-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FK1rN+l+zEXOe9q2aZJqa8ji4EJHysgCf+te5k1N61YGkhwUsBsSmD049KE5TiTb RAuvK5XA4RBKm8dKpzG37Q== 0000950144-99-012382.txt : 19991108 0000950144-99-012382.hdr.sgml : 19991108 ACCESSION NUMBER: 0000950144-99-012382 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19991102 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANKA BUSINESS SYSTEMS PLC CENTRAL INDEX KEY: 0000894010 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 980052869 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20828 FILM NUMBER: 99741410 BUSINESS ADDRESS: STREET 1: 11201 DANKA CIRCLE N CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 7275766003 MAIL ADDRESS: STREET 1: 11201 DANKA CIRCLE NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716 8-K 1 DANKA BUSINESS SYSTEMS PLC 1 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 2 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; 2 3 (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. 3 4 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. 4 5 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 5 EX-99.1 2 SUBSCRIPTION AGREEMENT 1 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 ================================================================================ 2 TABLE OF CONTENTS
Page 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..................................................................
-1- 3 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..................................
-2- 4 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........................................................
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
-3- 5 Exhibit F Form of Certificate of General Partner of Subscribers -4- 6 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: 7 2 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. 8 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 9 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 10 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 11 6 (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:
Term Section ---- ------- ADSs preamble Antitrust Division 5.2(a)
12 7 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
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 13 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"). 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. 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). 16 11 (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 17 12 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 18 13 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 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 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 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. 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. 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 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 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: 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 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 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 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 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. 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: 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. 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 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 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 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. 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. 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). 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." 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 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 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. 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. 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. 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, 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 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 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). 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. 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 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: 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 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 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)). 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] 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: 57 SCHEDULE 2.2 PURCHASERS OF PARTICIPATING SHARES
Number of Participating Shares to be Purchased ----------------------- 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 =======
EX-99.2 3 FORM OF AMENDMENTS TO ARTICLES OF ASSOCIATION 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 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 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 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 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 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 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 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 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 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:
Year Percentage of then effective ---- ---------------------------- Liquidation Return ------------------ 2003................. 103.250% 2004................. 102.167 2005................. 101.083 2006 and thereafter 100.000; 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 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 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 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 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 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 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 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 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 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 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 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 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 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 22 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 23 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 24 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 25 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): 26 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 27 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. 28 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 29 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. 30 31 "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. 31 32 "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 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 EX-99.3 4 FORM OF REGISTRATION RIGHTS AGREEMENT 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 =============================================================================== 2 TABLE OF CONTENTS
Page ---- 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..............................................
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Page ---- 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.............................................................................
-ii- 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. -1- 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). -2- 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. -3- 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:
Term Section ---- ------- 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
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- 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 -5- 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 -6- 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 -7- 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 -8- 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. -9- 13 (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 -10- 14 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 -11- 15 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 -12- 16 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; -13- 17 (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 -14- 18 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. -15- 19 (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 -16- 20 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 -17- 21 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 -18- 22 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 -19- 23 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- 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- 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- 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- 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- 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] 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: EX-99.4 5 TERM SHEET TO THE CREDIT AGREEMENT 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 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). 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." EX-99.5 6 TERM SHEET TO TROL FINANCING AGREEMENT 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. 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. EX-99.6 7 TERM SHEET TO GE CAPITAL LEASE AGREEMENT 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 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: -----END PRIVACY-ENHANCED MESSAGE-----