[futuremedia logo]
Futuremedia PLC
Nile House
June 28, 2007 Nile Street
Brighton
East Sussex, BN1 1HW
England
T +44 (0) 1273 829700
F +44 (0) 1273 829702
Dear ADR Holder,
The Board is pleased to advise that an Annual General Meeting of Futuremedia PLC
will be held at 9.30 am on July 27, 2007, at its offices at Nile House, Nile
Street, Brighton, East Sussex BN1 1HW, England.
All ADR holders are invited, and if you wish to attend, either in person or by
proxy, please advise before July 13, 2007, in order that sufficient places are
available, and bring personal identification with you.
If you wish to record your vote at this meeting on any resolution, either in
person or by proxy, please complete the enclosed proxy form and return it as
instructed. Your vote will not be included without the proper completion and
filing of this form, even if you attend on the day.
To minimise expense, it has been decided not to make a general issue of the
Annual Report to all ADR holders again this year. The Report is available on our
website (www.futuremedia.co.uk), or on request from the Company's registered
office or from Bank of New York at either of the following offices:
Bank Of New York Bank Of New York
ADR Division ADR Division
101, Barclay Street 15E One Canada Square
New York London
New York 10286 E14 5AL
USA England
The Annual Report is also being filed electronically with the United States
Securities and Exchange Commission on Form 6-K and should be available on the
SEC's website (www.sec.gov). Reference is also made to the Company's transition
report for the transition period from May 1, 2006 to June 20, 2006 on Form 20-F
that was filed electronically with the SEC on November 16, 2006, and to the
Company's most recent annual report on Form 20-F that was filed electronically
with the SEC on November 14, 2006.
Please note that a summary explanation regarding certain of the resolutions set
out below is included in the Annual Report for your reference, as well as at the
end of this letter. In addition, set out in the paragraph below is further
detail and explanation for Resolution 4.
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[futuremedia logo]
ADR holders will be aware of the decline in the market price of our ADRs. Due to
this decline, the Company may be required to issue shares for a consideration of
less than their current nominal value of one and one-ninth pence each; which is
prohibited by English company law. As a result, it will be necessary for
Futuremedia to reorganise its share capital. Futuremedia is therefore proposing
to sub-divide each existing ordinary share of one and one-ninth pence into one
new ordinary share of 0.010 pence and one deferred share of 1.101111111 pence.
The new ordinary shares of 0.010 pence nominal value will have all the rights
and be subject to all the restrictions of the existing ordinary shares of one
and one ninth pence nominal value, and the sub-division should not affect the
value of such shares or the Company's ADRs. ADR holders will retain the same
number of ordinary shares and ADRs as held currently, representing the same
percentage of the Company's issued share capital as were held prior to the
sub-division. The deferred shares will have no rights as to voting, dividend
entitlement and only very limited rights on return of capital. The deferred
shares will not be admitted to trading on any stock exchange. In addition, the
deferred shares will have no right to receive notice of, or attend or vote at,
any general or class meeting (other than a class meeting of the deferred
shareholders). No share certificates will be issued in respect of the deferred
shares (which the company is taking authority to buy back for a nominal amount
or cancel for no consideration). The deferred shares will not be included in the
ADR programme.
IMPORTANT: ADR holders should note that the Company closed a $4.6 million
financing, in the form of a senior secured convertible debenture (the
"Debenture"), with Cornell Capital Partners, L.P. ("the Investor") on June 1,
2007. The terms of the financing, and the material documents relating to the
financing, including the Debenture and a securities purchase agreement (the
"SPA") were filed electronically with the SEC on June 5, 2007. Under the SPA,
the Investor agreed to purchase the Debenture and the Company is required to
comply with certain ongoing covenants. These covenants include, but are not
limited to: (1) Mr George O'Leary, Ms Margot Lebenberg and Mr Brendan McNutt
must be appointed and remain directors of the Company for a period of 18 months
from June 1, 2007; (2) within 180 days of June 1, 2007, the Company should
reduce the nominal value of its ADRs (which represent 50 ordinary shares) to
$0.01. The proposals put forward in Resolution 4 reduce the nominal value of the
Company's ordinary shares to an equivalent amount which would, if passed, comply
with the covenant described above. ADR holders are under no obligation to vote
in favour of the resolutions included in this letter and the attached Notice.
