Articles of association
§ 1 Company and headquarters
1. The Company is registered to trade as Höft & Wessel Aktiengesellschaft.
2. The company is headquartered in Hanover.
§ 2 Objects of the enterprise
1. The objects of the enterprise are the development, manufacture, distribution and operation of microcomputers, the development, manufacture and distribution of software and the provision of services of all kinds in the field of Information Technology.
2. The Company shall be entitled to enter into any transactions and take any measures required to achieve the objects of the enterprise. The Company may also carry out its business activities through subsidiaries, associated companies and joint ventures. The Company may outsource all or part of its operations or transfer the latter to affiliated companies.
II. Capital stock and shares
§ 3 Size and division of share capital
1. The share capital of the Company amounts to EUR 8,497,490.00, divided into 8,497,490 shares without par-value. The shares are issued to bearer.
2. The Board of Management is authorised to raise the share capital by June 16, 2015 on a cash or non-cash basis once or repeatedly by up to a total of EUR 4,248,745.00 by issuing new bearer shares without par-value (authorised capital) with the approval of the Supervisory Board. The shareholders shall be granted subscription rights. The new shares may be assumed by a credit institution or some other company engaged pursuant to § 53 (1) sentence 1 or § 53b (1) sentence 1 or (7) of the German Banking Act (Gesetz über das Kreditwesen – KWG) subject to the duty to offer the said shares only for purchase to the shareholders in accordance with the Company’s instructions. The Board of Management shall, however, be authorised to exclude maximum amounts from the right of subscription of the shareholders with the approval of the Supervisory Board. The Board of Management shall further be authorised, with the approval of the Supervisory Board, to exclude the right of subscription if it should be necessary to grant holders of warrants and convertible bonds issued by the Company a subscription right to the new shares to the extent to which they would have been entitled thereto after exercising their options or conversion rights. In addition, the Board of Management shall be authorised to exclude the subscription right to employee shares issued up to a total of EUR 350,000.00 with the approval of the Supervisory Board. The Board of Management shall further be authorised, in the event of increases in capital totalling up to EUR 849,749.00, to exclude the right of subscription of the shareholders with the approval of the Supervisory Board, when the issue price of the new shares does not fall substantially below the stock market price of already listed shares on the same terms at the time of the final stipulation of the amount of issue. To the extent that the Company acquired own shares and sold the latter without servicing shareholders’ subscription rights in accordance with § 186 (3) Sentence 4 AktG (German Company Law) by analogy, the aforementioned amount of EUR 849,749.00 shall be reduced by the pro-rata portion of the share capital accounted for by the own shares sold. To the extent that the Company issued convertible bonds, excluding the right of subscription in accordance with § 186 (3) Sentence 4 of AktG, the aforementioned amount of EUR 849,749.00 shall be reduced further by the pro-rata portion of the share capital of those shares to which the bearers of convertible bonds are or were entitled to subscribe. Finally, the Board of Management shall be authorised to exclude shareholders’ subscription rights once or repeatedly up to an amount totalling EUR 4,248,745.00 when the new shares are issued against non-cash contributions with the approval of the Supervisory Board.
3. The Company’s share capital is to be raised on a contingent basis by EUR 210,000.00. The contingent capital increase shall only be effected to the extent that bearers of convertible bonds issued by the Company on the basis of the authorization passed by the Annual General Meeting of June 11, 1998 exercise their conversion rights in respect of new shares. The new shares shall carry dividend rights starting in the fiscal year in which they are created as a result of the exercise of conversion rights. The Board of Management shall be authorized to stipulate further details of the contingent capital increase and execution thereof with the approval of the Supervisory Board. The Supervisory Board shall be authorized to amend § 3 of the articles of association in accordance with the respective utilization of the contingent capital.
