No. 0142200
Fujitsu Services Holdings plc
Minutes of a Meeting of the Board of Directors
held on 28 March 2003 at 26 Finsbury Square, London EC2A 1SL
Present: R. Christou (in the Chair)
T. Adachi
In attendance: R. Moseley
RAJ. Allnutt
Apologies: _H. Hirata
K. Kurokawa
BACKGROUND
1.
It was noted that notice had been given to all the Directors of the Meeting and there
was a quorum present.
It was reported that the meeting had been convened to consider certain actions to be
taken by the Company pursuant to a proposed restructuring (the "Restructuring") of
the Fujitsu Services group in the United Kingdom (the "FS Group"). It was explained
that the primary reasons for the Restructuring were:
(a) _ to enable the Company to continue paying preference dividends out of profits
available for distribution in respect of its Preference Shares and to fully or
partially repay amounts owing in respect of its Preference Shares of
approximately £168,000,000 in July 2005; and
(b) to improve the financial position of Fujitsu Services Limited ("FSL"), a
subsidiary of the Company, so as to provide further comfort and confidence to
its customers and suppliers and reflect the FS Group's improving financial
performance.
There was tabled before the meeting a copy of a memorandum setting out in outline
the terms of the Restructuring which was envisaged in relation to the FS Group (the
“Restructuring Memorandum"). It was explained that, as part of the Restructuring,
the Company would be required to perform various actions pursuant to Steps 1, 3, 4
and 5 of the Restructuring Memorandum. The meeting would consider the
commercial reasons for and legal issues relating to these proposed actions and, if
appropriate, approve these actions in anticipation of the Restructuring.
RMLIBOL #1057700 v6 27-Mar2003 13:46 1
FUJ00003646
FUJ00003646
commercial reasons for and legal issues relating to these proposed actions and, if
appropriate, approve these actions in anticipation of the Restructuring.
LEGAL ISSUES
4.
There was produced to the meeting a memorandum from the Company's legal
advisors, Mayer, Brown, Rowe & Maw explaining the principal legal issues arising in
relation to the proposed Restructuring and the matters to be considered by the
directors of the relevant FS Group companies ("Legal Issues Memorandum"). The
directors considered the Legal Issues Memorandum.
GUARANTEE IN RELATION TO PATHWAY CONTRACT
pe
It was noted that as part of Step 1 of the Restructuring, all rights, obligations and
liabilities of Fujitsu Services (Pathway) Limited (“FSP”) under the contract between
FSP and Post Office Limited dated 28 July 1999 (including the amended form of that
contract agreed on 31 December 2002) (the “Pathway Contract”) would be novated to
FSL pursuant to a novation agreement to be entered into between FSP, FSL and Post
Office Limited (the "Novation Agreement").
It was noted that the Company was party to a guarantee entered into on 31 December
2002 (the “Guarantee”) relating to FSP’s obligations and liabilities under the Pathway
Contract. It was also noted that the provisions of the Guarantee confirmed that,
following execution of the Novation Agreement, the Company would guarantee the
performance FSL’s obligations and liabilities (in substitution for FSP's obligations
and liabilities) under the Pathway Contract. Consequently, no re-statement or re-
execution of the Guarantee was required as part of the Restructuring.
CONSENT AGREEMENT IN RELATION TO PATHWAY CONTRACT — DEED OF
RELEASE
qn
It was reported to the meeting that there existed two consent agreements as follows:
the first, an agreement dated 16 September 1997 between (1) The Secretary of State
for Social Security (on behalf of DSS), (2) Post Office Limited (formerly Post Office
Counters Limited), (3) the Company, (4) FSP and (5) Fujitsu Services (Pathway Asset
Company) Limited ((FSPAL”) (including an amendment to this consent agreement
noted in a letter from Bird & Bird dated 19 September 1997 concerning the correction
of the registered office of Post Office Counters Limited as set out in the consent
agreement); and
RMLIBO! #1057700 v6 27-Mar-2003 13:46 2
FUJ00003646
FUJ00003646
ae
94
9.2
93.