ADR holders should note, however, that if any of Resolutions 2.1, 2.2, 2.3 or 4
are not passed, then the Company will be in default of its obligations under the
Debenture. If there is an event of default on the Debenture, the principal
amount of the Debenture, plus accrued and unpaid interest may be declared
immediately due and payable, subject to certain conditions set forth in the
Debenture.
By order of the Board
/s/ Andrew Haire
Andrew Haire
Secretary
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NOTICE AND AGENDA OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that an Annual General Meeting of the Company will be
held at Nile House, Nile Street, Brighton, BN1 1HW, England, on July 27, 2007 at
9.30 am for the following purposes:
ORDINARY BUSINESS
1. To receive and adopt the directors' remuneration report and the company's
annual accounts, together with the directors' report and the auditors'
report on those accounts and the auditable part of the remuneration
report, for the year ended April 30, 2006.
To consider each of the following resolutions:
ORDINARY RESOLUTIONS
2. To:
2.1 re-elect Ms Margot Lebenberg as Director;
2.2 re-elect Mr. Brendan McNutt as Director;
2.3 re-elect Mr George O'Leary as Director;
2.4 re-elect Mr Michiel Steel as Director;
2.5 re-elect Mr Jan Vandamme as Director.
3. To re-appoint BDO Stoy Hayward LLP as the Auditors and to authorise the
Directors to determine the remuneration of the Auditors.
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SPECIAL BUSINESS
To consider and, if thought fit, to pass the following resolution which will be
proposed as a special resolution.
SPECIAL RESOLUTION
4. THAT:
4.1 each of the authorised ordinary shares of one and one-ninth pence in the
capital of the Company (whether issued or unissued) be and is hereby
sub-divided into 1 ordinary share of 0.01 pence and 1 deferred share of
1.101111111 pence, such ordinary share of 0.01 pence having the same
rights and being subject to the same restrictions as each existing
ordinary share of one and one-ninth pence has prior to the date of this
resolution and as set out in the articles of association from time to time
in force and such deferred share which will be created having the rights
and being subject to the restrictions set out in Article 5(A)(a) adopted
pursuant to paragraph 4.4 below;
4.2 the directors be and they are generally and unconditionally authorised for
the purposes of section 80 of the Companies Act 1985 (the "Act") to
exercise all the powers of the Company to allot relevant securities
(within the meaning of that section) up to the aggregate nominal amount of
the authorised but unissued share capital of the Company at the time of
passing this resolution providing that this authority is for a period
expiring five years from the date of this resolution but that the Company
may before such expiry make an offer or agreement which would or might
require relevant securities to be allotted after such expiry and the
directors may allot relevant securities in pursuance of such offer or
agreement notwithstanding that the authority conferred by this resolution
has expired. This authority is in substitution for all substituting
authorities, to the extent unused;
4.3 the directors be and they are empowered pursuant to section 95 of the Act
to allot equity securities (within the meaning of section 94(2) of the
Act) wholly for cash pursuant to the authority conferred by the previous
resolution as if section 89(1) of the Act did not apply to any such
allotment, provided that this power shall expire five years from the date
of this resolution save that the Company may, before such expiry, make an
offer or agreement which would or might require equity securities to be
allotted after such expiry and the directors may allot equity securities
pursuant to any such offer or agreement notwithstanding that the power
conferred by this resolution has expired.
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4.4 by replacing the existing Article 5(A) with the following new Article
5(A):
"5(A) The capital of the Company is (pound)27,817,778 divided into
2,500,000,000 ordinary shares of 0.010 pence each (the
"Ordinary Shares"), 2,500,000,000 deferred shares of
1.101111111 pence each (the "Deferred Shares") and 2,000,000
preference shares of 2 pence each (the "Preference Shares")";
4.4.1 By adding the following new Article 5(A)(a) immediately following Article
5(A):
"The Deferred Shares of 1.101111111 pence each in the capital of the
Company shall have the rights and be subject to the restrictions set
out below, namely:
(a) no right to participate in or receive any dividends declared,
made or paid by the Company;
(b) no right to receive notice of or attend or vote at any general
or class meeting (other than a class meeting of the deferred
shares) of the Company;
(c) the approval of the Directors shall be required for any
transfer of the deferred shares;
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(d) the right on a return of assets in a winding-up to a repayment
of the capital paid up on such shares after the rights of all
holders of ordinary shares have been discharged in full and a
sum of (pound)1,000,000 has been paid in respect of each
issued ordinary share in the capital of the Company, but no
other right to participate in the assets of the Company;
(e) the Directors shall have irrevocable authority at any time to
appoint any person to execute on behalf of the holders of the
deferred shares a transfer thereof and/or an agreement to
transfer the same, without making any payment to the holders
thereof, to such persons as the Directors may determine as
custodian thereof and to cancel and/or purchase the same (in
accordance with the provisions of statute) without making any
payment to or obtaining the sanction of the holders thereof
and pending the transfer and/or cancellation and/or purchase
to retain the certificates for such shares;
but so that none of the rights or restrictions attached to such
deferred shares shall be or be deemed to be varied or abrogated in
any way by the passing or coming into effect of any resolution of
the Company to reduce its share capital and/or reduce or cancel (as
the case may be) its share premium account (including a resolution
to reduce the capital paid up on, and to cancel, such deferred
shares)."
