-----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, JeoBFfrb5ORVm/EQ+9O/JZ8BYMctjOxX2fmVAoylEU0rNho+tju4dFr3hdL1GZV3 TaHBHXY4rfUT21jo3U+XCw== 0000950147-01-500579.txt : 20010321 0000950147-01-500579.hdr.sgml : 20010321 ACCESSION NUMBER: 0000950147-01-500579 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010305 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010320 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORK CONNECTION INC CENTRAL INDEX KEY: 0000932088 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 581712432 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13760 FILM NUMBER: 1572886 BUSINESS ADDRESS: STREET 1: 1811 CHESTNUT ST SUITE 110 STREET 2: THE BELGRAVIA CITY: PHILADELPHIA STATE: PA ZIP: 85034 BUSINESS PHONE: 6022008900 MAIL ADDRESS: STREET 1: 1811 CHESTNUT ST SUITE 110 STREET 2: THE BELGRAVIA CITY: PHILADELPHIA STATE: PA ZIP: 85034 8-K 1 e-6516.txt CURRENT REPORT DATED 3/5/01 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) March 5, 2001 The Network Connection, Inc. (Exact Name of Registrant as specified in its charter) Georgia 1-13760 58-1712432 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) The Belgravia, 1811 Chestnut Street, Suite 110, Philadelphia, PA 19103 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (215) 832-1046 (Former Name or Former Address, if Changed Since Last Report) INFORMATION TO BE INCLUDED IN THIS REPORT 2. DISPOSITION OF ASSETS On March 7, 2001, The Network Connection, Inc., a Georgia corporation ("Registrant"), announced that it had re-evaluated certain aspects of its business and would be focusing its efforts on the operations of TNCi UK Ltd., a company incorporated under the laws of England and Wales ("TNCi UK"), and discontinuing and suspending its domestic operations. As explained in the Current Report on Form 8-K filed on March 7, 2001, the Registrant has discontinued its education and corporate training operations, suspended its hotel operations and is focusing on train operations. In connection with this discontinuance and suspension of domestic operations, the Registrant has determined it necessary to write off all of the intangible assets on its balance sheet, which consisted of goodwill and certain intellectual property. The amount to be written off is approximately $5.8 million. In addition, based on the impairment of certain fixed assets of the Registrant, consisting primarily of installed interactive entertainment systems at hotel properties, resulting from the determination to suspend hotel operations, the Registrant has written down the value of these assets as reflected on its balance sheet by approximately $3.3 million. On March 2, 2001, TNCi UK's English directors provided a letter to TNCi's Chairman expressing their concerns regarding the solvency of TNCi UK, and explaining that under English law statutory directors can be personally and criminally liable for operating a company that is insolvent, i.e., that such directors have an obligation to put an entity the solvency of which is questionable into a voluntary dissolution. The letter explained that unless funding was received by March 9, 2001, they were going to put TNCi UK into receivership. The Registrant and Global Technologies, Ltd., a Delaware corporation ("Global"), have been pursuing capital from many third party sources to finance the operations of TNCi UK. These efforts included retaining Dawnay Day Corporate Finance Limited ("Dawnay Day"), a reputable London-based investment bank, to find investors for TNCi UK. After an extensive search and repeated reductions of TNCi UK's valuation, Dawnay Day has been unable to secure an investment. To permit TNCi UK to fund ongoing operations and avoid insolvency and receivership, on March 9, 2001, TNCi UK issued 600 cumulative redeemable preferred shares (the "Preferred Shares") to Global, which currently owns approximately 70% of the Registrant. Global has committed to pay $600,000 for the Preferred Shares, $50,000 of which was paid to TNCi UK through March 15, 2001. The remainder of the purchase price is evidenced by a 9% note payable over the next 150 days. The Preferred Shares issued to Global represent 60% of the outstanding voting equity securities of TNCi UK. The Registrant now holds the remaining 40% of the outstanding voting equity securities of TNCi UK through its ownership of ordinary shares. The Preferred Shares have a 9% cumulative dividend payable in cash or in-kind, and each Preferred Share has a liquidation preference and redemption price of $1,000, is convertible into one ordinary share and votes as if it were an ordinary share. The Preferred Shares have customary anti-dilution protection. Prior to this transaction, TNCi UK was a wholly owned subsidiary of the Registrant. In connection with the transaction, the Registrant converted approximately $1.4 million (as of February 28, 2001) of inter-company advances to TNCi UK into equity. Subsequently, the Registrant wrote down the value of its investment in TNCi UK by approximately $900,000 to reflect its 40% net equity interest in TNCi UK. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS Listed below are certain financial statements, pro forma financial information and exhibits filed as part of this Report on Form 8-K: a. FINANCIAL STATEMENTS: None. b. PRO FORMA FINANCIAL INFORMATION: THE NETWORK CONNECTION INC. AND SUBSIDIARY PRO FORMA FINANCIAL INFORMATION The following pro forma unaudited financial information presents the Registrant's pro forma condensed consolidated balance sheet as of December 31, 2000 and the Registrant's pro forma condensed consolidated statements of operations for the fiscal year ended June 30, 2000 and the six months ended December 31, 2000. The pro forma unaudited financial information gives effect to (i) the discontinuance and suspension of domestic operations of the Registrant, including the write off of all the intangible assets on its balance sheet, consisting of goodwill and certain intellectual property, and the impairment of certain fixed assets, consisting primarily of installed interactive entertainment systems at hotel properties, (ii) the conversion of approximately $1.4 million (as of February 28, 2001) of the Registrant's inter-company advances to TNCi UK into equity representing 40% of the equity of TNCi UK, and (iii) the acquisition of 600 cumulative redeemable preference shares of TNCi UK by Global representing 60% of the equity of TNCi UK. The pro forma adjustments were recorded as if they had occurred, for purposes of the pro forma unaudited condensed consolidated balance sheet, as of December 31, 2000 and, for purposes of the pro forma unaudited condensed consolidated statements of operations, as of the beginning of the respective periods presented. This pro forma unaudited financial information does not purport to represent what the Registrant's actual financial position and operating results would have been had such events actually occurred on the aforementioned dates. The pro forma unaudited financial information also does not purport to serve as a forecast of the Registrant's financial position or results of operations for any future periods. The pro forma adjustments are based upon currently available information that management believes is reasonable in the circumstances. This pro forma financial information should be read in conjunction with the Registrant's audited consolidated financial statements as of and for the fiscal year ended June 30, 2000 and the unaudited condensed consolidated financial statements as of and for the six months ended December 31, 2000 appearing in the Registrant's form 10-QSB for the quarter then ended. 2 THE NETWORK CONNECTION, INC. AND SUBSIDIARY Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2000 (Unaudited)
PRO FORMA AS REPORTED ADJUSTMENTS PRO FORMA ------------- ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 13,720 $ -- $ 13,720 Accounts receivable 99,512 -- 99,512 Prepaid expenses 119,399 -- 119,399 Other current assets 750,075 (18,097)(3) 731,978 ------------- ------------- ------------- Total current assets 982,706 (18,097) 964,609 Property and equipment, net 6,876,953 (3,344,897)(1) 2,997,954 (534,102)(3) -- Intangibles, net 5,833,615 (5,833,615)(2) -- Investment in Affiliate 1,136,556 (3) 235,870 (900,686)(4) -- Other assets 146,512 -- 146,512 ------------- ------------- ------------- Total assets $ 13,839,786 $ (9,494,841) $ 4,344,945 ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 6,762,655 (403,801)(3) 6,358,854 Accrued liabilities 2,067,443 (158,722)(3) 1,908,721 Dividends payable 224,659 -- 224,659 Advances from related parties 781,672 -- 781,672 Notes payable 551,753 -- 551,753 Notes payable to related parties 1,050,000 -- 1,050,000 ------------- ------------- ------------- Total current liabilities 11,438,182 (562,523) 10,875,659 Notes payable to related parties 4,120,000 -- 4,120,000 ------------- ------------- ------------- Total liabilities 15,558,182 (562,523) 14,995,659 ------------- ------------- ------------- Stockholders' equity (deficiency) : Series B preferred stock 15 -- 15 Series D preferred stock 16,690 -- 16,690 Series E preferred stock 1 -- 1 Common stock 21,434 -- 21,434 Additional paid-in capital 107,163,458 -- 107,163,458 Loss on foreign currency translation (25,834) 25,834(3) -- Accumulated deficit (108,894,160) (9,178,512)(1)(2) (117,852,312) -- 1,121,046(3) -- -- (900,686)(4) -- ------------- ------------- ------------- Total stockholders' equity (deficiency) (1,718,396) (8,932,318) (10,650,714) ------------- ------------- ------------- Total liabilities and stockholders' equity (deficiency) $ 13,839,786 $ (9,494,841) $ 4,344,945 ============= ============= =============