10.
the second, a deed dated 14 December 1999 between (1) Post Office Limited, (2) the
Company, (3) FSP and (4) FSPAL;
(together, the “Consent Agreements”) pursuant to which certain fiancing
arrangements and corporate structures can only be changed with the consent of the
relevant partics to the Consent Agreements. Under the Consent Agreements the
Company provides certain guarantees to Post Office Limited and DSS, including the
performance of FSP’s obligations under the Consent Agreements.
Jt was reported to the meeting that all borrowings under the finance arrangements
referred to in the Consent Agreements had been repaid in full and that the financing
arrangements and corporate structures falling within the scope of the Consent
Agreements would no longer need to be maintained as provided for in the Consent
Agreements. Consequently it was desirable that the parties to the Consent
Agreements were released from their obligations under those agreements,
There was produced to the meeting a form of deed of release from the Consent
Agreements to be entered into between (1) Post Office Limited, (2) FSP, (3) FSPAL
and (4) FSH (the “Deed of Release”). It was noted that under the Deed of Release
with effect from 00:01 on 31 March 2003:
the parties would release each other from all obligations and liabilities (if any) and
waive all rights they had in respect of each other under or in relation to the Consent
Agreements;
as between any or all of the parties to the Deed of Release the Consent Agreements
would be deemed to be terminated and of no effect; and
the terms of the release would be in full and final settlement of all claims and
counterclaims which any of the parties to the Deed of Release may have against any
other of them.
The meeting discussed the financial and commercial aspects of the Consent
Agreements and the Deed of Release and concluded that the Deed of Release is in the
best interests of the Company.
INCORPORATION OF NEWCO AND NEWCO LOAN
11.
It was reported that Step 3 in the Restructuring Memorandum involved the proposed
establishment by the Company of a newly incorporated company, Mawlaw 598
Limited ("NewCo"). The directors considered that the establishment of NewCo
RMLIBO! #1057700 v6 27-Mar-2003 13:46 3
FUJ00003646
FUJ00003646
12.
formed a necessary part of the Restructuring (bearing in mind the actions
contemplated by Steps 3 and 4 of the Restructuring Memorandum) and that, in view
of the primary reasons for the Restructuring (discussed above) the establishment of
NewCo would be in the best interests of the Company. Copies of the incorporation
documentation relating to Newco (including the memorandum and articles of
associations) were tabled before the meeting.
The meeting also noted that Step 3 in the Restructuring Memorandum contemplated
the creation of an inter-company loan between the Company and NewCo whereby the
Company would lend to NewCo up to £125,000,000 (the "NewCo Loan"). It was
explained that the terms of the NewCo Loan were set out in a draft loan agreement
(the "NewCo Loan Agreement"). A copy of the latest draft of the NewCo Loan
Agreement was tabled to the meeting. The meeting noted that interest on the NewCo
Loan would be charged at the rate of 1% above LIBOR and that the NewCo Loan
would be repayable on 30 March 2004 (or as otherwise contemplated by the NewCo
Loan Agreement). The directors considered whether NewCo ought to be capable of
repaying the NewCo Loan and concluded that since the Company controls NewCo, it
will therefore have control over NewCo's ability to repay the NewCo Loan. The
directors noted that the legal issues relating to the establishment of the NewCo Loan
had already been considered earlier in the meeting.
CONVERSION OF FSL SUBORDINATED LOAN
13.
14.
It was explained that Step 4 of the Restructuring involved the Company consenting to
the conversion of £125,000,000 of a subordinated loan of £210,000,000 between the
Company and FSL to 125,000,000 ordinary shares of £1 each in the share capital of
FSL. The meeting noted that the legal issues relating to the conversion had already
been discussed earlier in the meeting and that, in view of the primary reasons for the
Restructuring (as stated above) the conversion of the Subordinated Loan would be in
the best interests of FSL.
The meeting also noted that as shareholder of FSL, the Company would also be
required to pass the necessary ordinary and special resolutions in order to give effect
to the conversion. This would involve increasing the authorised share capital of FSL
by £210,000,000, granting the directors of FSL the necessary authority under s80 CA
to allot relevant securities up to a maximum nominal amount of £210,000,000 and
disapplying the provisions of s89 CA in relation to such allotment. It was also noted
that as the sole shareholder of FSH, the Company would also be required to provide
its consent to hold an Extraordinary General Meeting of FSH at short notice so as to
pass the aforesaid resolutions.