4.5 the Company may reduce its share capital by cancelling all its deferred
shares (which are unrepresented by available assets).
By Order of the Board
Andrew Haire
Secretary
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Registered Office: Nile House, Nile Street, Brighton, East Sussex, BN1 1HX,
England
Dated: June 28, 2007
NOTES:
(1) A member entitled to attend and vote at this Meeting is entitled to
appoint one or more proxies to attend and vote in his stead. A proxy need
not be a member of the Company.
(2) Members and proxies may be asked to produce evidence of their identity in
order to be admitted to the Meeting.
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EXPLANATORY NOTES
Shareholders will be asked to approve the following resolutions at the Annual
General Meeting:
Resolution 1 -- to receive the report and accounts
The Directors will present the report and accounts of the Company for the year
ended 30 April 2006.
Resolution 2 -- re-election of directors
In accordance with the articles of association of the Company, each director is
required to offer themselves for re-election at the Annual General Meeting of
the company. The resolution for the re-election of each director will be voted
on separately.
Resolution 3 -- appointment and remuneration of the independent auditors
Resolution 3 is a resolution to reappoint BDO Stoy Hayward LLP as the Company's
auditors and to authorise the Directors to determine the auditors' remuneration.
Resolution 4 - sub-division of the Company's ordinary shares
ADR holders will be aware of the decline in the market price of our ADRs. Due to
this decline, the Company may be required to issue shares for a consideration of
less than their current nominal value of one and one-ninth pence each; which is
prohibited by English company law. As a result, it will be necessary for
Futuremedia to reorganise its share capital. Futuremedia is therefore proposing
to sub-divide each existing ordinary share of one and one-ninth pence into one
new ordinary share of 0.010 pence and one deferred share of approximately 1.101
pence. The new ordinary shares of 0.010 pence will have all the rights and be
subject to all the restrictions of the existing ordinary shares of one and one
ninth pence, and the sub-division should not affect the value of such shares.
ADR holders will retain the same number of ordinary shares and ADRs as held
currently, representing the same percentage of the Company's issued share
capital as were held prior to the sub-division. The deferred shares will have no
rights as to voting, dividend entitlement and only very limited rights on return
of capital. The deferred shares will not be admitted to trading on any stock
exchange. In addition, the deferred shares will have no right to receive notice
of, or attend or vote at, any general or class meeting (other than a class
meeting of the deferred shareholders). No share certificates will be issued in
respect of the deferred shares (which the company is taking authority to buy
back for a nominal amount or cancel for no consideration).
Resolutions 1, 2 and 3 will be proposed as ordinary resolutions, requiring a
majority of the votes cast, and resolution 4 will be proposed as a special
resolution requiring a majority of three-quarters of the votes cast.
Voting Procedures
The votes of shareholders present in person or represented by proxy at the
Annual General Meeting will be tabulated by the Company Secretary.
A quorum, consisting of at least two persons entitled to vote upon the
business being transacted, each being a member or a proxy for a member or a duly
authorized representative of a corporation, will be required for the transaction
of the business on the agenda for the Annual General Meeting. The Bank of New
York, as depositary of the Company's ADR facility, is expected to be represented
at the Meeting and, in such case, shares held by the Bank of New York in its
capacity as depositary that are not otherwise represented at the Meeting by
proxy shall be counted for purposes of a quorum.
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Except as indicated above, the affirmative vote of the majority of the
holders of shares present in person or by proxy and voting at the Annual General
Meeting is required to approve the resolutions on the agenda for the Annual
General Meeting.
The enclosed proxy, if executed and returned in accordance with the instructions
thereon, will be voted as directed in the proxy.
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