka's capital stock. The participating shares
will have a preference over ordinary shares as to dividends and other
distributions and be entitled to a liquidation preference equal to the initial
purchase price plus accumulated and unpaid dividends.
The Company is required to redeem the participating shares after 11
years at the greater of 100% of their liquidation preference and the value of
the ordinary shares into which they would then be convertible, in each case plus
accumulated and unpaid dividends from the most recent dividend payment date. The
Company is also required to redeem the participating shares at the holders'
options at the greater of 101% of their liquidation preference and the value of
the ordinary shares into which they are then convertible, in each case plus
accumulated and unpaid dividends from the most recent dividend payment date,
upon an earlier change of control of the Company. In the event of a change of
control within three and one-half years of the initial issuance of the new
shares, the Company will be required to make additional payments equal to the
dividends that would have accumulated through the end of the three and one-half
year period, to the extent such dividends were not previously paid. After the
fourth anniversary of issuance, the Company is permitted to redeem the
participating shares at a price equal to the greater of a percentage of their
liquidation preference declining from 103.25% and the value of the ordinary
shares into which they are then convertible, in each case plus accumulated and
unpaid dividends from the most recent dividend payment date. In the case of any
redemption at the "as converted" valuation, the payment may be made through
delivery of ordinary shares equal to the number into which the redeemed shares
could then be converted.
Under the terms of the agreement, Danka will expand its Board of
Directors from nine to eleven members. Upon closing of the transaction, two
representatives from Cypress will be elected to fill the vacancies created by
the expansion of the Board.
The transaction is subject to various conditions, including, without
limitation, (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;
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(iii) obtaining amendments to the Company's bank Credit Agreement, TROL
Financing Agreements and GE Capital Lease Financing Agreements; (iv) receipt of
required regulatory approvals, and (v) other customary conditions. Either party
may decline to close if the average closing price of the Company's ADSs on the
New York Stock Exchange during the 10-day period ending three business days
before the scheduled closing date is less that $9.00 per ADR.
Copies of the Agreement and other documents contemplated in connection
with this transaction are filed as Exhibits 1-6 hereto and incorporated herein
by this reference. The summary above is qualified in its entirety by reference
to the complete terms and conditions of the Agreement and such other documents.
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ITEM 7: EXHIBITS
1. Subscription Agreement dated November 3, 1999 among Danka Business
Systems PLC, 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.
2. Form of Amendments to Articles of Association to be adopted at an
extraordinary general meeting pursuant to the Subscription Agreement.
3. Form of Registration Rights Agreement to be executed at the closing
under the Subscription Agreement.
4. Term Sheet for Amendments to Credit Agreement, to be obtained pursuant
to the Subscription Agreement.
5. Term Sheet for Amendments to TROL Financing Agreements, to be obtained
pursuant to the Subscription Agreement.
6. Term Sheet for Amendment to GE Capital Lease Financing Agreements, to
be obtained pursuant to the Subscription Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
DANKA BUSINESS SYSTEMS PLC
By: /s/ David Berg
-----------------------------------------
David Berg
Its: Vice President and General Counsel
Dated: November 4, 1999
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Exhibit 1
================================================================================
SUBSCRIPTION AGREEMENT
BETWEEN
DANKA BUSINESS SYSTEMS PLC
AND
CYPRESS MERCHANT BANKING PARTNERS II L.P.,
CYPRESS MERCHANT BANKING II C.V.
AND
55TH STREET PARTNERS II L.P.
DATED AS OF NOVEMBER 2, 1999
================================================================================
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS............................................................
SECTION 1.1. Certain Defined Terms.....................................................
SECTION 1.2. Other Defined Terms.......................................................
SECTION 1.3. Other Definitional Provisions.............................................
ARTICLE II SUBSCRIPTION AND SALE..................................................
SECTION 2.1. The Closing...............................................................
SECTION 2.2. Subscription and Payment..................................................
SECTION 2.3. Conversion Price of Participating Shares..................................
SECTION 2.4. Closing Deliveries by the Company.........................................
SECTION 2.5. Closing Deliveries by the Subscribers.....................................
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING
THE COMPANY............................................................
SECTION 3.1. Organization..............................................................
SECTION 3.2. Authority; Enforceability.................................................
SECTION 3.3. Capitalization............................................................
SECTION 3.4. Non-Contravention, etc....................................................
SECTION 3.5. Consents and Approvals....................................................
SECTION 3.6. Significant Subsidiaries, etc..............................................
SECTION 3.7. Company Reports...........................................................
SECTION 3.8. Financial Information.....................................................
SECTION 3.9. No Undisclosed Liabilities................................................
SECTION 3.10. Absence of Certain Changes or Events.....................................
SECTION 3.11. Material Contracts........................................................
SECTION 3.12. Employee Benefit Plans...................................................
SECTION 3.13. Compliance with Law; Other Instruments...................................
SECTION 3.14. Litigation...............................................................
SECTION 3.15. Real Property............................................................
SECTION 3.16. Intellectual Property....................................................
SECTION 3.17. Tax Matters..............................................................
SECTION 3.18. Environmental Laws.......................................................
SECTION 3.19. Insurance................................................................
SECTION 3.20. Brokers..................................................................
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SECTION 3.21. Transactions with Affiliates.............................................
SECTION 3.22. Labor Matters............................................................
SECTION 3.23. Year 2000 Problem........................................................
SECTION 3.24. Offering of Participating Shares.........................................
SECTION 3.25. Accuracy and Completeness of Information Provided........................
SECTION 3.26. No Other Representations or Warranties...................................
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING
THE SUBSCRIBERS........................................................
SECTION 4.1. Organization..............................................................
SECTION 4.2. Authority.................................................................
SECTION 4.3. Non-Contravention.........................................................
SECTION 4.4. Consents and Approvals....................................................
SECTION 4.5. Subscription for Investment...............................................
SECTION 4.6. Financial Capability......................................................
SECTION 4.7. Brokers...................................................................
SECTION 4.8. No Other Representations or Warranties....................................
ARTICLE V ADDITIONAL AGREEMENTS..................................................
SECTION 5.1. Conduct of Business Prior to the Closing..................................
SECTION 5.2. Regulatory and Other Authorizations; Notices and Consents.................
SECTION 5.3. Access to Information.....................................................
SECTION 5.4. Further Action............................................................
SECTION 5.5. Non-Solicitation..........................................................
SECTION 5.6. Availability of Shares.....................................................
SECTION 5.7. Other Businesses..........................................................
SECTION 5.8. Credit Agreement, etc.....................................................
SECTION 5.9. Use of Proceeds...........................................................
SECTION 5.10. Shareholder Approvals, etc...............................................
SECTION 5.11. Legend on Certificates for Participating Shares, etc.....................
SECTION 5.12. Directors' and Officers' Insurance.......................................
SECTION 5.13. Operating Company........................................................
ARTICLE VI CONDITIONS TO CLOSING..................................................
SECTION 6.1. Conditions to Obligations of the Subscribers..............................
SECTION 6.2. Conditions to Obligations of the Company..................................
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ARTICLE VII SURVIVAL; INDEMNIFICATION..............................................
SECTION 7.1. Survival of Representations and Warranties................................
SECTION 7.2. Indemnification...........................................................
SECTION 7.3. Indemnification Amounts. .................................................
SECTION 7.4. Additional Limitations....................................................
SECTION 7.5. Indemnification Procedures................................................
SECTION 7.6. Non-Exclusive Remedy......................................................
SECTION 7.7. Certain Limitations.......................................................
ARTICLE VIII TERMINATION............................................................
SECTION 8.1. Termination...............................................................
ARTICLE IX GENERAL PROVISIONS.....................................................
SECTION 9.1. Termination Fee............................................................
SECTION 9.2. Notices...................................................................
SECTION 9.3. Interpretation............................................................
SECTION 9.4. Counterparts..............................................................
SECTION 9.5. Entire Agreement; No Third Party Beneficiaries............................
SECTION 9.6. Governing Law; Consent to Jurisdiction....................................
SECTION 9.7. Severability..............................................................
SECTION 9.8. Assignment................................................................
SECTION 9.9. Amendment.................................................................
SECTION 9.10. Waiver of Jury Trial.....................................................
SECTION 9.11. Judgment Currency.......................................................
SECTION 9.12. Public Disclosure........................................................
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SCHEDULES
EXHIBITS:
Exhibit A-1 Form of Articles Amendments
Exhibit A-2 Form of Shareholders Resolutions
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Certificate of Officer of the Company
Exhibit D-1 Form of Legal Opinion of Altheimer & Gray
Exhibit D-2 Form of Legal Opinion of David Berg, Esq., General Counsel
of the Company
Exhibit E-1 Proposed Amendments to Credit Agreement
Exhibit E-2 Proposed Amendments to TROL Financing Agreements
Exhibit E-3 Form of Amendment to GE Capital Lease Financing
Agreements
Exhibit E-4 Modification to Proposed Amendments to Credit Agreement
</TABLE>
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Exhibit F Form of Certificate of General Partner of Subscribers
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SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of
November 2, 1999, between DANKA BUSINESS SYSTEMS PLC, a limited liability
company organized and existing under the laws of England and Wales (the
"Company"), and 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 (collectively, the "Subscribers").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions set forth in
this Agreement, the Company has agreed to issue 6.50% Senior Convertible
Participating Shares (the "Participating Shares"), which are convertible into
Ordinary Shares, nominal value 1.25 pence per share ("Ordinary Shares"), of the
Company and which may, in certain circumstances, be delivered to such holders
in the form of American Depositary Shares representing such Ordinary Shares
("ADSs"), and the Subscribers have agreed to subscribe for the Participating
Shares;
WHEREAS, as a condition and inducement to the Subscribers'
willingness to enter into this Agreement, prior to or at Closing, the Company's
shareholders must approve resolutions (the "Shareholders Resolutions")
approving amendments to the Articles of Association of the Company and certain
other matters necessary for the consummation of the transactions herein
provided substantially in the form of Exhibit A-1 hereto (the "Articles
Amendments"), to be effective as of the Closing (the Shareholders Resolutions
to be substantially in the form of Exhibit A-2 hereto);
WHEREAS, as a condition and inducement to the Subscribers'
willingness to enter into this Agreement, prior to or at Closing, the Company
must enter into a Registration Rights Agreement with the Subscribers in the
form of Exhibit B hereto (the "Registration Rights Agreement"), to be dated as
of the Closing; and
WHEREAS, the Company and the Subscribers are entering into
this Agreement to provide for the issue and subscription of the Participating
Shares.
NOW, THEREFORE, in consideration of the premises and the
mutual terms, conditions and agreements set forth herein, the Company and the
Subscribers hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"ADR Deposit Agreement" means the Deposit Agreement dated as
of June 25, 1992 between the Company and The Bank of New York, as Depositary,
and owners and holders of American Depositary Receipts, as amended.
"ADR Depositary" means The Bank of New York as depositary
under the ADR Deposit Agreement.
"ADRs" means American Depositary Receipts evidencing ADSs and
issued from time to time pursuant to the ADR Deposit Agreement.
"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.
"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.
"Companies Acts" means the U.K. Companies Act 1985 and 1989
(including all instruments or orders made or issued thereunder).
"Company Plans" means the U.S. Plans and the U.K. Plans.
"control" means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, and the terms "controlled by" and "under common control
with" shall have correlative meanings.
"Convertible Subordinated Notes Indenture" means the
Indenture dated as of March 13, 1995 between the Company and The Bank of New
York, as trustee, relating to the Convertible Subordinated Notes.
"Convertible Subordinated Notes" means the Company's
outstanding 6.75% Convertible Subordinated Notes due 2002 in an aggregate
principal amount of U.S.$200,000,000.
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3
"Credit Agreement" means the Credit Agreement dated as of
December 5, 1995, among the Company, Dankalux Sarl & Co., SCA and Danka Holding
Company, the several financial institutions party thereto, and Nationsbank,
N.A., as agent, as amended or supplemented (taking into account waivers
thereunder).
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended
"Encumbrance" means any security interest, right of
pre-emption, pledge, mortgage, lien (statutory or other), charge, equity,
option to purchase, lease or otherwise acquire any interest or any claim,
restriction, covenant, title defect, hypothecation, assignment, deposit
arrangement or other encumbrance of any kind or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement).
"Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended.
"GE Capital Lease Financing Agreements" means the Global
Operating Agreement, dated as of December 22, 1997, between General Electric
Capital Corporation and Danka Business Systems PLC, as amended or supplemented,
each Principal Document (as therein defined), as amended or supplemented, and
the Operating Agreement, dated as of January 29, 1999, between Danka Office
Imaging Company and General Electric Capital Corporation, as amended or
supplemented (taking into account any waivers thereunder).
"Governmental Authority" means any governmental, regulatory
or administrative agency, authority, instrumentality or commission or any
court, tribunal or judicial or arbitral body of the United States (federal,
state or local), the United Kingdom, any other country or the European
Community or any other supranational organization or body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HSR Act" means the U.S. Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money
(including reimbursement obligations in respect of letters of credit,
guarantees or similar instruments), (b) all obligations of such Person for the
deferred subscription price of property or services, (c) all other indebtedness
of such Person evidenced by notes, bonds, debentures, letters of credit or
other similar instruments, (d) all obligations under leases required to be
classified and accounted for as capital leases in accordance with U.S. GAAP and
(e) all indebtedness of others referred to in clauses (a) through (d) above
guaranteed directly or indirectly in any manner by such Person, except, in the
case of
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4
clauses (a) through (e), indebtedness of the Company or any of its Subsidiaries
to the Company or any of its wholly-owned Subsidiaries.
"Intellectual Property" means all intellectual property
rights, including without limitation (a) copyrights and copyrightable works,
including computer hardware, firmware, applications, programs, software,
databases, equipment, systems, semiconductors and related items, (b)
trademarks, service marks, trade names, brand names, domain names, product
names, corporate names and logos, (c) patents, inventions, technology,
processes and know-how, (d) trade secrets and confidential or proprietary
information and materials and (e) all registrations, applications, recordings,
licenses or other agreements and common-law or other rights related to the
foregoing.
"Listing Rules" means the listing rules of the London Stock
Exchange.
"London Stock Exchange" means London Stock Exchange Limited.
"Market Value" shall have the meaning set forth in Articles
Amendments (except that, solely for purposes of this Agreement, the Market
Value for the Ordinary Shares shall be determined based upon the closing prices
for the ADSs for a 10 (not 20) day trading period ended on the relevant date of
determination hereunder).
"material" shall have the meaning for such term as used under
the Securities Act and the Exchange Act (including, without limitation, under
SEC Staff Accounting Bulletin No. 99) ; provided, however, that, in the case of
the Company, the term "material" shall, to the extent relevant or applicable in
the case of a particular representation, warranty, covenant, agreement or
condition, be determined based upon the Company and its Subsidiaries taken as a
whole, and the term "materiality" and the phrase "in all material respects"
shall have correlative meanings.
"Material Adverse Effect" means a material adverse effect
upon the business, operations, properties, assets, liabilities, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the parties hereto to
perform their respective obligations under this Agreement and the Registration
Rights Agreement and to consummate the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the
Participating Shares, the conversion of the Participating Shares into Ordinary
Shares or ADSs and the issuance of additional Participating Shares as dividends
or by way of bonus issue on the Participating Shares).
"knowledge" means, with respect to any Person, the actual
knowledge of such Person or, in the case of the Company or its Subsidiaries,
the actual knowledge of at least one of the Company's executive officers (as
such term is defined in Rule 405 under the Securities Act), in each case, after
reasonable inquiry in the light of the circumstances.
"Permits" means all licenses, permits, orders, consents,
approvals, registrations, authorizations, qualifications and filings with and
under all U.S. federal, state or local, English or
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5
other non-U.S. laws and Governmental Authorities and the NASDAQ National Market
System and the London Stock Exchange.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivisions thereof, or any group comprised of two or more
of the foregoing.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Share Capital" means any and all shares, interest,
participation or other equity 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, interest, participation, other equity equivalents including, to the
fullest extent applicable, American depository receipts or similar instruments
representing any such Share Capital.
"Significant Subsidiary" means any Subsidiary that
constitutes a "significant subsidiary" (as such term is defined in Article
1-02(w) of Regulation S-X under the Securities Act).
"Subsidiary" means (i) any corporation of which a majority of
the securities entitled to vote generally in the election of directors thereof,
at the time as of which any determination is being made, are owned by another
entity, either directly or indirectly and (ii) any joint venture, general or
limited partnership, limited liability company or other legal entity in which
an entity is the record or beneficial owner, directly or indirectly, of a
majority of the voting interests or the general partner.
"TROL Financing Agreements" means the Participation
Agreement, dated as of November 15, 1995, among Danka Holding Company, as
Construction Agent, Danka Holding Company, as Lessee, First Security Bank of
Utah, N.A., as Owner Trustee under the Danka Trust 1995-1, Nationsbank of
Florida, N.A., as Holder, Nationsbank of Florida, N.A., as Administrative Agent
for the Lenders and Sun Trust Bank, Tampa Bay, as Co-Agent, as amended or
supplemented, and each other Operative Agreement (as therein defined), as
amended or supplemented (taking into account any waivers thereunder).
"Taxes Act" means the U.K. Income and Corporation Taxes Act
1988.
"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 Shareholder
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(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).
"U.K. GAAP" means generally accepted accounting principles
applied on a consistent basis and set forth in, or in accordance with, the U.K.
Companies Acts 1985, the U.K. Statements of Standard Accounting Practice, the
U.K. Financial Reporting Standards and pronouncements of the Urgent Issues Task
Force in the United Kingdom. The requirement that such principles be applied on
a consistent basis shall mean that the accounting principles applied in a
current period are comparable in all material respects to those applied in a
preceding period.
"U.K. Plan" means any arrangement for the provision of
relevant benefits (as defined in Section 612(1) of the Taxes Act excluding the
words "or to be given on or in anticipation of or in connection with any change
in the nature of the service of the employee in question" in lines 3 and 4 of
that definition, under which any employee or former employee of the Company or
any of its Subsidiaries has any present or future right to benefits and under
which the Company or any of its Subsidiaries has any present or future
liability.
"U.S. GAAP" means generally accepted accounting principles
applied on a consistent basis and set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants, or
their successors, which are applicable in the circumstances as of the date in
question. The requirement that such principles be applied on a consistent basis
shall mean that the accounting principles applied in a current period are
comparable in all material respects to those applied in a preceding period.
"U.S. Plan" means any "employee benefit plan" (within the
meaning of ERISA section 3(3), including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, commission, profit sharing, deferred compensation
and any other employee benefit plan, agreement or program, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transactions contemplated by this
Agreement and the Registration Rights Agreement or otherwise), whether formal
or informal, oral or written, under which any employee or former employee of
the Company or any of its Subsidiaries has any present or future right to
benefits and under which the Company or any of its Subsidiaries has any present
or future liability, other than any plan, agreement or program which is
maintained outside the United States primarily for the benefit of non-U.S.
residents.
SECTION 1.2. Other Defined Terms. The following terms shall
have the meanings defined for such terms in the sections set forth below:
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Term Section
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ADSs preamble
Antitrust Division 5.2(a)
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Articles Amendments preamble
Balance Sheets 3.9
Closing 2.1
Closing Date 2.1
Code 3.12(c)
Company Reports 3.7
Competition Act 3.13(c)
Contract 3.4
Controlled Group 3.12(c)
Conversion Price 2.3
Damages 7.2(a)
Deductible 7.3(a)
Environmental Laws 3.18(c)
Environmental Permits 3.18(c)
Forward-Looking Statement 3.8
FTC 5.2(a)
Government Approval 3.5
HSR Approval 3.5
Indemnitee 7.4(a)
Indemnitor 7.4(a)
Insurance Policies 3.19
Law 3.4
Lease 3.15(c)
Litigation 3.14
Material Company Intellectual Property 3.16(a)
Material Contracts 3.11
Material Leased Properties 3.15(b)
Material Owned Properties 3.15(a)
Material Properties 3.15(b)
Materials of Environmental Concern 3.18(c)
Non-Governmental Approval 3.5
Notice 7.4(a)
Ordinary Shares preamble
Participating Shares preamble
Subscription Price 2.2
Registration Rights Agreement preamble
Shareholders Resolutions preamble
Software 3.23
Tax Return 3.17(v)
Taxes 3.17(v)
Year 2000 Compliant 3.23
</TABLE>
SECTION 1.3. Other Definitional Provisions. (a) The words
"hereof," "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this
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8
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section and Exhibit references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) All references to U.S. dollar amounts in this Agreement
shall be deemed to include, to the fullest extent applicable, the equivalent
amount in any relevant non-U.S. currency translated into U.S. dollars on the
date of determination based upon the (i) rate for customs purposes by The
Federal Reserve Bank of New York for cable transfers payable in such non-U.S.
currency or, in the absence thereof, (ii) the exchange rate quoted or published
by the relevant central bank for such non-U.S. currency or, in the absence
thereof, (iii) the exchange rate quoted or published by the foreign exchange
operations of an internationally recognized commercial bank selected in good
faith by the Company.
(d) All references to U.S. federal or New York state legal
terms or concepts in this Agreement shall be deemed to include, to the fullest
extent applicable, the equivalent legal terms or concepts in or of other
jurisdictions. Notwithstanding the preceding sentence or any provision of this
Agreement to the contrary, the preceding sentence and the application of the
definitional provisions thereof shall be subject in all respects to Section
9.6.
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.1. The Closing. The closing (the "Closing") of the
transactions provided for in this Agreement shall be held at the offices of
Simpson Thacher & Bartlett, 99 Bishopsgate, 21st Floor, London EC2M 3YH,
England as promptly as possible after, and in no event later than five Business
Days after, the conditions to the Closing set forth in Article VI hereof have
been satisfied or waived (other than the conditions which are set forth in
Sections 6.1(n) and 6.2(i) or which by their terms are to be satisfied at the
Closing), or at such other time, date and place as shall be agreed upon by the
parties hereto. The actual time and date of the Closing are herein called the
"Closing Date."