3 NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000 1) To record the write down of equipment, primarily interactive entertainment systems installed at hotel properties, to net realizable value. 2) To record the write-off of intangible assets, primarily goodwill. 3) To record the investment in TNCi UK under the equity method of accounting (reflecting the Registrant's less than 50% ownership). The pro forma adjustments eliminate the assets, liabilities and accumulated deficit of TNCi UK, which the Registrant had consolidated as of December 31, 2000. The Registrant's inter-company advance of $1.1 million as of December 31, 2000 was reclassified as an investment in TNCi UK. 4) To record the write down in the value of the TNCi UK investment to reflect the value of the Registrant's 40% net equity after the pro forma adjustments. 4 THE NETWORK CONNECTION, INC. AND SUBSIDIARY Pro Forma Condensed Consolidated Statement of Operations for the fiscal year ended June 30, 2000
PRO FORMA AS REPORTED ADJUSTMENTS PRO FORMA ------------ ------------ ------------ Revenue: Equipment sales $ 6,983,787 $ -- $ 6,983,787 Service income 107,873 -- 107,873 ------------ ------------ ------------ 7,091,660 -- 7,091,660 ------------ ------------ ------------ Costs and expenses: Cost of equipment sales 4,867,519 -- 4,867,519 Cost of service income 61,978 -- 61,978 General and administrative expenses 10,833,036 (571,267)(2) 10,098,754 (163,015)(3) Special charges 2,156,205 -- 2,156,205 Amortization of intangibles 912,553 (912,553)(3) -- Loss on impairment of assets -- 9,937,739(1) 9,937,739 ------------ ------------ ------------ 18,831,291 8,290,904 27,122,195 ------------ ------------ ------------ Operating loss (11,739,631) (8,290,904) (20,030,535) Other: Interest expense (4,602,183) -- (4,602,183) Interest income 109,001 -- 109,001 Other expense (19,386) -- (19,386) Loss on investment in affiliate -- (423,100)(4) (423,100) Equity in loss of non-consolidated affiliates -- (228,507)(2) (228,507) ------------ ------------ ------------ Net Loss (16,252,199) (8,942,511) (25,194,710) Cummulative dividend on preferred stock (120,000) -- (120,000) ------------ ------------ ------------ Net loss available to common stockholders (16,372,199) (8,942,511) (25,314,710) ============ ============ ============ Basic and diluted net loss per common share (1.71) (2.64) ============ ============ Weighted average number of shares outstanding 9,600,322 9,600,322 ============ ============
5 NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 2000 1) To record the impairment losses on the write down of equipment, primarily interactive entertainment systems installed at hotel properties, and the write-off of intangible assets, primarily goodwill. 2) To record the investment in TNCi UK under the equity method of accounting (reflecting the Registrant's less than 50% ownership). The pro forma adjustments eliminate the expenses of TNCi UK, which the Registrant had consolidated for the fiscal year, and record the Registrant's portion of TNCi UK's loss for the period. 3) To eliminate the depreciation and amortization expenses associated with the equipment write down and the intangible asset write-off. 4) To record the write down in the value of the TNCi UK investment to reflect the value of the Registrant's 40% net equity after the pro forma adjustments. 6 THE NETWORK CONNECTION, INC. AND SUBSIDIARY Pro Forma Condensed Consolidated Statement of Operations for the six months ended December 31, 2000 (Unaudited)
PRO FORMA AS REPORTED ADJUSTMENTS PRO FORMA ------------ ------------ ------------ Revenue: Equipment sales $ 59,186 $ -- $ 59,186 Service income 36,459 -- 36,459 ------------ ------------ ------------ 95,645 -- 95,645 ------------ ------------ ------------ Costs and expenses: Cost of equipment sales 43,632 -- 43,632 Cost of service income 133,249 -- 133,249 General and administrative expenses 7,533,425 (555,009)(2) 6,822,239 -- (156,177)(3) -- Amortization of intangibles 864,342 (864,342)(3) -- Loss on impairment of assets -- 10,199,030 (1) 10,199,030 ------------ ------------ ------------ 8,574,648 8,623,503 17,198,151 ------------ ------------ ------------ Operating loss (8,479,003) (8,623,503) (17,102,506) Other: Interest expense (2,464,711) -- (2,464,711) Interest income 18,152 -- 18,152 Other income 7,578 -- 7,578 Gain on legal settlement 1,336,563 -- 1,336,563 Loss on investment in affiliate -- (900,686)(4) (900,686) Equity in loss of non-consolidated affiliates -- (222,004)(2) (222,004) ------------ ------------ ------------ Net Loss (9,581,421) (9,746,192) (19,327,613) Cummulative dividend on preferred stock (84,659) -- (84,659) Beneficial conversion on preferred stock (173,469) -- (173,469) ------------ ------------ ------------ Net loss available to common stockholders (9,839,549) (9,746,192) (19,585,741) ============ ============ ============ Basic and diluted net loss per common share (0.51) (1.01) ============ ============ Weighted average number of shares outstanding 19,354,373 19,354,373 ============ ============