4. The Company’s share capital is to be raised on a contingent basis by up to EUR 233,000.00. The contingent capital increase shall only be effected to the extent that holders of subscription rights issued under the 2000 stock-option plan on the basis of the authorization passed on August 9, 2000 exercise their subscription rights. The new shares shall carry dividend rights starting in the fiscal year in which they are created as a result of the exercise of subscription rights. The Board of Management shall be authorized to stipulate further details of the contingent capital increase and execution thereof with the approval of the Supervisory Board.
5. The share capital is to be increased on a contingent basis by up to EUR 600,000.00 through the issue of up to 600,000.00 bearer shares. The contingent capital increase shall only be effected to the extent that holders of subscription rights granted to persons entitled to subscription rights on the basis of the authorization passed by the Annual General Meeting of June 17, 2005 exercise their subscription rights. The new shares shall carry dividend rights starting in the fiscal year in which they are created as a result of the exercise of subscription rights. The Supervisory Board shall be authorized to amend § 3 of the articles of association in accordance with the respective utilization of the contingent capital.
6. The share capital is to be increased on a contingent basis by up to EUR 1.5 million through the issue of up to 1.5 million bearer shares (contingent capital). The contingent capital increase shall only be effected to the extent that the holders of convertible bonds issued and/or guaranteed on the basis of the authorization of the Board of Management in terms of a resolution passed at the Annual General Meeting of June 17, 2005, exercise their conversion rights or, like the holders obliged to convert their bonds, comply with their conversion obligation. The new shares shall carry dividend rights starting in the fiscal year in which they are created as a result of the exercise of conversion rights or compliance with conversion obligations. The Board of Management shall be authorized to stipulate further details of the contingent capital increase and execution thereof with the approval of the Supervisory Board. The Supervisory Board shall be authorized to amend the wording of the articles of association in accordance with the respective size of the capital increase from contingent capital.
§ 4 Certification of shares
1. The Board of Management shall stipulate the form of share certificates and profit-sharing and renewal certificates with the approval of the Supervisory Board.
2. The Company is entitled to consolidate individual shares into share certificates embodying a multitude of (global) shares. The right of shareholders to individual certification of their shares shall be precluded.
§ 5 Composition and Rules of Procedure
1. The Board of Management comprises one or more persons. Deputy members of the Board may be appointed.
2. The Board of Management may adopt its Rules of Procedure in the absence of Rules of Procedure having been adopted by the Supervisory Board for the Board of Management.
§ 6 Representation of the Company; approval requirements
1. The Board of Management shall represent the Company in and out of court. If the Board of Management consists of several persons, the Company shall be legally represented by two members of the Board of Management or by one member of the Board of Management jointly with a Prokurist (holder of a general commercial power of attorney); the Supervisory Board may grant each member of the Board of Management sole powers of representation, however. Deputy members of the Board of Management enjoy the same powers of representation as ordinary members of the Board of Management.
2. The Supervisory Board may permit members of the Board of Management to represent the Company in legal transactions to be entered into with themselves or as agent of a third party.
§ 7 Composition and term of office, deputy members
1. The Supervisory Board shall consist of six members, to be elected at the Annual General Meeting. The members of the Supervisory Board are appointed for a period ending at the conclusion of the Annual General Meeting passing a resolution on their discharge for the fourth fiscal year after the commencement of their tenure, unless the Annual General Meeting passes a resolution to the contrary. The financial year in which the term of office commences shall not be counted.
2. With the election of ordinary Supervisory Board members, deputy members may be elected at the same time to replace Supervisory Board members who resigned prior to the expiry of their tenure of office in accordance with the order of succession stipulated in the election. One person may be appointed as deputy member to represent several Supervisory Board members.
3. If a member of the Supervisory Board is appointed to replace a member leaving the Supervisory Board, his tenure expires on the date on which the original member's tenure would also have expired. If a Deputy member replaces a retired Supervisory Board member, his tenure expires upon the termination of the next Annual General Meeting at which new elections for the term of office of the retired Supervisory Board member are held, at the latest on the date on which the original member’s tenure would have expired, however.