SECTION 2.2. Subscription and Payment. Upon the terms and
subject to the conditions of this Agreement, each of the Subscribers hereby
agrees to subscribe for and purchase, at the Closing, the number of
Participating Shares set forth opposite its name on Schedule 2.2, and the
Company hereby agrees to allot and issue, to the Subscribers, at the Closing,
against payment of the subscription price in immediately available funds, an
aggregate of 200,000 Participating Shares, in each case, fully paid and free
and clear of all Encumbrances, for an aggregate subscription price of
U.S.$200,000,000 (the "Subscription Price").
<PAGE> 14
9
SECTION 2.3. Conversion Price of Participating Shares. Each
Participating Share shall, subject to the next sentence, initially be
convertible into 320 Ordinary Shares based upon a Conversion Price (as such
term is defined in the form of Articles Amendments) of U.S.$3.125 per Ordinary
Share. The Conversion Price shall be subject to adjustment prior to issue and
allotment of the Participating Shares at the Closing in the event that (i) the
Market Value for the Ordinary Shares as determined at the close of business
(New York City time) three Business Days immediately preceding the Closing Date
shall have decreased to below U.S.$2.25 per Ordinary Share (for the avoidance
of doubt, after taking into account the then prevailing ratio of Ordinary
Shares per ADS) and (ii) the Company and the Subscribers, in their respective
sole discretion, shall mutually agree in writing not later than the close of
business (New York City time) on the Business Day immediately preceding the
Closing Date to a downward adjustment to the Conversion Price, in which event
each Participating Share shall be initially convertible into a higher number of
Ordinary Shares based upon a Conversion Price per Ordinary Share equal to such
Market Value multiplied by a factor of 1.25.
SECTION 2.4. Closing Deliveries by the Company. At the
Closing, the Company shall deliver to the Subscribers:
(i) certificates evidencing the Participating Shares,
registered in the name of the applicable Subscriber;
(ii) a receipt for the Subscription Price;
(iii) an executed Registration Rights Agreement;
(iv) a non-refundable commission payable to the Subscribers
or an Affiliate of the Subscribers by wire transfer of immediately
available funds to a bank account or accounts to be designated by the
Subscribers in writing at least two Business Days prior to the Closing
Date in an amount equal to U.S.$4,000,000, which represents 2% of the
Subscription Price (for the avoidance of doubt, the Company being
responsible for any VAT payable in respect of such commission).
SECTION 2.5. Closing Deliveries by the Subscribers. At the
Closing, each of the Subscribers shall deliver to the Company:
(i) the applicable Subscription Price for the Participating
Shares to be subscribed for by such Subscriber pursuant to Section
2.2, by wire transfer of immediately available funds to a bank account
or accounts to be designated by the Company in writing at least two
Business Days prior to the Closing Date;
(ii) receipts for the Participating Shares subscribed for by
such Subscriber pursuant to Section 2.2; and
(iii) an executed Registration Rights Agreement.
<PAGE> 15
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company hereby represents and warrants to the Subscribers
on the date hereof as follows:
SECTION 3.1. Organization. The Company is a limited liability
company duly incorporated and validly existing under the laws of England and
Wales. Each of the Company's Subsidiaries is a corporation, limited liability
company or other Person duly organized, validly existing and, to the extent
applicable, in good standing under the laws of the jurisdiction of its
organization, except where the failure to be so organized, existing or in good
standing that would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. The Company and each of its
Subsidiaries have full power and authority to conduct their respective
businesses as they are presently being conducted and to own, lease and operate
their respective properties and assets, except, in the case of any Subsidiary
only, where the failure to have such power or authority would not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect.
The Company and each of its Subsidiaries are duly qualified to do business as
foreign entities and are in good standing in each jurisdiction in which the
character or location of the properties and assets owned or operated by them or
the nature of the businesses conducted by them makes such qualification
necessary, except where the failure to be so qualified or in good standing,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company has provided to the Subscribers a complete
and correct copy of its Memorandum and Articles of Association, and all
amendments thereto, as in effect on the date of this Agreement.
SECTION 3.2. Authority; Enforceability. (a) The Company has
all necessary corporate power and authority to enter into this Agreement and
the Registration Rights Agreement and, subject to the Shareholders Resolutions
being passed, perform its obligations hereunder and thereunder and consummate
the transactions contemplated hereby and thereby. The Company has, subject to
the Shareholders Resolutions being passed, taken all corporate action necessary
to execute and deliver this Agreement and the Registration Rights Agreement, to
consummate the transactions contemplated hereby and thereby and to perform
their respective obligations hereunder and thereunder. This Agreement and the
Registration Rights Agreement have been or will be duly executed and delivered
by the Company. Assuming the due execution of this Agreement and the
Registration Rights Agreement by the Subscribers, this Agreement constitutes,
and the Registration Rights Agreement will constitute, legal, valid and binding
obligations of the Company enforceable against it in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing (it being recognized that the issuance of ADSs
representing, and the related deposit of, Ordinary Shares to be issued upon
conversion of Participating Shares will be subject to the provisions of the ADR
Deposit Agreement).
<PAGE> 16
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(b) Upon the passing of the Shareholders Resolutions by the
Company's shareholders, no further corporate action is required to make
effective the Articles Amendments and such other matters as are referred to in
the Shareholders Resolutions.
SECTION 3.3. Capitalization. (a) As of October 29, 1999, the
capitalization of the Company consisted of:
(i) 500,000,000 authorized Ordinary Shares, of which
233,026,993 shares were issued and fully paid; and
(ii) no shares of any other class or series of Share
Capital were authorized or issued.
As of October 29, 1999, 187,456,851 Ordinary Shares were represented by ADSs.
Since October 29, 1999, no Ordinary Shares have been issued,
other than upon the exercise of Company options described in Schedule 3.3(b)
and the issue of 4,959,128 Ordinary Shares for the Company's 401(k) plan
representing the employer stock match as set forth in Schedule 3.3(b).
All of the issued Ordinary Shares have been duly and validly
authorized and validly issued and are fully paid and nonassessable and were not
issued in violation of, or subject to, any preemptive, subscription or other
similar rights of any other Person. All of the outstanding ADSs have to the
knowledge of the Company, been duly and validly authorized and validly issued
and are entitled to the benefits specified in the corresponding ADRs and in the
ADR Deposit Agreement.
(b) Except as set forth on Schedule 3.3(b), and except as
provided in Section 2.2, there are no subscriptions, options, warrants, puts,
calls, commitments, contracts, preemptive rights, demands or other rights,
agreements or arrangements outstanding as to which the Company or any of its
Subsidiaries is a party for the purchase of, nor any securities issued by the
Company or any of its Subsidiaries that are convertible into or exchangeable
for, any Share Capital of the Company (or any other securities of the Company
or any of its Subsidiaries which, whether after notice, lapse of time or
payment of monies, are or would be convertible into or exercisable or
exchangeable for Share Capital of the Company), nor has the Company taken or
agreed to take any action to issue or grant the same. Except as set forth in
Schedule 3.3(b), the Company is not obligated to purchase, redeem or otherwise
acquire any shares of its Share Capital. Except for any sanction which may be
imposed on a shareholder for failing to comply with a notice served under
section 212 of the U.K. Companies Act 1985, there are no restrictions upon the
voting or transfer of any Voting Shares pursuant to the Memorandum and Articles
of Association of the Company or any agreement or other instrument to which the
Company or any of its Subsidiaries are a party or by which the Company or any
of the Subsidiaries are bound. Except as set forth on Schedule 3.3(b), the
consummation of the transactions contemplated by this Agreement will not
trigger the anti-dilution provisions or other price adjustment mechanisms
<PAGE> 17
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of any outstanding subscriptions, options, warrants, puts, calls, commitments,
contracts, preemptive rights, demands, conversion rights or other agreements or
arrangements under which the Company or any of its Subsidiaries is or may be
obligated to issue or acquire Ordinary Shares or any other Share Capital.
(c) At the Closing, the authorized capital of the Company
will be:
(i) 500,000,000 Ordinary Shares; and
(ii) 500,000 Participating Shares.
When issued in accordance with this Agreement and the terms of the
Participating Shares, respectively, the Participating Shares, the Ordinary
Shares to be issued upon the conversion of the Participating Shares and any
additional Participating Shares to be issued as dividends or by way of bonus
issue on the Participating Shares will have been duly and validly authorized,
will be validly issued, fully paid and nonassessable and will be delivered to
the Subscribers free and clear of all Encumbrances (other than any Encumbrances
created by the Subscribers) and will not be issued in violation of, nor subject
to, any preemptive, subscription or other similar rights of any other Person.
Any ADSs that may be issued in connection with the conversion of the
Participating Shares will, to the knowledge of the Company, upon issuance be
duly and validly issued and will also be entitled to the benefits specified in
the corresponding ADRs and in the deposit agreement relating to such ADSs.
(d) Except as set forth on Schedule 3.3(d), and except for
the Registration Rights Agreement, the Company has not granted or agreed to
grant any rights relating to the registration of its securities under U.S.
applicable federal and state securities laws, including piggyback registration
rights.
(e) Neither the Company nor any of its Subsidiaries is a
party to, or has knowledge of, any voting trusts, proxies or any other
agreements or understandings with respect to the voting of the Ordinary Shares
pursuant to which any Person, acting pursuant to such voting trust, proxies or
other agreements or understandings, controls more than 5% of the voting rights
of the Ordinary Shares.
(f) As of the date hereof, the only outstanding Indebtedness
for borrowed money of the Company and its Subsidiaries is (i) Indebtedness
under the Credit Agreement and the Convertible Subordinated Notes and (ii) the
Indebtedness set forth on Schedule 3.3(f). There exists (i) no default or event
of default (with or without notice or lapse of time or both) by the Company or
any of its Subsidiaries under the provisions of the Credit Agreement and (ii)
no default or event of default (with or without notice or lapse of time or
both) by the Company or any of its Subsidiaries under the provisions of any
other instrument evidencing such other Indebtedness or of any agreement
relating thereto, that, in either case, permits or would reasonably be expected
to result in the parties thereto accelerating all or any part of such
Indebtedness, except, in the case of clause (ii), where such acceleration would
not result in a
<PAGE> 18
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default under the Credit Agreement and would not otherwise, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect.
SECTION 3.4. Non-Contravention, etc. (a) Except as set forth
on Schedule 3.4, neither the execution or delivery of this Agreement or the
Registration Rights Agreement by the Company nor the performance by the Company
of its obligations hereunder or thereunder nor the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the allotment and issue of the Participating Shares, the conversion
of the Participating Shares into Ordinary Shares, the issuance and delivery of
ADSs and the creation, allotment and issue of additional Participating Shares
as dividends or by way of bonus issue on the Participating Shares), will result
in (i) a violation of or a conflict with any provision of the Memorandum and
Articles of Association of the Company or the comparable organizational
documents of any of its Subsidiaries, (ii) breach of, or a default under (with
or without notice or lapse of time or both), any term or provision of, or
create any right of termination, cancellation, acceleration or additional
payment arising under, any material provision of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, agreement, lease or
other instrument or obligation (each, a "Contract") or material Permit to which
the Company or any of its Subsidiaries is a party or is subject or by which any
of its properties or assets are bound, (iii) a violation by the Company or any
of its Subsidiaries of any Government Order or statute, law, ordinance, rule or
regulation of the United States (federal, state or local), the United Kingdom,
any other country or the European Community or any other supranational
organization or body ("Law") to which the Company or any of its Subsidiaries is
subject or by which any of its properties or assets are bound, or (iv) the
imposition of any material Encumbrance on the business, properties or assets of
the Company or any of its Subsidiaries or any of the Ordinary Shares or the
Participating Shares (it being recognized that the issuance of ADSs
representing, and the related deposit of, Ordinary Shares to be issued upon
conversion of Participating Shares will be subject to the provisions of the ADR
Deposit Agreement).
(b) The notices, proxy materials and circulars relating to
the Shareholders Resolutions and the Articles Amendments, when prepared, will
contain all information and particulars required, to the extent applicable,
pursuant to the Securities Act, the Exchange Act, the Companies Acts, the
Listing Rules and any other applicable Law.
SECTION 3.5. Consents and Approvals. Except as set forth on
Schedule 3.5, no consent, approval, order or authorization of, notice to, or
declaration, filing or registration with, any Governmental Authority
("Government Approval"), or consent, approval or waiver of any other Person
("Non-Governmental Approval"), is required to be made or obtained by the
Company in connection with the execution, delivery and performance of this
Agreement or the Registration Rights Agreement and the consummation of the
transactions contemplated hereby or thereby (including, without limitation, the
allotment and issue of the Participating Shares, the conversion of the
Participating Shares into Ordinary Shares, the issuance and delivery of ADSs
and the creation, allotment and issue of additional Participating Shares as
dividends or by way of bonus issue on the Participating Shares) except for (i)
the Shareholders Resolutions and the Articles Amendments and ancillary filings
in respect thereof with the U.K. Companies Registry
<PAGE> 19
14
and the London Stock Exchange, and the clearance by the SEC and the London
Stock Exchange of all necessary notices, proxy materials and circulars related
thereto, (ii) the amendment to the Credit Agreement, the TROL Financing
Agreements and the GE Capital Lease Financing Agreements as contemplated by
Section 5.8, (iii) the filing of any notices, reports and other documents
required by, and the expiration or termination of any waiting periods under,
the HSR Act ("HSR Approval") and any notices or filings under European
Community or European national antitrust, competition or merger laws and
regulations, (iv) such other Non-Governmental Approvals the failure of which to
obtain would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and except, further, as may be required under
any U.S. state securities or "blue sky" laws the failure of which to obtain
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (v) such Governmental Approvals as are contemplated
by the Registration Rights Agreement.
SECTION 3.6. Significant Subsidiaries, etc. (a) Schedule
3.6(a) sets forth each Significant Subsidiary of the Company, including its
name, place of organization or formation, and if not wholly owned directly or
indirectly by the Company, the record ownership as of the date of this
Agreement of all Share Capital issued by such Significant Subsidiary. All
shares of Share Capital of any Significant Subsidiary directly or indirectly
owned by the Company have been duly and validly authorized and validly issued,
are fully paid, and, in the case of corporations, nonassessable and, except as
set forth on Schedule 3.6(a), are directly or indirectly owned by the Company
free and clear of all Encumbrances and have not been issued in violation of,
nor subject to, any preemptive, subscription or other similar rights of any
other Person (other than as described on Schedule 3.6(a)).
(b) There are no outstanding subscriptions, options,
warrants, puts, calls, commitments, contracts, preemptive rights, demands or
other rights, agreements or arrangements as to which the Company or any of its
Significant Subsidiaries is a party for the purchase of, nor any securities
issued by the Company or any of its Significant Subsidiaries convertible into
or exchangeable for, any Share Capital of any Significant Subsidiary of the
Company (or any other securities of any Significant Subsidiary of the Company
which, whether after notice, lapse of time or payment of monies, are or would
be convertible into or exercisable or exchangeable for Share Capital of any
Significant Subsidiary of the Company), nor has any Significant Subsidiary of
the Company taken or agreed to take any action to issue or grant the same, in
each case other than agreements or arrangements providing for the issuance of
any Share Capital of any Significant Subsidiary to the Company or any of its
other direct or indirect wholly-owned Significant Subsidiaries (and not to any
other Person).
(c) None of the Company or any of its Significant
Subsidiaries is party to any voting trust, proxy or any other agreement or
understanding with respect to the voting of any Share Capital of any
Significant Subsidiary of the Company.
(d) Except for the Subsidiaries, the Company does not own any
material Share Capital, other securities or other interest in any other Person,
and neither the Company nor any of its Significant Subsidiaries has any
written, or to the knowledge of the Company, oral
<PAGE> 20
15
understanding or agreement to provide any material funds to, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any other Person, other than a wholly-owned Subsidiary of the Company.
SECTION 3.7. Company Reports. The Company has made available
to the Subscribers an accurate and complete copy of each report, return,
document, notice or announcement filed since January 1, 1997 by the Company
with the SEC pursuant to the Exchange Act, with Companies House pursuant to the
Companies Acts or with the London Stock Exchange pursuant to the Listing Rules
(collectively, and in each case including all exhibits and schedules thereto
and documents incorporated by reference therein, the "Company Reports"). As of
its date of filing, each Company Report complied in all material respects with
the requirements of applicable law and the rules and regulations promulgated
thereunder applicable to such Company Report, except as set forth in Schedule
3.7. No Company Report (including any and all financial statements included
therein) contained when filed or, in the case of any Company Report filed since
January 1, 1999 (except to the extent revised or superseded by a subsequent
filing with the SEC, Companies House or the London Stock Exchange, as the case
may be, prior to the date hereof) contains, any untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Since January 1, 1997,
the Company has filed all reports and other documents required to be filed by
it under applicable law on a timely basis (after giving effect to Rule 12b-25
under the Exchange Act). The Company has duly registered its Ordinary Shares
and ADSs under the Exchange Act in accordance with the Exchange Act and the
rules and regulations promulgated by the SEC thereunder, and its Ordinary
Shares have been duly admitted to listing under the Listing Rules.
Notwithstanding the preceding sentences of this Section 3.7, any projection,
business plan or similar forward-looking statement (a "Forward-Looking
Statement") contained in a Company Report shall not be deemed to have contained
an untrue statement of a material fact or omitted to state any fact necessary
to make the statements therein not misleading if such Forward-Looking Statement
(i) was prepared in good faith, (ii) was based upon reasonable assumptions and
(iii) the Company did not believe and had no reasonable grounds to believe that
such Forward-Looking Statement contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein
not misleading at the time of preparation or delivery thereof.
SECTION 3.8. Financial Information. Each of the consolidated
financial statements (including the notes thereto) included in the Company
Reports complied as to form, as of its date of filing with the SEC, Companies
House or the London Stock Exchange, as the case may be, in all material
respects with applicable legal and accounting requirements and the published
rules and regulations of the SEC or the London Stock Exchange, respectively,
with respect thereto, has been prepared in accordance with U.S. GAAP and U.K.
GAAP, respectively, applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended. The books and
records of the
<PAGE> 21
16
Company and its consolidated Subsidiaries have been, and are being, maintained
in all material respects in accordance with U.S. GAAP and U.K. GAAP,
respectively.
SECTION 3.9. No Undisclosed Liabilities. Neither the Company
nor any of its Subsidiaries had at June 30, 1999, and since such date none of
them has incurred, any liabilities or obligations of any nature whatsoever
(whether accrued, absolute, contingent or otherwise and whether or not required
to be reflected in the Company's financial statements in accordance with U.S.
GAAP or U.K. GAAP, as the case may be), except for (i) liabilities included or
reserved for in the Company's audited consolidated balance sheet (including the
notes thereto) included in its Annual Report on Form 10-K for the fiscal year
ended March 31, 1999 or the Company's unaudited consolidated balance sheet
(including the notes thereto) included in its Quarterly Report on Form 10-Q for
the quarter ended June 30, 1999, each as filed with the SEC (the "Balance
Sheets"), (ii) liabilities disclosed on Schedule 3.9, (iii) liabilities
incurred since June 30, 1999 in the ordinary course of business consistent with
past practice, (iv) obligations to be performed or satisfied after the date
hereof under any existing Contract or Permit and (v) any other liabilities
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
SECTION 3.10. Absence of Certain Changes or Events. (a)
Except as set forth in the Company Reports filed and publicly available prior
to the date hereof, since June 30, 1999, no event, change or circumstance has
occurred which has had, or would reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as disclosed in the Company Reports filed and
publicly available prior to the date hereof, since June 30, 1999, the Company
has not taken any action or omitted to take any action and there has not
occurred any event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 5.1 hereof without the
prior consent of the Subscribers.
SECTION 3.11. Material Contracts. Schedule 3.11(a) sets forth
all Contracts to which the Company or its Subsidiaries is a party or is subject
that are material to the Company and its Subsidiaries taken as a whole
(collectively, the "Material Contracts"). Each of the Material Contracts is in
full force and effect, and, assuming the due authorization, execution and
delivery thereof by the counterparties thereto, is legal, valid and binding
obligations of the Company or its Subsidiary, as the case may be, enforceable
against it in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. Except as set forth on
Schedule 3.11(b), there are no existing or alleged defaults, nor have any
events or circumstances occurred which, with or without notice or the lapse of
time or both, would constitute defaults by the Company or its Subsidiaries, or,
to the knowledge of the Company, any other party, under any of the Material
Contracts.
<PAGE> 22
17
SECTION 3.12. Employee Benefit Plans. (a) Schedule 3.12
contains a true and complete list of each material Company Plan.
(b) (i) Each U.S. Plan has been established and administered
in material compliance with its terms and the applicable provisions of ERISA,
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and other
applicable Law; (ii) each U.S. Plan which is intended to be qualified within
the meaning of Code section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has occurred, whether
by action or failure to act, that could reasonably be expected to cause the
loss of such qualification; (iii) with respect to each U.S. Plan, no event has
occurred and no condition exists that would subject the Company or any of its
Subsidiaries, either directly or by reason of their affiliation with any member
of their "Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any tax, fine, lien, penalty or other liability imposed by
ERISA, the Code or other applicable Law; (iv) no U.S. Plan provides retiree
welfare benefits and neither the Company nor any of its Subsidiaries have any
obligation to provide any retiree welfare benefits other than as required by
Section 4980B of the Code; and (v) neither the Company nor any member of its
Controlled Group has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or 4212(c)
of ERISA, except, in the case of clauses (i) through (v), for any failures,
conditions or other circumstances which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) None of the U.S. Plans is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan within the meaning of
ERISA section 4001(a)(3)) and none of the Company, its Subsidiaries or any
member of their Controlled Group has incurred any material withdrawal liability
under Title IV of ERISA which remains unsatisfied. All benefits payable under
the U.K. Plans are "money purchase benefits" within the meaning of Section
181(1) Pension Schemes Act 1993 or are, in all material respects, effectively
and fully insured under policies with insurers of repute.