7 NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 1) To record the impairment losses on the write down of equipment, primarily interactive entertainment systems installed at hotel properties, and the write-off of intangible assets, primarily goodwill. 2) To record the investment in TNCi UK under the equity method of accounting (reflecting the Registrant's less than 50% ownership). The pro forma adjustments eliminate the expenses of TNCI UK, which the Registrant had consolidated for the fiscal year, and record the Registrant's portion of TNCi UK's loss for the period. 3) To eliminate the depreciation and amortization expenses associated with the equipment write down and the intangible asset write-off 4) To record the write down in the value of the TNCi UK investment to reflect the value of the Registrant's 40% net equity after the pro forma adjustments. c. EXHIBITS: 2.1 Articles of Association of TNCi UK LIMITED. 2.2 Application for Shares. 8 SIGNATURES 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. THE NETWORK CONNECTION, INC. Dated: March 20, 2001 By: /s/ Irwin L. Gross ------------------------------------- Name: Irwin L. Gross Title: Chairman and Chief Executivep Officer 9 Index to Exhibits No. Description --- ----------- 2.1 Articles of Association of TNCI UK LIMITED.* 2.2 Application for Shares.* - ---------- * Filed herewith. 10 EX-2.1 2 ex21.txt ARTICLES OF ASSOCIATION OF TNCI UK LIMITED Exhibit 2.1 THE COMPANIES ACT 1985 COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF TNCi UK LIMITED (ADOPTED ON 9 MARCH 2001) PRELIMINARY 1 The following regulations and (subject to their provisions) the regulations contained in Table A in the Companies (Tables A to F) Regulations 1985 (`TABLE A') constitute the articles of association of the Company. 2 In regulation 1 of Table A the words `and the articles' shall be deemed to be added after the words `these regulations' in each place where they occur. 3 Regulations 40, 73 to 80 (inclusive), 87 and 94 to 98 (inclusive) of Table A shall not apply to the Company. SHARES 4 The share capital of the Company is (pound)1000 divided into 600 9 per cent. cumulative redeemable preference shares of (pound)1 each (in these articles called `THE CONVERTIBLE REDEEMABLE PREFERENCE SHARES') and 400 ordinary shares of (pound)1 each. The rights and restrictions attached to each class of share are as follows - 4.1 INCOME The profits of the Company for each financial year available for distribution shall be applied - (a) first, in paying to the holders of the Convertible Redeemable Preference Shares as a class for so long as there are 600 of such shares in issue, a fixed cumulative dividend of the sterling equivalent on the date of payment of 9 per cent per annum on the sum of US$600,000 credited as paid up on those shares (to be paid pro rata to the number of such shares held) but to the extent that any of the Convertible Redeemable Preference Shares have been converted or redeemed or otherwise ceased to exist so that on the date of such payment there are less than 600 Convertible Redeemable Preference Shares in issue, such proportion of the sterling equivalent (on that date) of nine percent per annum of US$600,000 as the number of Convertible Redeemable Preference Shares remaining in issue bears to the original total of 600 Convertible Redeemable Preference Shares shall be paid to the holders of the Convertible Redeemable Preference Shares as a class; and (b) secondly, in paying so much of the balance as the Company may determine to the holders of the Convertible Redeemable Preference Shares and the holders of the ordinary shares in proportion to the amounts paid up or credited as paid up on those shares held by them respectively. The dividend on the Convertible Redeemable Preference Shares shall, in so far as there are sufficient profits available for the purpose, become automatically due and payable on 30th June and 31st December in each year and any payment to the holders of Convertible Redeemable Preference Shares may be satisfied in cash or in specie. 