4. In the event of new elections being held prior to the expiry of the retired Supervisory Board member’s tenure, the original membership of a deputy member appointed to represent several Supervisory Board members and as a successor to the retired Supervisory Board member shall be resumed.
5. At the election of the members of the Supervisory Board and any Deputy members, the Chairman of the Annual General Meeting shall be entitled to call for a vote on a list of proposed candidates submitted by the Supervisory Board of the shareholders. If any Deputy members are elected as part of a list, in the absence of anything to the contrary agreed at the election they shall replace the Supervisory Board members resigning prematurely in the sequence of their appointment.
6. The members and deputy members of the Supervisory Board may also resign from their mandates without good cause. Such resignation is effected by sending a declaration in writing to the Board of Management and notifying the Chairman of the Supervisory Board subject to a period of notice of four weeks.
§ 8 Chairman and Deputy
1. Following an Annual General Meeting at which all the members of the Supervisory Board have been newly elected at the Annual General Meeting, a meeting of the Supervisory Board is held to which no special invitation is necessary. At this meeting, the Supervisory Board elects a Chairman from its ranks and a Deputy for the period of office defined in § 7 (1).
2. If the Chairman or Deputy resigns from office prior to the end of their tenure, the Supervisory Board shall immediately arrange for a fresh election to be held for the residual term of office of the person resigning from his mandate.
§ 9 Convening meetings and adopting resolutions
1. The meetings of the Supervisory Board are convened in writing by its Chairman and, if the latter is unable to do so, by his Deputy, subject to 14 days’ notice. In determining the period of notice, the date on which the invitation is posted and the date of the meeting are not counted. In urgent cases, the Chairman may reduce the period of notice and convene the meeting orally, by telephone, facsimile or by e-mail.
2. The items on the agenda are to be communicated with the invitation, along with any proposed resolutions.
3. Supervisory Board members who are absent may participate in voting on resolutions by submitting written votes in accordance with § 108 (3) of the German Companies Act (AktG).
4. A resolution on items or motions not stated in the agenda and which have not been communicated to the members of the Supervisory Board at least three days prior to the meeting can be adopted only if no member of the Supervisory Board present at the meeting objects, if the absent members of the Supervisory Board are given an opportunity to submit their votes subsequently within a period to be fixed by the Chairman, and if these members of the Supervisory Board do not object to the resolution either within the stipulated period.
5. The Chairman or, if the latter is unavailable, his Deputy, shall chair the meeting and determine the sequence in which the items on the agenda are to be dealt with, as well as the type and sequence of voting.
6. Resolutions of the Supervisory Board are adopted subject to a simple majority of votes unless stated otherwise in the relevant statutory regulations. This shall also apply to election.
7. Outside meetings, the adoption of a resolution by voting in writing, by telephone or facsimile shall be permissible if the Chairman of the Supervisory Board or his Deputy if the Chairman is unavailable orders such form of adoption the resolution for certain reasons and no member of the Supervisory Board objects to such resolution being adopted.
§ 10 Submission of declarations of intent
The Chairman shall be entitled to submit the declarations of intent required to carry out the resolutions of the Supervisory Board and to accept declarations of intent required to be submitted to the Supervisory Board.
§ 11 Rules of Procedure
Within the scope of the mandatory statutory rules and regulations and the provisions of these Articles of Association, the Supervisory Board defines and adopts certain rules of procedure applicable to it.
§ 12 Remuneration
With effect as of the beginning of the financial year 2005, each member of the Supervisory Board shall receive, in addition to refunds for out-of-pocket expenses, a fixed remuneration amounting to EUR 10,000,00 at the end of the financial year. The Chairman shall receive double this amount, and his Deputy the one-and-a-half-fold amount. Value added tax shall be payable by the Company.