(d) Each U.K. Plan is approved as an exempt approved scheme
(within the meaning of Chapter I of Part XIV of the Taxes Act) or an approved
personal pension scheme (within the meaning of Chapter IV of Part XIV of the
Taxes Act) and, to the knowledge of the Company, all the U.K. Plans have at all
times been administered in all material respects in accordance with the trusts
powers and provisions of the U.K. Plans and the requirements of applicable Law
and of the Pension Schemes Office and in all material respects with due regard
to the relevant requirements of trust law.
(e) With respect to any Company Plan, (i) no actions, suits
or claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened and (ii) there are no
matters which have been or are likely to be investigated by the Occupational
Pensions Regulatory Authority in respect of any U.K. Plan, except, in the case
of clauses (i) and (ii), for any actions, suits, claims or matters which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
<PAGE> 23
18
(f) No Company Plan exists that could result in the payment
to any present or former employee of the Company or any of its Subsidiaries of
any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
Subsidiaries as a result of the transactions contemplated by this Agreement and
the Registration Rights Agreement. There is no contract, plan or arrangement
(written or otherwise) covering any employee or former employee of the Company
or any of its Subsidiaries that, individually or collectively, could give rise
to the payment of any amount that would not be deductible pursuant to the terms
of Section 280G of the Code, except for any such contract, plan or arrangement
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(g) As of the Closing, the Company constitutes an "operating
company" as defined in 29 CFR ss. 2510.3-101(c).
SECTION 3.13. Compliance with Law; Other Instruments. (a)
Except as set forth on Schedule 3.13(a), the Company and its Subsidiaries are
in compliance with, and are not in default under, all applicable Laws and
Government Orders except for such failures to be in compliance or such defaults
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries have not
received any notice of, and to the knowledge of the Company, no investigation
or review is in process or threatened by any Governmental Authority with
respect to, any violation or alleged violation of any Law or Government Order
other than any violation which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) The Company holds all Permits necessary for the ownership
and conduct of its business in each of the jurisdictions in which it conducts
or operates its business in the manner now conducted and all of such Permits
are in full force and effect, except for those failures to hold or to remain in
full force and effect which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. There are no pending
or, to the knowledge of the Company, threatened, suits, actions, proceedings or
investigations with respect to the possible revocation, cancellation,
suspension, limitation or nonrenewal of any such Permits, and there has
occurred no event which (whether with notice or lapse of time or both) could
reasonably be expected to result in or constitute the basis for such a
revocation, cancellation, suspension, limitation or nonrenewal thereof, except
in such cases where such revocation, cancellation, suspension, limitation or
nonrenewal would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(c) The Company and each of the Subsidiaries is not, and has
not been party to any agreement between undertakings, decision by any
association of undertakings or concerted practice which will following the
entry into force of the U.K. Competition Act 1998 (the "Competition Act") in
respect of such agreement, decision or practice (as the case may be) infringe
the Chapter I prohibition of the Competition Act, whether or not it will be
exempted under sections 4 to 11 of the Competition Act or be excluded under
section 3 of the Competition Act and has not in respect of any such agreement,
decision or practice received, or made any
<PAGE> 24
19
notifications seeking, early guidance from the Director General of Fair Trading
pursuant to paragraph 7(2) of Schedule 13 of the Competition Act; and the
Company and each of the Subsidiaries is not and has not been, party to any
conduct, course of conduct, arrangement, action or omission which constitutes
an abuse of dominant position under Chapter II of the Competition Act,
following the entry into force of the Competition Act.
SECTION 3.14. Litigation. Except as disclosed on Schedule
3.14, there is no action, order, writ, summons, application, injunction,
judgment, fine or decree outstanding or suit, litigation, proceeding, arbitral
action, investigation or claim, including, without limitation, those involving
any Governmental Authority ("Litigation"), pending or, to the knowledge of the
Company, threatened by or against or relating to (a) the Company or any of its
Subsidiaries or any of their respective assets or properties, which, if
reasonably expected to be adversely determined and if so adversely determined,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (b) the transactions contemplated by this Agreement
and the Registration Rights Agreement. The Company does not have any knowledge
of any event which could lead to any such Litigation of the type referred to in
clause (a) or (b) of the preceding sentence, except as set forth on Schedule
3.14.
SECTION 3.15. Real Property.
(a) Except for the Encumbrances described in Section 3.15(c)
and except as disclosed on Schedule 3.15(c), the Company and/or any of its
Subsidiaries own good and marketable title to all of the material real property
(including all buildings, structures and improvements thereon) owned by the
Company or any of its Subsidiaries (the "Material Owned Properties"), free and
clear of any material Encumbrances.
(b) (i) Except for the Encumbrances described in Section
3.15(c) and except as set forth on Schedule 3.15(b), the Company and/or any of
its Subsidiaries holds a valid leasehold interest in the material real property
(including all buildings, structures and improvements thereon) leased by the
Company or any of its Subsidiaries (the "Material Leased Properties" and,
together with the Material Owned Properties, the "Material Properties")
pursuant to a valid lease or ground lease (each, a "Lease"), (ii) each Lease
relating to a Material Leased Property as of the date hereof and immediately
prior to the Closing will be in full force and effect and is valid and
enforceable in accordance with its terms, (iii) the Company or its Subsidiary
which is the lessee under each Lease relating to a Material Leased Property is
not in default under any such Lease in respect of any monetary obligation or
otherwise in any material respect, subject however to obtaining any consents
identified on Schedule 3.15(b) as it relates to such Lease and (iv) the Company
or its Subsidiary which is the lessee under each Lease relating to a Material
Leased Property enjoys peaceable and quiet possession thereunder.
(c) Except as set forth on Schedule 3.15(c), the Properties
are not subject to any material Encumbrances except for (i) Encumbrances
imposed or promulgated by law or any Governmental Authority with respect to
real property, including zoning regulations that do not adversely affect the
current use of the Material Property, or materially detract from the value of
<PAGE> 25
20
or materially interfere with the present use of the Material Property; (ii)
mechanics', carriers', workmen's, repairmen's or other like liens arising or
incurred in the ordinary course of business which relate to liabilities the
total amount of which are not material or are for amounts not yet due; (iii)
any other item currently of record in the applicable land or comparable real
property records that does not materially detract from the value of or
materially interfere with the present use of the applicable Material Property,
and do not otherwise materially impair business operations conducted by the
Company and its Subsidiaries and which have been incurred only in the ordinary
course of business; and (iv) any other Encumbrances which are not, individually
or in the aggregate, material to the Company and its Subsidiaries taken as a
whole.
(d) There is no pending or, to the knowledge of the Company,
threatened condemnation, expropriation, eminent domain or similar proceeding
affecting all or any part of the Material Properties, and the Company and its
Subsidiaries have not received any written or oral notice of any of the same or
have any knowledge that any such proceeding is contemplated.
SECTION 3.16. Intellectual Property. (a) Schedule 3.16(a)
sets forth a complete and accurate list of all material Intellectual Property
that the Company and its Subsidiaries own or are licensed to use (in each case,
as set forth on Schedule 3.16(a)) (the "Material Company Intellectual
Property"). All of the Material Company Intellectual Property is valid,
enforceable, unexpired, is free of Encumbrances, has not been abandoned and, to
the knowledge of the Company, does not infringe or otherwise impair the
Intellectual Property or other rights of any Person, except where any failure
with respect to the foregoing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company owns or
has the valid right to use all of the Intellectual Property used in or
necessary for the conduct of its business as currently conducted, except where
any failure with respect to the foregoing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company has not licensed or otherwise granted to
others any rights to use the Material Company Intellectual Property.
(c) To the knowledge of the Company, the use of the Material
Company Intellectual Property by the Company is in accordance with any
applicable licenses pursuant to which the Company acquired the right to use the
Material Company Intellectual Property.
(d) The Company and its Subsidiaries have taken all
reasonable actions to protect or maintain the Material Company Intellectual
Property. To the Company's knowledge, no Person is challenging, infringing on
or otherwise violating any right of the Company with respect to the Material
Company Intellectual Property, and no Government Order has been rendered or is,
to the knowledge of the Company, threatened, by any Governmental Authority that
would limit, cancel or question the validity of, or the right of the Company or
any Subsidiary to own or use any Material Company Intellectual Property, in
each case where the foregoing would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 3.17. Tax Matters. Except as set forth on Schedule
3.17:
<PAGE> 26
21
(a) There have been properly completed and filed on a timely
basis (taking into account extensions of time to file granted therefor) all
material Tax Returns required to be filed with respect to the Company and each
of its Subsidiaries on or prior to the date hereof;
(b) All Taxes of the Company and each of its Subsidiaries
with respect to taxable periods, or portion thereof, ending on or before the
Closing Date have been paid or an adequate reserve, or liability (other than
for deferred Taxes except to the extent that deferred Taxes includes any
liability for current Taxes) for any unpaid Taxes has been established on the
most recent balance sheets;
(c) (i) No issues have been raised in writing by any taxing
authority which could give rise to an adjustment in excess of U.S.$50,000 in
connection with any Tax Return of the Company or any of its Subsidiaries with
respect to the Company or any of its Subsidiaries for any taxable period with
respect to which the statute of limitations has not expired, (ii) no waivers of
statutes of limitation with respect to any such Tax Returns that have been
given by the Company or any of its Subsidiaries are currently in force and no
power of attorney granted by or with respect to the Company and any of its
Subsidiaries is currently in force, (iii) all deficiencies asserted or
assessments made as a result of any examinations have been paid, (iv) neither
the Company nor any of its Subsidiaries has (A) applied for or received a tax
ruling or (B) entered into any closing agreement under Section 7121 of the Code
(or any similar provision of U.S. state or local or non-U.S. Law), and (v)
neither the Company nor any of its Subsidiaries has agreed to make any material
adjustment under Section 481(a) of the Code (or any similar provision of U.S.
state or local or non-U.S. Law) by reason of a change of accounting or
otherwise;
(d) All material arrangements, agreements or undertakings,
between the Company or any of its Subsidiaries and the Internal Revenue
Service, the Inland Revenue, H.M. Customs & Excise or any other non-U.S. tax
authorities regarding or affecting the taxation treatment of the Company or any
of its Subsidiaries have been disclosed on Schedule 3.17(d);
(e) There are no material charges, liens or powers of sale
for Taxes on or over any asset of the Company or any of its Subsidiaries other
than for current Taxes not yet due and payable or if due, (i) not delinquent or
(ii) being contested in good faith by appropriate proceedings;
(f) Neither the Company nor any of its Subsidiaries has ever
been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code;
(g) No consent has been filed relating to the Company or any
of its Subsidiaries pursuant to Section 341(f) of the Code;
(h) The Company and each of its Subsidiaries has duly and
timely withheld from employee salaries, wages, and other compensation and paid
over to the appropriate taxing authorities all material amounts required to be
so withheld and paid over for all periods under all
<PAGE> 27
22
applicable law. The Company and each of its Subsidiaries has withheld and paid
over all other material amounts required to be so withheld and paid over for
all periods under all applicable Law;
(i) Neither the Company nor any of its Subsidiaries has made
any material payments, or is currently obligated to make any material payments
that will not be deductible under Section 280G of the Code;
(j) As of the Closing Date, neither the Company nor any of
its Subsidiaries will be a party to, be bound by or have any obligation under,
any tax sharing agreement or similar contract or arrangement or any agreement
that obligates it to make any material payments computed by reference to the
taxes, taxable income or taxable losses of any other Person, other than
agreements among the Company and its wholly-owned Subsidiaries;
(k) The aggregate amount of U.S. federal income tax net
operating losses of the U.S. subsidiaries (all of which are members of a U.S.
federal income tax consolidated group) as of the end of the fiscal year March
31, 1999, after adjustment for net operating loss carrybacks to prior years but
unadjusted for (1) amounts representing timing differences which will result in
deductions to the consolidated group in taxable years subsequent to March 31,
1999, and (2) the portion of the tax reserve on the Company's March 31, 1999
financial statements attributable to such subsidiaries, was not less than
U.S.$232,000,000;
(l) Neither the Company's nor any of its Subsidiaries' U.S.
federal income tax net operating loss are subject to a limitation under Section
382 of the Code, and the acquisition of the Shares by the Buyer will not
trigger a Section 382 limitation;
(m) All arrangements for surrenders (other than among the
Company and its wholly-owned Subsidiaries) allow tax assets in a Subsidiary to
be sold for a sum equal to the percentage rate of corporation tax prevailing in
the year of surrender;
(n) No jurisdiction seeks to charge tax on the worldwide
profits or gains of the Company or its Subsidiaries other than the
jurisdictions in which the Company or its Subsidiaries currently report their
worldwide profits or gains;
(o) If the Company is in a VAT group for the purposes of the
U.K. Value Added Tax Act 1994, all the members of the VAT group are 100%
Subsidiaries of the Company;
(p) Stamp duty has been paid on the title documents of all
material business assets used in the U.K. and acquired in the last six years;
and
(q) For purposes of this Agreement, the terms below are
defined as follows:
(i) "Taxes" means all forms of tax, duty, rate, levy, charge
or other imposition or withholding whenever and by whatever authority
imposed and whether of the United
<PAGE> 28
23
States, the United Kingdom, or elsewhere, including, without
limitation, any tax (including income tax required to be deducted or
withheld from or accounted for in respect of any payment), corporation
tax, advance corporation tax, capital gains tax, capital transfer tax,
inheritance tax, development land tax, petroleum revenue tax, value
added tax, customs duties, excise duties, lottery duty, air passenger
duty, insurance premium tax, rates (including the uniform business
rate), stamp duty, capital duty, stamp duty reserve tax, national
insurance and other similar contributions, any liability arising under
Section 419, Section 601 or Section 703 of the Taxes Act and any other
taxes, duties, rates, levies, charges, imposts or withholdings
corresponding to, similar to, replaced by or replacing any of them
together with any interest, penalty or fine in connection with any
taxation, and any liability to make a payment by way of reimbursement,
recharge, indemnity, damages or a management charge connected in any
way with any taxation and regardless of whether any such taxes,
duties, rates, levies, charges, imposts, withholdings, interest,
penalties or fines are chargeable directly or primarily against or
attributable directly or primarily to the Company, any of its
Subsidiaries or any other person and of whether any amount in respect
of any of them is recoverable from any other person.
(ii) "Tax Return" means any return, report, information
return or other document (including any related or supporting
information) filed or required to be filed with any taxing authority
with respect to Taxes.
SECTION 3.18. Environmental Laws. (a) (i) the Company and its
Subsidiaries comply and have complied, during all applicable statute of
limitations periods, with all applicable Environmental Laws and, the Company
and its Subsidiaries possess and comply, and have possessed and complied during
all applicable statute of limitations periods, with all Environmental Permits;
(ii) there are and have been no Materials of Environmental Concern or other
conditions at any property owned, operated, or otherwise used by the Company or
any of its Subsidiaries, now or in the past, or at any other location
(including, without limitation, any facility to which Materials of
Environmental Concern from the Company or any of its Subsidiaries or the
Properties have been sent) that are in circumstances that could reasonably be
expected to give rise to any liability of the Company or any of its
Subsidiaries, or to result in costs arising out of any Environmental Law; (iii)
no judicial, administrative, or arbitral proceeding (including, without
limitation, any notice of violation or alleged violation), under any
Environmental Law or with respect to any Materials of Environmental Concern to
which the Company or any of its Subsidiaries is, or to the knowledge of the
Company will be, named as a party, or affecting the Properties, is pending or,
to the knowledge of or the Company, threatened; nor is the Company or any of
its Subsidiaries the subject of any investigation or the recipient of any
request for information in connection with any such proceeding or potential
proceeding; (iv) there are no orders, judgments, decrees, or agreements under
any Environmental Law or with respect to any Materials of Environmental Concern
to which the Company or any of its Subsidiaries is a party or affecting the
Properties; (v) to the knowledge of the Company, there are no events,
conditions, circumstances, practices, plans, or legal requirements (in effect
or reasonably anticipated), that could be expected to prevent the Company or
any of its Subsidiaries
<PAGE> 29
24
from, or materially increase the burden on the Company or any of its
Subsidiaries of (A) complying with applicable Environmental Laws, or (B)
obtaining, renewing, or complying with all Environmental Permits; and (vi) to
the knowledge of the Company, each of the foregoing representations and
warranties is true and correct with respect to any entity for which the Company
or any of its Subsidiaries has assumed or retained liability, whether by
contract or operation of law, except, in the case of clauses (i) through (vi),
for any failures, conditions or other circumstances which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) For purposes of this Agreement, the terms below are
defined as follows:
(i) "Environmental Laws" means any and all Laws and
Governmental Orders of any Governmental Authority and all codes of
practice, industry agreements and guidance notes, regulating, relating
to or imposing liability or standards of conduct concerning protection
of the environment or of human health, or employee health and safety.
(ii) "Environmental Permits" means any and all Permits and
any other authorizations required of the Company under any
Environmental Law.
(iii) "Materials of Environmental Concern" means any gasoline
or petroleum (including crude oil or any fraction thereof) or
petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos, pollutants, contaminants, radioactivity, and any
other substances or forces of any kind, whether or not any such
substance or force is defined as hazardous or toxic under any
Environmental Law, that is regulated pursuant to or could give rise to
liability under any Environmental Law.
SECTION 3.19. Insurance. (i) All policies of fire, flood and
casualty, general liability, errors and omissions, directors and officers
liability and other forms of insurance held or maintained by the Company or any
of its Subsidiaries (the "Insurance Policies") are sufficient for compliance in
all material respects with Law, Leases and all other material agreements to
which the Company or any of its Subsidiaries is a party and are reasonable for
the business and assets of the Company and its Subsidiaries and the Properties,
(ii) all Insurance Policies are in full force and effect, and all premiums due
and payable thereon have been paid and the Company and its Subsidiaries have
complied with the provisions of such Insurance Policies, (iii) no insurer under
any Insurance Policy has canceled or generally disclaimed liability under any
such policy or indicated any intent to do so or to increase the premiums
payable under or not renew any such policy and (iv) to the knowledge of the
Company, there is no fact or circumstance that could invalidate the Insurance
Policies or make them unenforceable, except, in the case of clauses (ii), (iii)
and (iv), as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 3.20. Brokers. No broker, finder or investment banker
is entitled to any broker's, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement and the Registration
Rights Agreement based upon agreements
<PAGE> 30
25
or other arrangements made by or on behalf of the Company, except for Lehman
Brothers Inc. and except as set forth on Schedule 3.20, the fees of which will
be the responsibility of the Company, and which have been previously disclosed
to the Subscribers.
SECTION 3.21. Transactions with Affiliates. Except as set
forth in the Company Reports filed and publicly available prior to the date
hereof and as set forth on Schedule 3.21, since June 30, 1999, there have been
no contracts, agreements, arrangements or understandings of any kind between
any director or officer of the Company or any of its Subsidiaries or any other
Affiliate of the Company, on the one hand, and the Company or any of its
Subsidiaries, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act or require approval of the
shareholders of the Company under the Companies Acts or the Listing Rules.
SECTION 3.22. Labor Matters. Except as set forth on Schedule
3.22, neither the Company nor any of its Subsidiaries is a party to any
material collective bargaining agreement or other contract, agreement or
arrangement with any labor organization, works council or other representative
of any of their respective employees. In addition, there is no pending or, to
the knowledge of the Company, threatened any strike, walkout, industrial action
or other work stoppage or any union organizing effort by or respecting any of
the Company's or any of its Subsidiaries' employees, and the Company and its
Subsidiaries have not experienced any such labor controversy within the past
three years, except, in each case, for any labor-related actions or matters
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
SECTION 3.23. Year 2000 Problem. Except as set forth on
Schedule 3.23, to the knowledge of the Company, (a) except for Software
described in clause (b) of this Section 3.23, all computer hardware, software,
databases, systems and other computer equipment (collectively, "Software")
owned, held, and/or used by the Company and its Subsidiaries can be used prior
to, during and after the calendar year 2000 A.D., and will operate during each
such time period, either on a stand-alone basis, or by interacting or
interoperating with third-party Software without error relating to the
processing, calculating, comparing, sequencing or other use of date data,
including any errors relating to the occurrence or non-occurrence of a "leap
year" in 1900 or 2000 (the foregoing ability, "Year 2000 Compliant"); (b) for
any Software that is not Year 2000 Compliant as of the Closing Date, the
Company expects such Software to be Year 2000 Compliant sufficiently promptly
so as to avoid any disruption or harm to the business or operations of the
Company; and (c) the Company and its Subsidiaries have taken all reasonable
measures to address the impact that the year 2000 date change may have on all
Software owned and/or used by them and have assigned resources reasonably
believed to be necessary to the execution of any necessary remediation efforts
to provide uninterrupted millennium functionality to record, store, process and
present calendar dates falling on or after January 1, 2000 in substantially the
same manner and with the same functionality as such software records, stores,
processes and presents such calendar dates falling on or before December 31,
1999, except, in the case of clauses (a) through (c), for any failures,
conditions or other circumstances which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
<PAGE> 31
26
SECTION 3.24. Offering of Participating Shares. Neither the
Company nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of the Company
under circumstances which would require, under the Securities Act, the
integration of such offering with the offering and sale of the Participating
Shares) which might subject the offering or sale of the Participating Shares to
the registration requirements of the Securities Act.