4.2 CAPITAL On a return of assets, on liquidation or otherwise, the surplus assets of the Company available for distribution among the members shall be applied - Page 2 (a) first, in paying to the holders of the Convertible Redeemable Preference Shares as a class for so long as there are 600 of such shares in issue, the sterling equivalent on the date of payment of US$600,000 (to be paid pro rata to the number of such shares held) but to the extent that any of the Convertible Redeemable Preference Shares have been converted or redeemed or otherwise ceased to exist so that on the date of such return, liquidation or otherwise, so that there are less than 600 Convertible Redeemable Preference Shares in issue, such proportion of the sterling equivalent (on that date) of US$600,000 as the number of Convertible Redeemable Preference Shares remaining in issue bears to the original total of 600 Convertible Redeemable Preference Shares shall be paid to the holders of the Convertible Redeemable Preference Shares as a class, together with a sum equal to any arrears or accruals of the dividends on those shares to be calculated to the date of the return of capital and to be payable whether or not the dividends have been declared or earned; and (b) secondly, in distributing the balance among the holders of the Convertible Redeemable Preference Shares and the holders of the ordinary shares in proportion to the amounts paid up or credited as paid up on those shares held by them respectively. 4.3 REDEMPTION (a) Subject to the provisions of the Act and to the following provisions of this article, the Convertible Redeemable Preference Shares are redeemable at the price of the sterling equivalent on the date of payment of US$600,000 (to be paid pro rata to the number of such shares held) but to the extent that any of the Convertible Redeemable Preference Shares have been converted or redeemed or otherwise ceased to exist so that on the date of such return, liquidation or otherwise there are less than 600 Convertible Redeemable Preference Shares in issue, such proportion of the sterling equivalent (on that date) of US$600,000 as the number of Convertible Redeemable Preference Shares Page 3 remaining in issue bears to the original total of 600 Convertible Redeemable Preference Shares shall be paid to the holders of the Convertible Redeemable Preference Shares as a class, together with a sum equal to any arrears or accruals of the dividends on those shares, to be calculated to the date on which the dividends on the redeemed Convertible Redeemable Preference Shares cease to accrue and to be payable whether or not the dividends have been declared or earned. (b) The dividend on any redeemed preference shares shall cease to accrue on the date fixed for redemption; but if the payment of the redemption moneys on any shares is refused upon the surrender of the relative certificate, the dividend on those shares shall accrue until the redemption moneys are paid. 4.4 CONVERSION (a) The Convertible Redeemable Preference Shares shall be automatically converted into the same number of ordinary shares on written request by the holder of a Convertible Redeemable Preference Share to the directors of the Company. (b) If on or before the conversion date the Company varies its issued share capital, whether by way of a consolidation, sub-division, increase or reduction (including a redemption or purchase of its own shares), the rate at which the Convertible Redeemable Preference Shares shall be converted into ordinary shares shall be adjusted in such manner as the auditors of the Company shall certify in writing to be in their opinion fair and reasonable; but the Company shall not at any time on or before the conversion date so vary its issued share capital if, as a result, an ordinary share would be issued on conversion at a subscription price less than its nominal value. Page 4 4.5 VARIATION OF RIGHTS (a) The rights attached to the preference shares shall be deemed to be varied by - (i) the issue by the Company of any further shares (except an issue of ordinary shares upon the conversion of the preference shares); (ii) the issue by a subsidiary of the Company of any share otherwise than to the Company or to a wholly owned subsidiary of the Company; (iii) the variation of the share capital of the Company or the redemption or purchase by the Company of any of its shares (except a redemption of the preference shares) in accordance with this article; (iv) the disposal of the whole or a substantial part of the undertakings or assets of the Company and its subsidiaries taken as a whole whether by a single transaction or a series of transactions, whether related or not (except a disposal of current assets in the ordinary