V. Annual General Meeting
§ 13 Venue and convening of meetings
The Annual General Meeting shall be held at the Company’s headquarters or in a neighbouring district or in some other German city with a population of more than 100,000 inhabitants. It is convened by the Board of Management or by the Supervisory Board.
§ 14 Attendance and voting rights
1. The Annual General Meeting shall be convened subject to the statutory period of notice.
2. Only shareholders who registered in text form in either German or English prior to the date of the Annual General Meeting shall be entitled to attend the Annual General Meeting and to exercise voting rights. The registration must be received by the entity communicated in the invitation by the expiration of the statutory period at the latest.
3. The Company shall be furnished with proof of entitlement to attend the Annual General Meeting and to exercise voting rights. Proof of share ownership shall be furnished in text form in either German or English. Confirmation effected by the custodian bank shall be deemed to be sufficient proof thereof. Such proof shall refer to the statutory date and be received by the entity communicated in the invitation by the expiration of the statutory notice period at the latest.
§ 15 Chairing the Annual General Meeting
1. The Annual General Meeting shall be chaired by the Chairman of the Supervisory Board or, in his absence, by his Deputy, unless some other chairman is elected at the Annual General Meeting.
2. The Chairman shall be in charge of the Annual General Meeting and determine the sequence in which the agenda items are to be dealt with as well as the form and further particulars of voting. The outcome of the vote is determined by counting the number of yes and no votes. The type of determination, e.g. by deducting the no votes and abstentions from the total number of votes that may be cast by persons entitled to vote is likewise ordered by the Chairman.
3. The Chairman may reasonably curtail the time allowed for shareholders to ask questions and speak and appropriately fix the timeframe for the meeting, discussions of specific agenda items as well as the time allowed for specific comments or questions made.
§ 16 Adopting resolutions
1. In the absence of any statutory regulations providing otherwise, the resolutions at the Annual General Meeting are adopted by a simple majority of the number of votes cast and, if the Act prescribes a capital majority in addition to a majority of the number of votes cast, with a simple majority of the capital stock represented at the time of adopting the resolution.
2. Each share confers the right to one vote at the Annual General Meeting.
VI. Accounting, appropriation of profits
§ 17 Financial year, annual financial statements and ordinary annual general meeting
1. The financial year is the calendar year.
2. In the first three months of the financial year, the Board of Management shall prepare the annual financial statements and the management report for the last financial year and submit these items to the auditor via the Supervisory Board. The Supervisory Board shall notify the Board of Management of receipt of the audit report without delay and shall make a copy of it available to the Board of Management; next, the Board of Management is required to submit the annual financial statements, the management report and the proposal for appropriation of the balance-sheet profit.
3. Upon receipt of the report from the Supervisory Board on its findings, the Board of Management shall convene the ordinary Annual General Meeting to be held within the first eight months of each financial year. At the Annual General Meeting, a resolution is adopted to ratify the actions of the members of the Board of Management and the Supervisory Board, as well as on the appropriation of the balance-sheet profit, and the auditor is elected.
§ 18 Appropriation of profits
1. In adopting a resolution on the appropriation of profits at the Annual General Meeting, amounts may be added to revenue reserves or carried forward as profits. Moreover, a form of appropriation may be adopted other than that stated in sentence 1, or other than distribution amongst the shareholders.
2. The shares of profits attributable to the shareholders are determined according to their share of the capital stock.
3. When new shares are issued, a profit participation entitlement may be fixed other than that stipulated in § 60 (2) of the German Companies Act (AktG).
VII. Final provisions
§ 19 Amendments to the wording of these Articles of Association
The Supervisory Board shall be entitled to amend the Articles of Association in terms of their wording.
§ 20 Notices
Notices on the part of the Company are published in the electronic Federal (German government) Gazette. The Company shall be entitled to transmit information to shareholders by way of remote data transmission subject to the statutory regulations prevailing from time to time.
§ 21 Conversion costs
The Company shall assume the costs associated with the conversion up to an amount of DM 50,000,00.