SECTION 3.25. Accuracy and Completeness of Information
Provided. To the Company's knowledge, none of this Agreement and the documents
or written information delivered by the Company to the Subscribers or any of
their respective advisers or agents or otherwise prepared, issued, filed or
distributed in connection with the transactions contemplated by this Agreement
(including, without limitation, the Company Reports filed since January 1, 1999
with the SEC, Companies House or the London Stock Exchange and any notices,
proxy materials, circulars and associated documents required pursuant to the
Securities Act, the Exchange Act, the Listing Rules and any other applicable
Law) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances when made, not misleading. To the Company's
knowledge, there is no fact or information relating to the Company or its
Subsidiaries that is known to the Company that could reasonably be expected to
be material to the Company and its Subsidiaries taken as a whole and that has
not been disclosed to the Subscribers in this Agreement (including the
Schedules hereto) or otherwise. Notwithstanding the two preceding sentences of
this Section 3.25, any Forward-Looking Statement so delivered by the Company
shall not be deemed to have contained an untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein not
misleading if such Forward- Looking Statement (i) was prepared in good faith,
(ii) was based upon reasonable assumptions and (iii) the Company did not
believe, and had no reasonable grounds to believe, that such Forward- Looking
Statement contained an untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein not misleading at
the time of preparation or delivery thereof.
SECTION 3.26. No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, neither
the Company nor any of its Subsidiaries nor any other Person has made or makes
any other express or implied representation or warranty, either oral or
written, on behalf of the Company or its Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SUBSCRIBERS
Each of the Subscribers, severally and not jointly, hereby
represents and warrants to the Company as follows:
<PAGE> 32
27
SECTION 4.1. Organization. Such Subscriber is duly organized,
validly existing and in good standing as a limited partnership under the laws
of the jurisdiction of its organization.
SECTION 4.2. Authority. Such Subscriber has all necessary
limited partnership power and authority to enter into this Agreement and the
Registration Rights Agreement and has taken all action necessary to execute and
deliver such agreements, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. This Agreement
and the Registration Rights Agreement have been or will be duly executed and
delivered by such Subscriber. Assuming the due execution of this Agreement and
the Registration Rights Agreement by the Company and the other Subscribers,
this Agreement constitutes and the Registration Rights Agreement will
constitute a legal, valid and binding obligation of such Subscriber,
enforceable against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 4.3. Non-Contravention. Neither the execution and
delivery of this Agreement or the Registration Rights Agreement by such
Subscriber nor the performance by such Subscriber of its obligations hereunder
or thereunder nor the consummation by such Subscriber of the transactions
contemplated hereby or thereby, will result in (a) a violation of or a conflict
with any provision of the limited partnership agreement of such Subscriber, (b)
a breach or violation of, or a default under (with or without notice or lapse
of time or both), any term or provision of, or any right of termination,
cancellation, modification or acceleration arising under, any Contract or
Permit to which such Subscriber is a party or is subject or by which any of its
properties or assets are bound, (c) a violation by such Subscriber of any
Government Order or Law to which such Subscriber is subject or by which any of
its properties or assets are bound, or (d) the imposition of any Encumbrance on
the business, properties or assets of such Subscriber, except in the case of
clauses (b), (c) and (d), for those breaches, defaults, rights, violations or
impositions which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.4. Consents and Approvals. No Government Approval
with any Governmental Authority, or consent, approval or waiver of any other
Person, is required to be made or obtained by such Subscriber in connection
with the execution, delivery and performance of this Agreement or the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby or thereby except those that have been made or obtained
prior to the date hereof, and except for the HSR Approval and any notices or
filings under European Community or European national antitrust, competition or
merger laws or regulations and except, further, for those Government Approvals,
consents, approvals or waivers which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
<PAGE> 33
28
SECTION 4.5. Subscription for Investment. Such Subscriber
acknowledges that the Participating Shares have not been registered under the
Securities Act or under any state securities laws. Such Subscriber (a) is an
accredited investor (as defined in Rule 501 under the Securities Act), (b) is
acquiring its respective Participating Shares pursuant to an exemption from
registration under the Securities Act solely for investment with no present
intention to distribute any of its Participating Shares to any Person, (c) will
not sell or otherwise dispose of any of its Participating Shares, except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws and (d) has such
knowledge and experience in financial and business matters and in investments
of this type that it is capable of evaluating the merits and risks of its
investment in the Participating Shares and of making an informed investment
decision.
SECTION 4.6. Financial Capability. Such Subscriber has or, on
the Closing Date, will have sufficient funds to purchase the Participating
Shares on the terms and conditions contemplated by this Agreement.
SECTION 4.7. Brokers. No broker, finder or investment banker
is entitled to any broker's, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement and the Registration
Rights Agreement based upon agreements or other arrangements made by or on
behalf of such Subscriber.
SECTION 4.8. No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV, neither
such Subscriber nor any other Person has made or makes any other express or
implied representation or warranty, either oral or written, on behalf of such
Subscriber.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Conduct of Business Prior to the Closing. Except
as contemplated by this Agreement and the Registration Rights Agreement or
consented to in writing by the Subscribers, prior to the Closing, the Company
shall, and shall cause its Subsidiaries to, conduct their respective businesses
in all material respects only in the ordinary course and consistent with past
practice and shall use all reasonable efforts consistent with past practices to
preserve their respective relationships with customers and other Persons with
whom the Company or any of its Subsidiaries has business dealings and keep
available the services of their present employees to the extent material to the
operation of the business. Without limiting the generality of the foregoing,
except as contemplated by this Agreement and the Registration Rights Agreement
and to the fullest extent permitted under applicable Law and the fiduciary
duties of the directors of the Company, the Company shall not, and shall cause
each of its Subsidiaries not to, prior to the Closing do, or take any action
whatsoever in anticipation of
<PAGE> 34
29
doing, any of the following without the prior written consent of the
Subscribers (which consent shall not be unreasonably withheld):
(a) the proposal of any amendments to the Memorandum and
Articles of Association or equivalent constitutive documents of the Company or
the making of any such amendments in respect of any of its Significant
Subsidiaries;
(b) (i) the sale, lease, transfer, mortgage, encumbrance or
other disposition of any properties, rights or assets of the Company or any of
its Significant Subsidiaries, in one transaction or a series of related
transactions, including, without limitation, Share Capital in any Significant
Subsidiaries of the Company, to any Person other than its wholly-owned
Subsidiaries or (ii) the transfer of properties or assets to joint ventures,
partnerships, corporations or other business entities in which it is or thereby
becomes a participant, except, in the case of clause (i) or (ii), (A) in the
ordinary course of business consistent with past practice, (B) for such
properties or assets having an aggregate fair market value of less than
U.S.$25,000,000 and (C) for Danka Services International solely in accordance
with the Credit Agreement;
(c) the merger or consolidation of the Company or any of its
Significant Subsidiaries or the sale, directly or indirectly, of all or
substantially all of the assets of the Company or any of its Significant
Subsidiaries;
(d) (i) the acquisition (directly or through any of its
Subsidiaries) by merging or consolidating with, or by purchasing all or a
substantial portion of the stock or assets of, or by any other manner
acquiring, any business, properties, assets or Person, or (ii) the making of
any investment in any other Person, in the case of each of clause (i) and (ii),
in one transaction or a series of related transactions, for consideration
(including assumed debt) exceeding U.S.$25,000,000;
(e) the incurrence of any Indebtedness (other than (i)
short-term Indebtedness incurred to refinance existing short-term Indebtedness
or otherwise incurred in the ordinary course of business consistent with past
practice, (ii) Indebtedness incurred under the Credit Agreement or the TROL
Financing Agreements, in each case, as in effect on the date hereof or as
amended as contemplated hereby, and (iii) Indebtedness incurred under the GE
Capital Lease Financing Agreements (or similar financing agreement in the
ordinary course of business consistent with past practice), in each case, as in
effect on the date hereof or as amended as contemplated hereby), assumption,
guarantee, endorsement or otherwise as an accommodation becoming responsible
for the obligations of any other Person (other than to the Company or any of
its wholly-owned Subsidiaries), or the making of any loan, advance or capital
contribution (other than to the Company or any of its wholly-owned
Subsidiaries) in excess of U.S.$25,000,000 in the aggregate;
(f) the making, declaration, setting aside or payment of any
dividend or making of any other distribution (whether in cash, Share Capital or
other property) on, or directly or
<PAGE> 35
30
indirectly redeeming, purchasing or otherwise acquiring, any shares of its
Share Capital or any securities or obligations convertible into or exchangeable
for any shares of its Share Capital;
(g) entering into any direct or indirect transaction by the
Company or any of its Subsidiaries with an Affiliate of the Company, other than
any transaction between or among the Company and any of its Subsidiaries or any
other transaction which (i) is in the ordinary course of business; (ii)
involves or has a potential value of U.S.$10,000,000 or less; and (iii) is no
less favorable to the Company than an arm's-length transaction with a third
party which is not such a party as determined in good faith by the Board;
(h) to the extent reasonably within the Company's control,
(i) the removal or election of the chief executive officer of the Company or
(ii) approval of any new, or modification of any existing, director or
executive officer compensation plans or agreements offered by the Company or
any of its Subsidiaries;
(i) 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 involving the Company;
(j) the initiation, settlement or compromise of any
litigation (whether or not commenced prior to the date of this Agreement),
other than settlements or compromises of litigation where the amount paid does
not exceed U.S.$10,000,000 for any single litigation matter or related group of
litigation matters (provided such settlement or compromise agreements do not
involve any non-monetary obligations on the part of Company or any of its
Subsidiaries);
(k) the allotment or issue by the Company of any Ordinary
Shares or other Share Capital (except, in each case, Ordinary Shares issued or
reserved for issuance by the Company, or ADSs representing such Ordinary
Shares, (i) upon exercise of outstanding share options or (ii) upon conversion
of the outstanding U.S.$200,000,000 aggregate principal amount of the Company's
6.75% Convertible Subordinated Notes due 2002);
(l) make any material change in any method of accounting or
accounting practice or policy except as required by U.S. GAAP or U.K. GAAP, as
the case may be, and with the concurrence of its independent accountants or
auditors;
(m) take any action which would reasonably be expected to
cause any representation or warranty of the Company contained in this Agreement
to be or become untrue at Closing in any material respect; or
(n) agree to, or make any commitment to, take, or authorize,
any of the actions prohibited by this Section 5.1.
SECTION 5.2. Regulatory and Other Authorizations; Notices and
Consents. (a) The Company shall promptly make any filings required under the
HSR Act or any other
<PAGE> 36
31
applicable Law for the making of the Articles Amendments, the allotment and
issue of the Participating Shares, the conversion of the Participating Shares
or the creation, allotment and issue of any additional Participating Shares as
dividends or by way of bonus issue on the Participating Shares. The Company
agrees to furnish the Subscribers with such necessary information and
reasonable assistance as the Subscribers may reasonably request in connection
with their preparation of any necessary filings or submissions to the Federal
Trade Commission ("FTC") or the Antitrust Division of the U.S. Department of
Justice (the "Antitrust Division"), including, without limitation, any filings
or notices necessary under the HSR Act, or to any Governmental Authority
pursuant to any European national antitrust, competition or merger laws and
regulations. Any such actions with respect to the conversion of the
Participating Shares or the issuance of any additional Participating Shares in
accordance with the terms of the Participating Shares, shall be taken by the
Company at such times as the Subscribers reasonably shall so request. The
Company shall, at its own expense, utilize all reasonable efforts to respond to
any request for additional information, or other formal or informal request for
information, witnesses or documents which may be made by any Governmental
Authority pertaining to the Company with respect to the allotment and issue of
the Participating Shares, the conversion of the Participating Shares or the
creation, allotment and issue of any additional Participating Shares as
dividends or by way of bonus issue on the Participating Shares, and shall keep
the Subscribers fully apprized of their actions with respect thereto.
(b) Each of the Subscribers shall promptly make any filings
which it is required to make under the HSR Act or any other applicable Law with
respect to the subscription for the Participating Shares, the conversion of the
Participating Shares or the receipt of any additional Participating Shares in
accordance with the terms of the Participating Shares, and the Subscribers
agree to furnish the Company with such necessary information and reasonable
assistance as they may request in connection with their preparation of any
necessary filings or submissions to the FTC or the Antitrust Division,
including, without limitation, any filings or notices necessary under the HSR
Act or to any Governmental Authority pursuant to any European Community or
European national antitrust, competition or merger laws or regulations. The
Subscribers shall, at their own expense, utilize all reasonable efforts to
respond promptly to any request for additional information, or other formal or
informal request for information, witnesses or documents which may be made by
any Governmental Authority pertaining to the Subscribers with respect to the
purchase of the Participating Shares, the conversion of the Participating
Shares or the receipt of any additional Participating Shares in accordance with
the terms of the Participating Shares, and shall keep the Company fully
apprised of its actions with respect thereto.
(c) Each of the parties hereto shall use their 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, this Agreement and the
Registration Rights Agreement and will cooperate with the other parties hereto
in promptly seeking to obtain all such authorizations, consents, orders and
approvals.
<PAGE> 37
32
SECTION 5.3. Access to Information. (a) The Company and its
Subsidiaries shall, and shall cause their respective officers, employees,
counsel, financial advisors and other representatives to, afford to the
Subscribers and their representatives and advisors reasonable access during
normal business hours prior to the Closing to their respective properties,
books, contracts, personnel, records, Tax Returns and related work papers and,
during such period, the Company and its Subsidiaries shall, and shall cause
their respective officers, employees and representatives to, furnish promptly
to the Subscribers all information concerning their respective businesses,
properties, financial condition, operations and personnel as the Subscribers
may from time to time reasonably request.
(b) All information provided or obtained pursuant to Section
5.3(a) hereof shall be held by the Subscribers (and the Subscribers shall make
certain that it agents are informed of the confidential nature of such
information and agree to maintain such information) in accordance with and
subject to the terms of the confidentiality agreement between the Company and
The Cypress Group LLC dated as of September 13, 1999.
(c) No investigation pursuant to this Section 5.3 shall
affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
SECTION 5.4. Further Action. Each of the parties hereto shall
use its reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to consummate the transactions contemplated by this Agreement and
the Registration Rights Agreement.
SECTION 5.5. Non-Solicitation. Prior to the Closing, except
with the prior written consent of the Subscribers and as contemplated by this
Agreement and the Registration Rights Agreement, the Company and its
Subsidiaries will not, and will direct their agents, representatives and
employees not to, (i) solicit any inquiries or 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 the Company or any Significant Subsidiaries, (B)
the direct or indirect sale or disposition of any substantial assets of the
Company or any of its Significant Subsidiaries, or (C) any merger,
reorganization, consolidation or recapitalization or other similar transaction
involving the Company or any of its Significant Subsidiaries, or (ii) discuss
or disclose any non-public information pertaining to the Company or any of its
Significant Subsidiaries with or to any Person in connection with the
foregoing, except, in the cases of clauses (i) and (ii), to the extent (but
only to the extent) required by applicable Law or fiduciary duties of the
directors of the Company, in each case based upon the formal advice of
independent English or U.S. counsel to the Company. The Company will notify the
Subscribers within 48 hours of any overture received from any other Person
concerning any such transaction and the terms of any proposal which may be
conveyed by any such other Person.
<PAGE> 38
33
SECTION 5.6. Availability of Shares. From and after the
Closing Date, the Company shall:
(a) at all times have sufficient authorized 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 issued
from time to time into Ordinary Shares in accordance with the terms of the
Participating Shares.
(b) issue and cause the transfer agent to deliver such
Ordinary Shares as required upon conversion of the Participating Shares and
take all actions necessary to ensure that all such Ordinary Shares shall, when
issued and paid for pursuant to the conversion of the Participating Shares, be
duly and validly issued, fully paid and nonassessable; and
(c) cause the issuance of, and cause the ADR depositary to
deliver, ADSs representing such Ordinary Shares as required upon conversion of
the Participating Shares, and take all actions necessary to ensure that, to the
knowledge of the Company, all such ADSs shall, when issued, be duly and validly
issued and shall be entitled to the benefits specified in the corresponding
ADRs and in the deposit agreement relating to such ADSs; and
(d) if any Ordinary Shares to be issued on conversion of
Participating Shares, or ADSs representing such Ordinary 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 in good faith and as
expeditiously as possible, endeavor 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, or ADSs representing such Ordinary
Shares, are listed or quoted on any securities exchange or market, the Company
shall, 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.
SECTION 5.7. Other Businesses. Neither the terms of this
Agreement nor the ownership of any Participating Shares or Ordinary Shares
shall restrict any of the Subscribers or their Affiliates from engaging in or
owning an interest in any business that is competitive with the business of the
Company or any of its Subsidiaries.
SECTION 5.8. Credit Agreement, etc. (a) Prior to the Closing,
the Company shall use its best efforts to cause the Credit Agreement, the TROL
Financing Agreements and the GE Capital Lease Financing Agreements to be
amended by amendments, which shall be in substance substantially on the terms
attached hereto as Exhibits E-1, E-2 and E-3, respectively (modified, in the
case of Exhibit E-1, by Exhibit E-4).
<PAGE> 39
34
(b) The Company shall use its best efforts to obtain a
financing commitment from one or more major banks or financial institutions
with respect to the refinancing of the substantial portion of its outstanding
Indebtedness.
(c) Prior to the Closing, the Company shall use its best
efforts (i) to cause its independent auditors to determine, pursuant to Section
1204(b)(3) of the Convertible Subordinated Notes Indenture with respect to the
Convertible Subordinated Notes that no anti-dilution adjustment is required in
respect of the conversion price of the Convertible Subordinated Notes pursuant
to such Section 1204(b)(3) as a result of the issue and allotment of the
Participating Shares in accordance with this Agreement or, alternatively, (ii)
to obtain on commercially reasonable terms an amendment to, or waiver of, the
provisions of Section 1204(b) to permit the issue and allotment of the
Participating Shares in accordance with this Agreement.
SECTION 5.9. Use of Proceeds. The Company shall use all or
substantially all of the proceeds from the Subscription Price for the repayment
of indebtedness of the Company and its Subsidiaries under the Credit Agreement.
SECTION 5.10. Shareholder Approvals, etc. The Company shall,
promptly after the date hereof, duly issue a notice convening, and convene, an
extraordinary general meeting of its shareholders for the purpose of passing
the Shareholders Resolutions. In connection with such meeting, the Company
shall use its best efforts (a) to file and have cleared by the SEC and the
London Stock Exchange and thereafter to mail to its shareholders and to holders
of ADSs as promptly as practicable all necessary and desirable notices, proxy
materials and circulars for such meeting and (b) to obtain the necessary
approval by its shareholders of the foregoing and in accordance with applicable
Law (including, without limitation, recommendation to its shareholders that the
Shareholders Resolutions be passed). The Company shall not file, mail or
otherwise distribute any such notices, proxy materials or circulars or any
associated documents and shall not make or otherwise agree to any amendments to
the Shareholders Resolutions, the Articles Amendments or any notice, proxy
materials or circular, in each case without the prior approval by the
Subscribers and their U.S. and English counsel of the form and content thereof
(which approval shall not be unreasonably withheld). The preceding two
sentences of this Section 5.10 shall not require the Company or its directors
to take, or fail to take, any action to the extent (but only to the extent) not
permitted by applicable Law or fiduciary duties of the directors of the
Company, in each case based upon the formal advice of independent English or
U.S. counsel to the Company.
SECTION 5.11. Legend on Certificates for Participating
Shares, etc. (a) So long as applicable, each certificate representing the
Participating Shares or the Ordinary Shares or ADSs, as the case may be, shall
bear the following legend:
"The securities represented hereby have not been registered
under the U.S. Securities Act of 1933, as amended, and may
not be offered, sold, transferred or otherwise disposed of
except in compliance with such Act."
<PAGE> 40
35
The Company agrees that, promptly upon the request of the
Subscribers or any transferee, it will remove such legend from the certificates
representing Participating Shares or the Ordinary Shares or ADSs, as the case
may be, in the event that U.S. counsel for the Subscribers or such transferee
determines that the transfer thereof is no longer restricted by the Securities
Act and, if reasonably requested by the Company, such U.S. counsel provides a
written legal opinion to the foregoing effect.
(b) In the event that the Ordinary Shares are deemed to
constitute "restricted securities" (within the meaning of Rule 144 under the
Securities Act) or cannot otherwise be deposited into the Company's existing
ADR program consistent with the Securities Act, the Company shall use its best
efforts to establish a separate restricted American depositary receipt program
into which such Ordinary Shares may be deposited (or otherwise amend such
existing ADR program), in each case to permit such deposit and on terms
reasonably satisfactory to the Subscribers.
SECTION 5.12. Directors' and Officers' Insurance. Prior to
the Closing, the Company shall amend its directors' and officers' liability
insurance policy to include the persons designated by the Subscribers to serve
on the Company's Board of Directors as named insureds and to provide for
minimum annual coverage not less than in the amount of such policy on the date
hereof.
SECTION 5.13. Operating Company. So long as the Subscribers
retain their investment in the Participating Shares, the Company shall
constitute an "operating company" within the meaning of 29 CFR ss.
2510.3-101(c).
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1. Conditions to Obligations of the Subscribers.
The obligations of each of the Subscribers to consummate the transactions
contemplated by this Agreement and the Registration Rights Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the
following conditions (provided, that any such condition may, to the extent
permitted by applicable law, be waived with respect to any Subscriber by such
Subscriber in its sole discretion):
(a) Representations, Warranties and Covenants. (i) Each of
the representations and warranties of the Company contained in this Agreement
that is qualified as to materiality or Material Adverse Effect shall be true
and correct, and each of the representations and warranties of the Company
contained in this Agreement that is not so qualified as to materiality or
Material Adverse Effect shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date, except for
those representations and warranties which address matters only as of a
<PAGE> 41
36
particular date (which shall be true and correct, or true and correct in all
material respects, as the case may be, as of such date), and the Company shall
have performed in all material respects all agreements, obligations and
covenants required hereby to be performed and complied with by it prior to or
on the Closing Date. The Subscribers shall have received a certificate from the
Company signed by its chief executive officer with respect to the matters
described in this Section 6.1(a) in the form attached hereto as Exhibit C.