course of trading); (v) the disposal by the Company or by any of its subsidiaries of its interest in any share or debenture or other obligation of a subsidiary of the Company otherwise than in favour of the Company or a wholly owned subsidiary of the Company; (vi) the alteration to the memorandum of association of the Company with respect to its objects or to any provision of its articles of association; (vii) the making of an order or the passing of an effective resolution for winding up the Company or of any of its subsidiaries; (viii) the modification or variation of the rights attaching to any class of its shares; Page 5 (ix) the transfer by the Company of any profits to reserves or any other action (excluding any payment of dividends) which will or may reduce the amount of the Company's profits available for distribution; (x) the capitalisation by the Company of any profits (whether or not the same are available for distribution and including profits standing to any reserve) or any sum standing to the credit of its share premium account or capital redemption reserve; (xi) the change by the Company of its accounting reference date or auditors; (xii) save as may be required from time to time to comply with changes in the law or with Statements of Standard Accounting Practice, Financial Reporting Standards and pronouncements of the Urgent Issues Task Force and made with the prior approval of the Auditors of the Company, the change by the Company of any of the Group's accounting policies or principles (as in force on the date of the adoption of these articles) or the basis of their application; (xiii) the creation, extension, variation by the Company of any guarantee save as implied by law or otherwise in the ordinary course of the supply of goods and services by the Company; (xiv) the lending by the Company of any money (except to employees in advance of expenses in amounts not exceeding (pound)1,000 per employee or in the ordinary course of business); (xv) the appointment by the Company to or from office of any Director; or (xvi) the undertaking or entering into by the Company of any transaction of any nature whatsoever - * otherwise than by way of bargain at arms' length and upon normal commercial terms; and * otherwise than in the normal course of trading of the Company. Page 6 (b) For the purpose of this article, a disposal of a substantial part of the assets of the Company and its subsidiaries shall be deemed to be made if the Company or any of its subsidiaries disposes of assets with a book value of at least 10 per cent. of the total net assets (within the meaning of section 264 of the Act) of the Company and its subsidiaries, as shown in their then latest audited balance sheets. 4.6 VOTING The holders of Convertible Redeemable Preference Shares shall be entitled to receive notice of and to attend any general meeting and shall be entitled to vote on any resolution at a general meeting of the Company either by proxy or on a poll and on a poll on the basis of one vote for each Convertible Redeemable Preference share and such voting rights shall rank pari passu with the voting rights attaching to the ordinary shares. 4.7 QUORUMS No meeting of the members of the Company shall be quorate unless those members present include (whether in person or by a duly authorised representative or a proxy) the holders of not less than 50 per cent of the Convertible Redeemable Preference Shares for the time being in issue, and regulation 40 of Table A shall be construed accordingly. 5 The directors are generally and unconditionally authorised for the purpose of section 80 of the Act to allot relevant securities (within the terms of that section) up to a maximum nominal amount of (pound)998. The authority given by this article shall expire at the end of five years beginning oN THE date on which it was given. 6 Sections 89 and 90 of the Act shall not apply to the Company. Page 7 TRANSFER OF SHARES 7 The directors may, in their absolute discretion and without giving any reason, refuse to register a transfer of any share (whether or not fully paid) to any person. GENERAL MEETINGS 8 The words `or a resolution appointing a person as a director' shall be deemed to be omitted from regulation 38 of Table A; and notice of meeting need not be given to the directors (in their capacity as directors) and regulation 38 of Table A shall be deemed to be modified accordingly. 