RMLIBO1 #1057700 v6 27-Mar-2003 13:46 4
FUJ00003646
FUJ00003646
AMENDMENT TO THE FSL MEMORANDUM
15.
It was proposed that Paragraph 3 the Memorandum of Association of the Company's
subsidiary, FSL, be amended with respect to its objects in order to reflect a change in
activities conducted by FSL. The meeting noted that, as the sole shareholder of FSL,
the Company would be required to pass a resolution in order to give effect to the
amendment at an Extraordinary General Meeting of the Company. A print of the
amended Memorandum of Association (the "Amended Memorandum") was also
tabled to the meeting.
EXTRAORDINARY GENERAL MEETING
16.
The notice to the sole shareholder of FSL (the "Notice") convening the Extraordinary
General Meeting of FSL and enclosing the resolutions contemplated by Minutes 14
and 15 and the draft consent to short notice (the "Consent") were tabled before the
meeting.
THE FSL LOAN
17.
Tt was reported that Step 5 of the Restructuring contemplated the creation of an inter-
company loan between the Company and FSL whereby the Company would borrow
from FSL the amount of £64,000,000 (the "FSL Loan"). It was explained that the
terms of the FSL Loan were set out in a draft loan agreement (the "FSL Loan
Agreement"). A copy of the latest draft of the FSL Loan Agreement was tabled to the
meeting. It was noted that interest would be charged at the rate of 0.375% above
LIBOR and the FSL Loan would be repayable on 30 March 2004 (or as otherwise
contemplated by the FSL Loan Agreement. The directors also noted that the legal
issues relating to the establishment of the FSL Loan were set out in the Legal Issues
Memorandum and had been considered earlier in the meeting.
RESOLUTIONS
18.
The directors present took time to consider all the proposed actions of the Company
pursuant to the Restructuring. Having fully and carefully considered those actions
and the legal issues relevant to those actions (which had been discussed earlier in the
meeting) the directors present were unanimously of the opinion that it was in the best
commercial interests of the Company and the FS Group to approve the Restructuring
and for the Company to enter into the Deed of Release, the NewCo Loan Agreement
and the FSL Loan Agreement and to pass the resolutions contemplated by the Notice.
and IT WAS THEREFORE UNANIMOUSLY RESOLVED that
RMLIBO1 #1057700 v6 27-Mar-2003 13:46 5
FUJ00003646
FUJ00003646
(a)
(b)
©
@
©
@
the terms of the proposed Restructuring in substantially the form set out in the
Restructuring Memorandum be approved (subject to any amendments considered
appropriate by Toshio Adachi and Richard Christou);
the terms of the Deed of Release, the NewCo Loan Agreement, the FSL Loan
Agreement and Notice be and they are hereby approved subject to such final
amendments as the directors may in their sole discretion consider to be necessary or
appropriate in the interests of the Company;
any director, or in the case of any deed any two directors or any director and the
secretary, be and is hereby authorised to sign the Deed of Release, the NewCo Loan
Agreement, the FSL Loan Agreement and Consent for and on behalf of the Company;
the Company be and is hereby authorised to pass the resolutions set out in the Notice
at the proposed Extraordinary General Meeting of FSL;
in pursuance of Section 375 Companies Act 1985, Richard Christou or, failing him,
Richard Allnutt or, failing him, Rachel Moseley be and is hereby authorised to act as
the representative of the Company at the Extraordinary General Meeting of FSL to be
held on 31 March 2003 and at any adjournment thereof; and
any director, or in the case of any deed any two directors or any director and the
secretary, be and is hereby authorised to take all steps and do all such things and
deeds as they consider necessary to give effect to the Restructuring and to the above
resolutions and to agree any amendments to the above which he may consider
necessary to give effect to the Restructuring.
MEETING CLOSED
19.
There being no further business, the Chairny~~-t+-t-~74-Aerrrn nner
_GRO
Chai
RMLIBOI #1057700 v6 27-Mar-2003 13:46 6
FUJ00003646
FUJ00003646