(ii) Notwithstanding Section 6.1(a)(i) hereof, the
Subscribers shall not deem a breach or violation of the representation and
warranty set forth in Section 3.10(a) hereof at or prior to Closing to
constitute a basis for determining not to consummate the transactions
contemplated by this Agreement and the Registration Rights Agreement except in
their reasonable judgment (after consultation with the Company).
(b) No Proceeding or Litigation. No action, suit,
investigation or proceeding shall have been commenced by any Governmental
Authority against any party hereto seeking to restrain or delay the
transactions contemplated by this Agreement and the Registration Rights
Agreement.
(c) No Order. There shall not be in effect any Law or
Governmental Order directing that the transactions contemplated by this
Agreement and the Registration Rights Agreement not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(d) Articles Amendments. The Shareholders Resolutions shall
have been duly passed, and the Articles Amendments shall have become effective.
The Company shall have delivered to the Subscribers copies of the Articles
Amendments and the Shareholders Resolutions (certified by the Corporate
Secretary of the Company), which shall be substantially in the forms attached
hereto as Exhibits A-1 and A-2, respectively, in each case subject to amendment
in accordance with this Agreement.
(e) HSR Act. Any applicable waiting periods under the HSR Act
with respect to the transactions contemplated by this Agreement and the
Registration Rights Agreement shall have expired or been terminated.
(f) Credit Agreement, etc. (i) The Credit Agreement, the TROL
Financing Agreements and the GE Capital Lease Financing Agreements shall have
been amended as set forth in Section 5.8(a).
(ii) The Company shall have obtained the financing commitment
as set forth in Section 5.8(b). The Company shall have delivered to the
Subscribers copies of such financing commitment, which shall be in form and
substance reasonably satisfactory to the Subscribers.
(iii) The actions described in Section 5.8(c) with respect to
the Convertible Subordinated Notes shall have been taken, and the Company shall
have delivered to the
<PAGE> 42
37
Subscribers a copy of the determination of the Company's independent auditors
to the effect set forth in Section 5.8(c) or, alternatively, the amendment to,
or waiver from, Section 1204(b) of the Convertible Subordinated Note Indenture
contemplated by Section 5.8(c), in each case in form and substance reasonably
satisfactory to the Subscribers.
(g) Other Approvals and Consents. In addition to those
specified in Sections 6.1(d), 6.1(e) and 6.1(f), any Governmental Approvals and
Non-Governmental Approvals (including under any Material Contract) necessary to
permit the consummation of the transactions contemplated by this Agreement and
the Registration Rights Agreement shall have been obtained (except where, in
the case of any such Non-Governmental Approvals, the failure to obtain any such
Non-Governmental Approvals would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect), and all of such
Governmental Approvals and Non-Governmental Approvals shall be in form and
substance reasonably satisfactory to the Subscribers.
(h) Registration Rights Agreement. The Company shall have
executed and delivered the Registration Rights Agreement.
(i) Legal Opinions. (i)The Company shall have caused to be
delivered to the Subscribers a legal opinion, addressed to the Subscribers, of
Clifford Chance, English legal advisors to the Company (or another
internationally recognized firm of English legal advisors satisfactory to the
Subscribers), in form and substance reasonably satisfactory to the Subscribers
and confirming the validity and binding effect of this Agreement, the
Registration Rights Agreement and the Participating Shares and such other
matters relating to the transactions contemplated hereby and thereby as
requested by the Subscribers.
(ii) The Company shall have caused to be delivered to the
Subscribers legal opinions, addressed to the Subscribers, of (i) Altheimer &
Gray, U.S. counsel to the Company, and (ii) David Berg, Esq., General Counsel
to the Company, in the forms attached hereto as Exhibits D-1 and D-2
respectively, with such modifications, if any, as may be in form and substance
reasonably satisfactory to the Subscribers.
(j) Other Closing Documents. The Company shall have delivered
to the Subscribers such other closing certificates and documents as reasonably
requested by the Subscribers, including without limitation good standing
certificates and certificates of the Corporate Secretary of the Company
annexing resolutions, incumbency, signature and other exhibits.
(k) Appointment of Directors. The size of the Board of
Directors of the Company shall have been increased by two directorships, and
two designees of the Subscribers shall have been duly elected to the Board of
Directors as contemplated by the terms of the Participating Shares.
<PAGE> 43
38
(l) Directors' and Officers' Insurance. The Company's
directors' and officers' liability insurance policy shall have been amended as
contemplated by Section 5.12.
(m) No Material Adverse Change in Financial Markets and Other
Conditions. Subsequent to the date hereof, there shall not have occurred, in
the reasonable judgment of the Subscribers (after consultation with the
Company), any material adverse change in the financial, banking or capital
markets in the United States or the United Kingdom which would materially and
adversely affect the Subscribers' investment in Participating Shares.
(n) Significant Decrease in Market Value of Ordinary Shares.
In the event that the Market Value for the Ordinary Shares as determined at the
close of business (New York City time) three Business Days immediately
preceding the Closing Date shall have decreased to below U.S.$2.25 per Ordinary
Share (for the avoidance of doubt, after taking into account the then
prevailing ratio of Ordinary Shares per ADS), the Subscribers shall have
advised the Company in writing not later than the close of business (New York
City time) on the Business Day immediately preceding the Closing Date that they
have, in their sole discretion, elected to proceed with the Closing or,
alternatively, agreed (or are willing to agree) to a downward adjustment of the
Conversion Price in accordance with Section 2.3.
SECTION 6.2. Conditions to Obligations of the Company. The
obligation of the Company to consummate the transactions contemplated by this
Agreement and the Registration Rights Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the following conditions
(provided that any such condition may, to the extent permitted by applicable
law, be waived with respect to the Company by the Company in its sole
discretion):
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of the Subscribers contained in this Agreement
that is qualified as to materiality or Material Adverse Effect shall be true
and correct, and each of the representations and warranties of the Subscribers
contained in this Agreement that is not so qualified as to materiality or
Material Adverse Effect shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date, except for
those representations and warranties which address matters only as of a
particular date (which shall be true and correct, or true and correct in all
material respects, as the case may be, as of such date), and the Subscribers
shall have performed in all material respects all agreements, obligations,
covenants and conditions required hereby to be performed and complied with by
it prior to or on the Closing Date. The Company shall have received a
certificate from each of the Subscribers signed by a general partner thereof
with respect to the matters described in this Section 6.2(a) in the form
attached hereto as Exhibit E.
(b) No Proceeding or Litigation. No action, suit,
investigation or proceeding shall have been commenced by any Governmental
Authority against any party hereto seeking to restrain or delay the
transactions contemplated by this Agreement and the Registration Rights
Agreement.
<PAGE> 44
39
(c) No Order. There shall not be in effect any Law or
Governmental Order directing that the transactions contemplated by this
Agreement and the Registration Rights Agreement not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(d) Articles Amendments. The Shareholders Resolutions shall
have been duly passed, and the Articles Amendments shall have become effective.
The Articles Amendments and the Shareholders Resolutions shall be substantially
in the forms attached hereto as Exhibits A-1 and A-2, respectively, in each
case subject to amendment in accordance with this Agreement.
(e) HSR Act. Any applicable waiting periods under the HSR Act
with respect to the transactions contemplated by this Agreement and the
Registration Rights Agreement shall have expired or been terminated.
(f) Credit Agreement, etc. (i) The Credit Agreement, the TROL
Financing Agreements and the GE Capital Lease Financing Agreements shall have
been amended as set forth in Section 5.8(a).
(ii) The Company shall have obtained the financing commitment
as set forth in Section 5.8(b), which shall be in form and substance reasonably
satisfactory to the Company.
(iii) The actions set forth in Section 5.8(c) with respect to
the Convertible Subordinated Notes shall have been taken, and the Company shall
have obtained the determination of the Company's independent auditors to the
effect set forth in Section 5.8(c) or, alternately, the amendment to, or waiver
of, Section 1204(b) of the Convertible Subordinated Note Indenture contemplated
by Section 5.8(c).
(g) Other Approvals and Consents. In addition to that
specified in Sections 6.2(d), 6.2(e) and 6.2(f), any Governmental Approvals and
Non-Governmental Approvals necessary to permit the consummation of the
transactions contemplated by this Agreement and the Registration Rights
Agreement shall have been obtained (except where, in the case of any such
Non-Governmental Approvals, the failure to obtain any such Non-Governmental
Approvals would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect), and the terms and conditions of such
Governmental Approvals and Non-Governmental Approvals so obtained would not
reasonably be expected to cause the Company to suffer a Material Adverse
Effect. Notwithstanding the preceding sentence, the condition set forth in this
Section 6.1(g) shall not be available to the Company to excuse its failure to
consummate the transactions contemplated by this Agreement and the Registration
Rights Agreement in the event of any wilful misconduct, gross negligence,
negligence or any other fault or responsibility whatsoever on the part of the
Company or any of its Subsidiaries or Affiliates.
<PAGE> 45
40
(h) Registration Rights Agreement. The Subscribers shall have
executed and delivered the Registration Rights Agreement.
(i) Significant Decrease in Market Value of Ordinary Shares.
In the event that the Market Value for the Ordinary Shares as determined at the
close of business (New York City time) three Business Days immediately preceding
the Closing Date shall have decreased to below U.S.$2.25 per Ordinary Share
(for the avoidance of doubt, after taking into account the then prevailing
ratio of Ordinary Shares per ADS), the Company shall have advised the
Subscribers in writing not later than the close of business (New York City
time) on the Business Day immediately preceding the Closing Date that it has,
in its sole discretion, elected to proceed with the Closing or, alternatively,
agreed (or are willing to agree) to a downward adjustment of the Conversion
Price in accordance with Section 2.3.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
SECTION 7.1. Survival of Representations and Warranties. (a)
(i) The representations and warranties contained in the first sentence of
Section 3.1, Section 3.2, Section 3.3(c) and the last paragraph of Section
3.3(a) shall survive indefinitely.
(ii) All other representations and warranties contained in
this Agreement shall survive until the eighteen month anniversary of the
Closing Date, with the exception of Sections 3.12, 3.17, and 3.18, which shall
survive until the later of (A) the second anniversary of the Closing Date and
(B) three months after the expiration of the applicable statute of limitations
with respect to the subject matter thereof.
(b) The representations and warranties contained in this
Agreement, and the rights and remedies that may be exercised by any Person
seeking indemnification hereunder (except as expressly set forth in Section
7.4), shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by, any such Person or its
representatives.
(c) For purposes of this Agreement, each statement or other
item of information set forth by the Company on any Schedule hereto shall be
deemed to be a part of (and, to the extent applicable, modify) the
corresponding representation and warranty made by the Company in this
Agreement.
SECTION 7.2. Indemnification. (a) From and after the Closing
Date and subject to the provisions of this Article VII, the Company shall
defend, indemnify and hold harmless the Subscribers and their respective
Affiliates and each director, officer, member, partner, employee and agent of
such Persons against any loss, damage, claim, liability, judgment or settlement
of any nature or kind, including all costs and expenses relating thereto,
including without limitation,
<PAGE> 46
41
interest, penalties and reasonable attorneys' fees (collectively, "Damages"),
arising out of, resulting from or relating to:
(i) the breach of any representation or warranty contained in
Article III, or any certificate delivered by the Company pursuant
hereto; and
(ii) the breach by the Company of any covenant or agreement
contained in this Agreement, or any certificate delivered by the
Company pursuant hereto.
(b) From and after the Closing Date and subject to the
provisions of this Article VII, each Subscriber shall, severally and not
jointly, defend, indemnify and hold harmless the Company and its Affiliates and
each director and officer of such Persons against any Damages arising out of,
resulting from or relating to:
(i) the breach by such Subscriber of any representation
or warranty contained in Article IV, or any certificate delivered by
the Subscribers pursuant hereto; and
(ii) the breach by such Subscriber of any covenant or
agreement (whether to be performed prior to or after Closing)
contained in this Agreement, or any certificate delivered by the
Subscribers pursuant hereto.
(c) The term "Damages" as used in this Article VII is not
limited to matters asserted by third parties against any Person entitled to be
indemnified under this Article VIII, but includes Damages incurred or sustained
by any such Person in the absence of third party claims.
SECTION 7.3. Indemnification Amounts. (a) No Indemnitor (as
defined below) shall have liability under Section 7.2(a)(i) or 7.2(b)(i), as
the case may be, until the aggregate amount of Damages theretofore incurred by
one or more Indemnitees (as defined below) in respect of such Indemnitor, as
the case may be, exceeds U.S.$2,000,000 in the aggregate (the "Deductible"), in
which case the Indemnitees in respect of such Indemnitor shall be entitled to
Damages in an aggregate amount up to (but not in excess of): (i) in the event
that the Company is the Indemnitor, the Subscription Price, and (ii) in the
event that any Subscriber is the Indemnitor, an amount equal to the product of
(A) U.S. $1,000,000 and (B) the quotient obtained by dividing the number of
Participating Shares purchased by such Subscribers by the total number of
Participating Shares purchased by all of the Subscribers; provided, however,
that the Indemnitor shall be liable only for the amount by which all Damages of
the Indemnitees in respect of such Indemnitor exceed the Deductible; and
provided, further, that no individual claim for payment of Damages may be made
under Section 7.2(a)(i) or (b)(i) unless such claim (or the aggregate amount of
related claims) is in an amount of U.S. $75,000 or greater.
(b) The limitations on the indemnification obligations set
forth in this Section 7.3 shall apply only to Section 7.2(a)(i) or 7.2(b)(i)
and not to any other covenants or agreements of the parties in this Agreement.
In addition, notwithstanding the provisions of paragraph (a) above, the
limitations on the indemnification obligations of the parties set forth therein
shall not
<PAGE> 47
42
apply to breaches of the representations and warranties made in Sections 3.3(c)
and the last sentence of 3.3(a).
(c) Notwithstanding anything to the contrary set forth
herein, no limitation on the indemnification obligations set forth in this
Section 7.3 shall apply to any breach of a representation or warranty made as
of the date hereof if such representation or warranty was made with knowledge
by the party making such representation or warranty that it (i) contained an
untrue statement of a material fact or (ii) omitted to state a material fact
necessary to make the statements contained therein not misleading. Solely for
purposes of calculating the amount of Damages incurred arising out of or
relating to any breach or representation or warranty (and not for purposes of
determining whether or not a breach has occurred), the references to "Material
Adverse Effect" or other materiality qualifications (or correlative terms),
including as expressed in accounting concepts, shall be disregarded.
SECTION 7.4. Additional Limitations. The Indemnitees shall
not be entitled to recover Damages against or from the Indemnitor in respect of
such Indemnitees under Section 7.2(a)(i) or 7.2(a)(ii) or 7.2(b)(i) or
7.2(b)(ii), as the case may be, in the following circumstances: (a) in case the
Indemnitor is the Company, with respect to any breach of any particular
representation, warranty, covenant or agreement, if at or prior to the Closing
any Subscriber had knowledge of such breach of such representation, warranty or
covenant or agreement and nonetheless proceeded to consummate the transactions
contemplated by this Agreement; or (b) with respect to consequential damages,
including, without limitation, damages regarding lost profits, or punitive
damages incurred or sustained by such Indemnitees, provided, however, that this
Section 7.4(b) shall not limit in any way the right of any Indemnitee to
recover such consequential or punitive damages paid or required to be paid by
such Indemnitee in respect of third party claims or otherwise.
SECTION 7.5. Indemnification Procedures. (a) In the event
that any Person shall incur or suffer any Damages in respect of which
indemnification may be sought hereunder, such Person (the "Indemnitee") may
assert a claim for indemnification by written notice (the "Notice") to the
party from whom indemnification is being sought (the "Indemnitor"), stating the
amount of Damages, if known, and the nature and basis of such claim. In the
case of Damages arising or which may arise by reason of any third-party claim,
promptly after receipt by an Indemnitee of written notice of the assertion of
any claim or the commencement of any action with respect to any matter in
respect of which indemnification may be sought hereunder, the Indemnitee shall
give Notice to the Indemnitor and shall thereafter keep the Indemnitor
reasonably informed with respect thereto, provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any such action is brought against any Indemnitee, the Indemnitor shall be
entitled to assume the defense thereof, by written notice of its intention to
do so to the Indemnitee within 20 days after receipt of the Notice. If the
Indemnitor shall assume the defense of such action, it shall not settle such
action without the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld; provided that an Indemnitee shall not be
<PAGE> 48
43
required to consent to any settlement that (i) does not include as an
unconditional term thereof the giving by the claimant or the plaintiff of an
unconditional release of the Indemnitee from all liability with respect to such
action or (ii) involves the imposition of equitable remedies or the imposition
of any material obligations on such Indemnitee other than financial obligations
for which such Indemnitee will be indemnified hereunder. As long as the
Indemnitor is contesting any such action in good faith and on a timely basis,
the Indemnitee shall not pay or settle any claims brought under such action
(and the Indemnitee may not pay or settle any such claim prior to providing
notice to the Indemnitor and an opportunity to assume the defense of such
action as contemplated hereby). Notwithstanding the assumption by the
Indemnitor of the defense of any action as provided in this Section 7.5, the
Indemnitee shall be permitted to participate in the defense of such action and
to employ counsel at its own expense; provided, however, that if (i) the
defendants in any action shall include both an Indemnitor and any Indemnitee
and such Indemnitee shall have reasonably concluded that counsel selected by
Indemnitor has a potential conflict of interest because of the availability of
different or additional defenses to such Indemnitee or (ii) the Indemnitor has
not employed counsel reasonably satisfactory to such Indemnitee, such
Indemnitee shall have the right to select one separate counsel to participate
in the defense of such action on its behalf, at the expense of the Indemnitor.
(b) If the Indemnitor shall fail to notify the Indemnitee of
its desire to assume the defense of any such action within the prescribed
period of time, or shall notify the Indemnitee that it will not assume the
defense of any such action, then the Indemnitee may assume the defense of any
such action, in which event it may do so acting in good faith in such manner as
it may deem appropriate, and the Indemnitor shall be bound by any final,
non-appealable determination made in such action; provided, however, that the
Indemnitee shall not be permitted to settle such action without the consent of
the Indemnitor, which consent shall not be unreasonably withheld or delayed.
The Indemnitor shall be permitted to join in the defense of such action and to
employ counsel at its own expense.
(c) Amounts payable by the Indemnitor to the Indemnitee in
respect of any Damages for which such party is entitled to indemnification
hereunder shall be payable by the Indemnitor as incurred by the Indemnitee.
(d) In the event of any dispute between the parties regarding
the applicability of the indemnification provisions of this Agreement, the
prevailing party shall be entitled to recover all Damages incurred by such
party arising out of, resulting from or relating to such dispute.
SECTION 7.6. Non-Exclusive Remedy. The indemnification
remedies provided in this Article VII shall not be deemed to be exclusive.
Accordingly, the exercise by any Person of any of its rights under this Article
VII shall not be deemed to be an election of remedies and shall not be deemed
to prejudice, or to constitute or operate as a waiver of, any other right or
remedy that such Person may be entitled to exercise (whether under this
Agreement, under any other contract, under any law or otherwise).
<PAGE> 49
44
SECTION 7.7. Certain Limitations. The indemnification
obligations of the parties hereto for any breach of a representation and
warranty described in Article III or IV of this Agreement shall survive for
only the period applicable to such representations and warranties as set forth
in Section 7.1 of this Agreement, and thereafter all such claims with respect
to representations and warranties of the parties hereto under this Agreement
shall be extinguished; provided, however, that such indemnification obligation
shall not be extinguished (and an indemnification claim in respect thereof
shall not be barred) in the event of Damages incurred as a result of an
investigation, review, suit, claim or action that was instituted or begun prior
to the expiration of the survival period set forth in Section 7.1. so long as
notice of a possible indemnification claim was provided by the Indemnitee to
the Indemnitor within such period.
ARTICLE VIII
TERMINATION
SECTION 8.1. Termination. (a) This Agreement may be
terminated, and the transactions contemplated hereby abandoned, at any time
prior to the Closing:
(i) by the Company on the one hand, or the
Subscribers on the other hand, 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 this Agreement, which
breach or default (A) would permit the non-breaching or non-defaulting
party to elect not to consummate the transactions contemplated by this
Agreement pursuant to Article VI of this Agreement, and (B) either
cannot by its terms be cured or has not been cured within 30 days
after written notice of such breach or default, describing such breach
or default in reasonable detail, is given by the terminating party to
the breaching or defaulting party;
(ii) by the Company or any Subscriber if the Closing
shall not have occurred on or prior to 120 days after the date of this
Agreement; provided, however, that the right to terminate this
Agreement under this Section 8.1(a)(ii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement
shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur on or prior to such date;
(iii) by the Company or any Subscriber in the event
that any Governmental Authority whose consent is necessary for the
consummation of the transactions contemplated by this Agreement shall
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
this Agreement and the Registration Rights Agreement; or
(iv) by the mutual written consent of the Company and
each Subscriber.
<PAGE> 50
45
(b) Upon termination of this Agreement pursuant to Section
8.1(a), this Agreement and the Registration Rights Agreement shall be void and
of no further force and effect and no party shall have any liability to any
other party under this Agreement and the Registration Rights Agreement, except
for the obligations set forth in Articles VII and IX hereof. Notwithstanding
the preceding sentence of this Section 8.1(b) or any other provision of this
Agreement to the contrary, nothing contained in this Agreement (including,
without limitation, this Section 8.1) shall relieve (i) any party from any
liability for the breach or violation of any of the representations,
warranties, covenants and agreements set forth in this Agreement or (ii) the
Company from its obligations set forth in Section 9.1. The provisions of
Articles VII and IX shall survive any termination of this Agreement pursuant to
Section 8.1(a).