9 No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business. Two persons or, if the Company has only one member, one person entitled to vote at the meeting, being or each being a member or a proxy for a member or a duly authorised representative of a corporation, shall be a quorum. APPOINTMENT AND REMOVAL OF DIRECTORS 10 A member or members holding not less than a majority in nominal amount of the ordinary shares of the Company for the time being in issue may appoint a person willing to act to be a director and may remove any director (howsoever appointed) from office, without prejudice to any claim for damages he may have for breach of any contract of service between him and the Company. The appointment or removal shall be made by an instrument signed by or on behalf of the person or persons making it and delivered to the office. 11 The directors may also appoint a person willing to act to be a director. 12 A director shall not be required to vacate his office as a director and a person shall not be disqualified from being appointed as a director by reason of his attaining or having attained the age of seventy or any other age. Page 8 DIRECTORS' GRATUITIES AND PENSIONS 13 The directors may pay, or agree to pay, gratuities, pensions and other retirement, superannuation, death or disability benefits to any director or former director, to any member of his family (including a spouse or former spouse) or to any person who is or was dependent on him, and may contribute to any scheme or fund and pay premiums for the purchase or provision of any such benefits. PROCEEDINGS OF DIRECTORS 14 The words `But it shall not be necessary to give notice of a such meeting to an alternate director who is absent from the United Kingdom.' And `It shall not be necessary to give notice of a meeting to a director who is absent from the United Kingdom' shall be deemed to be omitted from regulations 66 and 88 respectively of Table A. 15 The directors (including alternate directors), or any of them, may participate in or form a meeting of the directors by means of a conference telephone or any communication equipment which allows all the participants to hear each other. A person so participating shall be deemed to be present in person at the meeting and shall be counted in the quorum and be entitled to vote accordingly. The meeting shall be deemed to take place where the group of the highest number of participants is assembled or, if there is no such group, where the chairman of the meeting is then present. 16 A director may as a director vote and be counted as one of the quorum upon a motion in respect of any transaction or arrangement which he enters into or makes with the Company or in which he is in any way interested. THE SEAL 17 Regulation 101 of Table A shall apply only if the Company has a common seal. Whether it does or not, a share certificate may be executed under section 36A (4) of the Act instead of being sealed. Page 9 NOTICES 18 Any notice to be given to or by any person pursuant to the articles shall be deemed to be given personally in writing at the time of transmission if it is given by telex, cable or facsimile transmission. 19 The words `instead of his registered address' shall be deemed to be substituted for the words `but otherwise no such member shall be entitled to receive any notice from the Company' in regulation 112 of Table A. 20 Regulation 115 of Table A shall apply to a notice posted to a member at his registered address if outside Europe (as defined for the purposes of the Royal Mail) only if it is sent by air mail or by means of an established air courier service. INDEMNITY 21 Subject to the provisions of the Act and without prejudice to the provisions of regulation 118 of Table A, every director or other officer or auditor of the Company shall be indemnified out of the assets of the Company against all costs, charges, expenses or liabilities incurred by him in the execution or discharge of his duties or in relation thereto. The Company may purchase and maintain for any such officer or auditor insurance against any liability which by virtue of any rule of law may attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the Company. Page 10 EX-2.2 3 ex22.txt APPLICATION OF SHARES Exhibit 2.2 APPLICATION FOR SHARES To the Directors, TNCi UK Limited ("THE COMPANY") 1 We hereby apply to subscribe for 600 Convertible Redeemable Preference shares of (pound)1.00 each in the Company for cash at the sterling equivalent of US $600,000 for the 600 Convertible Redeemable Preference shares and we authorise you to enter our name in the register of members as the holder of the shares applied for subject to the memorandum and articles of association of the Company. 2 We undertake to pay the subscription moneys for the shares applied forthwith. Dated: 9 March 2001 Signed ------------------------------------ for Global Technologies, Ltd. Address: 1811 Chestnut Street, Suite 120, Philadelphia, Pennsylvania, USA, 19103 -----END PRIVACY-ENHANCED MESSAGE-----