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Termination Fee (a) As a condition and
inducement to the Subscribers' willingness to enter into this Agreement, if the
issue and allotment of the Participating Shares is not consummated hereunder,
the Company will pay, upon demand (within three Business Days), to the
Subscribers a termination fee of U.S.$2,000,000 by wire transfer of immediately
available funds to a bank account or accounts designated by the Subscribers;
provided, however, that the Subscribers shall not be entitled to such
termination fee if the issue and allotment of the Participating Shares is not
consummated hereunder for:
(i) any reason set forth in Section 6.1(a)(ii) or 6.1(m);
(ii) any reason set forth in Section 6.1(b), 6.1(c), 6.1(e),
6.1(g), 6.2(b), 6.2(c), 6.2(e) or 6.2(g) (but only in the absence of
any wilful misconduct, gross negligence, negligence or any other fault
or responsibility whatsoever on the part of the Company or any of its
Subsidiaries or Affiliates);
(iii) any reason set forth in Section 6.1(f)(ii) (but only in
the event that the Subscribers determine that the financing commitment
referred to therein is not reasonably satisfactory to them);
(iv) any reason set forth in Section 6.1(n); or
(v) any default by the Subscribers in the performance of
their obligations under this Agreement.
(b) The termination fee provided for in Section 9.1(a) shall
constitute the sole remedy of the Subscribers against the Company if the issue
and allotment of the Participating Shares is not consummated because of any
reason not involving wilful misconduct, gross negligence, negligence or any
other fault or responsibility whatsoever on the part of the
<PAGE> 51
46
Company or any of its Subsidiaries or Affiliates. The preceding sentence of
this Section 9.1(b) shall, however, not apply in the event (i) of any wilful
misconduct, gross negligence, negligence or any other fault or responsibility
whatsoever on the part of the Company or any of its Subsidiaries or Affiliates
or (ii) that the Company fails to pay such termination fee demand (within three
Business Days), in which case the Subscribers shall be entitled to exercise any
and all rights and remedies against the Company (whether under this Agreement,
under any other contract, under any law or otherwise).
SECTION 9.2. Notices. Any notice, request, claim, demand or
other communication under this Agreement shall be in writing, shall be either
personally delivered, delivered by facsimile transmission or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service.
(a) if to the Subscribers:
c/o The Cypress Group LLC
65 East 55th Street
New York, New York 10022
Fax: (212) 705-0199
Attention: James L. Singleton
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Fax: (212) 455-2502
Attention: Glenn M. Reiter, Esq.
(b) if to the Company:
Danka Business Systems PLC
107 Hammersmith Road
London W14 OQH, England
Fax: (011-44-171) 603-8448
Attention: Corporate Secretary
with copies to:
<PAGE> 52
47
Danka Holding Company
11201 Danka Circle North
St. Petersburg, Florida 33716
Fax: (727) 579-2880
Attention: General Counsel
Altheimer & Gray
10 South Wacker Drive
Chicago, IL 60606
Fax: (312) 715-4800
Attention: Richard F. Levy, Esq.
Peter H. Lieberman, Esq.
John E. Lowe, Esq.
SECTION 9.3. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.4. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
SECTION 9.5. Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Except for the provisions of Article VII relating to
Indemnified Parties, this Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.6. Governing Law; Consent to Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and the United States District Court for the Southern
District of New York for any Litigation in any court or before any Governmental
Authority arising out of or relating to this Agreement and the transactions
contemplated hereby and further agrees that service of any process, summons,
notice or document by U.S. mail to its respective address set forth in this
Agreement shall be effective
<PAGE> 53
48
service of process for any Litigation brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any Litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
New York sitting in the Borough of Manhattan in the City of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such Litigation brought in any such court
has been brought in an inconvenient forum.
SECTION 9.7. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 9.8. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties hereto, and any attempt
to make any such assignment without such consent shall be null and void;
provided, however, that the Subscribers may, without the consent of any of the
other parties to this Agreement, (i) assign its rights and obligations
hereunder to any of its Affiliates (provided, that no such assignment shall
relieve the Subscribers of their responsibility for the performance of their
obligations hereunder and provided, further, that no such assignment shall
result in any increase (other than an incidental increase) in VAT or similar
taxes or other meaningful costs payable by the Company in connection with the
issue and allotment of the Participating Shares at the Closing hereunder or any
delay (other than an incidental delay) in the consummation of the issue and
allotment of the Participating Shares at the Closing hereunder) and (ii)
subject to compliance with the terms of the legend set forth in Section 5.11,
transfer any or all of the Participating Shares to one or more other Persons
(which Persons shall be entitled to the benefits, but not subject to the
obligations, of Article VII in accordance with its terms). Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.9. Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.10. Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION.
SECTION 9.11. Judgment Currency. The Company agrees that, if
a judgment or order given or made by any court for the payment of any amount
due to the Subscribers hereunder is expressed in currency (the "judgment
currency") other than the currency (the "denomination currency") in which such
amount is payable, it shall indemnify the Subscribers
<PAGE> 54
49
against any deficiency arising or resulting from any variation in rates of
exchange between the date as of which the amount in the denomination currency
is notionally converted into the amount in the judgment currency for the
purposes of such judgement or order and the date of actual payment thereof.
This indemnity shall constitute a separate and independent obligation from the
other obligations contained in this Agreement, shall give rise to a separate
and independent cause of action, will apply irrespective of any indulgence
granted from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum or sums in respect
of any amounts so due in respect hereof under any such judgment or order.
SECTION 9.12. Public Disclosure. Notwithstanding anything
herein to the contrary, each of the parties to this Agreement hereby agrees
with the other parties hereto that, except as may be required to comply with
the requirements of any applicable laws or regulations (including, without
limitation, regulations of the SEC, the Listing Rules and the Companies Acts),
no press release or similar public announcement or communication shall be made
or caused to be made concerning the execution or performance of this Agreement
unless the parties shall have agreed in advance with respect thereto (it being
recognized that the parties hereto shall issue a joint press release
satisfactory to such parties in connection with execution and delivery of this
Agreement and that the Company shall file with the SEC a Current Report on Form
8-K containing such press release and annexing this Agreement (other than the
Schedules and Exhibits A-2, C, D-1, D-2, D-3 and F hereto)).
<PAGE> 55
IN WITNESS WHEREOF, each of the undersigned has
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
DANKA BUSINESS SYSTEMS PLC
By:
------------------------
Name:
Title:
[Signatures continue on following page]
<PAGE> 56
CYPRESS MERCHANT BANKING
PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By:
------------------------
Name:
Title:
CYPRESS MERCHANT BANKING II C.V.
By: Cypress Associates II LLC, its
Managing General Partner
By:
------------------------
Name:
Title:
55TH STREET PARTNERS II L.P.
By: Cypress Associates II LLC,
its General Partner
By:
------------------------
Name:
Title:
<PAGE> 57
SCHEDULE 2.2
PURCHASERS OF PARTICIPATING SHARES
<TABLE>
<CAPTION>
Number of Participating
Shares to be Purchased
-----------------------
<S> <C>
Cypress Merchant Banking Partners II LLP 190,080
Cypress Merchant Banking II C.V. 8,080
55th Street Partners II L.P. 1,840
-------
200,000
=======
</TABLE>
<PAGE> 1
EXHIBIT 2
DANKA BUSINESS SYSTEMS PLC
RIGHTS OF THE NEW PARTICIPATING SHARES
THE FOLLOWING ARE THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY
SO AS TO CREATE THE NEW PARTICIPATING SHARES PURSUANT TO RESOLUTION [ ] TO BE
PROPOSED AT THE EXTRAORDINARY GENERAL MEETING TO BE HELD ON [ ].
Article 3 shall be deleted and replaced by the following:
"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
(pound)6,250,000 and U.S.$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")"
Article 5(2) shall be amended by the insertion of "Subject to Article 10A(C)
(xiii) and" at the beginning of that Article.
Article 9(B)(iv)(d) shall be deleted and replaced by the following:
"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;"
Article 10 shall be redesignated as Article 10B and a new Article 10A shall be
inserted immediately prior to such Article 10B as follows:
6.50% SENIOR CONVERTIBLE PARTICIPATING SHARES
10A
(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
1
<PAGE> 2
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 paid
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 effective
Liquidation Return per Participating Share,
2
<PAGE> 3
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
3
<PAGE> 4
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 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.$1000 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
4
<PAGE> 5
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.
(i) 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 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.
5
<PAGE> 6
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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.
6
<PAGE> 7
(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 as a class 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
when calculated in accordance with this Article 10A(D)(i)
exceed 29.99%, then the aggregate voting rights of the
Participating Shares shall be deemed to be 29.99%, and such
voting rights shall be exercisable by each holder 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 Directors by majority vote at a class meeting of
the holders of the Participating Shares to be held
7
<PAGE> 8
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
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 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:
8
<PAGE> 9
(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).
9
<PAGE> 10
(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>
Year Percentage of then effective
---- ----------------------------
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
10
<PAGE> 11
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 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;
11
<PAGE> 12
(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 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").
12
<PAGE> 13
(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;
13
<PAGE> 14
(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;
(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
14
<PAGE> 15
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 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
15
<PAGE> 16
(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
16
<PAGE> 17
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 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
17
<PAGE> 18
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 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(pound)50,000 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
18
<PAGE> 19
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 provisions of the Statutes, the Company) for
19
<PAGE> 20
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.
20
<PAGE> 21
(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;
(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
21
<PAGE> 22
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
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<PAGE> 23
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 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
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<PAGE> 24
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 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
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<PAGE> 25
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 (including
without limitation, any action which
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<PAGE> 26
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):
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<PAGE> 27
(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.
(ii) In the event that Cypress and/or Affiliates of Cypress, as
the original holders of the Participating Shares issued and
allotted on the Issue Date, shall transfer a majority of
their Participating Shares in the aggregate 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), 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
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<PAGE> 28
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
(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.
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<PAGE> 29
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
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<PAGE> 30
(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 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 less than
US$[ ] 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.
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"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 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
Preference 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.
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"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).
(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.
Article 76 shall be amended by the substitution of all references to the
"members" with references to the "Members".
Article 76(D) shall be deleted and replaced by the following:
"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."
Article 76(E)(iii) shall be amended by the deletion of "Section 14 of the
Company Securities (Insider Dealing) Act 1985" and the insertion in its place
of "Section 428(1) of the Companies Act 1985".
32
<PAGE> 33
Article 119 shall be amended by the insertion of "and always in compliance with
Article 10A(H)(iii)" after the words "The Directors may from time to time..."
in the first line thereof.
Article 127 shall be amended by the insertion of "Subject to Article
10A(C)(i)," at the beginning of that Article.
Article 128 shall be amended by the insertion of "Dividends regarding the
Participating Shares shall be paid only in accordance with Article 10A(C)." at
the end of such Article.
Article 137 shall be amended by deleting the period at the end of paragraph
(ii) thereof and by replacing it with ";" and by the addition of a new
paragraph (iii) as follows:
"(iii) to the holders of the Participating Shares for the issue of
bonus shares in accordance with Article 10A(C)(iv)."
Article 138 shall be deleted and replaced by the following:
"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 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).
138(2) The authority of the Company in General Meeting
shall be required for any capitalisation pursuant to
paragraph (i) of Article 137 above.
138(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 alloted 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).
138(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)."
33
<PAGE> 1
EXHIBIT 3
===============================================================================
REGISTRATION RIGHTS AGREEMENT
BETWEEN
DANKA BUSINESS SYSTEMS PLC
AND
CYPRESS MERCHANT BANKING PARTNERS II L.P.,
CYPRESS MERCHANT BANKING II C.V.
AND
55TH STREET PARTNERS II L.P.
DATED AS OF _________, __ 1999
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms.......................................................................
SECTION 1.2 Other Defined Terms.........................................................................
SECTION 1.3 Other Definitional Provisions...............................................................
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.2 Piggyback Registrations.....................................................................
SECTION 2.3 Piggyback Listings..........................................................................
SECTION 2.4 Preservation of Rights......................................................................
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.2 Registration Expenses.......................................................................
SECTION 3.3 Limitations on Sale or Distribution of Other Securities.....................................
SECTION 3.4 Company Right to Postpone Registration......................................................
SECTION 3.5 No Required Sale............................................................................
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification.............................................................................
SECTION 4.2 Contribution................................................................................
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1 Rule 144....................................................................................
SECTION 5.2 Further Assurances..........................................................................
SECTION 5.3 Amendment...................................................................................
SECTION 5.4 Waiver of Jury Trial........................................................................
SECTION 5.5 Judgment Currency...........................................................................
SECTION 5.6 Severability................................................................................
SECTION 5.7 Effective Date..............................................................................
SECTION 5.8 Entire Agreement; No Third Party Beneficiaries..............................................
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 5.9 Assignment.................................................................................
SECTION 5.10 Counterparts...............................................................................
SECTION 5.11 Remedies...................................................................................
SECTION 5.12 Notices....................................................................................
SECTION 5.13 Governing Law; Consent to Jurisdiction.....................................................
SECTION 5.14 Interpretation.............................................................................
</TABLE>
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<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ________ __, 1999
between DANKA BUSINESS SYSTEMS PLC, a limited liability company organized and
existing under the laws of England and Wales (the "Company") and CYPRESS
MERCHANT BANKING PARTNERS II L.P., a Delaware limited partnership, CYPRESS
MERCHANT BANKING II C.V., a limited partnership organized under the laws of The
Netherlands, and 55TH STREET PARTNERS II L.P., a Delaware limited partnership
(collectively, the "Subscribers").
W I T N E S S E T H :
WHEREAS, the Company and the Subscribers have entered into a
Subscription Agreement, dated as of November 2, 1999 (the "Subscription
Agreement"), pursuant to which the Company has agreed to issue its 6.50% Senior
Convertible Participating Shares (the "Participating Shares"), which are
convertible into Ordinary Shares, nominal value 1.25 pence per share ("Ordinary
Shares"), of the Company and which may, in certain circumstances, be delivered
to such holders in the form of American Depositary Shares representing such
Ordinary Shares ("ADSs"), and the Subscribers have agreed to subscribe for the
Participating Shares;
WHEREAS, as a condition and inducement to the Subscribers'
willingness to enter into the Subscription Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and obligations hereinafter set forth, the Company and the
Subscribers hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used herein, the
following terms shall have the following meanings:
"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.
"Agreement" means this Registration Rights Agreement, as it
may be amended, supplemented, restated or modified from time to time.
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<PAGE> 5
"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.
"Closing" has the meaning ascribed to such term in the
Subscription Agreement.
"control" means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, and the terms "controlled by" and "under common control
with" shall have correlative meanings.
"Exchange Act" means the U.S. Securities Exchange Act of
1934, as amended.
"Expenses" means any and all fees and expenses incident to
the Company's performance of or compliance with its obligations under this
Agreement (other than internal expenses incurred by the Company including the
services of the Company's executive officers and legal department), including,
without limitation: (i) registration, filing and other fees of the SEC or
relating to any U.S. or U.K. securities exchange or market registration or
qualification, (ii) fees and expenses of compliance with U.S. state and local
securities or "blue sky" laws and in connection with the preparation of a "blue
sky" survey, including reasonable fees and expenses of "blue sky" counsel,
(iii) printing and copying expenses, (iv) messenger and delivery expenses, (v)
expenses incurred in connection with any road show, (vi) fees and disbursements
of U.S., English and other counsel for the Company, (vii) with respect to each
registration, the reasonable fees and disbursements of one counsel for the
selling Holder(s) (selected by the Initiating Holder, in the case of a Demand
Registration, or by the Requisite Percentage of Participating Holders, in the
case of a Piggyback Registration), (viii) fees and disbursements of the
Company's independent public accountants (including the expenses relating to
any audit or limited review and "comfort" letters) and (ix) any other fees and
disbursements of underwriters, if any, customarily paid by issuers of
securities in the United States or the United Kingdom, as the case may be.
"Governmental Authority" means any governmental, regulatory
or administrative agency, authority, instrumentality or commission or any
court, tribunal or judicial or arbitral body of the United States (federal,
state or local), the United Kingdom, any other country or the European
Community or any other supranational organization or body.
"Holder" means each Person who owns Registrable Securities
and is either (a) a Subscriber or (b) any direct or indirect transferee of a
Subscriber which agrees to be bound by the provisions of this Agreement as a
"Holder" hereunder; provided that only a transferee to whom a Subscriber
specifically assigns the rights to make a Demand Registration shall be
permitted to make a Demand Registration Request pursuant to Section 2.1(a).
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<PAGE> 6
"Independent Investment Banking Firm" means an investment
banking firm of nationally recognized standing that is, in the reasonable
judgment of the Person engaging such firm, qualified to perform the task for
which it has been engaged.
"Initial Interest" means, with respect to any Shareholder,
all of the Participating Shares beneficially owned by such Shareholder
immediately following the Closing.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivisions thereof or any group comprised of two or more
of the foregoing.
"Registrable Ordinary Shares" means the Ordinary Shares
issued upon conversion of the Participating Shares, including any additional
Ordinary Shares issued in respect thereof in connection with a share split,
share dividend or similar event with respect to the Ordinary Shares.
"Registrable ADSs" means the ADSs, if any, representing the
Ordinary Shares issued upon conversion of the Participating Shares, including
any additional ADSs issued in respect thereof in connection with a share split,
share dividend or similar event with respect to the Ordinary Shares underlying
such ADSs.
"Registrable Securities" means (a) the Participating Shares
(including Participating Shares issued as dividends or by way of bonus issues),
(b) the Registrable Ordinary Shares and (c) the Registrable ADSs, in each case
whether beneficially owned by a Holder as of the Closing or thereafter acquired
by such Holder. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have been declared effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (ii) such securities shall have
been sold (other than in a privately-negotiated sale) pursuant to Rule 144 (or
any successor provision) under the Securities Act, (iii) such securities are
eligible for sale pursuant to Rule 144 without being subject to applicable
volume limitations thereunder or (iv) such securities shall have ceased to be
outstanding.
"Registration Period" means the period ending on the date
when there are no Holders of Registrable Securities.
"Requisite Percentage of Participating Holders" means, with
respect to any registration pursuant to Section 2.2., Holders of a majority in
interest of the total Registrable Securities which the Company has been
requested to register by all Holders.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
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<PAGE> 7
"Share Capital" means any and all shares, interest,
participation or other equity 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, interest, participation or other equity equivalents, including, to the
fullest extent applicable, American depository receipts or similar instruments
representing any such Share Capital.
"Transfer" means, as to any security, directly or indirectly,
to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose
of, either voluntarily or involuntarily, or to enter into any contract, option
or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition, of such
security beneficially owned by a Person or any interest in any such security
beneficially owned by a Person.
"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 Shareholder (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).
SECTION 1.2 Other Defined Terms. The following terms shall
have the meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
ADSs preamble
Claims 2.8(a)
Demand Exercise Notice 2.1(a)
Demand Registration Request 2.1(a)
Demand Registrations 2.1(a)
Initiating Holder 2.1(a)
Initiating Holder Group 2.1(a)
Litigation 5.13
Ordinary Shares preamble
Other Holders 2.1(b)
Participating Share preamble
Piggyback Registration 2.2(a)
Piggyback Listing 2.3(a)
Subscription Agreement preamble
</TABLE>
SECTION 1.3 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article and Section references are
to this Agreement unless otherwise specified;
-4-
<PAGE> 8
(2) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms; and
(3) All references to U.S. federal or New York state legal
terms or concepts in this Agreement shall be deemed to include, to the fullest
extent applicable, the equivalent legal terms or concepts in or of other
jurisdictions. Notwithstanding the preceding sentence or any provision of this
Agreement to the contrary, the preceding sentence and the application of the
definitional provisions thereof shall be subject in all respects to Section
5.13 hereof.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 Demand Registrations. (a) At any time and from
time to time after the first anniversary of the Closing and during the
Registration Period, any Subscriber (and any other Holder to whom a Subscriber
has specifically transferred its rights under this Section 2.1) shall have the
right to require the Company to file a registration statement under the
Securities Act covering all or any part of their respective Registrable
Securities, by delivering a written request therefor to the Company specifying
the number of Registrable Securities to be included in such registration by
such Holder(s), a price range acceptable to such Holder for the sale of such
Registrable Securities and the intended method of distribution thereof. All
such requests pursuant to this Section 2.1(a) are referred to herein as "Demand
Registration Requests" and the registrations so requested are referred to
herein as "Demand Registrations" (with respect to any Demand Registration, the
Holder making such demand for registration being referred to as the "Initiating
Holder" and, in the case that the Initiating Holder is a Subscriber, such
initiating Holder, together with the other Subscribers, the "Initiating Holder
Group"). As promptly as practicable, but no later than 10 Business Days after
receipt of a Demand Registration Request, the Company shall give written notice
(the "Demand Exercise Notice") of such Demand Registration Request to all
Holders of record of Registrable Securities.
(b) The Company shall include in a Demand Registration (i)
the Registrable Securities of the Initiating Holder and the other members of
the Initiating Holder Group that shall have made a written request to the
Company for inclusion thereof in such registration (which request shall specify
the maximum number of Registrable Securities intended to be disposed of by such
other members) within the time period specified below and (ii) the Registrable
Securities of any other Holder (other than members of the Initiating Holder
Group) (collectively, the "Other Holders") that shall have made a written
request to the Company for inclusion thereof in such registration (which
request shall specify the maximum number of Registrable Securities intended to
be disposed of by such Holder(s)) within 30 days after the receipt of the
Demand Exercise Notice.
(c) The Company shall, as expeditiously as practicable
following a Demand Registration Request, use its best efforts to (i) effect the
registration under the Securities Act
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<PAGE> 9
(including by means of a shelf registration pursuant to Rule 415 under the
Securities Act if so requested by the Initiating Holder and if the Company is
then eligible to use such a registration) of the Registrable Securities which
the Company has been so requested to register by the Initiating Holder Group
and the Other Holders (to the extent permitted to be included in accordance
with the terms hereof), for distribution, in accordance with such intended
method of distribution, and (ii) if requested by the Initiating Holder, obtain
acceleration of the effective date of the registration statement relating to
such registration.
(d) The rights of Holders of Registrable Securities to
request Demand Registrations pursuant to Section 2.1(a) are subject to the
following limitations: (i) in no event shall the Company be required to effect
more than four Demand Registrations pursuant to this Agreement; (ii) the
Company shall not be required to take any action to effect any Demand
Registration within the six-month period following the effective date of a
previous Demand Registration; and (iii) the Company shall not be obligated to
effect more than one Demand Registration under which the aggregate number of
Registrable Securities to be included in such Demand Registration would not
exceed 10% of the Subscribers' Initial Interest.
(e) A registration requested pursuant to this Section 2.1
will not be deemed to have been effected unless the relevant registration
statement has become effective; provided that if, after it has become
effective, the offering of Registrable Securities pursuant to such registration
is subject to any stop order, injunction or other order or requirement of the
SEC or other governmental agency or court for an aggregate of more than 30 days
in the 180 days following the date of effectiveness, such registration will be
deemed not to have been effected.
(f) If a requested registration pursuant to this Section 2.1
involves an underwritten offering, the Initiating Holder shall have the right
to select in good faith an investment banker or bankers and managers of
nationally recognized standing to administer the offering; provided, however,
that such investment banker or bankers and managers shall be reasonably
satisfactory to the Company. The Company shall notify the Initiating Holder if
the Company objects to any investment banker or manager selected by the
Initiating Holder pursuant to this Section 2.1(f) within 10 Business Days after
the Initiating Holder has notified the Company of such selection.
(g) If the managing underwriter of any underwritten offering
shall advise the Holders participating in a Demand Registration that the
Registrable Securities covered by the registration statement cannot be sold in
such offering within a price range acceptable to the Initiating Holder, then
the Initiating Holder shall have the right to notify the Company that it has
determined that the registration statement be abandoned or withdrawn, in which
event the Company shall abandon or withdraw such registration statement. If a
requested registration pursuant to this Section 2.1 involves an underwritten
offering and the managing underwriter advises the Company that, in its opinion,
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering within a price range
reasonably acceptable to the Initiating Holder, the Company will include in
such registration only the
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<PAGE> 10
Registrable Securities requested to be included in such registration pursuant
to this Section 2.1. In the event that the number of Registrable Securities
requested to be included in such registration exceeds the number which, in the
opinion of such managing underwriter, can be sold in such offering within a
price range acceptable to the Initiating Holder, the Company shall include in
such registration the number of Registrable Securities proposed to be sold by
the Initiating Holder Group (to the extent the managing underwriter believes
that such Registrable Securities can be sold in such offering within such price
range, and if they cannot and the Initiating Holder chooses not to exercise its
rights provided in the first sentence of this paragraph, such smaller number of
Registrable Securities of the members of the Initiating Holder Group as
specified by the Initiating Holder) and, to the extent the managing underwriter
believes that additional Registrable Securities can be sold in such offering
within such price range, the number of Registrable Securities proposed to be
sold by the Other Holders, allocated pro rata among the Other Holders on the
basis of the relative number of shares of Registrable Securities requested to
be registered pursuant to clause (ii) of Section 2.1(b) by each such Holder. In
the event that the number of Registrable Securities requested by all Holders to
be included in such registration is less than the number which, in the opinion
of the managing underwriter, can be sold, the Company or other holders who are
entitled to exercise "piggyback" or similar registration rights may include in
such registration a number of securities that the Company proposes to sell up
to the number of securities that, in the opinion of the managing underwriter,
can be sold in such offering within a price range acceptable to the Initiating
Holder.
(h) If the Company at any time grants to any other holders of
Voting Shares (or securities that are convertible, exchangeable or exercisable
into Voting Shares) any rights to request the Company to effect the
registration under the Securities Act of any such Voting Shares (or any such
securities) on terms (other than with respect to the number of demands
permitted to be requested) more favorable to such holders than the terms set
forth in this Section 2.1, then the Holders shall be entitled to such more
favorable rights and benefits.
SECTION 2.2 Piggyback Registrations. (a) If, at any time
following the first anniversary of the Closing, the Company proposes or is
required to register any shares of its Share Capital under the Securities Act
(other than pursuant to (i) registrations on such form or similar form(s)
solely for registration of securities in connection with an employee benefit
plan or dividend reinvestment plan or a merger, consolidation or acquisition or
(ii) a Demand Registration pursuant to Section 2.1) on a registration statement
on Form S-1, Form S-2 or Form S-3 (or an equivalent general registration form
then in effect), whether or not for its own account, the Company shall give
reasonable written notice of its intention to do so to each of the Holders of
record (but in no event less than 20 days before the anticipated filing date).
Upon the written request of any Holder, made within 15 days following the
receipt of any such written notice (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof), the Company shall, subject to the
remainder of this Section 2.2, use its best efforts to cause all such
Registrable Securities, the Holders of which have so requested the registration
thereof, to be registered under the Securities Act (with the securities that
the Company at the time proposes to register) to permit the sale or other
disposition by such Holders (in accordance with the intended method of
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<PAGE> 11
distribution thereof) of the Registrable Securities to be so registered (such
registration, a "Piggyback Registration"). There is no limitation on the number
of Piggyback Registrations pursuant to the preceding sentence that the Company
is obligated to effect. No registration effected under this Section 2.2(a)
shall relieve the Company of its obligations to effect Demand Registrations.
(b) If, at any time after giving written notice of its
intention to register any shares of its Share Capital and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such shares of its Share Capital, the Company may, at its
election, give written notice of such determination to all Holders of record
and (i) in the case of a determination not to register, shall be relieved of
its obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of Holders
under Section 2.1, and (ii) in the case of a determination to delay such
registration of its shares of its Share Capital, shall be permitted to delay
the registration of such Registrable Securities for the same period as the
delay in registering such other shares of its Share Capital.
(c) Any Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Company of its
request to withdraw; provided, however, that (i) such request must be made in
writing prior to the earlier of the execution of the underwriting agreement or
the execution of the custody agreement with respect to such registration and
(ii) such withdrawal shall be irrevocable and, after making such withdrawal, a
Holder shall no longer have any right to include Registrable Securities in the
registration as to which such withdrawal was made.
(d) If the managing underwriter of any underwritten offering
shall inform the Company in writing of its belief that the number of
Registrable Securities requested to be included in a registration under this
Section 2.2 would materially adversely affect such offering, then the Company
will include in such registration, first, the securities proposed by the
Company to be sold for its own account, second, the Registrable Securities and
any other securities of the Company with respect to which the holders thereof
are entitled to and desire "piggyback" or similar registration rights, pro rata
among all such holders on the basis of the relative number of securities of the
Company requested to be registered pursuant to Section 2.2(a) or such other
"piggyback" or similar registration rights by each such holder and third, other
securities of the Company.
(e) If a Piggyback Registration pursuant to this Section
involves an underwritten offering, the Company shall have the right in its
reasonable discretion to select an investment banker or bankers and managers of
nationally recognized standing to administer the offering.
SECTION 2.3 Piggyback Listings. (a) If, at any time following
the first anniversary of the Closing, the Company proposes or is required to
list any shares of its Share Capital on the London Stock Exchange (other than
following registration under the Securities Act in accordance with this
Agreement), whether or not for its own account, the Company shall
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<PAGE> 12
give reasonable written notice of its intention to do so to each of the Holders
of record. Upon the written request of any Holder, made within 15 days
following the receipt of any such written notice (which request shall specify
the maximum number of Ordinary Shares or, if securities issued by the Company
similar to other Registrable Securities are then listed or quoted on the London
Stock Exchange, such other Registrable Securities ("U.K. Listed Shares")
intended to be disposed of by such Holder and the intended method of
distribution thereof), the Company shall, subject to the remainder of this
Section 2.3, use its best efforts to cause all such U.K. Listed Shares, the
Holders of which have so requested the listing thereof, to be listed on the
London Stock Exchange (with the securities that the Company at the time
proposes to list) to permit the sale or other disposition by such Holders (in
accordance with the intended method of distribution thereof) of the U.K. Listed
Shares to be so listed (such listing, a "Piggyback Listing"). There is no
limitation on the number of Piggyback Listings pursuant to the preceding
sentence that the Company is obligated to effect. No listings effected under
this Section 2.3(a) shall relieve the Company of its obligations to effect
Demand Registrations.
(b) If, at any time after giving written notice of its
intention to list any shares of its Share Capital in accordance with Section
2.3(a) and prior to the listing of such shares, the Company shall determine for
any reason not to list or to delay listing of such shares of its Share Capital,
the Company may, at its election, give written notice of such determination to
all Holders of record and (i) in the case of a determination not to list, shall
be relieved of its obligation to list any U.K. Listed Shares in connection with
such abandoned listing, without prejudice, however, to the rights of Holders
under Section 2.1, and (ii) in the case of a determination to delay such
listing of its shares of its Share Capital, shall be permitted to delay the
listing of such U.K. Listed Shares for the same period as the delay in listing
such other shares of its Share Capital.
(c) Any Holder shall have the right to withdraw its request
for inclusion of its U.K. Listed Shares in any listing pursuant to this Section
2.3 by giving written notice to the Company of its request to withdraw;
provided, however, that (i) such request must be made in writing prior to the
earlier of the execution of the underwriting agreement or the execution of the
custody agreement with respect to such listing and (ii) such withdrawal shall
be irrevocable and, after making such withdrawal, a Holder shall no longer have
any right to include U.K. Listed Shares in the listing as to which such
withdrawal was made.
(d) If the managing underwriter of any underwritten offering
shall inform the Company in writing of its belief that the number of U.K.
Listed Shares requested to be included in a listing under this Section 2.3
would materially adversely affect such offering, then the Company will include
in such listing, first, the securities proposed by the Company to be sold for
its own account, second, the U.K. Listed Shares and any other securities of the
Company with respect to which the holders thereof are entitled to and desire
"piggyback" or similar rights, pro rata among all such holders on the basis of
the relative number of securities of the Company requested to be listed
pursuant to Section 2.3(a) or such other "piggyback" or similar registration
rights by each such holder and third, other securities of the Company.
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(e) If a Piggyback Listing pursuant to this Section 2.3
involves an underwritten offering, the Company shall have the right in its
reasonable discretion to select an investment banker or bankers and managers of
nationally recognized standing to administer the offering.
(f) If and whenever the Company is required by the provisions
of this Section 2.3 to effect or cause the listing of any U.K. Listed Shares,
the Company shall (i) comply with all applicable laws and the requirements of
the relevant securities exchange or market or quotation system in respect of
such listing; (ii) consult with the Holders in respect of all aspects of such
listing; and (iii) comply with the reasonable requests of the Holders in
respect of the form and content of any documents (including, without
limitation, listing particulars and circulars) prepared in connection with such
listing, and otherwise in connection with the procedural requirements for
listing.
SECTION 2.4 Preservation of Rights. The Company shall not
grant any registration or listing rights to third parties which contravene the
rights of Holders granted hereunder.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1 Registration Procedures. Subject to Section
2.2(b), if and whenever the Company is required by the provisions of this
Agreement to effect or cause the registration of any Registrable Securities
under the Securities Act as provided in this Agreement, the Company shall, as
expeditiously as practicable:
(a) prepare and file with the SEC a registration statement on
an appropriate registration form of the SEC for the disposition of such
Registrable Securities in accordance with the intended method of disposition
thereof, which form (i) shall be selected by the Company (provided, that if any
registration requested pursuant to this Agreement which is proposed by the
Company to be effected by filing of a registration statement on Form S-3 (or
any successor or similar short-form registration statement) shall be in
connection with an underwritten public offering, and if the managing
underwriter shall advise the Company in writing that, in its opinion, it is of
material importance to the success of such proposed offering to include in such
registration statement information not required to be included pursuant to Form
S-3, then the Company shall supplement such registration statement as
reasonably requested by such managing underwriter) and (ii) shall, in the case
of a shelf registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and such registration statement shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and the Company shall use its best efforts to cause such
registration statement to become effective (provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, or comparable statements under U.S. state securities or "blue sky"
laws, the Company
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will furnish to one counsel for the Holders participating in the planned
offering (selected by the Initiating Holder, in the case of a Demand
Registration, or the Requisite Percentage of Participating Holders, in the case
of a Piggyback Registration) and the underwriters, if any, copies of all such
documents proposed to be filed (including all exhibits thereto), which
documents will be subject to the reasonable review and, in the case of a Demand
Registration, reasonable comment of such counsel, and the Company shall not
file any registration statement or amendment thereto or any prospectus or
supplement thereto with respect to a Demand Registration to which the Holders
of a majority of the Registrable Securities covered by such registration
statement or the managing underwriter, if any, shall reasonably object in
writing;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Registrable
Securities covered by such registration statement in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement in each case until the earlier of (i) such time as
all such Registrable Securities have been disposed of in accordance with the
intended methods of disposition set forth in such registration statement by the
Holder or Holders thereof and (ii) the expiration of 120 days from the date
such registration statement first becomes effective;
(c) furnish, without charge, to each seller of such
Registrable Securities and each underwriter, if any, of the securities covered
by such registration statement such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits), and the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in conformity
with the requirements of the Securities Act, such documents incorporated by
reference in such registration statement, and such other documents, as such
seller and underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities as contemplated by such registration
statement;
(d) use its best efforts to register or qualify all
Registrable Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions within the United States as
any sellers of Registrable Securities or any managing underwriter, if any,
shall reasonably request, to the extent such registration or qualification is
required by law, and do any and all other acts and things that may be necessary
or advisable to enable such sellers or underwriter, if any, to consummate the
disposition of the Registrable Securities in such jurisdictions, except that in
no event shall the Company be required to qualify generally to do business as a
foreign corporation in any jurisdiction where it would not, but for the
requirements of this paragraph (d), be required to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) enter into such customary agreements (including an
underwriting agreement in customary form, which may include customary
indemnification provisions in favor of underwriters and other persons in
addition to, or in substitution for, the provisions of Section 4.1
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hereof) and take such other actions as the Initiating Holder, in the case of a
Demand Registration, or the underwriters, if any, shall reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities;
(f) obtain (i) any opinion of U.S., English and other counsel
for the Company, dated the date of the closing under the underwriting agreement
with respect to such offering, in customary form and in form and scope
reasonably satisfactory to the underwriter and its counsel and (ii) any
"comfort" letter signed by the independent public accountants in customary form
and covering matters of the type customarily covered by "comfort" letters;
(g) notify each Holder selling Registrable Securities covered
by such registration statement and each managing underwriter, if any, as soon
as practicable: (i) when the registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has been filed and, with
respect to the registration statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the SEC or state securities
authority for amendments or supplements to the registration statement or the
prospectus related thereto or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of
the qualification of any Registrable Securities for sale under the U.S. state
securities or "blue sky" laws or the initiation of any proceeding for such
purpose; and (v) of the existence of any fact of which the Company becomes
aware that results in the registration statement, the prospectus related
thereto or any document incorporated therein by reference containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statement therein not misleading;
and, if the notification relates to an event described in clause (v), the
Company shall, as soon as reasonably practicable, subject to Section 3.1(b),
prepare and furnish to each such seller and each underwriter, if any, a
reasonable number of copies of a prospectus as supplemented or amended so that,
as thereafter delivered to the Holders of such Registrable Securities, the
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading;
(h) use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable after the effective date of the registration
statement (and in any event within 16 months thereafter), an earning statement
(which need not be audited) covering the period of at least 12 consecutive
months beginning with the first day of the Company's first calendar quarter
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and the rules and regulations thereunder;
(i) use its best efforts to (i) cause all such Registrable
Securities covered by such registration statement to be listed on each U.S. or
U.K. securities exchange or market or quotation system on which similar
securities issued by the Company are then listed or quoted (if
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any), and provide a transfer agent and registrar for such Registrable
Securities not later than the effective date of such registration statement;
(ii) comply with all applicable laws and the requirements of the relevant
securities exchange or market or quotation system in respect of such listing;
(iii) consult with the Holders in respect of all aspects of such listing; and
(iv) comply with the reasonable requests of the Holders in respect of the form
and content of any documents (including, without limitation, listing
particulars and circulars) prepared in connection with such listing, and
otherwise in connection with the procedural requirements for listing;
(j) deliver, as soon as practicable, to each Holder and one
counsel for the selling Holders participating in the offering and each
underwriter, if any, copies of all correspondence between the SEC and the
Company, its counsel or auditors and any memoranda relating to discussions with
the SEC or its staff with respect to the registration statement, other than
those portions of any such memoranda that contain information subject to
attorney-client privilege with respect to the Company or other shareholders,
and, upon receipt of such confidentiality agreements as the Company may
reasonably request, make reasonably available for inspection by any seller of
such Registrable Securities covered by such registration statement, by any
underwriter, if any, participating in any disposition to be effected pursuant
to such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent financial
and other records, pertinent corporate documents and properties of the Company,
and cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(k) use reasonable efforts to prevent the issuance of any
stop order suspending the effectiveness of the registration statement or of any
order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the withdrawal of any such order at the
earliest possible moment;
(l) provide a CUSIP number for all Registrable Securities
sold pursuant to the Registration Statement, not later than the effective date
of the registration statement;
(m) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses and the requirements of the
marketing process) in the marketing of Registrable Securities in any
underwritten offering;
(n) promptly prior to the filing of any document that is to
be incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement), provide copies of
such document to one counsel for the selling Holders and to each managing
underwriter, if any, and make the Company's representatives reasonably
available for discussion of such document and make such changes in such
document concerning the selling Holders prior to the filing thereof as such
counsel for such selling Holders or underwriters may reasonably request;
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(o) furnish to each Holder participating in the offering and
the managing underwriter, without charge, at least one signed copy of the
registration statement and each post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(p) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.;
(q) use reasonable efforts to make available the executive
officers of the Company to participate with the Holders of Registrable
Securities and any underwriters in any "road shows" or other selling efforts
that may be reasonably requested by the selling Holders in connection with the
methods of distribution for the Registrable Securities;
(r) cooperate with the selling Holders of Registrable
Securities and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the underwriters or, if not an underwritten offering, in
accordance with the instructions of the selling Holders of Registrable
Securities at least two Business Days prior to any sale of Registrable
Securities; and
(s) take all such other reasonable actions as are necessary
or advisable or reasonably requested by the selling Holders of Registrable
Securities in order to expedite or facilitate the disposition of such
Registrable Securities.
The Company may require as a condition precedent to the Company's obligations
under this Section 3.1 that each seller of Registrable Securities as to which
any registration is being effected furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law,
by the SEC or by any securities exchange or market or quotation system on which
the Registrable Securities are to be listed or quoted in connection therewith;
provided, that such information shall be used only in connection with such
registration and the fulfillment of the Company's obligations under this
Agreement. Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (v) of paragraph (g) of this Section 3.1, such Holder will discontinue
such Holder's disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt of
the copies of a supplemented or amended prospectus as contemplated by paragraph
(g) of this Section 3.1 and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession of any prospectus covering such Registrable
Securities that was in effect at the time of receipt of such notice. In the
event the
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Company shall give any such notice, the 120-day period mentioned in paragraph
(b) of this Section 3.1 shall be extended by the number of days during such
period from and including the date of the giving of such notice to and including
the date when each seller of any Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by paragraph (g) of this Section 3.1. If any
such registration statement or comparable statement under "blue sky" laws refers
to any Holder by name or otherwise as the Holder of any securities of the
Company, then such Holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such Holder and the
Company, to the effect that the holding by such Holder of such securities is not
to be construed as a recommendation by such Holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such Holder will assist in meeting any future financial requirements of the
Company or (ii) in the event that such reference to such Holder by name or
otherwise is not in the judgment of the Company, as advised by counsel, required
by the Securities Act or any similar federal statute or any state "blue sky" or
securities law then in force, the deletion of the reference to such Holder.
SECTION 3.2 Registration Expenses. To the fullest extent
permitted by applicable laws, the Company will pay (or promptly reimburse the
payment of) all Expenses incurred in connection with each registration
statement filed pursuant to this Agreement and the fulfillment of the Company's
obligations under this Agreement, provided, however, that all underwriting
discounts and selling commissions applicable to the sale of the Registrable
Securities in connection with any registration statement filed pursuant to this
Agreement shall be borne by the Holders of the Registrable Securities sold
pursuant to such registration statement, pro rata in proportion to the number
of Registrable Securities of each such Holder included in such registration.
SECTION 3.3 Limitations on Sale or Distribution of Other
Securities. (a) To the extent requested in writing by a managing underwriter,
if any, of any registration effected pursuant to Section 2.1 and 2.2, each
Holder of Registrable Securities agrees not to Transfer, including, without
limitation, any sale pursuant to Rule 144 under the Securities Act, any
Registrable Securities (other than as part of such underwritten public
offering) during the time period reasonably requested by the managing
underwriter, not to exceed 90 days from the effective date of the registration
statement (and the Company hereby also so agrees (except that the Company may
effect any sale or distribution of any such securities pursuant to a
registration on Form S-8 or any successor or similar form that is then in
effect or upon the conversion, exchange or exercise of any then outstanding
options, warrants, rights or other securities convertible into or exchangeable
or exercisable for Registrable Securities or on Form S-4 or any successor or
similar form that is then in effect for a merger, acquisition or other
transaction and related distributions of securities) to use its reasonable best
efforts to cause each holder, directly or indirectly, of at least 1% of any
Share Capital of the Company purchased from the Company at any time other than
in a public offering so to agree); provided that with respect to registrations
effected pursuant to Section 2.2, each Holder of Registrable Securities shall
only be required to agree to one such period of restriction on Transfer in any
365-day period.
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(b) The Company hereby agrees that, if it shall previously
have received a request for registration pursuant to Section 2.1 hereof or
postponed pursuant to Section 3.4 hereof, and if such previous registration
shall not have been withdrawn or abandoned, the Company shall not Transfer any
Registrable Securities (other than as part of such underwritten public
offering, a registration on Form S-8 or any successor or similar form that is
then in effect or upon the conversion, exchange or exercise of any then
outstanding options, warrants, rights or other securities convertible into or
exchangeable or exercisable for Registrable Securities or on Form S-4 or any
successor or similar form that is then in effect for a merger, acquisition or
other transaction and related distributions of securities) during the time
period reasonably requested by the managing underwriter, not to exceed 90 days
from the effective date of the registration statement.
SECTION 3.4 Company Right to Postpone Registration. The
Company shall be entitled to postpone for a reasonable period of time (but not
exceeding 120 days) the filing or effectiveness of any registration statement
otherwise required to be prepared and filed by it pursuant to this Agreement if
the Company determines (i) in its good faith judgment after consultation with
its external U.S. securities counsel of nationally recognized standing that
such registration and offering would require premature disclosure of material
information which the Company has a bona fide business purpose for preserving
as confidential or (ii) in its good faith judgment after consulting with an
Independent Investment Banking Firm that the filing of the registration
statement and the related sale of securities of the Company would be reasonably
likely to have an adverse affect on the Company's financing plans or any
planned material transaction involving the Company, including, without
limitation, sales of securities of the Company, in each case provided that the
Company promptly gives the Holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such delay. If
the Company shall so postpone the filing or effectiveness of a registration
statement, such Holders of Registrable Securities requesting registration
thereof pursuant to Section 2.1 shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal,
such request shall not be counted for purposes of the requests for registration
to which Holders of Registrable Securities are entitled pursuant to Section 2.1
hereof. The Company shall not be permitted to postpone registration pursuant to
this Section 3.4 more than once in any 365-day period.
SECTION 3.5 No Required Sale. Nothing in this Agreement shall
be deemed to create an independent obligation on the part of any Holder to sell
any Registrable Securities pursuant to any effective registration statement.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
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SECTION 4.1 Indemnification. (a) In the event of any
registration of any securities of the Company under the Securities Act pursuant
this Agreement, the Company will, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by all applicable laws, each seller of any
Registrable Securities covered by such registration statement, its directors,
officers, affiliates, employees, shareholders, members and general and limited
partners (and the directors, officers, affiliates, employees, shareholders,
members and general and limited partners thereof), each other Person who
participates as an underwriter in the offering or sale of such securities, each
director, officer, employee, shareholder, member or general and limited partner
of such underwriter, and each other Person, if any, who controls such seller or
any such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof ("Claims") and expenses (including reasonable
fees of counsel and any amounts paid in any settlement effected with the
Company's consent, which consent shall not be unreasonably withheld) to which
each such indemnified party may become subject under the Securities Act or
otherwise, insofar as such Claims or expenses arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such securities were
registered under the Securities Act, together with the documents incorporated
by reference therein or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary, final or summary
prospectus or listing particulars or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Company shall not be liable to any such indemnified party in
any such case to the extent such Claim or expense arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of a material fact made in such registration
statement or amendment thereof or supplement thereto or in any such prospectus
or any preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such indemnified party specifically for use therein. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party and shall
survive the Transfer of such securities by such seller.
(b) Each Holder of Registrable Securities that are included
in the securities as to which any registration under Section 2.1 or 2.2 is
being effected (and, if the Company requires as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 2.1 or 2.2, any underwriter) shall, severally and not jointly,
indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 4.1) to the extent permitted by law the
Company, its directors and officers, each Person controlling the Company within
the meaning of the Securities Act and all other prospective sellers and their
directors, officers, general and limited partners and respective controlling
Persons with respect to any untrue statement or alleged untrue statement of any
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material fact in, or omission or alleged omission of any material fact from,
such registration statement, any preliminary, final or summary prospectus or
listing particulars, or any amendment or supplement thereto, if such statement
or alleged statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company or its
representatives by or on behalf of such Holder specifically for use therein and
reimburse such indemnified party for any legal or other expenses reasonably
incurred in connection with investigating or defending any such Claim as such
expenses are incurred; provided, however, that the aggregate amount that any
such Holder shall be required to pay pursuant to this Section 4.1(b) and
Section 4.2 shall in no case be greater than the amount of the net proceeds
received by such person upon the sale of the Registrable Securities pursuant to
the registration statement giving rise to such Claim.
(c) Indemnification similar to that specified in the
preceding paragraph (a) of this Section 4.1 (with appropriate modifications)
shall be given by the Company with respect to any required registration or
other qualification of securities under any U.S. state securities and "blue
sky" laws.
(d) Any person entitled to indemnification under this
Agreement shall notify promptly the indemnifying party in writing of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 4.1, but the failure of
any indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under the preceding paragraphs of this Section 4.1,
except to the extent the indemnifying party is materially prejudiced thereby,
and shall not relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than under this Article IV. In case any
action or proceeding is brought against an indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, unless in the reasonable
opinion of outside counsel to the indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, to assume the defense thereof jointly with any other indemnifying party
similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if (i) the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; (ii) such indemnified party
who is a defendant in any action or proceeding that is also brought against the
indemnifying party reasonably shall have concluded that there may be one or
more legal defenses available to such indemnified party that are not available
to the indemnifying party; or (iii) representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct, then, in any such case, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than
one firm of counsel for all indemnified parties in each jurisdiction who shall
be approved by the
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majority of the participating Holders in the registration in respect of which
such indemnification is sought), and, to the fullest extent permitted by all
applicable laws, the indemnifying party shall be liable for any expenses
therefor. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (x)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (y) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution that any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the Transfer
of the Registrable Securities by any such party.
(f) The indemnification and contribution required by this
Section 4.1 and Section 4.2 shall be made by periodic payments of reasonable
frequency of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or liability
is incurred.
SECTION 4.2 Contribution. (a) If for any reason the indemnity
provided for in Section 4.1 is unavailable or is insufficient to hold harmless
an indemnified party under Sections 4.1(a), (b) or (c) in respect of any Claims
or expenses (including reasonable fees of counsel and any amounts paid in any
settlement effected with the indemnifying party's consent, which consent shall
not be unreasonably withheld), then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, to the fullest extent permitted by
all applicable laws, contribute to the amount paid or payable by such
indemnified party as a result of such Claims or expenses (i) as between the
Company and the Holders of Registrable Securities covered by a registration
statement, on the one hand, and the underwriters, on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and such Holders, on the one hand, and the underwriters, on the other,
from the offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
such Holders, on the one hand, and of the underwriters, on the other, in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations, and (ii) as between the Company, on the one hand, and each
holder of Registrable Securities covered by a registration statement, on the
other, in such proportion as is appropriate to reflect the relative fault of
the Company and of each such holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Company and such Holders, on the one hand, and the
underwriters, on the other, shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and
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commissions but before deducting expenses) received by the Company and such
Holders bear to the total underwriting discounts and commissions received by
the underwriters. The relative fault of the Company and such Holders, on the
one hand, and of the underwriters, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and such Holders
or by the underwriters. The relative fault of the Company, on the one hand, and
of each such Holder, on the other, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(b) The Company and the Holders of Registrable Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 4.2 were determined by pro rata allocation (even if the underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the next preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the next preceding paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 4.2, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public exceeds the amount
of any damages that such underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no holder of Registrable Securities shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such holder were offered to the public exceeds
the amount of any damages that such holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each
Holder's obligation to contribute pursuant to this Section 4.2 is several in
the proportion that the proceeds of the offering received by such Holder bears
to the total proceeds of the offering received by all the Holders and not
joint. The aggregate amount that any such Holder shall be required to pay
pursuant to this Section 4.2 and Section 4.1(b) shall in no case be greater
than the amount of the net proceeds received by such person upon the sale of
the Registrable Securities pursuant to the registration statement giving rise
to such Claim.
-20-
<PAGE> 24
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1 Rule 144. The Company covenants and agrees that
(i) so long as it remains subject to the reporting provisions of the Exchange
Act, it will timely file the reports required to be filed by it under the
Securities Act or the Exchange Act (including, but not limited to, the reports
under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 under the Securities Act), and (ii) it will take such
further action as any Holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (x) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (y) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.2 Further Assurances. At any time or from time to
time after the date hereof, the parties agree to cooperate with each other, and
at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent of
the parties hereunder.
SECTION 5.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 5.4 Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION.
SECTION 5.5 Judgment Currency. The Company agrees that, if a
judgment or order given or made by any court for the payment of any amount due
to the Subscribers hereunder is expressed in currency (the "judgment currency")
other than the currency (the "denomination currency") in which such amount is
payable, to the fullest extent permitted by all applicable laws, it shall
indemnify the Subscribers against any deficiency arising or resulting from any
variation in rates of exchange between the date as of which the amount in the
denomination currency is notionally converted into the amount in the judgment
currency for the purposes of such judgement or order and the date of actual
payment thereof. This indemnity shall constitute a separate and independent
obligation from the other obligations contained in this Agreement, shall give
rise to a separate and independent cause of action, will apply irrespective of
any indulgence granted from time to time and shall continue in full force and
-21-
<PAGE> 25
effect notwithstanding any judgment or order for a liquidated sum or sums in
respect of any amounts so due in respect hereof under any such judgment or
order.
SECTION 5.6 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 5.7 Effective Date. This Agreement shall become
effective immediately upon the Closing.
SECTION 5.8 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Except for the provisions of Article IV relating to
Indemnified Parties, this Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 5.9 Assignment. Except as expressly provided herein,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto, in whole or in part
(whether by operation of law or otherwise), without the prior written consent
of the other parties hereto, and any attempt to make any such assignment
without such consent shall be null and void; provided, however, that the
Subscribers may, without the consent of any of the other parties to this
Agreement, (i) assign its rights and obligations hereunder to any Person or
Persons to whom it is entitled to assign the Participating Shares in accordance
with the Subscription Agreement, subject to such Person or Persons agreeing to
be bound by the terms of this Agreement and (ii) subject to compliance with the
terms of the legend set forth in Section 5.12 of the Subscription Agreement,
transfer any or all of the Participating Shares to one or more other Persons.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by, the parties and their respective
successors and assigns.
SECTION 5.10 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
SECTION 5.11 Remedies. (a) Each party hereto acknowledges
that money damages would not be an adequate remedy in the event that any of the
covenants or agreements
-22-
<PAGE> 26
in this Agreement are not performed in accordance with its terms, and it is
therefore agreed that in addition to and without limiting any other remedy or
right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.
(b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
SECTION 5.12 Notices. Any notice, request, claim, demand or
other communication under this Agreement shall be in writing, shall be either
personally delivered, delivered by facsimile transmission or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service:
(a) if to the Subscribers:
c/o The Cypress Group
65 East 55th Street, 19th Floor
New York, New York 10022
Fax: (212) 705-0199
Attention: James L. Singleton
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Fax: (212) 455-2502
Attention: Glenn M. Reiter, Esq.
(b) if to the Company:
Danka Business Systems PLC
107 Hammersmith Road
London W14 OQH, England
Fax: (011-44-171) 603-8448
Attention: Corporate Secretary
-23-
<PAGE> 27
with copies to:
Danka Holding Company
11201 Danka Circle North
St. Petersburg, Florida 33716
Fax: (727) 579-2880
Attention: General Counsel
Altheimer & Gray
10 South Wacker Drive
Chicago, IL 60606
Fax: (312) 715-4800
Attention: Richard F. Levy, Esq.
Peter H. Lieberman, Esq.
Jon E. Lowe, Esq.
SECTION 5.13 Governing Law; Consent to Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and the United States District Court for the Southern
District of New York for any action, order, writ, injunction, judgment, fine or
decree outstanding or suit, litigation, proceeding, arbitral action,
investigation or claim, including, without limitation, those involving any
Governmental Authority ("Litigation") in any court or before any Governmental
Authority arising out of or relating to this Agreement and the transactions
contemplated hereby and further agrees that service of any process, summons,
notice or document by U.S. mail to its respective address set forth in this
Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York sitting in the Borough of Manhattan in the City
of New York, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such Litigation brought
in any such court has been brought in an inconvenient forum.
SECTION 5.14 Interpretation. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
-24-
<PAGE> 28
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DANKA BUSINESS SYSTEMS PLC
By:
-------------------------------
Name:
Title:
[Signatures for this Agreement continue on the following page]
<PAGE> 29
CYPRESS MERCHANT BANKING
PARTNERS
II L.P.
By: Cypress Associates II LLC, its
General Partner
By:
----------------------------------
Name:
Title:
CYPRESS MERCHANT BANKING C.V.
By: Cypress Associates II LLC, its
Managing General Partner
By:
----------------------------------
Name:
Title:
55TH STREET PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By:
----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4
PROPOSED AMENDMENTS TO CREDIT AGREEMENT AMENDMENTS
PRELIMINARY TERM SHEET
The following terms have been discussed with the Banks comprising the Steering
Committee; however, no such Bank nor any other Bank has received necessary
internal approvals for any of these terms.
1. Amend the Termination Date to March 31, 2002.
2. A minimum of 85% of the anticipated net proceeds from
the proposed Participating Shares (85% x U.S.$192 million (estimated, after
deduction of direct costs) = U.S.$163.2 million) to be used to permanently
repay the Term Loan.
3. Permit PIK dividends on the proposed Participating
Shares and exclude the same from the Consolidated Fixed Charge Coverage Ratio;
such Participating Shares to be treated as equity.
4. Amend the Adjusted Consolidated Net Worth covenant
based on revised quarterly projections to be provided by the Company and after
(i) giving effect to the proposed preferred stock investment and (ii) review by
PWC.
5. Eliminate requirement to sell Danka Services
International.
6. Reduce Term Loan Commitment to provide a smaller but
sufficient cushion to account for currency fluctuations.
7. Permit U.S.$10,000,000 of unsecured indebtedness
subject to compliance with the Consolidated Total Leverage Ratio covenant.
8. Payment at closing of the proposed issuance of the
Participating Shares of the U.S.$10,000,000 fee otherwise payable on July 31,
2000.
9. All interest rates and fees under the Sixth Amendment
to remain in place and unchanged during the existing Waiver Term (except as
provided in paragraph 8 hereof); no other fees will be required as a condition
to the effectiveness of the Seventh Amendment (other than reimbursement of
professional fees).
10. Interest rates for the period subsequent to the
existing Waiver Term and until the Terminate Date to be identical with those in
effect on July 31, 2000 under the Sixth Amendment
<PAGE> 2
(i.e., 3.5% over LIBOR if Average Outstandings are greater than or equal to
U.S.$650 million and 2.75% over LIBOR if Average Outstandings are less than
U.S.$650 million).
<PAGE> 3
Clause (ii) of Section 8.3 of the Credit Agreement shall be amended to
read as follows:
"(1) At any time (a) on and after September 30, 1999 and on or prior to
December 30, 1999, the Adjusted Consolidated Net Worth (which term, as used in
this Section 8.3 (ii), shall exclude the impact of the $10,000,000 waiver
extension fee provided for in the first sentence of Section 9 of the Sixth
Amendment) of Danka PLC and its subsidiaries to be less than $158,000,000; (b)
on and after December 31, 1999 and on or prior to March 30, 2000 the Adjusted
Consolidated Net Worth of Danka PLC and its Subsidiaries to be less than
$166,000,000; (c) on or after March 31, 2000 and on or prior to June 29, 2000,
the Adjusted Consolidated Net Worth of Danka PLC and its Subsidiaries to be
less than $172,000,000 and (d) on and after June 30, 2000, the Adjusted
Consolidated Net Worth of Danka PLC and its Subsidiaries to be less than the
sum of (a) $184,000,000, plus (B) 50% of the quarterly consolidated net
earnings of Danka PLC and its Subsidiaries (if Positive) for each fiscal
quarter ending after June 30, 2000 (on a cumulative basis); provided, that if
any time after September 30, 1999, Danka PLC issues an equity interest, the
minimum requirement will be increased by an amount equal to 75% of the net
proceeds of the equity interest issued by Danka PLC after September 30, 1999."
<PAGE> 1
EXHIBIT 5
PROPOSED AMENDMENTS TO TROL FINANCING AGREEMENTS AMENDMENTS
TERM SHEET
1. Permit PIK dividends on the proposed Participating Shares. PIK
dividends to be excluded from the Consolidated Fixed Charge Ratio
Covenant. Participating Shares to be treated as equity, not
Indebtedness.
2. Any requirement to sell Danka Services International is eliminated.
3. Permit U.S.$10,000,000 of unsecured Indebtedness subject to compliance
with the Consolidated Total Leverage Ratio covered.
4. All interest charges shall remain in place and unchanged during the
existing waiver period; thereafter, the interest rates shall be those
in effect on July 31, 2000.
5. The Adjusted Consolidated Net Worth covenant as set forth in clause
(ii) of Section 8.3 of the Credit Agreement shall be amended to
provide as follows:
"(1) At any time (a) on and after September 30, 1999 and on
or prior to December 30, 1999, the Adjusted Consolidated Net
Worth (which term, as used in this Section 8.3 (ii), shall
exclude the impact of the $10,000,000 waiver extension fee
provided for in the first sentence of Section 9 of the sixth
Amendment) of Danka PLC and its subsidiaries to be less than
$158,000,000; (b) on and after December 31, 1999 and on or
prior to march 30, 2000 the Adjusted Consolidated Net Worth
of Danka PLC and its Subsidiaries to be less than
$166,000,000; (c) on or after March 31, 2000 and on or prior
to June 29, 2000, the Adjusted Consolidated Net Worth of
Danka PLC and its Subsidiaries to be less than $172,000,000
and (d) on and after June 30, 2000, the Adjusted Consolidated
Net Worth of Danka PLC and its Subsidiaries to be less than
the sum of (a) $184,000,000, plus (B) 50% of the quarterly
consolidated net earnings of Danka PLC and its Subsidiaries
(if Positive) for each fiscal quarter ending after June 30,
2000 (on a cumulative basis); provided, that if any time
after September 30, 1999, Danka PLC issues an equity
interest, the minimum requirement will be increased by an
amount equal to 75% of the net proceeds of the equity
interest issued by Danka PLC after September 30, 1999."
6. No other fees required as a result of waiver except for the
reimbursement of professional fees.
<PAGE> 2
7. The waiver fees to be paid on December 31, 1999 and March 31, 2000
under the prior waiver shall be paid upon closing of the issuance of
the Participating Shares.
<PAGE> 1
EXHIBIT 6
FORM OF AMENDMENT TO GE CAPITAL LEASE FINANCING AGREEMENTS
_______________, 1999
Danka Business Systems PLC
33 Cavendish Square
London, England w1M ODE
Danka Office Imaging Company
11201 Danka Circle North
St. Petersburg, FL 33716
Re: Global Operating Agreement (the "Global Operating Agreement")
dated as of December 22, 1997 by and between General Electric
Capital Corporation ("GE Capital") and Danka Business Systems
PLC ("Danka"), and Exempt Leases Operating Agreement (the
"Exempt Operating Agreement" and, together with the Global
Operating Agreement, the "Agreements") dated as of January
29, 1999 by and between GE Capital and Danka Office Imaging
Company ("Danka Office").
Ladies and Gentlemen:
This letter shall confirm our agreement with respect to certain
matters relating to the Agreements. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Agreements.
1. Section (ii) of the definition of "Material Change" contained
in Appendix I to the Global Operating Agreement, and section (2) of the
definition of "Material Adverse Change in the Financial Condition" in respect
of Danka Office contained in Article XI of the Exempt Operating Agreement are
deleted as of the original dates of such Agreements, and the following is
substituted therefor as of such dates:
"the failure of Danka Business Systems PLC to maintain a
Consolidated Net Worth (which term, as used herein, shall
exclude the impact of the waiver extension fee provided for
in the first sentence of Section 9 of the Sixth Amendment to
the Credit Agreement dated as of December 5, 1996 among Danka
Business Systems PLC, NationsBank, N.A., as agent, et al) as
of the end of each fiscal quarter ending on or after December
30, 1999 of at least the lesser of (i) $400,000,000, or (ii)
(a) on or prior to December 30, 1999, $158,000,000, (b) on or
prior to March 30, 2000, $166,000,000, (c) on or prior
to June 29, 2000, $172,000,000 and (d) on and after
<PAGE> 2
June 30, 2000 the sum of (A) $184,000,000, plus (B) 50% of
the quarterly consolidated net earnings of Danka Business
Systems PLC and its consolidated subsidiaries (if positive)
for each fiscal quarter ending after June 30, 2000 (on a
cumulative basis), provided that if at any time after
September 30, 1999, Danka Business Systems PLC issues an
equity interest, the minimum requirement set forth in this
subsection (ii) will be increased by an amount equal to 75%
of the net proceeds of the equity interest issued by Danka
Business Systems PLC after September 30, 1999."
2. This Letter Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but all of which together shall constitute one and the same instrument, and may
be executed by facsimile signatures.
3. This Letter Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
4. Except as amended hereby, the Agreements remain in full force
and effect.
Please indicate your agreement with the foregoing by signing one
original of this Letter Agreement and returning it to us.
Very truly yours,
GENERAL ELECTRIC
CAPITAL CORPORATION
By:
---------------------------------
Name:
Title:
AGREED:
DANKA BUSINESS SYSTEMS PLC
By:
------------------------------------
Name:
Title:
Date:
DANKA OFFICE IMAGING COMPANY
By:
------------------------------------
Name:
Title:
Date:
