British Virgin Islands. The BVI Business Companies Act. (No. 16 of 2004) Memorandum and Articles of Association DOLPHIN CAPITAL INVESTORS LTD.

Transcription

1 British Virgin Islands The BVI Business Companies Act (No. 16 of 2004) Memorandum and Articles of Association of DOLPHIN CAPITAL INVESTORS LTD. Incorporated this 7 th day of June, 2005 amended on 18 th July, 2005 amended on 28 th July,2005 amended on 7 th December, 2005 amended on 21 st June, 2007 amended on 11 th February, 2011 Icaza Gonzales-Ruiz & Aleman (BVI) Trust Limited Vanterpool Plaza 2 nd Floor Wickhams Cay 1 Road Town, Tortola British Virgin Islands

2 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE BVI BUSINESS COMPANIES ACT, 2004 MEMORANDUM OF ASSOCIATION OF DOLPHIN CAPITAL INVESTORS LTD. 1. Company Name 1.1 The name of the Company is DOLPHIN CAPITAL INVESTORS LTD. 1.2 The directors or members may from time to time change the Company's name by Resolution of Directors or Resolution of Members. The directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file an application for change of name with the Registrar, and any such change will take effect from the date of the certificate of change of name issued by the Registrar. 1.3 A change of name of the Company shall constitute an amendment of the Memorandum and Articles and in the event of a resolution being passed to change the name of the Company, the provisions below in respect of amendments to the Memorandum and Articles must be complied with. 2. Re-registration 2.1 The Company was first incorporated as a company on 07 June 2005 under the International Business Companies Act, 1984 (CAP 291), and was automatically re-registered under the BVI Business Companies Act, 2004 (the "Act") on 1 January Immediately before its reregistration under the Act the Company was governed by the International Business Companies Act, 1984 (CAP 291). 3. Company Limited by Shares, Liability of Members 3.1 The Company is a company limited by shares. 3.2 The liability of each member is limited to: (a) (b) (c) the amount from time to time unpaid on that member's shares; any liability expressly provided for in the Memorandum or the Articles; and any liability to repay a distribution pursuant to section 58(1) of the Act. 1

3 4. Registered Office 4.1 At the date of filing of the notice of election to disapply Part IV of Schedule 2 of the Act, the registered office of the Company was situated at the office of the registered agent which is Vanterpool Plaza, 2 nd Floor, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands. 4.2 The directors or members may from time to time change the Company's registered office by Resolution of Directors or Resolution of Members, provided that the Company's registered office shall at all times be the office of the registered agent. The directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file with the Registrar a notice of change of registered office, and any such change of registered office will take effect from the date of the registration by the Registrar of such notice. 5. Registered Agent 5.1 At the date of filing of the notice of election to disapply Part IV of Schedule 2 of the Act, the registered agent of the Company was Icaza, Gonzales-Ruiz & Aleman (BVI) Trust Limited of Vanterpool Plaza, 2 nd Floor, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands. 5.2 The directors or members may from time to time change the Company's registered agent by Resolution of Directors or Resolution of Members. The directors shall give notice of such resolution to the registered agent of the Company (meaning the existing registered agent), for the registered agent to file with the Registrar a notice of change of registered agent, and any such change of registered agent will take effect from the date of the registration by the Registrar of such notice. 5.3 If the existing registered agent does not file such notice on instruction by the directors, the directors shall procure that a notice of change of registered agent is filed with the Registrar by a legal practitioner in the British Virgin Islands acting on behalf of the Company, and any such change of registered agent will take effect from the date of the registration by the Registrar of such notice. 6. General Objects and Powers 6.1 Subject to the following provisions of this Memorandum, the objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Act or any other law of the British Virgin Islands including but not limited to: i) To carry on the business of an investment company and for that purpose to acquire and hold either in the name of the Company or in that of any nominee shares, stocks, debentures, debenture stock, scrip, bonds, notes, obligations, investments and securities and warrants or options in respect of any shares, stocks, debentures, debenture stock, scrip, bonds, notes, obligations, investments or securities. ii) To acquire any such shares, stocks, debentures, debenture stocks, scrip, bonds, notes, obligations, investments or securities or warrants or options therein by original subscription, contract, tender, purchase, exchange, underwriting, participation in syndicates or otherwise, and whether or not fully paid up, and to subscribe for the same subject to such terms and conditions (if any) as may be thought fit. 2

4 iii) iv) To exercise and enforce all rights and powers conferred by or incident to the ownership of such shares, stock obligations or other securities including without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of the holding by the Company of some special proportion of the issued or nominal account thereof and to provide managerial and other executive supervisory and consultant services for or in relation to any company in which the Company is interested upon such terms as may be thought fit. To acquire and hold either in the name of the Company or in that of any nominee and whether as principal or broker or agent any currency in any form of any part of the world in any commodity and to enter into any contract of purchase, sale or option to purchase or sell in respect of any such currency or commodity. v) To offer for public subscription any shares or stocks, in the capital of, or debentures or debenture stock or other securities of or otherwise to establish or promote, or concur in establishing or promoting, any company, society anonyme, association, undertaking or public or private body. vi) vii) viii) ix) To carry on business as capitalists, financiers, concessionaires and merchants and to undertake and carry on and execute any other business which may seem to be capable of being conveniently carried on in connection with any of these objects, or calculated directly or indirectly to enhance the value of or facilitate the realization of, or render profitable, any of the Company s property or rights. To carry on the business of a property investment and holding Company, and for that purpose to purchase, take on lease, or in exchange, or otherwise acquire, hold, undertake or direct the management or work, develop the resources of, and turn to account any estates, lands, buildings, tenements, and other real property and property of every description, whether of freehold, leasehold, or other tenure, and wheresoever situate, and any interests therein, and any rights connected therewith, and to exercise and enforce all rights and powers conferred by, or incident to, the ownership of any such property. To sell, lease, let, mortgage, or otherwise dispose of grant rights over or otherwise provide any such property of the Company without seeking rental or consideration for such disposal or provision, or otherwise upon such terms as the Company shall determine. To acquire and assume for any estate or interest and to take options over, construct, develop or exploit any property of the Company without seeking rental or consideration for such disposal or provision, or otherwise upon such terms as the Company shall determine. x) To acquire, trade and deal with, or hold stocks, shares, bonds, debentures, scrip, investments and securities of all kinds issued in any country in any part of the world. To raise and borrow money by the issue of shares stock, debentures, bonds, obligations, deposit notes and otherwise howsoever and to underwrite any such issue and without limiting the generality of the foregoing to secure or discharge any debt or obligation of or binding on the Company in any manner and in particular by the issue of debentures (perpetual or otherwise) and to secure the repayment of any money 3

5 borrowed, raised or owing by mortgage, charge, or lien upon the whole or any part of the Company s property or assets (whether present or future). xi) xii) xiii) xiv) xv) xvi) xvii) xviii) xix) To deposit the monies of the Company with any company or person and to advance and lend money upon such terms as may be arranged and with or without security and to guarantee the performance of any contract or obligation and the payment of money of or by any person or Company, and generally to give guarantees and indemnities including guarantees and indemnities in respect of the liabilities of persons whether or not associated with the Company and whether or not the Company receives any consideration therefore and to secure any such guarantee or indemnity by the grant of charges, mortgages or liens on the whole or any part of the Company s property or assets present or future. To apply for, purchase or by other means acquire and protect, prolong and renew any patents, patent rights brevets d invention, licences, trade marks, protections or concessions or other rights which may appear likely to be advantageous or useful to the Company. To acquire and undertake on any terms and subject to any conditions, the whole or any part of the business, property and liabilities of any person or company carrying on any business which the Company is authorised to carry on, or possessed of property suitable for the purposes of the Company; To amalgamate with or enter into partnership or any joint purchase or profit-sharing arrangement with or to co-operate in any way with, or assist or subsidise any company, form or person carrying on, or proposing to carry on, or possessed of property suitable for the purposes of the Company; To purchase with a view to closing or reselling in whole or in part any business or properties which may seem to be deemed likely to injury by competition or otherwise any business or branch of business which the Company is authorised to carry on, and to close, abandon and give up any works or businesses at any time acquired by the Company. To act as Directors or Managers of or to appoint Directors or Managers of any subsidiary company or of any other company in which this company is or may be interested. To make, draw, accept, endorse, discount, negotiate, execute and issue and to buy, sell and deal in promissory notes, bills of exchange, cheques, bills of lading, shipping documents, dock and warehouse warrants and other instruments negotiable or transferable or otherwise. To lend money with or without security and to subsidise, assist and guarantee the payment of money by or the performance of any contract, engagement or obligation by any persons or companies. To pay all preliminary expenses of the Company and any company promoted by the Company or any company in which this Company is or may contemplate being interested including in such preliminary expenses all or any part of the costs and expenses of owners of any business or property acquired by the Company. 4

6 xx) xxi) xxii) xxiii) xxiv) xxv) xxvi) xxvii) To enter into any arrangements with any Government or authority, imperial, supreme, municipal, local or otherwise, or company that seem conducive to the company s objects or any of them and to obtain from any such Government, authority, or company and charters, contracts, decrees, rights, grants, loans, privileges or concessions which the Company may think it desirable to obtain and to carry out, exercise and comply with others. To vest in any real or personal property, rights or interest, acquired by or belonging to the Company in any person or company on behalf or for the benefit of the Company, with or without any declared trust in favour of the Company. To undertake and perform sub-contracts and to act through or by means of agents, brokers, sub-contracts or others. To remunerate any person or company rendering services to the Company, whether by cash payment or by the allotment to him or them of shares, stocks, debentures, bonds or other securities of the Company credited as paid up in full or in part or otherwise. To procure the Company to be registered or recognised in any part of the world outside the British Virgin Islands. To distribute among the members of the Company in kind, any property of the Company (whether by way of dividend or otherwise) and in particular any shares, stocks, debentures, bonds or other securities belonging to or at the disposal of the Company. To do all or any of the above things in any part of the world, and either as principals, agents, trustees, contractors or otherwise, and either along or in conjunction with others, and either by or through agents, sub-contractors, trustees or otherwise. To accept payment for any property or rights sold or otherwise disposed of or dealt with by the Company either in cash, by instalments or otherwise, or in fully or partly paid up shares of any company or corporation, with or without preferred or preferred rights in respect of dividend or repayment of capital dividend or repayment of capital or otherwise or in debentures of mortgage debentures or debenture stock, mortgages or other securities of any company or corporation, or partly in one mode and partly in another, and generally on such terms as the Company may determine and to hold, dispose of or otherwise deal with any shares, stock or securities so acquired. xxviii) To have the power exercisable solely by resolution of the Directors to vest the corpus or the income of any trust in itself and to do all such things as may be conducive to the attainment of such objects. xxix) To make such gifts or the Company s property as all members of the company in general meeting shall decide including, without limiting the generality thereof, the power to vest all or any part of the company s property revocable or irrevocable, in the name of trustees for the benefit of such person or persons including the company on such terms as all the members of the company in general meeting shall decide 5

7 6.2 The Company has no power to: (a) (b) (c) (d) (e) carry on banking or trust business, unless it is licensed to do so under the Banks and Trust Companies Act, 1990; carry on business as an insurance or as a reinsurance company, insurance agent or insurance broker, unless it is licensed or authorised to do so under the Insurance Act, 2008; carry on the business of company management unless it is licensed to do so under the Companies Management Act, 1990; carry on the business of providing the registered office or the registered agent for companies incorporated in the British Virgin Islands unless it is licensed to do so under the Banks and Trust Companies Act, 1990; or carry on Investment Business or business as a Mutual Fund unless it is licensed to do so pursuant to the Securities Investment Business Act, Without limiting the foregoing, the powers of the Company include the power to do the following: (a) (b) (c) (d) (e) (f) grant options over unissued shares in the Company and treasury shares; issue securities that are convertible into shares; give financial assistance to any person in connection with the acquisition of the Company's own shares; issue debt obligations of every kind and grant options, warrants and rights to acquire debt obligations; guarantee a liability or obligation of any person and secure any of its obligations by mortgage, pledge or other charge, of any of its assets for that purpose; and protect the assets of the Company for the benefit of the Company, its creditors and its members and, at the discretion of the directors, for any person having a direct or indirect interest in the Company. 7. Maximum Number of Authorised Shares 7.1 The Company is authorised to issue a maximum of 2,000,000,000 ordinary shares of one class having a par value of 0.01 (Euro one cent) each. 7.2 The directors or members may from time to time by Resolution of Directors or Resolution of Members increase the maximum number of shares the Company is authorised to issue, by amendment to the Memorandum in accordance with the provisions below. 8. Designation, Powers, Preferences, etc. of Shares 8.1 The designations, powers, preferences, rights, qualifications, limitations and restrictions of each class and series of each class and series of shares that the Company is authorised to issue shall 6

8 be fixed as to voting, dividends, redemption or distributions on liquidation unless the Memorandum of Association shall have been amended to create separate classes of shares and all the aforesaid right as to voting, dividends, redemption and distributions shall be identical in each separate class. 9. Variation of Class Rights 9.1 If at any time the shares which the Company is authorised to issue are divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or series and of the holders of not less than three-fourths of the issued shares of any other class or series of shares which may be affected by such variation. 10. Rights not varied by the issue of shares Pari Passu 10.1 The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation of issue of further shares ranking pari passu therewith. 11. Registered Shares 11.1 Shares shall be issued as registered shares and shall not be issued as, exchanged or converted into bearer shares. 12. Amendments to the Memorandum and Articles 12.1 Subject to the provisions of the Act, the directors or members may from time to time amend the Memorandum or Articles by Resolution of Directors or Resolution of Members. The directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file with the Registrar a notice of the amendment to the Memorandum or Articles, or a restated memorandum and articles of association incorporating the amendment(s) made, and any such amendment to the Memorandum or Articles will take effect from the date of the registration by the Registrar of the notice of amendment or restated memorandum and articles of association incorporating the amendment(s) made The directors shall not have the power to amend the Memorandum or Articles: (a) (b) (c) to restrict the rights or powers of the members to amend the Memorandum or Articles; to change the percentage of members required to pass a resolution to amend the Memorandum or Articles; or in circumstances where the Memorandum or Articles may only be amended by the members A change of registered office or registered agent shall not constitute an amendment of the Memorandum or Articles. 7

9 12.4 An amendment to the Memorandum or Articles which would have the effect of varying the rights of the holders of a class of shares may only be made in accordance with the provisions of the Memorandum and Articles relating to the variation of class rights. 13. Definitions and Interpretation 13.1 In this memorandum of association and the attached articles of association: "Act" means the BVI Business Companies Act, 2004; "Aim" "Articles" "Connected" means AIM, a market operated by the London Stock Exchange plc; means the Company's articles of association as attached to this Memorandum, and "Article" shall be construed accordingly; For the purposes of these Articles a person ("A") shall be treated as being connected with another person ("B") if A is: (a) a spouse, civil partner, child (under the age of eighteen) or stepchild (under the age of eighteen) of B; or (b) an associated body corporate which is a company in which B alone, or with Connected persons, is directly or indirectly beneficially interested in 20 per cent. or more of the nominal value of the equity share capital or is entitled (alone or with connected persons) to exercise or control the exercise of more than 20 per cent. of the voting power at general meetings; or (c) a trustee (acting in that capacity) of any trust, the beneficiaries of which include B or persons falling within paragraphs (a) or (b) above excluding trustees of an employees share scheme or pension scheme; or (d) a partner (acting in that capacity and pursuant to the terms of a written agreement) of B or persons in categories (a) to (c) above; "FSA" the United Kingdom Financial Services Authority; "FSA Handbook" "Memorandum" the FSA Handbook of Rules and Guidance (as amended and replaced from time to time); means this, the Company's memorandum of 8

10 association; "Registrar" means the Registrar of Corporate Affairs appointed under the Act; "Relevant System" means any computer-based system and procedures permitted by the AIM rules of the London Stock Exchange plc, which enable title to units of a security to be evidenced and transferred without a written instrument and which facilitate supplementary and incidental matters; "Resolution of Directors" "Resolution of Members" means: (a) a resolution approved at a duly convened and constituted meeting of directors of the Company or of a committee of directors of the Company by the affirmative vote of a simple majority of the directors present at the meeting who voted and did not abstain; or (b) a resolution consented to in writing by all directors or of all members of the committee, as the case may be, except that where a director is given more than one vote, he shall be counted by the number of votes he casts for the purpose of establishing a majority. means: (a) a resolution approved at a duly convened and constituted meeting of the members of the Company by the affirmative vote of: (i) a simple majority of the votes of the shares entitled to vote thereon which were present at the meeting and were voted and not abstained, or; (ii) a simple majority of the votes of each class or series of shares which were present at the meeting and entitled to vote thereon as a class or series and were voted and not abstained and of a simple majority of the votes of the remaining shares entitled to vote thereon which were present at the meeting and were voted and not abstained; or (b) a resolution consented to in writing by: (i) an absolute majority of the votes of shares 9

11 entitled to vote thereon, or (ii) an absolute majority of the votes of each class or series of shares entitled to vote thereon as a class or series and of an absolute majority of the votes of the remaining shares entitled to vote thereon; "United Kingdom" means Great Britain and Northern Ireland In the Memorandum and Articles: (a) (b) (c) (d) (e) words and expressions defined in the Act shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and the neuter and references to persons shall include corporations and all entities capable of having a legal existence; reference to a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation; the headings are for convenience only and shall not affect the construction of the Memorandum or Articles; reference to a thing being "written" or "in writing" includes all forms of writing, including all electronic records which satisfy the requirements of the Electronic Transactions Act, 2001; reference to a thing being "signed" or to a person's "signature" shall include reference to an electronic signature which satisfies the requirements of the Electronic Transactions Act, 2001, and reference to the Company's "seal" shall include reference to an electronic seal which satisfies the requirements of the Electronic Transactions Act,

12 We, ICAZA, GONZALEZ-RUIZ & ALEMAN (BVI) TRUST LIMITED of Vanterpool Plaza, 2 nd Floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands for the purpose of disapplying Part IV of Schedule 2 of the BVI Business Companies Act, 2004 hereby sign these Memorandum of Association this 7 th day of June, Registered Agent Yexadira Garcia Authorised Signatory Icaza, Gonzalez-Ruiz & Aleman (BVI) Trust Limited 11

13 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE BVI BUSINESS COMPANIES ACT, 2004 ARTICLES OF ASSOCIATION OF DOLPHIN CAPITAL INVESTORS LTD. 1. Share Certificates 1.1 Every person whose name is entered as a member in the share register, being the holder of registered shares, shall without payment be entitled to a share certificate in the following circumstances: (a) (b) (c) (d) on the issuance of such shares to such member; on the transfer of such shares to such member; on a re-designation or conversion of such shares with the effect that the certificate previously issued no longer properly describes such shares; and at the discretion of the directors (who may levy a reasonable charge), on notice to the Company of a change of name of the member. 1.2 Such certificate shall be signed by a director or under the common seal of the Company with or without the signature of any director or officer of the Company specifying the share or shares held and the par value thereof (if the Company is authorised at the relevant time to issue shares with a par value), provided that in respect of shares held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 1.3 If a certificate is worn out or lost it may, subject to the prior written consent of any mortgagee or chargee whose interest has been noted on the register of members, be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such a certificate. 1.4 The Directors shall permit shares to be held in uncertificated form and shall have power to implement such arrangements as they may, in their absolute discretion, think fit in order for any class of shares to be transferred by means of a Relevant System of holding and transferring

14 shares and to be a participating security (subject always to the requirements of the Relevant System concerned). 1.5 Where the arrangements described in Article 1.4 are implemented, no provision of these Articles shall apply or have effect to the extent that it is in any respect inconsistent with: (a) (b) (c) the holding of shares of that class in uncertificated form; the transfer of title to such shares of that class by means of a Relevant System; the requirements of the Relevant System. 1.6 Notwithstanding anything contained in these Articles (but subject always to any applicable law and regulations and the facilities and requirements of any Relevant System): (a) (b) (c) (d) (e) (f) (g) unless the Directors otherwise determine, shares held by the same holder or joint holder in certificated form and uncertificated form shall be treated as separate holdings; conversion of shares held in certificated form into shares held in uncertificated form, and vice versa, may be made in such a manner as the Directors may in their absolute discretion think fit; shares may be changed from uncertificated to certificated form, and from certificated to uncertificated form, in such manner as the Directors may in their absolute discretion, think fit; Article 6 shall not apply in respect of shares recorded on the register as being held in uncertificated form to the extent that Article 6 requires or contemplates the effecting of a transfer by an instrument in writing and the production of a certificate for the share to be transferred; a class of share shall not be treated as two classes by virtue only of that class comprising both certificated and uncertificated shares or as a result of any provision of these Articles or any other applicable law or regulation which applies only in respect of certificated and uncertificated shares; The Directors shall, subject to applicable laws and regulations, be entitled to require the conversion of any uncertificated share into certificated form; and Articles 1.1, 1.2 and 1.3 shall not apply so as to require the Company to issue a certificate to any person holding shares in uncertificated form. 2. Issue of Shares 2.1 Subject to the provisions of these Articles, the unissued shares of the Company (whether forming part of the original or any increased authorised shares) shall be at the disposal of the directors who may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration, being not less than the par value (if any) of the shares being disposed of, and upon such terms and conditions as the directors may determine. Such consideration may take any form acceptable to the directors, including money, a promissory note, or other written obligation to contribute money or property, real property, personal property 2

15 (including goodwill and know-how), services rendered or a contract for future services. Before issuing shares for a consideration other than money, the directors shall pass a Resolution of Directors stating: (a) (b) (c) the amount to be credited for the issue of the shares; their determination of the reasonable present cash value of the non-money consideration for the issue; and that, in their opinion, the present cash value of the non-money consideration for the issue is not less than the amount to be credited for the issue of the shares. 2.2 Subject to the provisions of the Act in this regard, shares may be issued on the terms that they are redeemable, or at the option of the Company be liable to be redeemed on such terms and in such manner as the directors before or at the time of the issue of such shares may determine. 2.3 The Company may issue bonus shares, partly paid shares and nil paid shares. 2.4 The directors may redeem any share issued by the Company at a premium. 3. Depository Interests 4.1 The directors shall, subject to any applicable laws and regulations, the facilities and requirements of any Relevant System concerned and these Articles, have the power to implement and/or approve any arrangements they may, in their absolute discretion, think fit in relation to (without limitation) the evidencing of title to and transfer of interests in shares in the capital of the Company in the form of depositary interests or similar interests, instruments or securities, and to the extent that such arrangements are so implemented, no provision of these Articles shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer thereof of the shares in the capital of the Company represented thereby. The Directors may, from time to time take such actions and do such things as they may, in their absolute discretion, think fit in respect of the operation of any of the aforesaid arrangements. 4. Forfeiture of Shares 4.1 The Company may, at any time after the due date for payment, serve on a member who has not paid in full for shares registered in the name of that member, a written notice of call ("Notice of Call") specifying a date for payment to be made. The Notice of Call shall name a further date not earlier than the expiration of 14 days from the date of service of the Notice of Call on or before which the payment required by the Notice of Call is to be made and shall contain a statement that in the event of non-payment at or before the time named in the Notice of Call the shares, or any of them, in respect of which payment is not made will be liable to be forfeited. 4.2 Where a written Notice of Call has been issued under the foregoing Article and the requirements of the Notice of Call have not been complied with, the directors may, at any time before tender of payment, forfeit and cancel the shares to which the Notice of Call relates. The Company is under no obligation to refund any moneys to the member whose shares have been cancelled pursuant to this Article and that member shall be discharged from any further obligation to the Company. 3

16 5. Transfer of Shares 5.1 Shares in the Company shall be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee. The instrument of transfer shall also be signed by the transferee if registration as a holder of the shares imposes a liability to the Company on the transferee. The instrument of transfer of a registered share shall be sent to the Company for registration. 5.2 Subject to the Memorandum of Association, these Articles and to section 54(5) of the Act, the Company shall, on receipt of an instrument of transfer, enter the name of the transferee of the share in the register of members unless the directors resolve to refuse or delay the registration of the transfer for reasons that shall be specified in the resolution. Where the directors pass such a resolution, the Company shall send to the transferor and the transferee a notice of the refusal or delay. Notwithstanding anything contained in the Memorandum or Articles, the directors shall not decline to register any transfer of shares, nor may they suspend registration thereof where such transfer is: (a) (b) (c) to any mortgagee or chargee whose interest has been noted on the register of members; by any such mortgagee or chargee, pursuant to the power of sale under its security; or by any such mortgagee or chargee in accordance with the terms of the relevant security document. 5.3 The transfer of a registered share is effective when the name of the transferee is entered in the register of members. 5.4 The board of Directors may, in its absolute discretion, and without assigning any reason therefor, refuse to register any transfers of shares which are not fully paid PROVIDED THAT such discretion may not be exercised in such a way as to prevent dealings in the shares of a class from taking place on an open and proper basis. 5.5 Subject to any limitations in the Memorandum, the Company must on the application of the transferor or transferee of a registered share in the Company enter in the share register the name of the transferee of the share save that the registration of transfers may be suspended and the share register closed at such times and for such periods as the Company may from time to time by resolution determine provided always that such registration shall not be suspended and the share register closed for more than 60 days in any period of 12 months. 6. Mortgages of Shares and Charges Over Shares 6.1 Members may mortgage or create a charge or other form of security over their shares. 6.2 The directors shall, at the written request of a member who has mortgaged or created a charge over his shares, enter in the register of members of the Company: (a) (b) a statement that such shares are mortgaged or charged; the name of the mortgagee or chargee (where such information has been stated by the member); and 4

17 (c) the date on which the statement and name are entered in the register of members. 7. Transmission of Shares 7.1 Subject to sections 52(2) and 53 of the Act, the executor or administrator of a deceased member, the guardian of an incompetent member or the trustee of a bankrupt member shall be the only person recognised by the Company as having any title to his share, save that and only in the event of death, incompetence or bankruptcy of any member or members of the Company as a consequence of which the Company no longer has any directors or members, then upon the production of any documentation which is reasonable evidence of the applicant being entitled to: (a) (b) (c) (d) a grant of probate of the deceased's will, or grant of letters of administration of the deceased's estate, or confirmation of the appointment as executor or administrator (as the case may be, or analogous position in the relevant jurisdiction), of a deceased member's estate; the appointment of a guardian (or analogous position in the relevant jurisdiction) of an incompetent member; the appointment as trustee (or analogous position in the relevant jurisdiction) of a bankrupt member; or upon production of any other reasonable evidence of the applicant's beneficial ownership of, or entitlement to the shares, to the Company's registered agent in the British Virgin Islands together with (if so requested by the registered agent) a notarised copy of the share certificate(s) of the deceased, incompetent or bankrupt member, an indemnity in favour of the registered agent and/or appropriate legal advice in respect of any document issued by a foreign court, then the administrator, executor, guardian or trustee in bankruptcy (as the case may be) notwithstanding that their name has not been entered in the share register of the Company, may by written resolution of the applicant, endorsed with written approval by the registered agent, be appointed a director of the Company and/or entered in the share register as the legal and/or beneficial owner of the shares. 7.2 Without limiting the foregoing, the production to the Company of any document which is reasonable evidence of: (a) (b) (c) (d) a grant of probate of the will, or grant of letters of administration of the estate, or confirmation of the appointment as executor (or analogous position in the relevant jurisdiction), of a deceased member; the appointment of a guardian (or analogous position in the relevant jurisdiction) of an incompetent member; the trustee (or analogous position in the relevant jurisdiction) of a bankrupt member; or the applicant's legal and/or beneficial ownership of the shares, shall be accepted by the Company even if the deceased, incompetent member or bankrupt member is resident and/or domiciled outside the British Virgin Islands if the document is issued by a foreign court which had competent jurisdiction in the matter. For the purposes of 5

18 establishing whether or not a foreign court had competent jurisdiction in such a matter the directors may obtain appropriate legal advice. The directors may also require an indemnity to be given by the executor, administrator, guardian, trustee in bankruptcy or the applicant. 7.3 Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member shall for all purposes be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such. 7.4 Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as the transferee of such share or shares and such request shall likewise be treated as if it were a transfer. 7.5 What amounts to incompetence on the part of a person is a matter to be determined by the court having regard to all the relevant evidence and the circumstances of the case. 8. Reduction or Increase in Shares Authorized to Issue and Acquisition of own Shares 8.1 Company may by a resolution of directors amend the Memorandum to increase or reduce the shares which it is authorised to issue and in connection therewith the Company may in respect of any unissued shares increase or reduce the number of such shares, increase or reduce the par value of any such shares or effect any combination of the foregoing. 8.2 The Company may by a resolution of directors amend the Memorandum to: (a) divide the shares, including issued shares, of a class or series into a larger number of shares of the same class or series; or (b) combine the shares, including issued shares, of a class or series into a smaller number of shares of the same class or series, provided, however, that where shares are divided or combined under (a) or (b) of this Article, the aggregate par value of the new shares must be equal to the aggregate par value of the original shares. 8.3 The directors may, on behalf of the Company, subject to the written consent of all the members whose shares are to be purchased, redeemed or otherwise acquired, purchase, redeem or otherwise acquire any of the Company's own shares for such consideration as the directors consider fit, and either cancel or hold such shares as treasury shares. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company. 8.4 The directors shall not, unless permitted pursuant to the Act, purchase, redeem or otherwise acquire any of the Company's own shares unless immediately after such purchase, redemption or other acquisition: (a) the value of the Company's assets exceeds it liabilities other than deferred taxes as shown in its books of account; and 6

19 (b) the Company is able to pay its debts as they fall due. 8.5 Sections 60 and 61 of the Act shall not apply to the Company. 9. Treasury Shares 9.1 Shares may only be held as treasury shares by the Company to the extent that the number of treasury shares does not exceed 50% of the shares of that class previously issued by the Company, excluding shares that have been cancelled. 9.2 The directors may dispose of or cancel and make available for re-issue any shares held as treasury shares on such terms and conditions as they may from time to time determine. 10. Notice of Meetings of Members 10.1 The directors of the Company may convene meetings of the members of the Company at such times and in such manner and places within or outside the British Virgin Islands as the directors consider necessary or desirable Upon the written request of members holding 10 per cent or more of the outstanding voting shares in the Company the Directors shall convene a meeting of members The director shall give not less than 7 days' notice of a meeting of members to those persons whose names appear as members in the share register of the Company and are entitled to vote at the meeting at the close of business on a day determined by the directors The directors may fix the date notice is given of a meeting of members as the record date for determining those shares that are entitled to vote at the meeting A meeting of members may be called on short notice: (a) (b) if members holding not less than 90 per cent of the total number of shares entitled to vote on all matters to be considered at the meeting, or 90 per cent of the votes of each class or series of shares where members are entitled to vote thereon as a class or series together with not less than a 90 per cent majority of the remaining votes, have agreed to short notice of the meeting, or if all members holding shares entitled to vote on all or any matters to be considered at the meeting have waived notice of the meeting; and for this purpose presence at the meeting shall be deemed to constitute waiver The inadvertent failure of the directors to give notice of a meeting to a member, or the fact that a member has not received notice, does not invalidate the meeting A member may be represented at a meeting of members by a proxy who may speak and vote on behalf of the member The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. 7

20 10.9 An instrument appointing a proxy shall be in substantially the following form or such other form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy. Only members who are individuals may appoint proxies. (Name of the Company) I/We being a member of the above Company with shares HEREBY APPOINT of or, failing him of to be my/our proxy to vote for me/us at the meeting of members to be held on the day of and at any adjournment thereof. (Any restrictions on voting to be inserted here) Signed this day of. Member The following shall apply in respect of joint ownership of shares: (a) (b) (c) if two or more persons hold shares jointly each of them may be present in person or by proxy at a meeting of members and may speak as a member; if only one of the joint owners is present in person or by proxy he may vote on behalf of all joint owners, and if two or more of the joint owners are present in person or by proxy they must vote as one A member shall be deemed to be present at a meeting of members if he participates by telephone or other electronic means and all members participating in the meeting are able to hear each other A meeting of members is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than 50 per cent. of the votes of the shares or class or series of shares entitled to vote on resolutions of members to be considered at the meeting. If a quorum is present, notwithstanding the fact that such quorum may be represented by only one person then such person may resolve any matter and a certificate signed by such person (accompanied where such person be a proxy by a copy of the proxy form) shall constitute a valid resolution of members If within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the next business day at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the shares of each class or series of shares entitled to vote on the resolutions to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved At every meeting of members, the Chairman of the Board of Directors shall preside as chairman of the meeting. If there is no Chairman of the Board of Directors or if the Chairman of the Board of Directors is not present at the meeting, the members present shall choose one of their number 8

21 to be the chairman. If the members are unable to choose a chairman for any reason, then the person representing the greatest number of voting shares present in person or by prescribed form of proxy at the meeting shall preside as chairman, failing which the oldest individual member or representative of a member present shall take the chair The chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place At any meeting of the members the chairman shall be responsible for deciding in such manner as he shall consider appropriate whether any resolution has been carried or not and the result of his decision shall be announced to the meeting and recorded in the minutes thereof. If the chairman shall have any doubt as to the outcome of any resolution put to the vote, he shall cause a poll to be taken of all votes cast upon such resolution, but if the chairman shall fail to take a poll then any member present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall thereupon cause a poll to be taken. If a poll is taken at any meeting, the result thereof shall be duly recorded in the minutes of that meeting by the chairman Any person other than an individual which is a member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the person which he represents as that person could exercise if it were an individual member of the Company. The right of any individual to speak for or represent such member shall be determined by the law of the jurisdiction where, and by the documents by which, the person is constituted or derives its existence. In case of doubt, the Directors may in good faith seek legal advice from any qualified person and unless and until a court of competent jurisdiction shall otherwise rule, the Directors may rely and act upon such advice without incurring any liability to any member The chairman of any meeting at which a vote is cast by proxy or on behalf of any person other than an individual may call for a notarially certified copy of such proxy or authority which shall be produced within 7 days of being so requested or the votes cast by such proxy or on behalf of such person shall be disregarded Directors of the Company may attend and speak at any meeting of members of the Company and at any separate meeting of the holders of any class or series of shares in the Company An action that may be taken by the members at a meeting may also be taken by a Written Resolution. 11. Directors 11.1 The first directors of the Company shall be appointed by the subscribers to the Memorandum within 30 days of the date of incorporation of the Company; and thereafter, the Directors shall be elected by the members for such term as the members determine. The first directors may elect any number of additional directors for such term as they may determine until such time as the members shall elect or re-elect any one or more directors The minimum number of directors shall be one and the maximum number shall be seven. At no time shall a majority of directors be resident in the United Kingdom. 9

22 11.3 Each director shall hold office for the term, if any, fixed by resolution of members or until his earlier death, resignation or removal A director may be removed from office, with or without cause, by a resolution of members A director may resign his office by giving written notice of his resignation to the Company and the resignation shall have effect from the date the notice is received by the Company or from such later date as may be specified in the notice A vacancy in the board of directors may be filled by a resolution of members or by a resolution of a majority of the remaining directors With the prior or subsequent approval by a Resolution of Members, the directors may, by a Resolution of Directors, fix the emoluments of directors with respect to services to be rendered in any capacity to the Company A director shall not require a share qualification, and must be an individual. 12. Disqualification and Removal of Directors 12.1 The office of a director shall ipso facto be vacated:- (a) (b) (c) (d) (e) (f) if he (not being a person holding for a fixed term an executive office subject to termination if he ceases for any cause to be a director) resigns his office by written notice signed by him sent to or deposited at the registered office; if he shall have absented himself (such absence not being absence with leave or by arrangement with the Board of Directors on the affairs of the Company) from meetings of the Board for a consecutive period of six months and the Board resolves that his office shall be vacated; if he becomes of unsound mind or incapable; if he becomes insolvent, suspends payment or compounds with his creditors; if the Company in general meeting by ordinary resolution shall declare that he shall cease to be a director; or if he becomes resident in the United Kingdom and, as a result thereof, a majority of the directors are resident in the United Kingdom If the Company in a general meeting removes any director before the expiration of his period of office it may by an ordinary resolution appoint another person to be a director in his stead who shall retain his office so long only as the director in whose stead he is appointed would have held the same if he had not been removed. Such removal shall be without prejudice to any claims such director may have for damages for breach of any contract of service between him and the Company. 10

23 13. Duties of Directors and Conflicts of Interests 13.1 A director of the Company, in exercising his powers or performing his duties, shall act honestly and in good faith and in what the director believes to be in the best interests of the Company Notwithstanding the foregoing Article, if the Company is a wholly-owned subsidiary, a director of the Company may, when exercising powers or performing duties as a director, act in a manner which he believes is in the best interests of that Company s holding company (as defined in the Act) even though it may not be in the best interests of the Company A director shall exercise his powers as a director for a proper purpose and shall not act, or agree to the Company acting, in a manner that contravenes the Act or the Memorandum or Articles A director, when exercising powers or performing duties as a director, shall exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances taking into account, but without limitation: (a) (b) (c) the nature of the Company; the nature of the decision; and the position of the director and the nature of the responsibilities undertaken by him A director of the Company, when exercising his powers or performing his duties as a director, is entitled to rely upon the register of members and upon books, records, financial statements and other information prepared or supplied, and on professional or expert advice given, by: (a) (b) (c) (d) (e) (f) an employee of the Company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned; a professional adviser or expert in relation to matters which the director believes on reasonable grounds to be within the person s professional or expert competence; and any other director, or committee of directors upon which the director did not serve, in relation to matters within the director s or committee s designated authority, provided that the director: acts in good faith; makes proper inquiry where the need for the inquiry is indicated by the circumstances; and has no knowledge that his reliance on the register of members or the books, records, financial statements and other information or expert advice is not warranted A director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall approve A director may be or become a director or officer of, or otherwise be interested in any company promoted by the Company, or in which the Company may be interested, as a member or 11

24 otherwise and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favour of any resolutions appointing them, or of their number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favour of the exercise of such voting rights in the manner aforesaid notwithstanding that he may be, or be about to become, a director or officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in the manner aforesaid No director shall be disqualified by his office from contracting with the Company either as a buyer, seller or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director shall be in any way interested be voided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement, by reason of such director holding that office or by reason of the fiduciary relationship thereby established, provided such director shall, immediately after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose such interest to the board of directors. For the purposes of this Article: (a) A director of the Company is not required to make such a disclosure if: (i) (ii) the transaction or proposed transaction is between the director and the Company; and the transaction or proposed transaction is or is to be entered into in the ordinary course of the Company's business and on usual terms and conditions. (b) (c) A disclosure to the board to the effect that a director is a member, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction. Such a disclosure is not made to the board unless it is made or brought to the attention of every director on the board. Subject to section 125(1) of the Act, the failure by a director to comply with this Article does not affect the validity of a transaction entered into by the director or the Company A director of the Company who is interested in a transaction entered into or to be entered into by the Company may: (a) (b) (c) vote on a matter relating to the transaction; attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and sign a document on behalf of the Company, or do any other thing in his capacity as a director, that relates to the transaction. 12

25 14. Powers of Directors 14.1 The business and affairs of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company and may exercise all such powers of the Company as are not by the Act or by the Memorandum or these Articles required to be exercised by the members of the Company, subject to any delegation of such powers as may be authorised by these Articles and to such requirements as may be prescribed by a resolution of members; but no requirement made by a resolution of members shall prevail if it be inconsistent with these Articles nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made The directors may, by a resolution of directors, appoint any person, including a person who is a director, to be an officer or agent of the Company Every officer or agent of the Company has such powers and authority of the directors, including the power and authority to affix the Seal, as are set forth in these Articles or in the Resolution of Directors appointing the officer or agent, except that no officer or agent has any power or authority with respect to fixing the emolument of directors The continuing directors may act notwithstanding any vacancy in their body, save that if their number is reduced to their knowledge below the number fixed by or pursuant to these Articles as the necessary quorum for a meeting of directors, the continuing directors or director may act only for the purpose of appointing directors to fill any vacancy that has arisen or summoning a meeting of members All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as shall from time to time be determined by resolution of directors. 15. Delegation by the Board to Directors, Committees, Officers, Attorneys and Agents 15.1 The board of directors (the "Board of Directors") may entrust to and confer upon any director or officer any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. Subject to the provisions of section 110 of the Act, the directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committees so formed shall in the exercise of powers so delegated conform to any regulations that may be imposed on it by the directors or the provisions of the Act The directors have no power to delegate the following powers to a committee of directors: (a) (b) (c) to amend the Memorandum or Articles; to designate committees of directors; to delegate powers to a committee of directors; (This and the preceding sub-article do not prevent a committee of directors, where authorised by the directors, from appointing a 13

26 sub-committee and delegating powers exercisable by the committee to the subcommittee); (d) (e) (f) (g) (h) to appoint or remove directors; to appoint or remove an agent; to approve a plan or merger, consolidation or arrangement; to make a declaration of solvency for the purposes of section 198(1)(a) of the Act or approve a liquidation plan; or to make a determination under section 57(1) of the Act that the Company will, immediately after a proposed distribution, satisfy the solvency test Where the directors of the Company delegate their powers to a committee of directors, they remain responsible for the exercise of that power by the committee, unless they believed on reasonable grounds that at all times before the exercise of the power that the committee would exercise the power in conformity with the duties imposed on directors of the Company by the Act The directors of the Company may, by Resolution of Directors, appoint officers of the Company at such times as shall be considered necessary or expedient. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modifications in such duties as may be prescribed by the directors thereafter Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in office until removed from office by the directors, whether or not a successor is appointed Any officer who is a body corporate may appoint any person as its duly authorised representative for the purpose of representing it and of transacting any of the business of the officers The directors may from time to time by power of attorney appoint any company, firm or person or body of persons to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles) and for such period and subject to such conditions as the directors think fit The directors may appoint any person, including a person who is a director, to be an agent of the company. An agent of the Company has such powers and authority of the directors, including the power and authority to affix the common seal of the Company, as are set forth in the Resolution of Directors appointing the agent, except that no agent has any power or authority with respect to the following: (a) (b) (c) (d) to amend the Memorandum or Articles; to change the registered office or registered agent; to designate committees of directors; to delegate powers to a committee of directors; 14

27 (e) (f) (g) (h) (i) (j) (k) to appoint or remove directors; to appoint or remove an agent; to fix emoluments of directors; to approve a plan of merger, consolidation or arrangement; to make a declaration of solvency for the purposes of section 198(1)(a) of the Act or to approve a liquidation plan; to make a determination under section 57(1) of the Act that the Company will, immediately after a proposed distribution, satisfy the solvency test as stipulated in section 56 of the Act; or to authorise the Company to continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands Where the directors appoint any person to be an agent of the Company, they may authorise the agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company The directors may at any time remove an agent and may revoke or vary a power conferred on him. 16. Proceedings of Directors 16.1 The directors of the Company or any committee thereof may meet at such times and in such manner and places within or outside the British Virgin Islands as the directors may determine to be necessary or desirable. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the Chairman at the meeting shall have a second or casting vote, but only if the effect of the exercise of such a vote is not to render a decision or vote in question one which is reached or passed by a majority of directors who are resident in the United Kingdom. All meetings of directors shall take place outside the United Kingdom and any decision reached or resolution passed by the directors at any meeting not held outside the United Kingdom or at which a majority of directors resident in the United Kingdom is present shall be invalid and of no effect A director shall be deemed to be present at a meeting of directors if he participates by telephone or other electronic means and all directors participating in the meeting are able to hear each other PROVIDED THAT no directors physically present in the United Kingdom at the time of any such meeting may participate in a meeting by means of video link, telephone conference call or other electronic or telephonic means of communication unless a majority of the Directors participating are physically present outside the United Kingdom A director shall be given not less than three days' notice of meetings of directors, but a meeting of directors held without three days notice having been given to all directors shall be valid if all the directors entitled to vote at the meeting who do not attend, waive notice of the meeting and for this purpose, the presence of a director at a meeting shall constitute waiver on his part. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting. 15

28 16.4 A director may by a written instrument appoint an alternate who need not be a director and an alternate is entitled to attend meetings in the absence of the director who appointed him and to vote or consent in place of the director PROVIDED THAT a director who is resident outside the United Kingdom shall not be entitled to appoint an alternate who is resident in the United Kingdom A meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one half of the total number of directors, unless there are only two directors in which case the quorum shall be two If the Company shall have only one director the provisions herein contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters as are not by the Act or the Memorandum or these Articles required to be exercised by the members of the Company and in lieu of minutes of a meeting shall record in writing and sign a note or memorandum of all matters requiring a resolution of directors. Such a note or memorandum shall constitute sufficient evidence of such resolution for all purposes The Board of Directors may elect one of their number other than a United Kingdom resident director as Chairman of their meetings and determine the period for which he is to hold office. At every meeting of the directors the Chairman of the Board of Directors shall preside as chairman of the meeting. If there is no Chairman of the Board of Directors or if the Chairman of the Board of Directors is not present at the meeting the Vice Chairman of the Board of Directors shall preside. If there is no Vice Chairman of the Board of Directors or if the Vice Chairman of the Board of Directors is not present at the meeting the directors present shall choose someone of their number to be chairman of the meeting An action that may be taken by the directors or a committee of directors at a meeting may also be taken by a Resolution of Directors or a committee of directors consented to in writing or by telex, telegram, cable, facsimile or other written electronic communication by all Directors or all members of the committee as the case may be, without the need for any notice. No such resolution shall be valid if a majority of the directors sign the resolution in the United Kingdom The directors shall cause the following corporate records to be kept: (a) (b) (c) minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members; copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members; and such other accounts and records as the directors by resolution of directors consider necessary or desirable in order to reflect the financial position of the Company The books, records and minutes shall be kept at the registered office of the Company, its principal place of business or at such other place as the directors determine The directors may, by Resolution of Directors, designate one or more committees, each consisting of one or more directors PROVIDED THAT all or a majority of the members of any such committee shall be persons who are resident outside the United Kingdom. Such committees shall meet only outside the United Kingdom. 16

29 16.12 Each committee of directors has such powers and authorities of the directors, including the power and authority to affix the Seal, as are set forth in the resolution of directors establishing the committee, except that no committee has any power or authority to amend the Memorandum or these Articles, to appoint directors or fix their emoluments, or to appoint officers or agents of the Company The meetings and proceedings of each committee of directors consisting of two or more directors shall be governed mutatis mutandis by the provisions of these Articles regulating the proceedings of directors so far as the same are not superseded by any provisions in the resolution establishing the committee. 17. Indemnification and Insurance 17.1 Subject to the provisions of the Act and the subsequent provisions of this Article, the Company may indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who: (a) (b) is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director of the Company; or is or was, at the request of the Company, serving as a director of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise This Article applies only to a person who has acted honestly and in good faith and in what he believed to be the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful. The Company shall not indemnify a person who has not so acted, and any indemnity given to such a person is void and of no effect. A director acts in the best interests of the Company if he acts in the best interests of: (a) the Company s holding company; or (b) a shareholder or shareholders of the Company; in either case, in the circumstances specified in the sub-articles below, as the case may be: 17.3 The termination of any proceedings by any judgement, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful Expenses, including legal fees, incurred by a director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the director is not entitled to be indemnified by the Company in accordance with this Article. 17

30 17.5 Expenses, including legal fees, incurred by a former director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the former director to repay the amount if it shall ultimately be determined that the former director is not entitled to be indemnified by the Company in accordance with this Article and upon such other terms and conditions, if any, as the Company deems appropriate The indemnification and advancement of expenses provided by, or granted pursuant to, this Article is not exclusive of any other rights to which the person seeking indemnification or advancement of expenses may be entitled under any agreement, resolution of members, resolution of disinterested directors or otherwise, both as to acting in the person s official capacity and as to acting in another capacity while serving as a director of the Company The Company may purchase and maintain insurance in relation to any person who is or was a director of the Company, or who at the request of the Company is or was serving as a director of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability under the foregoing Article. 18. Notification of Interest in Shares 18.1 For so long as the Company has any of its Shares admitted to trading on AIM, or any successor market or any other market operated by the London Stock Exchange plc., every member shall comply with the notification and disclosure requirements set out in Chapter 5 of the Disclosure and Transparency Rules Sourcebook (as amended and varied from time to time) of the FSA Handbook as if the Company were classified as an "Issuer" whose "Home State" is the "United Kingdom" (as such terms are defined in the FSA Handbook) If it shall come to the notice of the directors that any member has not, within the requisite period made or, as the case may be, procured the making of any notification required by this Article, the Company may (at the absolute discretion of the directors) at any time thereafter by notice (a "Restriction Notice") to such member direct that, in respect of the shares in relation to which the default has occurred (the "Default Shares") which expression shall include any further shares which are issued in respect of any Default Shares), the member shall not be entitled to be present or to vote on any question (either in person or in proxy), at any general meeting of the Company or separate general meeting of the holders of any class of shares of the Company, or to be recognised in a quorum or to sign a written resolution Where the Default Shares represent at least 0.25 per cent. in nominal value of the issued shares of their class, then the restriction notice may additionally direct that in respect of the Default Shares: (a) (b) any dividend or any part of a dividend or other amounts payable in respect of the Default Shares be withheld by the Company, which has no obligation to pay interest on the same, and shall be payable (when the restriction notice ceases to have effect) to the person who would but for the Restriction Notice have been entitled to them; and/or where an offer of the right to elect to receive shares of the Company instead of cash in respect of any dividend or part thereof is or has been made by the Company any election 18

31 made thereunder by such member in respect of such Default Shares shall not be effective; and/or (c) no transfer of any of the shares held by any such member shall be recognised or registered by the directors unless: (1) the transfer is an excepted transfer; or (2) the member is not himself in default as regards supplying the requisite information required under this Article and, when presented for registration the transfer is accompanied by a certificate by the member in a form satisfactory to the directors to the effect that after due and careful enquiry the member is satisfied that none of the shares, the subject of the transfer are Default Shares The Company shall send a copy of the Restriction Notice to each other person appearing to be interested in the shares the subject of such notice, but the failure or omission by the Company to do so shall not invalidate the notice Any Restriction Notice shall have effect in accordance with its terms from the date it is given until not more than seven days after the Directors are satisfied that the default in respect of which the Restriction Notice was issued no longer continues but shall cease to have effect in relation to any shares which are transferred by such member. The Company may (at the absolute discretion of the directors) at any time give notice to the member cancelling or suspending for a stated period the operation of a Restriction Notice in whole or part A person, other than the member holding a share, shall be treated as appearing to be interested in that share if the member has informed the Company that the person is, or may be interested, or the Company after taking account of information obtained from a member knows or has reasonable cause to believe that the person is, or maybe, so interested. 19. Request for Information 19.1 The directors shall have power by notice in writing to require any member to disclose to the Company the identity of any person other than the member (an "Interested Party") who has any interest in the Relevant Share Capital held by the member and the nature of such interest Any such notice shall require any information in response to such notice to be given in writing within such reasonable time as the directors shall determine The Company shall maintain a register of interested parties as if the register of Interested Parties was the register of members and whenever in pursuance of a requirement imposed on a shareholder as aforesaid the Company is informed of an Interested Party the identity of the Interested Party and the nature of the interest shall be promptly inscribed therein together with the date of the request The directors may be required to exercise their powers under Article 20.1 on the requisition of members of the Company holding at the date of the deposit of the requisition not less than one tenth of such of the paid-up capital of the Company as carries at that date the right of voting at general meetings of the Company. The requisition must:- (a) (b) state that the requisitionists are requiring the Company to exercise its powers under this Article; specify the manner in which they require those powers to be exercised; and 19

32 (c) give reasonable grounds for requiring the Company to exercise those powers in the manner specified, and must be signed by the requisitionists and deposited at the registered office. The requisition may consist of several documents in like form each signed by one or more requisitionists. On the deposit of a requisition complying with this section it is the directors duty to exercise their powers under Article 20.1 in the manner specified in the requisition If any member has been duly served with a notice given by the directors in accordance with Article 20.1 and is in default for the prescribed period in supplying to the Company the information thereby required, then the Directors may in their absolute discretion at any time thereafter serve a notice (a Direction Notice ) upon such member as follows:- (a) a Direction Notice may direct that, in respect of:- (i) (ii) (iii) the shares comprising the shareholder account in the Register which comprises or includes the shares in relation to which the default occurred (all or the relevant number as appropriate of such shares being the Default Shares ); and any other shares held by the member; the member shall have no right to vote at a general meeting or meeting of the holders of any class of shares of the Company either personally or by proxy or to exercise any other right conferred by membership in relation to meetings of the Company or of the holders of any class of shares of the Company; and (b) where the Default Shares represent at least 0.25 per cent. of the class of shares concerned, then the direction notice may additionally direct that: (i) (ii) in respect of the Default Shares, any dividend or part thereof which would otherwise be payable on such shares shall be retained by the Company without any liability to pay interest thereon when such money is finally paid to the member; no transfer other than an excepted transfer (as defined below) of any of the shares held by such member shall be registered unless:- (A) (B) the member is not himself in default as regards supplying the information requested; and the transfer is of part only of the member s holding and when presented for registration is accompanied by a certificate by the member in a form satisfactory to the Directors to the effect that after due and careful enquiry the member is satisfied that no person in default as regards supplying such information has an interest in any of the shares the subject of the transfer. 20

33 The Company shall send to each other person appearing to have an Interest in the shares the subject of any Direction Notice a copy of the notice, but failure or omission by the Company to do so shall not invalidate such notice If shares are issued to a member as a result of that member holding other shares in the Company and if the shares in respect of which the new shares are issued are Default Shares in respect of which the member is for the time being subject to particular restrictions, the new shares shall on issue become subject to the same restrictions whilst held by that member as such Default Shares. For this purpose, shares which the Company procures to be offered to members pro rata (or pro rata ignoring fractional entitlements and shares not offered to certain members by reason of legal or practical problems associated with offering shares outside the United Kingdom) shall be treated as shares issued as a result of a member holding other shares in the Company Any Direction Notice shall have effect in accordance with its terms for as long as the default, in respect of which the Direction Notice was issued, continues but shall cease to have effect in relation to any shares which are transferred by such member by means of an excepted transfer(as defined below). As soon as practical after the Direction Notice has ceased to have effect (and in any event within seven days thereafter) the Directors shall procure that the restrictions imposed by Articles 20.5 and 20.6 above shall be removed and that dividends and other monies withheld pursuant to Article 20.5(b)(i) above are paid to the relevant member For the purpose of this Article:- (a) (b) a person shall be treated as appearing to be interested in any shares if the member holding such shares has given to the Company a notification which either (a) names such person as having an Interest in Relevant Share Capital or (b) fails to establish the identities of those having an Interest in Relevant Share Capital in the shares and (after taking into account the said notification and any other relevant notification) the Company knows or has reasonable cause to believe that the person in question is or may have an interest in the Relevant Share Capital; the prescribed period in respect of any particular member is 28 days from the date of service of the said notice in accordance with Article 20.1 except where the Default Shares represent at least 0.25 per cent. of the class of shares concerned in which case such period shall be fourteen days; 19.9 Any shareholder who has given notice of an interested party in accordance with Article 20.2 who subsequently ceases to have any party interested in his shares or has any other person interested in his shares shall notify the Company in writing of the cessation or change in such interest and the Directors shall promptly amend the register of interested parties accordingly For the purposes of this Article 20, a transfer of shares is an "excepted transfer" if, but only if: (a) It is a transfer by way of, or in pursuance of, acceptance of a takeover offer for the Company meaning an offer to acquire all the shares, or all the shares of any class or classes, in the Company (other than shares which at the date of the offer are already held by the offeror), being an offer on terms which are the same in relation to all the shares to which the offer relates or, where those shares include shares of different classes, in relation to all the shares of each class; or 21

34 (b) (c) a transfer which is shown to the satisfaction of the Board to be made in consequence of a sale of the whole of the beneficial interest in the shares to a person that is not Connected with a member and with any other person appearing with or to be interested in the shares; or a transfer in consequence of a sale made through the London Stock Exchange plc or any stock exchange outside of the United Kingdom on which the Company's shares of the same class as the Default Shares are normally traded. 20. Company Seal and Entry into Contracts and Deeds 20.1 The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument (save for a share certificate in accordance with these Articles) shall be witnessed by a director or officer of the Company or any other person so authorised from time to time by the directors A contract may be entered into by the Company as follows: (a) (b) (c) a contract that, if entered into by an individual, would be required by law to be in writing and under seal, may be entered into by or on behalf of the Company in writing under the common seal of the Company, or executed by or on behalf of the Company by a director or an authorised agent of the Company, and may be varied or discharged in the same manner; a contract that, if entered into by an individual, would be required by law to be in writing and signed, may be entered into by or on behalf of the Company in writing and signed by a person acting under the express or implied authority of the company, and may be varied or discharged in the same manner; and a contract that, if entered into by an individual, would be valid although entered into orally, and not reduced to writing, may be entered into orally by or on behalf of the Company by a person acting under the express or implied authority of the Company, and may be varied or discharged in the same manner Notwithstanding the foregoing Article, an instrument is validly executed by the Company as a deed, or an instrument under seal, if it is either: (a) (b) sealed with the common seal of the Company and witnessed by a director of the Company and/or such other person who is authorised by the Memorandum or Articles to witness the application of the Company s seal; or expressed to be, or is expressed to be executed as, or otherwise makes clear on its face that it is intended to be, a deed and it is signed by a director and/or by a person acting under the express or implied authority of the Company. 21. Distributions 21.1 authorise a distribution dividends in money, shares, or other property by the Company at a time, and of an amount, and to any members they think fit if they are satisfied, on reasonable grounds that, immediately after the distribution, the value of the Company's assets will exceed the Company's liabilities and the Company is able to pay its debts as they fall due.. In the event that 22

35 dividends are paid in specie the directors shall have responsibility for establishing and recording in the Resolution of Directors authorising the dividends, a fair and proper value for the assets to be so distributed. No distribution shall be paid on those shares which are held by the Company as treasury shares at the date of declaration of the distribution The directors may, before recommending any distribution, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at their discretion, either be employed in the business of the Company or be invested in such investments as the directors may from time to time think fit If several persons are registered as joint holders of any share, any of them may give effectual receipt for any distribution or other monies payable on or in respect of the share Notice of any distribution that may have been declared shall be given to each member in manner hereinafter mentioned and all distributions unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company No distribution shall bear interest against the Company. 22. Company Records 22.1 The Company shall keep records that: (a) (b) are sufficient to show and explain the Company's transactions; and will, at any time, enable the financial position of the Company to be determined with reasonable accuracy The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine: (a) minutes of all meetings and all resolutions of members and of classes of members; and (b) minutes of all meetings and all resolutions of directors and committees of directors. Where any such records are kept at a place other than at the office of the Company s registered agent, the Company shall provide the registered agent with a written record of the physical address of the place or places at which the records are kept. Where the place at which any such records is changed, the Company shall provide the registered agent with the physical address of the new location of the records within fourteen days of the change of location The Company shall keep a register to be known as a register of directors containing the names and addresses of the persons who are directors of the Company, the date on which each person whose name is entered in the register was appointed as a director of the Company, the date on which each person named as a director ceased to be a director of the Company, and such other information as may be prescribed from time to time by law The Company shall maintain an accurate and complete register of members showing the full names and addresses of all persons holding registered shares in the Company, the number of each class and series of registered shares held by such person, the date on which the name of 23

36 each member was entered in the register of members and where applicable, the date such person ceased to hold any registered shares in the Company The Company shall keep the following at the office of its registered agent: (a) (b) (c) (d) (e) (f) the Memorandum and Articles of the Company; the register of members maintained in accordance with these Articles or a copy of the register of members; the register of directors maintained in accordance with these Articles or a copy of the register of directors; copies of all notices and other documents filed by the Company in the previous ten years; a copy of the register of charges kept by the Company pursuant to section 162(1) of the Act; and an imprint of the common seal Where the Company keeps a copy of the register of members or the register of directors at the office of its registered agent, it shall: (a) (b) (c) within 15 days of any change in the register, notify the registered agent, in writing, of the change; and provide the registered agent with a written record of the physical address of the place or places at which the original register of members or the original register of directors is kept. Where the place at which the original register of members or the original register of directors is changed, the Company shall provide the registered agent with the physical address of the new location of the records within 14 days of the change of location The records, documents and registers required by these Articles shall be open to the inspection of the directors at all times The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions the records, documents and registers of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right to inspect any records, documents or registers of the Company except as conferred by the Act or authorised by a Resolution of Directors. 23. Audit 23.1 The directors may by a Resolution of Directors call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed The auditor may be a member of the Company but no director or officer shall be eligible during his continuance in office. 24

37 23.3 Every auditor of the Company shall have a right of access at all times to the books of accounts of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company's audited profit and loss account and/or balance sheet is to be presented. 24. Notices 24.1 Any notice, information or written statement required to be given to members shall be served by mail (air-mail service if available) addressed to each member at the address shown in the share register All notices directed to be given to the members shall, with respect to any registered shares to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such shares Any notice, if served by post, shall be deemed to have been served within ten days of posting, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and mailed with the postage prepaid. 25. Arbitration 26.1 Whenever any difference arises between the Company on the one hand and any of the members or their executors, administrators or assigns on the other hand, touching the true intent and construction or the incidence of consequences of these Articles or of the Act, touching anything done or executed, omitted or suffered in pursuance of the Act or touching any breach or alleged breach or otherwise relating to the premises or to these Articles, or to any Act or Ordinance affecting the Company or to any of the affairs of the Company such difference shall, unless the parties agree to refer the same to a single arbitrator, be referred to 2 arbitrators one to be chosen by each of the parties to the difference and the arbitrators shall before entering on the reference appoint an umpire If either party to the reference makes default in appointment an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for 10 days after the other party has given him notice to appoint the same, such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party. 26. Continuation The Company may, by a Resolution of Directors or by a Resolution of Members, continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws. 27. Winding Up 27.1 The Company may be voluntarily liquidated under Part XII of the Act if it has no liabilities and it is able to pay its debts as they become due. A liquidator may, subject to the terms of the Act, be appointed by a Resolution of Directors or by a Resolution of Members. 25

38 27.2 If the Company shall be wound up, the liquidator may, in accordance with a Resolution of Members, divide amongst the members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any such property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributors as the liquidator shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability. 26

39 We, ICAZA, GONZALEZ-RUIZ & ALEMAN (BVI) TRUST LIMITED of Vanterpool Plaza, 2 nd Floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands for the purpose of disapplying Part IV of Schedule 2 of the BVI Business Companies Act, 2004 hereby sign these Articles of Association this 7 th day of June, Registered Agent Yexadira Garcia Authorised Signatory Icaza, Gonzalez-Ruiz & Aleman (BVI) Trust Limited 27

40 Dolphin_Cover 5/12/05 20:39 Page 1

41 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document and the action you should take, you are recommended immediately to seek your own advice from a person duly authorised under the Financial Services and Markets Act 2000 who specialises in the acquisition of shares and other securities. The Directors of Dolphin Capital Investors Limited, whose names appear on page 5 of this document, accept responsibility both individually and collectively for the information contained in this document including individual and collective responsibility for compliance with the AIM Rules. To the best of the knowledge of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect its import. This document, which constitutes an AIM admission document, has been drawn up in accordance with the AIM Rules. This document does not contain an offer of transferable securities to the public within the meaning of section 102B of the Financial Services and Markets Act 2000 (as amended) and is not required to be issued as a prospectus pursuant to section 85 of the Financial Services and Markets Act 2000 (as amended). Application has been made for the admission of the entire issued and to be issued share capital of the Company to trading on AIM, a market operated by the London Stock Exchange plc ( AIM ). It is expected that dealings in the Common Shares will commence on AIM on 8 December The rules of AIM are less demanding than those of the Official List of the United Kingdom Listing Authority. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the Official List of the United Kingdom Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Neither the United Kingdom Listing Authority nor the London Stock Exchange plc has examined or approved the contents of this document. It is emphasised that no application is being made for admission of these securities to the Official List of the United Kingdom Listing Authority. The Common Shares are not dealt on any other recognised investment exchange and no application has been or is being made for the Common Shares to be admitted to any such exchange. The whole of this document should be read. Attention is drawn in particular to the section entitled Risk Factors in Part 1 of this document. Dolphin Capital Investors Limited (an international business company incorporated in the British Virgin Islands with registration number ) Admission to trading on AIM and Placing of 104,000,000 Common Shares at 68p (A1.00) per share Nominated Adviser GRANT THORNTON CORPORATE FINANCE Broker PANMURE GORDON & CO Grant Thornton Corporate Finance, a division of Grant Thornton UK LLP which is regulated by the Financial Services Authority, is the Company s nominated adviser for the purposes of the AIM Rules and, as such, its responsibilities are owed solely to the London Stock Exchange plc and are not owed to the Company or any Director. Grant Thornton Corporate Finance will not be responsible to anyone other than the Company for providing the protection afforded to clients of Grant Thornton Corporate Finance or for advising any other person on the transactions and arrangements described in this document. No representation or warranty, expressed or implied, is made by Grant Thornton Corporate Finance or as to any of the contents of this document. Grant Thornton Corporate Finance has not authorised the contents of any part of this document. Panmure Gordon (Broking) Limited, which is regulated by the Financial Services Authority, is acting exclusively as the Company s broker in connection with the proposed admission of the Common Shares to trading on AIM and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Panmure Gordon for providing advice in connection with the matters set out in this document or any transaction or arrangement referred to herein. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. Your attention is drawn to the information contained on page 2 of this document under the heading Important Information. Copies of this document will be available free of charge during normal business hours on any weekday (except relevant public holidays) at the offices of Grant Thornton UK LLP, Grant Thornton House, Melton Street, Euston Square, London NW1 2EP for the period of one month from Admission.

42 IMPORTANT INFORMATION General No person has been authorised by the Company to issue any advertisement or to give any information or to make any representations in connection with the contents of this document and, if issued, given or made, such advertisement, information or representation must not be relied upon as having been authorised by the Company. This admission document does not constitute, and may not be used for the purposes of, an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. The distribution of this admission document may be restricted and accordingly persons into whose possession this document comes are required to inform themselves about and to observe such restrictions. Potential investors should not treat the contents of this admission document as advice relating to legal, taxation or investment matters. Potential investors should inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer or other disposal of Common Shares; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer or other disposal of Common Shares which they might encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the purchase, holding, transfer or other disposal of Common Shares. Potential investors must rely upon their own representatives, including their own legal advisers and accountants, as to legal, tax, investment or any other related matters concerning the Company and an investment therein. Statements made in this admission document are based on the law and practice currently in force in the British Virgin Islands and England and Wales and are subject to changes therein. This admission document should be read in its entirety. All Shareholders are entitled to the benefit of, and are bound by and are deemed to have notice of, the provisions of the Memorandum and Articles of Association of the Company. For the attention of United States Residents The Common Shares have not been and will not be registered under the US Securities Act of 1933, as amended, (the Securities Act ) or with any securities regulatory authority of any State or any other jurisdiction of the United States as defined in this document and, subject to certain exceptions, may not be offered, sold, transferred, assigned or delivered, directly or indirectly, within the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the Securities Act ( Regulation S )). In addition, the Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the Investment Company Act ) and investors will not be entitled to the benefits of that Act. The Investment Manager and the Administrator will not be required to register under the United States Investment Advisers Act of 1940, as amended. The Common Shares have not been approved or disapproved by the US Securities and Exchange Commission, any State securities commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of Common Shares or the accuracy or adequacy of this admission document. Any representation to the contrary is a criminal offence in the United States and re-offer or resale of any of the Common Shares in the United States or to US Persons may constitute a violation of US law or regulation. Any future applicants for Common Shares will be required to certify that they are not US Persons and are not subscribing for Common Shares on behalf of US Persons. Forward looking statements This document contains forward looking statements. These relate to the Company s future prospects, developments and strategies. Forward-looking statements are identified by their use of terms and phrases such as believe, could, would, envisage, estimate, intend, seek, may, plan, will or the negative of those, variations or comparable expressions, including references to assumptions. These statements are primarily contained in the section headed Summary Information and Parts 2 and 4 of this document. The forward looking statements in this document are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. 2

43 CONTENTS Page IMPORTANT INFORMATION CONTENTS... 3 EXPECTED TIMETABLE PLACING STATISTICS... 4 DIRECTORS, INVESTMENT MANAGER AND ADVISERS... 5 SUMMARY INFORMATION... 7 Part 1 RISK FACTORS Part 2 THE BUSINESS Introduction Product Focus Market Opportunity Investment Strategy The Prospective Investment Portfolio and Additional Investment Opportunities. 19 Investment Process Founding Shareholders Founding Shareholder Warrants Founding Shareholder Lock-in Agreements Part 3 DIRECTORS, INVESTMENT MANAGER AND ADMINISTRATION Directors of the Company Directors of the Investment Manager Investment Management Agreement Investment Management Fees The Administrator The Custodian Part 4 THE PROSPECTIVE INVESTMENT PORTFOLIO AND ADDITIONAL 27 INVESTMENT OPPORTUNITIES... Location Prospective Investment Portfolio Additional Investment Opportunities Part 5 OTHER INFORMATION Expenses Accounting Policies Shareholder Information Valuation Reporting and Policy Life of the Company Currency Issues and Cash Investment Further Issues of Common Shares Distributions to Shareholders Repurchase of Common Shares Part 6 COUNTRY PROFILES Part 7 THE PLACING Shares Subject to the Placing Placing Arrangements Lock-in Arrangements Admission, Settlement, Dealings and CREST Part 8 LETTER FROM ECONOMICS RESEARCH ASSOCIATES Part 9 ACCOUNTANTS REPORT UNAUDITED FINANCIAL INFORMATION ON DOLPHIN CAPITAL 44 INVESTORS LIMITED... Part 10 TAXATION Part 11 ADDITIONAL INFORMATION DEFINITIONS

44 EXPECTED TIMETABLE Publication of AIM admission document Admission of Common Shares to trading on AIM and commencement of dealings Delivery of Depositary Interests into CREST Where applicable, definitive share certificates in respect of the Common Shares despatched by December 8.00 a.m. on 8 December 8 December 15 December Save in relation to the date on which this document is published, each of the times and dates in the above timetable are subject to change. All references to time are to GMT. PLACING STATISTICS Placing Price 68p (A1.00) Number of Common Shares being issued pursuant to the Placing 104,000,000 Estimated initial Net Asset Value per Common Share on Admission Market capitalisation at the Placing Price on Admission Estimated net proceeds of the Placing receivable by the Company 0.65 (A0.96) 74,120,000 (A109,000,000) 67.9 million (A99.8 million) The Placing Price of 68p equates to A1.00 per Common Share based on an exchange rate of 68p to A1.00 as published by Bloomberg on 1 December 2005, being the last practicable date prior to the date of this document. This exchange rate has been used throughout this document. 4

45 DIRECTORS, INVESTMENT MANAGER AND ADVISERS Directors Investment Manager and Registered Office Nominated Adviser Broker Solicitors to the Company as to English Law Solicitors to the Company as to BVI Law Solicitors to the Placing Reporting Accountants Auditors Administrator Andreas Neophytou Papageorghiou (Chairman) Cecil Harold Nicholas Moy Cem Duna Antonios Achilleoudis Miltos Kambourides All non-executive and all of: Vanterpool Plaza 2nd Floor Wickhams Cay 1 Road Town Tortola British Virgin Islands Dolphin Capital Partners Limited Vanterpool Plaza 2nd Floor Wickhams Cay 1 Road Town Tortola British Virgin Islands Grant Thornton Corporate Finance Grant Thornton House Melton Street Euston Square London NW1 2EP United Kingdom Panmure Gordon (Broking) Limited Moorgate Hall 155 Moorgate London EC2M 6XB United Kingdom Lawrence Graham LLP 190 Strand London WC2R 1JN United Kingdom Maples & Calder Princes Court 7 Princes Street London EC2R 8AQ United Kingdom Travers Smith 10 Snow Hill London EC1A 2AL United Kingdom Grant Thornton UK LLP Explorer Building Fleming Way Manor Royal Crawley RH10 9GT United Kingdom KPMG Elma House 10 Mnasiadou Street 1065 Nicosia Cyprus 5

46 Custodian Registrar Depositary Property Valuer Anglo Irish Fund Services Limited Jubilee Buildings Victoria Street Douglas Isle of Man IM1 2SH Anglo Irish Bank Corporation (I.O.M.) P.L.C. Jubilee Buildings Victoria Street Douglas Isle of Man IM1 2SH Computershare Investor Services (Channel Islands) Limited Ordnance House 31 Pier Road St. Helier Jersey JE4 8PW Computershare Investor Services Plc PO Box 82 The Pavilions Bridgwater Road Bristol BS99 7NH United Kingdom Colliers International S.A. 18 Kifissias Ave Marousi, Athens Greece 6

47 SUMMARY INFORMATION The attention of potential investors is drawn to the Risk Factors set out in Part 1 of this document. The Common Shares are only suitable for investors who understand the potential risk of capital loss and for whom an investment in the Common Shares constitutes part of a diversified investment portfolio and who fully understand and are willing to assume the risks involved in investing in the Company. This information is derived from and should be read in conjunction with the full text of this document. Introduction Dolphin Capital Investors Limited is a limited liability, closed-ended, BVI incorporated real estate investment company. The investment objective of the Company is to provide Shareholders with an attractive level of capital growth through investing in sophisticated residential resort developments in Southeast Europe (principally Greece, Cyprus, Turkey and Croatia) in partnership with leading developers and operators. These developments integrate residential units with leisure facilities (such as hotels, golf courses, polo fields, country clubs, spas and marinas). Following almost two years of dedicated market research and deal-sourcing by the Founding Partners of the Investment Manager, the Company was established in June 2005 and was capitalised with A5 million subscribed by the Founding Shareholders which include the Investment Manager and Fortress Investment Group. The Investment Manager has agreed terms and is now in the process of finalising, on behalf of the Company, the contractual documentation relating to the Company s investment in six Projects which comprise the Prospective Investment Portfolio. Completion of these investments would require a minimum aggregate capital commitment of approximately A66 million. The Directors believe that the aggregate market value of the Company s interests in the Prospective Investment Portfolio at acquisition will be significantly greater than the Company s anticipated cost of investment. The Company will not invest in a Project unless it is expected to achieve an IRR of at least 25 per cent. A typical Project is anticipated to generate an IRR of between 25 and 45 per cent. 67,864,000 (A99,800,000), after expenses, is being raised by the Company for investment in the Prospective Investment Portfolio and other potential investment opportunities that are currently being negotiated. New Shareholders are investing in the Company at the same price per Common Share as the Founding Shareholders. Investment Environment The Directors and the Investment Manager believe that the demand from Northern Europe for properties in Residential Resorts, historically enjoyed by Spain and Portugal, is now apparent in the less developed region of Southeast Europe. While such demand is expected to grow further over the next five years, supply is expected to remain limited due to the time required to complete these Projects. The Directors and the Investment Manager believe that the Company is the first dedicated investment vehicle to focus exclusively on investing in Residential Resorts in Southeast Europe and that the Investment Manager is in discussions in connection with the majority of sophisticated Residential Resorts that are expected to be launched in the next year in Greece and Cyprus. The Directors and the Investment Manager further believe that the current lack of a competitive investment environment, coupled with the strategic value that the Investment Manager brings to Projects, should allow the Company to continue to negotiate investments in the forseeable future at attractive valuations and with limited competitive pressure. Investment Strategy The Projects targeted by the Investment Manager are sophisticated residential developments that combine a large number (typically several hundred) of residential units (villas, town houses, apartments) with leisure components such as hotels, golf courses, polo fields, country clubs, spas, marinas or other leisure facilities. The Company s strategy is to engage the most capable partners for each Project. The Investment Manager maintains working relationships with some of the leading regional and international developers and operators of proven ability who are active in the Region. The Company intends to invest in Projects at an early development stage or in strategic land sites that can be acquired at a discount to open market value at current usage. It is expected that the majority of the Company s investments will be in Greece, Cyprus, Turkey and Croatia. The Company may also invest in Projects in neighbouring countries, should the Directors 7

48 consider that such investments would be complementary to the Company s investment portfolio or offer attractive investment returns. The Project investments will have a pre-determined exit route, being the sale of the residential component usually expected within a 5 year time frame, typically on an off-plan basis. The residential units will normally be sold through the developers or operators network, international real estate marketing agents or residence clubs. The Company however aims to realise individual Project investments at any stage of their development as the opportunity arises. The investment returns that the Investment Manager is targeting rely only on the proceeds from the sale of the residential units and not on the operation or sale of the leisure components. Prospective Investment Portfolio and Additional Investment Opportunities The Company has utilised its initial funds to advance a number of investment opportunities in the Region, six of which comprise the Prospective Investment Portfolio. A substantial proportion of the net proceeds of the Placing will be used to fund the Company s expected capital commitments to Projects within the Prospective Investment Portfolio. The Prospective Investment Portfolio comprises four Projects located in Greece and two Projects located in Cyprus, further details of which are set out in Part 4 of this document. Completion of these investments would require a minimum aggregate capital commitment of approximately A66 million. The Directors and the Investment Manager believe that all of these Projects have the potential to become amongst the best conceived Residential Resorts in the Region. The completion of each investment in the Prospective Investment Portfolio depends not only upon the completion of the Placing but also, amongst other things, upon satisfactory completion of due diligence into each of the prospective Project companies and their respective land sites and the execution and delivery of binding agreements in a form mutually satisfactory to the parties. There can be no guarantee that the Company will complete all or any of these investments. In addition to the Prospective Investment Portfolio, the Investment Manager is negotiating a number of additional investment opportunities that meet the Company s investment strategy and that have the potential to be completed within 12 months following Admission and absorb additional capital commitments of approximately A127 million, subject to funds being available to the Company. A summary of the additional investment opportunities is also set out in Part 4 of this document. Investment Process The Investment Manager carefully selects a limited number of investment opportunities by adhering to a thorough investment process that includes extensive market research and due diligence. The Investment Manager specialises in matching leading local developers with its international network of sophisticated operators, designers, master-planners and marketing agents. The Investment Manager aims to take a hands-on investment management approach towards all Projects and work with its partners to create maximum value throughout the development and realisation process by utilising its financial skills and access to an extensive network of debt providers and investors. The Company intends to commit to the Projects the minimum amount of capital required to purchase the land and/or to finance the Project s initial infrastructure (such as roads, utilities, landscaping and leisure components). Capital is typically provided in stages as the planning and development process progresses. The Company seeks to protect itself from planning or other development risks by only investing in (a) Projects that have the required permits in place (b) land options or (c) land sites at a price below their market land value and with sufficient planning visibility. The Company aims to optimise the capital and tax structure of its investments through efficient use of equity, bank debt and participating loans and by investing through special purpose vehicles for each Project. Most of the Project s development costs will be funded via pre-sales of the residential units and construction loans secured on the land. Each Project s debt commitments will be ringfenced in the special purpose vehicle with no recourse to the Company. The Directors do not currently anticipate that the Company itself will borrow any funds. Founding Shareholders The Company was capitalised with A5 million in the summer of 2005 by institutional and private investors including the Investment Manager. The lead investor was Fortress, a world-leading investor in real estate private equity with approximately $15 billion of equity capital currently under management. Wes Edens, Chairman and co-founder of Fortress, Rob Kauffman, President and cofounder of Fortress and three other Fortress managing partners invested personally in the Company. 8

49 In June 2005, Fortress listed one of its wholly-owned real estate companies, Mapeley Limited, on the London Stock Exchange and Mapeley Limited thereby became one of the largest real estate companies quoted in the UK with a market capitalisation of approximately 575 million. While at Soros Real Estate Partners, Miltos Kambourides, the founder and managing partner of the Investment Manager, was the deal leader in relation to the establishment of Mapeley Limited, which was a co-investment between Soros Real Estate Partners and Fortress until early 2005 when Fortress acquired full ownership of Mapeley Limited. Miltos Kambourides was the financial architect of the two major real estate outsourcing deals that Mapeley Limited currently has under management. Investment Manager The principals of the Investment Manager possess a combination of extensive local knowledge and contacts together with an international network of professionals and real estate investment expertise gained at some of the most reputable financial institutions in the world, such as Soros, Goldman Sachs, JP Morgan, Citibank, CSFB and GE Capital. The Investment Manager s four senior investment professionals have collectively over 40 years of relevant investment experience. Miltos Kambourides was a co-founding partner of Soros Real Estate Partners which has been one of the biggest foreign investors in the master-planned leisure-integrated residential sector in Spain achieving returns in excess of the minimum returns currently targeted by the Company. Board of Directors of the Company The Board of Directors of the Company comprises four independent non-executive Directors and Miltos Kambourides. Further details of each Director s background are set out in Part 3 of this document. Distributions The Company s intention is to maximise the IRR of each Project and therefore it intends to return capital profits as soon as they are realised. For the first three years following Admission only, the profits realised from Projects (net of any performance fees due) could be made available for reinvestment into further Projects as determined by the Board. It is the intention that the Investment Manager will utilise the net proceeds of the Placing to progress and complete the Company s investments in the Prospective Investment Portfolio. To the extent that the Company has sufficient funds available; either from the balance of the seed capital of the Company and the net proceeds of the Placing, or arising from potential further fund raisings or, as explained above, from the realisation of its investments in the first three years; it will use these to progress other investment opportunities. Life of the Company The Company does not have a fixed life, however, shortly before the tenth anniversary of Admission (or earlier if appropriate) the Board will convene a Shareholders meeting at which a resolution will be proposed to determine the future of the Company. Management Fees and Admission Expenses The Investment Manager will receive an annual management fee payable quarterly in advance of 2 per cent. per annum of the total funds raised by the Company (being initially the gross proceeds of the Placing and the A5 million subscribed by the Founding Shareholders). The Investment Manager will also be paid a performance fee equal to 20 per cent. of the net realised cash profits received by the Company from each Project, after achieving a hurdle of 8 per cent. annual compounded return. The performance fee is subject to escrow and claw-back provisions (described in Part 3 of this document) and is structured to fully align the interests of the Investment Manager with those of Shareholders. The Company will be incurring costs in connection with the Placing and the application for Admission. These expenses will be met by the Company. Such expenses will include fees payable under the Placing Agreement, registrar s fees, depositary s fees, admission fees, printing costs, legal, advisory and accounting fees and any other applicable expenses. The Directors do not anticipate that these expenses will exceed 4.0 per cent. of the gross proceeds of the Placing. There are no upfront fees payable to the Investment Manager. 9

50 Founding Shareholder Warrants The Founding Shareholders provided the initial equity capital necessary to establish the Company and to fund the cost of negotiating and advancing a number of investment opportunities including the Prospective Investment Portfolio. The Directors believe that the aggregate market value of the Company s interests in the Prospective Investment Portfolio at acquisition will be significantly greater than the Company s cost of investment. In recognition of the fact that new Shareholders will be investing in the Company at the same price per Common Share as the Founding Shareholders, the Company has issued the Founding Shareholder Warrants. The Investment Manager owns 20 per cent. of the Founding Shareholder Warrants. The Founding Shareholder Warrants entitle the Founding Shareholders to subscribe, at par value per Common Share of A0.01, for such number of Common Shares (capped at 12.5 million Common Shares) which when multiplied by the Placing Price of 68 pence (A1.00) equals 50 per cent. of the difference between the market value of the Company s legal interests in the Prospective Investment Portfolio at acquisition and its cost of investment. The valuation of the Company s legal interests in the Prospective Investment Portfolio will be carried out by the Property Valuer, as at 30 June 2006, and this valuation will then be approved by the Board. The Founding Shareholders have also entered into individual lock-in agreements in relation to their Common Shares which prevent them from disposing of such shares until the date on which the Founding Shareholder Warrants lapse. The Placing 67,864,000 (A99,800,000), after expenses, is being raised by the Company for investment in the Prospective Investment Portfolio and other potential investment opportunities that are currently being negotiated. The Placing Price is 68 pence (A1.00) per Common Share. Pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed, as agent of the Company, to use its reasonable endeavours to procure subscribers for all of the Placing Shares. The Placing is not being underwritten. 10

51 PART 1 RISK FACTORS Investment in the Company constitutes a high risk investment and prospective purchasers of Common Shares should carefully evaluate the factors set out below. Investment in the Company should be regarded as speculative and, given the inherent illiquidity of the Company s proposed underlying property assets, should be considered long term in nature and suitable only for sophisticated investors who understand the risks involved, including the risk of a total loss of capital. THE COMPANY The Company operates in a market which may become competitive for investment opportunities It is possible that some entities may in the future compete with the Company to make the types of investments that the Company intends to make. In some instances, the Company may compete with wealthy local entrepreneurs and other sources of financing, including traditional financial services companies such as commercial banks and speciality finance companies. There can be no assurance that the Company will not, in the future, face competitive pressures that could have a material adverse effect on the Company s investment returns. Also, as a result of this potential competition, the Company may not be able to take advantage of attractive investment opportunities from time to time, and the Company can offer no assurance that it will be able to identify and make investments that are consistent with the Company s investment strategy, or that it will be able to fully invest its available capital. The Company may experience fluctuations in its results The Company may experience fluctuations in its operating results due to a number of factors, including the rate at which the Company makes new investments, the interest rates payable on debt capital to fund the Projects, the level of expenses, variations in and the timing of the recognition of realised and unrealised gains or losses, the degree to which it encounters competition in its markets and general economic conditions. Accordingly, results for any period should not be relied upon as being indicative of performance in future periods. Life of the Company Shortly before the tenth anniversary of Admission, the Board will convene a Shareholders meeting at which a resolution will be proposed to wind-up the Company. Unless Shareholders vote to wind-up the Company, Shareholders will only be able to realise their investment by selling their Common Shares. Future issues of Common Shares could dilute the interest of existing Shareholders and lower the price of the Common Shares The Company may issue additional Common Shares without limitation. The Company is not required under BVI law to offer any such Common Shares to existing Shareholders on a pre-emptive basis. Therefore, it may not be possible for existing Shareholders to participate in such future issues of Common Shares, which would dilute the existing Shareholders interests in the Company. The issue of additional Common Shares by the Company, or the possibility of such issue, may cause the market price of the Common Shares to decline. However, it should be noted that the Company cannot issue further Common Shares at a subscription price that is less than the prevailing Net Asset Value per Common Share. THE INVESTMENT MANAGER The Company s financial condition and results of operations will depend on its, and the Investment Manager s ability to manage investments effectively The Company s ability to implement its investment strategy will depend on the Investment Manager s ability to identify, analyse, invest in and finance Projects that meet the Company s investment criteria. Accomplishing this result on a cost-effective basis is largely a function of the Investment Manager s structuring of the investment process, its ability to provide competent, attentive and efficient services to the Company and the Company s access to financing on acceptable terms. Failure by the Investment Manager to manage investments effectively could have a material adverse effect on the Company s business, financial condition and results of operations. The Company s performance is dependent on the Investment Manager, and the Company may not find a suitable replacement if the Investment Manager terminates the Investment Management Agreement, ceases to operate or its principals leave 11

52 The Company has no employees and no separate facilities and is reliant on the Investment Manager, which has significant discretion as to the implementation of the Company s operating policies and strategies. The Company is subject to the risk that the Investment Manager will terminate the Investment Management Agreement and that no suitable replacement will be found or exists. In addition, the Directors believe that the Company s success depends to a significant extent upon the experience of the Investment Manager s executive officers (particularly Miltos Kambourides and Pierre Charalambides), whose continued service is not guaranteed. The departure of a key executive of the Investment Manager may have an adverse effect on the performance of the Company. REGULATORY Changes in laws or regulations governing the Group s operations may adversely affect the Company s business The Company and its investments will be subject to regulation and laws imposed by the countries in which they operate. These laws and regulations, as well as their interpretation, may be changed from time to time. Accordingly, any change in these laws or regulations could have a material adverse effect on the Company s business. Limited regulatory control The holders of the Common Shares will not enjoy any protections or rights other than those reflected in the Articles and those rights conferred by the AIM Rules and applicable law. Neither the Listing Rules nor the Disclosure Rules of the FSA nor the Combined Code on Corporate Governance issued by the Financial Reporting Council will apply to the Company. Shareholders will not be entitled to the takeover offer protections provided by the City Code on Takeovers and Mergers The City Code applies, inter alia, to offers for all listed public companies considered by the Panel on Takeovers and Mergers to be incorporated or resident in the United Kingdom, the Channel Islands or the Isle of Man. The Company will not be so incorporated or resident and therefore Shareholders will not receive the benefit of the takeover offer protections provided by the City Code. See paragraph 4.13 of Part 11 of this document for details of BVI law on takeovers. Legal systems and enforcement in the Region The relevant legal systems in the various countries in the Region may not afford to the Company the same level of certainty in relation to issues such as title to property-related rights as may be achieved in more developed markets. Enforcement of legal rights in the Region may prove expensive and difficult to achieve. Taxation The Company and/or Shareholders may in the future be subject to income or other tax in the jurisdictions in which investments are made. Additionally, withholding tax or branch tax may be imposed on earnings of the Company from investments in such jurisdictions. Local tax incurred in other jurisdictions by the Company or vehicles through which it invests may not be creditable to or deductible by Shareholders in their respective jurisdictions. If under BVI law there were to be a change to the basis on which dividends could be paid by BVI companies, this could have a negative impact on the Company s ability to pay dividends. Any change in the Company s tax status or in taxation legislation could affect the value of the investments held by and the performance of the Company. Representations in this document concerning the taxation of investors in Common Shares are based upon current tax law and practice which is subject to change. The attention of investors is drawn to Part 10 of this document which contains further information on taxation. Enforcement of judgements in the BVI As a Company incorporated under the IBCA, the rights of Shareholders will be governed by BVI law and the Company s Memorandum of Association and Articles. The rights of Shareholders under BVI law differ from the rights of Shareholders of companies incorporated in other jurisdictions. For example, there are very limited statutory protection rights for minority shareholders. Any final and conclusive monetary judgment obtained against the Company in the courts of England and Wales or those countries listed in the BVI Reciprocal Enforcement of Judgements Act (Cap. 65) 1991, for a definite sum, may be registered and enforced as a judgment of the BVI court if application is made for registration of the judgment within twelve months or such longer period as the court may allow, and if the BVI court considers it just and convenient that the judgment be so 12

53 enforced. Alternatively, the judgment may be treated as a cause of action in itself so that no retrial of the issues would be necessary. In either case, it will be necessary that in respect of the foreign judgment: 1. the foreign court issuing the judgment had jurisdiction in the matter and the judgment debtor either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process; 2. the judgment given by the foreign court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the Company; 3. in obtaining judgment there was no fraud on the part of the person in whose favour judgment was given, or on the part of the foreign court; 4. recognition or enforcement of the judgment in the BVI would not be contrary to public policy; 5. the proceedings pursuant to which judgment was obtained were not contrary to natural justice; and 6. the judgment given by the foreign court is not the subject of an appeal. Any final and conclusive monetary judgment obtained against the Company in the courts of all countries not covered the BVI Reciprocal Enforcements of Judgements Act (Cap. 65) 1991 for a definite sum, may be treated by the courts of the BVI as a cause of action in itself so that no retrial of the issues would be necessary provided that in respect of the foreign judgment: 1. the foreign court issuing the judgment had jurisdiction in the matter and the Company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process; 2. the judgment given by the foreign court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the Company; 3. in obtaining judgment there was no fraud on the part of the person in whose favour judgment was given or on the part of the court; 4. recognition or enforcement of the judgment in the BVI would not be contrary to public policy; and 5. the proceedings pursuant to which judgment was obtained were not contrary to natural justice. Regulatory status of the Investment Manager The Investment Manager will not (nor will its personnel) be subject to regulation by the FSA or any other financial services regulator. Accordingly, the Investment Manager will not be subject to the requirements applicable to persons who are authorised by the FSA to provide investment management and similar services in the United Kingdom. RISKS RELATING TO AIM Risk attaching to the market in Common Shares Since the Common Shares have not previously traded, their market value is uncertain. There can be no assurance that the market will value the Common Shares at the Placing Price. Following Admission the market price of the Common Shares may be volatile and may go down as well as up and investors may therefore be unable to recover their original investment. The Company s operating results and prospects from time to time may be below the expectations of market analysts and investors. At the same time, stock market conditions may affect the Common Shares regardless of the operating performance of the Company. Stock market conditions are affected by many factors, such as general economic outlook, movements in or outlook on interest rates and inflation rates, currency fluctuations, commodity prices, changes in investor sentiment towards particular market sectors and the demand and supply of capital. Accordingly, the market price of the Common Shares may not reflect the underlying value of the Company s net assets, and the price at which investors may dispose of their Common Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company while others of which may be outside the Company s control. Lack of liquidity of the Common Shares Although the Company has applied for the Common Shares to be admitted to trading on AIM, no assurance can be given that at any time after Admission a liquid market for the Common Shares will develop. In the future, Shareholders who need to dispose of their Common Shares may be forced to do so at prices that do not fully reflect the Net Asset Value per Common Share. 13

54 AIM Application has been made for the Common Shares to be admitted to AIM, a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. An investment in shares quoted on AIM may carry a higher risk than an investment in shares quoted on the Official List. AIM has been in existence since June 1995 but its future success, and liquidity in the market for the Company s securities, cannot be guaranteed. UNDERLYING INVESTMENTS Gearing Some of the Project companies may utilise a leveraged capital structure, in which case a third party would be entitled to cash flow generated by such investments prior to the Company receiving a return. While such leverage may increase returns or the funds available for investment by the Project company, it also will increase the risk of loss on a leveraged investment. If the Project company defaults on secured indebtedness, the lender may foreclose and the Project company could lose its entire investment which may have been used as security for such loan. Nature of investment in the Company Investment in the Company requires a long term commitment, with no certainty of return. Many of the Company s investments might be illiquid, and there can be no assurance that the Company will be able to realise financial returns on such investments in a timely manner. There may be little or no near term cash flow available to Shareholders. Partial or completed sales, transfers, or other dispositions of investments which may result in a return of capital or the realisation of gains, if any, are generally not expected to occur for a number of years after an investment is made. Risk of limited number of investments The Company may participate in a limited number of investments and, as a consequence, the aggregate return of the Company may be substantially adversely affected by the unfavourable performance of even a single investment. Other than as set forth above, investors have no assurance as to the degree of diversification in the Company s investments, either by geographic region or asset type. General real estate risks Investments will be subject to the risks inherent in the ownership and operation of real estate and real estate related businesses and assets. Risks include those associated with general economic climate, local real estate conditions, changes in supply of, or demand for, competing properties in an area, energy and supply shortages, various uninsured or uninsurable risks, natural disasters, government regulations, changes in real property taxes and interest rates. As a result, a downturn in the real estate sector or the materialisation of any one or a combination of the aforementioned risks could materially adversely affect the Company. Development risks The Company may acquire interests in real estate projects and/or in businesses that engage in real estate development. To the extent that the Company invests in such development activities, it will be subject to the risks normally associated with such activities such as cost overruns. Projects under development may generate little or no cash flow from the date of acquisition through to the date of completion of development, if completed, and may experience operating deficits after the date of completion. Investments with third parties in joint ventures and other entities The Company intends to co-invest with third parties through special purpose vehicles and may acquire non-controlling interests. Although the Company may not have control over these investments and therefore, may have a limited ability to protect its position therein, the Investment Manager expects that appropriate rights will be negotiated to protect the Company s interests. Nevertheless, such investments may involve risks not present in investments where a third party is not involved, including the possibility that a third party partner or co-venturer may have financial difficulties resulting in a negative impact on such investment, may have economic or business interests or goals which are inconsistent with those of the Company, or may be in a position to take action contrary to the Company s investment objectives. In addition, the Company may in certain circumstances be liable for the actions of its third party partners or co-venturers. 14

55 Developer and counterparty risk If projected returns on investment properties are not met or if special purpose vehicles in which the Company has invested become insolvent, the Company may lose some or all of its investment. Developers may become insolvent and fail to complete a development in which the Company has invested. Although deposit amounts are generally held in escrow, they might not be in all cases and developer insolvency may result in loss to the Company. Counterparties to whom the Company sells investment properties may default on payment of the purchase price. THE REGION Regional real estate risks In certain of the countries in the Region land ownership rights may not be appropriately registered with the respective land registry authorities and may give rise to ownership disputes for wrongful misappropriation. Risk of military conflict Some countries of the Region have in the previous decades been involved in military conflict and there is no guarantee that future events and circumstances will not again result in military conflict. Risk of political instability Investments in the Region can be subject to political risk. Non-European Union countries may have not yet formulated clear policies or established legislative frameworks from which to regulate rapidly developing sectors. As these countries continue to develop legislation, existing laws may be changed. Legislative changes and international initiatives Changes in government regulations and policies of the BVI, Cyprus, Turkey, Greece and Croatia and international initiatives of organisations such as the Organisation for Economic Co-operation and Development and the Financial Action Task Force aimed at offshore jurisdictions may adversely affect the financial performance of the Company. RISKS ASSOCIATED WITH THE PROSPECTIVE INVESTMENT PORTFOLIO No guarantee that investments will be made Although the Company has entered into preliminary agreements in respect of some of the Projects within the Prospective Investment Portfolio there can be no guarantee that the Company will ultimately be able to invest in any of the Projects comprised within the Prospective Investment Portfolio on terms satisfactory to it or at all. Investments in the Prospective Investment Portfolio will be conditional, amongst other things, on the Company being able to finance its commitments to a particular Project, satisfactory completion of due diligence, and the entering into of binding agreements in a form satisfactory to all the parties thereto including the Company. GENERAL Currency and inflation risk and hedging policies Although the Company s funds will be converted into and held in Euros, some of its investments are expected, at least initially, to be made in other currencies. Thus, the Company s investments may be subject to currency and inflation risks. The Company intends to consult with reputable local and/or international financial institutions on an ongoing basis to minimise the negative effects of such risks. In instances where currency is perceived to be a substantial risk factor, the Investment Manager may attempt, but is not obliged, to structure investments using Euro-denominated financial structures or hedging instruments that might help mitigate such risks. In connection with certain investments, the Company may employ hedging techniques designed to protect itself against adverse movements in currency and/or interest rates and other risks. While such transactions may reduce certain risks, such as unanticipated changes in interest rates, securities prices, or currency exchange rates, they may result in a poorer overall performance for the Company than if it had not entered into such hedging transactions. The foregoing factors are not exhaustive and do not purport to be a complete explanation of all the risks and significant considerations involved in investing in the Company. Accordingly and as noted above, additional risks and uncertainties not presently known to the Directors, or that the Directors currently deem immaterial, may also have an adverse effect on the Company s business. 15

56 PART 2 THE BUSINESS Introduction Dolphin Capital Investors Limited is a limited liability, closed-ended, BVI incorporated real estate investment company. The investment objective of the Company is to provide Shareholders with strong capital growth combined with a low risk profile through investing in sophisticated leisure-integrated residential resort developments in Southeast Europe (principally Greece, Cyprus, Turkey and Croatia) in partnership with leading developers and operators. The Company s assets are managed by Dolphin Capital Partners Limited, an investment management company incorporated in the BVI in February The business was founded in April 2004 by Miltos Kambourides and Pierre Charalambides after leaving Soros Real Estate Partners, and has exclusively focused on sourcing and negotiating investment opportunities in the Region. The Investment Manager is using its experience, and what it believes is its first mover advantage, to select the best investment opportunities in the Region, to become the preferred source of capital to developers of Residential Resorts and to achieve strong capital appreciation by aligning the Company s interests with them. Since incorporation on 7 June 2005, the Company has raised A5 million of seed capital from the Founding Shareholders. The Company has utilised these funds to advance a number of investment opportunities in the Region, six of which comprise the Prospective Investment Portfolio. Completion of these investments would require a minimum aggregate capital commitment of A66 million. The Directors believe that the aggregate market value of the Company s interests in the Prospective Investment Portfolio at acquisition will be significantly greater than the Company s anticipated cost of investment. The Company s anticipated commitments to Projects within the Prospective Investment Portfolio will be met out of the proceeds of the Placing. The Investment Manager is also negotiating a number of additional investment opportunities in the Region that meet the Company s investment strategy, which could be executed in the next 12 months following Admission and absorb additional capital commitments of approximately A127 million, subject to funds being available to the Company. Product Focus The investments targeted by the Investment Manager are Master-planned Leisure-integrated Residential Resorts. These are sophisticated developments and include a large number (typically several hundred) of holiday, second or retirement home units (villas, town houses, apartments) integrated with a combination of leisure components such as hotels, golf courses, polo fields, country clubs, spas, marinas or other facilities. These Projects are typically located by or close to the sea, in an attractive natural landscape and within driving distance from an airport. They also offer comprehensive community services such as security, maintenance, facilities and property management and replicate a product that has proved popular and has experienced success in Southwest Europe and the US. The Directors and the Investment Manager believe that residential property buyers from Northern Europe and Russia typically prefer Residential Resorts over single residential property units because these developments offer a high-quality standard of living without the burden of maintenance and dealing with local authorities and service providers. An added attraction for buyers is the potential to generate rental income from the resort s management company while the residential unit is not in use. The Directors and the Investment Manager believe that the countries which offer the most attractive locations for such Projects are Greece, Cyprus, Turkey and Croatia. The Company s investment activity is concentrated on these four countries with particular emphasis being given to Greece and Cyprus. The Company may also invest in Projects in neighbouring countries, should the Directors consider that such investments would be complementary to the Company s investment portfolio or offer attractive investment returns. Market Opportunity Although demand for holiday, second or retirement homes in Southeast Europe has always existed, the Directors believe that a confluence of current trends will cause such demand to grow significantly. Firstly, the number of retirees in Northern Europe is growing rapidly and these retirees are increasingly moving overseas often incentivised by the pensions policy their own government. According to a report by Alliance & Leicester (entitled The New Age of Retirement Migration ), in 16

57 excess of 2.3 million people aged over 50 are expected to leave the United Kingdom over the next seven years to retire abroad. Secondly, retirees and holiday and second home buyers are also becoming increasingly mobile, in particular within the European Union. Thirdly, there is growing demand from Russia. Finally, the Directors anticipate a shift in demand to Southeast Europe as the traditional markets of Southern France, Spain and Portugal are becoming over-developed and expensive. In terms of supply, the Directors believe that Southeast Europe has considerable scope for Masterplanned Leisure-integrated Residential Resorts. The Directors believe there is currently only one completed Project in the Region, Aphrodite Hills ( located in Cyprus, which has enjoyed strong demand, achieving residential sales prices at least two times those originally planned. In Southwest Europe (Spain and Portugal) more than two hundred such Projects have been successfully developed. As illustrated by the following table, simply by virtue of a comparison of key measurements such as tourist arrivals, land size, shoreline, international airports, availability of beaches, golf courses and completed projects with golf, the Directors and the Investment Manager believe that Southeast Europe could sustain today more than one hundred such Projects. Indicators Southwest Europe (Spain and Portugal) Southeast Europe (Greece, Cyprus, Turkey and Croatia) Tourist arrivals (2004) Growth in tourist arrivals from million 3% 43 million 10% Area 597,000 m 2 978,000 m 2 Shoreline 6,757 km 27,359 km International airports (2004) Number of Blue Flag beaches (2005) Golf courses (2004) Completed projects with golf (2004) 200+ (estimated) 1 The Directors and the Investment Manager believe that, in terms of regional competitiveness, Southeast Europe is now very well positioned to offer a highly attractive product as the Region has many advantages, including: * availability of undeveloped seafront locations at attractive prices; * unspoilt nature, clean waters and historic sites; * excellent climate and a long season; * hospitable culture and low crime rates; * upcoming golf destinations; * low cost bases regarding land, labour and construction costs and living expenses (Turkey and Croatia); * improving infrastructure and transportation; * EU convergence (Turkey and Croatia); * increasing political and economic stability; * significant recent rise in tourism; and * enhanced profile resulting from the Athens 2004 Olympics. Due to the size, the profile and the time required for launching and completing such Projects, potential future supply is very visible. The Directors and the Investment Manager believe that no more than 20 such Projects will be launched in the next one to two years in Greece and Cyprus and that the Investment Manager is in discussions in connection with the majority of them. The Company aims to capitalise on what the Directors and the Investment Manager believe to be a compelling demand versus supply imbalance that exists today and benefit from the evolution of the market which is at a stage that resembles Spain and Portugal in the mid-1990s after the Barcelona 1992 Olympics. Investment Strategy The Directors and the Investment Manager believe that Dolphin Capital Investors Limited is the first dedicated investment vehicle to focus exclusively on investing in Residential Resorts in Southeast Europe. Further, the Directors and the Investment Manager believe that the current lack of a competitive investment environment, coupled with the strategic value that the Investment Manager brings to the Projects, should allow the Company to continue to negotiate investments in the foreseeable future at attractive valuations and with limited competitive pressure. 17

58 The Company s strategy is to engage the most capable partners for each Project. The Investment Manager maintains working relationships with some of the leading regional and international developers and operators of proven ability who are active in the Region. The Company intends to invest in Projects at an early development stage or in strategic land sites that can be acquired at a discount to open market value at current usage. The Company s investments will be made through special purpose vehicles established specifically for each Project. The Company will either control these vehicles or have minority interest protection rights. As part of the due diligence process on each prospective investment, the Investment Manager will obtain a valuation from a third party property valuer, such as Colliers International, of the land owned or to be acquired by the relevant Project company. The Company will typically invest in Projects at an entry price which is lower than the relevant market value of the land. The Company seeks to minimise planning or other development risks by investing into (a) Projects with all permits in place, (b) land options, or (c) land sites at a price below market value and with sufficient planning visibility. In most cases, the Company will have a right to demand a refund of its investment if planning permission is not granted within a specified timetable and its investment will be secured over all the shares or land of the Project company. Each Project should be substantial enough to generate residential unit sales of at least A50 million and require at least a A5 million capital commitment from the Company. The Company will not invest in Projects unless the Directors and the Investment Manager believe that they will generate a minimum IRR of 25 per cent. A typical Project is anticipated to generate an IRR of between 25 and 45 per cent. The targeted investment return relies only on the proceeds from the sale of the residential units and not on the operational income or sale of the leisure component. The residual leisure assets such as golf courses, hotels, polo fields, country clubs, spas and marinas and other leisure facilities will typically be sold to other investors, or returned to the developers at a pre-agreed price, or passed on to the residents. The Company s investments in Residential Resorts will have a pre-determined exit route, being the sale of the residential component usually expected within a 5 year time frame typically on an off-plan basis. The residential units will normally be sold through the developers or operators network, international real estate marketing agents or residential clubs. The Company will aim to realise individual Project investments at any stage of their development as the opportunity arises. Other possible exit routes include (a) the sale of the land or parts of it to other developers when all the permits are in place, (b) the sale of shares in the Project company to other investors, (c) the refinancing of a Project based on the future sales proceeds when the residential unit pre-sales are concluded, or (d) the listing of the Project company on a stock exchange. The Directors believe that the Investment Manager s regional approach will enable the Company to (a) diversify risk, (b) generate cross-border partnerships and local know-how transfer among development partners, (c) reduce costs (as duplication could be eliminated in certain cost aspects of developments), and (d) create scale and support a pan-european marketing distribution network promoting a wider product range. Furthermore, most international developers and operators are typically more interested in doing business regionally rather than locally. The Directors and the Investment Manager believe that the Company s investment approach offers an attractive risk/reward profile to Shareholders in a compelling market environment at an optimal time for investment in residential resort developments in Southeast Europe. Prospective Investment Portfolio and Additional Investment Opportunities Starting with dedicated regional market research and network building while at Soros Real Estate Partners, and following extensive deal-sourcing and negotiations since its business was founded in April 2004, the Investment Manager has agreed terms and is now finalising the contractual documentation relating to six investments (collectively comprising the Prospective Investment Portfolio) on behalf of the Company which, if completed, would require a minimum aggregate capital commitment by the Company of approximately A66 million. The successful completion of the investments represented by the Prospective Investment Portfolio would establish the Company as the leading investor in the Residential Resort sector in Southeast Europe. The Prospective Investment Portfolio comprises four projects located in Greece and two projects located in Cyprus as summarised in the following table. The Directors and the Investment Manager believe that all of these Projects have the potential to become among the best conceived Residential Resorts in the Region. Further details setting out the background to, and the contractual status of, each Project within the Prospective Investment Portfolio are set out in Part 4 of this document. 18

59 Project Estimated Company investment (Am) Expected Company shareholding (%) Expected to be fully funded within (months) GREECE Amanmila Kilada Hills 14* Kyparissia Bay Scorpio Bay CYPRUS Artemis Hills Apollo Heights Total 66 * Additional A9 million may be required if a further option is exercised to acquire adjacent land and expand the Kilada Hills Project. The completion of each investment in the Prospective Investment Portfolio depends not only upon the completion of the Placing but also, amongst other things, satisfactory completion of due diligence into each of the prospective Project companies and their respective land sites and the execution and delivery of binding agreements in a form mutually satisfactory to the parties. There can be no guarantee that the Company will complete all or any of these investments. In addition to the Prospective Investment Portfolio, the Investment Manager has advanced negotiations in a number of additional investment opportunities that meet the Company s investment strategy and that have the potential to be executed within 12 months following Admission. Most of these Project opportunities stem from the strategic relationships that the Investment Manager has with some of the leading developers and operators in the Region. Further details of these additional investment opportunities are set out in Part 4 of this document. The Investment Manager anticipates that, should negotiations be successful in respect of these additional investment opportunities, an additional capital commitment of approximately A127 million would be required from the Company, subject to funds being available. However, the Investment Manager does not anticipate that all of these opportunities will materialise or that the Company will reach a binding agreement to invest in more than 50 per cent. of them. Nevertheless, when combined with the Prospective Investment Portfolio, they further underline the Company s strong investment potential in the Residential Resort sector in the Region. Investment Process Sourcing and Execution The Investment Manager carefully selects a limited number of potential Projects by adhering to a thorough investment process that includes extensive due diligence and market research. The Investment Manager delegates the technical due diligence to some of the Region s leading project managers and technical advisers, the preferred provider being Focal Project Managers S.A. Technical due diligence includes reviewing the land zoning status, the legislative framework, the permit status, environmental, forestry and archeological issues and licensing requirements. In addition to providing a full technical due diligence report, the project manager further provides a budget estimate of the Project which is then used as verification by the Investment Manager. The Investment Manager always aims to engage leading local law firms to perform the legal due diligence and draft all the investment documents, as well as leading accounting firms to undertake the requisite accounting and financial due diligence. Subject to completion of satisfactory due diligence, the Investment Manager recommends the investment opportunity to the Board for approval. Once the Company has committed to a Project following Board approval, the Investment Manager engages a project manager to supervise the development and construction process. The Project company will then be required to enter into a number of development and construction related contracts. The project manager undertakes to establish schedule and cost control procedures with the contractors, monitor the ongoing procurement process and quality of the development, and provide the Investment Manager with regular update reports that identify any potential deviations from the pre-agreed business plan. 19

60 The Investment Manager takes a hands-on management approach towards all Projects and works with its partners to create maximum value throughout the development and realisation process by utilising its financial skills and access to an extended network of debt providers and real estate investors. The Company intends to have control over the majority of Projects in which it invests. In Projects where the Company is a minority shareholder, minority protection rights will be achieved through appropriate provisions set out in shareholders agreements. Each shareholder agreement will have a specific business plan attached to which the developer will be required to adhere. When appropriate, the Investment Manager and its development partners will involve the original land owners and other local partners in the Project, particularly where this involvement strengthens the Project s ability to obtain the required local planning permits and licenses and/or improves the lines of communication with local authorities and construction management. Execution risk is minimised by partnering with trusted developers and by fully aligning their economic interests with those of the Company. Project Funding The Company intends to commit to Project companies the minimum level of capital required to purchase the land and/or to finance the Project s initial infrastructure (such as roads, utilities, landscaping and leisure components). Funding of the commitment is usually provided in stages depending on the planning and development progress. The Investment Manager aims to optimise the capital and tax structure of its investments through efficient use of equity, bank debt and participating loans and by investing through special purpose vehicles for each Project. Most of the Project s development costs will be funded via pre-sales of the residential units and construction loans secured on the land. Each Project s debt commitments will be ring-fenced in a special purpose vehicle with no recourse to the Company. Each Project company will seek to minimise local taxes by utilising local tax incentives available in each relevant jurisdiction. In addition, the Company will seek to achieve repatriation of profits through tax efficient holding company structures. The Directors do not currently anticipate that the Company itself will borrow any funds. Founding Shareholders The Company was capitalised with A5 million in the summer of 2005 by institutional and private investors including the Investment Manager. The lead investor was Fortress, a world-leading investor in real estate private equity with approximately $15 billion of equity capital currently under management. Wes Edens, Chairman and co-founder of Fortress, Rob Kauffman, President and cofounder of Fortress, and three other Fortress managing partners invested personally in the Company. In June 2005, Fortress listed one of its wholly-owned real estate companies, Mapeley Limited, on the London Stock Exchange, and Mapeley Limited thereby became one of the largest real estate companies quoted in the UK with a market capitalisation of approximately 575 million. While at Soros Real Estate Partners, Miltos Kambourides, the founder and managing partner of the Investment Manager, was the deal leader in relation to the establishment of Mapeley Limited, which was a co-investment between Soros Real Estate Partners and Fortress until early 2005 when Fortress acquired full ownership of Mapeley Limited. Miltos Kambourides was the financial architect of the two major real estate outsourcing deals that Mapeley Limited currently has under management. Founding Shareholder Warrants The Founding Shareholders provided the initial equity capital necessary to establish the Company and to fund the cost of negotiating and advancing a number of investment opportunities including the Prospective Investment Portfolio. The Directors believe that the aggregate market value of the Company s interests in the Prospective Investment Portfolio at acquisition will be significantly greater than the Company s cost of investment. In recognition of the fact that new Shareholders will be investing in the Company at the same price per Common Share as the Founding Shareholders, the Company has issued the Founding Shareholder Warrants. The Investment Manager owns 20 per cent. of the Founding Shareholder Warrants. The Founding Shareholder Warrants entitle the Founding Shareholders to subscribe, at par value per Common Share of A0.01, for such number of Common Shares (capped at 12.5 million Common Shares) which when multiplied by the Placing Price of 68p (A1.00) equals 50 per cent. of the difference between the market value of the Company s legal interests in the Prospective Investment Portfolio and its cost of investment. The valuation of the Company s legal interests in the Prospective Investment Portfolio will be carried out by the Company s Property Valuer as at 30 June 2006 and 20

61 this valuation will then be approved by the Board. All of the Founding Shareholder Warrants must be exercised within 30 days of the valuation or will otherwise lapse. Founding Shareholder Lock-in Agreements The Founding Shareholders have also entered into lock-in agreements in relation to their Common Shares which prevent them from disposing of such shares until the date on which the Founding Shareholder Warrants lapse. Further details of these lock-in agreements are set out in paragraph 6.2 of Part 11 this document. 21

62 PART 3 DIRECTORS, INVESTMENT MANAGER AND ADMINISTRATION Directors of the Company The Directors of the Company, all of whom are non-executive, will be responsible for the overall investment activities of the Company. The Directors are: Andreas Papageorghiou (Non-executive Chairman), aged 72, a practising lawyer and the Managing Partner of A. N. Papageorghiou & Associates Law Offices in Nicosia, Cyprus. Mr. Papageorghiou was called to the English Bar in 1959 (Gray s Inn) and he subsequently practiced law from 1959 to From 1963 to 1978, Mr. Papageorghiou was internal legal adviser and subsequently senior manager of Legal & Trustee Services of the Bank of Cyprus group of companies. From 1978 to 1980, he was the Minister of Commerce & Industry of the Republic of Cyprus and from 1981 to 1993, he was the general manager of the Cyprus Housing Finance Corporation. Nicholas Moy (Non-executive Director), aged 66, the Group Chairman of Gryphon Emerging Markets Ltd ( Gryphon ), an investment banking firm specializing in the countries of the Mediterranean basin and the Middle East. Gryphon is active in restructuring and refinancing companies requiring capital, as well as establishing and operating private equity investment funds in the larger emerging market economies. Mr. Moy currently serves as chairman of the Arab Business Council in London, and is also a director or advisory board member of a number of international funds and related companies. Mr. Moy was previously co-founder and Deputy Chairman of Granville Holdings Limited, a London based investment bank and one of the pioneers of the private equity sector in the UK, Continental Europe and the Middle East. Mr. Moy has an MA in Oriental Languages and Law from St. Catharine s College, Cambridge University, and an MBA in international finance from the Wharton School of Finance, University of Pennsylvania. He is a member of the Arab Bankers Association, the Middle East Association and an alumnus of the Middle East Centre for Arabic Studies. Cem Duna (Non-executive Director), aged 58, the president of AB Consultancy and Investment Services, a leading Turkish consultancy company providing strategic business development services to both Turkish and international corporations and entrepreneurs. He is also the Vice Chairman of the board of Turkish Industrialists and Businessmen Association. Mr. Duna was previously Ambassador and Permanent Delegate of Turkey to the European Union between 1991 and During this period, he led the negotiations for the formation of the Customs Union. Mr. Duna was also the Ambassador and Permanent Delegate of Turkey to the United Nations Offices in Geneva and the Chief Negotiator in the GATT Uruguay Round Multilateral trade negotiations. He also served as the Director General of Turkish Radio and Television during the years 1988 and He spent three and half years as the late President Turgut Ozal s Foreign Policy Advisor between the years 1985 and 1988 when Mr. Ozal was the Prime Minister of Turkey. Mr. Duna served at various diplomatic levels in capitals that included Copenhagen, The Hague, Jeddah and London through his career in the Foreign Ministry. He is a graduate of the Political Sciences Faculty of the University of Ankara and has an MA in The Theory of Economic Integration (the European Union) from the University of Amsterdam. As a public figure in Turkey, Mr. Duna is also an independent lecturer at universities and participates in conferences and media debates as a guest speaker both in Turkey and abroad. Antonios Achilleoudis (Non-executive Director), aged 36, the co-founder and Managing Director of Axia Ventures Ltd and Axia Asset Management, a New York based alternative investment advisory firm. In this capacity, Mr. Achilleoudis has advised and consulted on the structuring of several hedge fund and alternative investment products and projects, including the formation of a multi-strategy hedge fund and the management of a long/short equity fund. He has been instrumental in assisting several institutions and family offices, in the formation and implementation of alternative investment strategies. From 1993 to 2000, Mr. Achilleoudis was Vice President of Investments at the Private Client Group of Gruntal & Co. LLC, an investment bank and member of the New York Stock Exchange. In this capacity, he was managing the investment portfolios of high net worth individuals and institutions with specialization in hedge fund advisory services and research. Mr. Achilleoudis is a graduate of New York University Stern School of Business with a Bachelors Degree in Accounting and International Finance. Miltos Kambourides (Non-Independent Director), aged 33, the founder and managing partner of Dolphin Capital Partners Limited. Information regarding Mr. Kambourides is set out below. 22

63 Directors of the Investment Manager The Company s assets will be managed by Dolphin Capital Partners Limited. The senior investment professionals of the Investment Manager are Miltos Kambourides and Pierre Charalambides (who are the ultimate beneficial owners of the Investment Manager) and Pedro Miranda and Constantinos Hassabis. They together possess a combination of in-depth local knowledge and contacts with extensive real estate investment skills gained at some of the most reputable financial institutions in the world, such as Soros Real Estate Partners, Goldman Sachs, JPMorgan, Citibank, CSFB and GE Capital. The Investment Manager s four senior investment professionals have collectively over 40 years of relevant investment experience, hold several academic qualifications including six degrees from Massachusetts Institute of Technology ( MIT ) and three MBAs, and speak six languages. Miltos Kambourides Managing Partner, aged 33, is the founder and managing partner of the Investment Manager. Mr. Kambourides was previously a founding member and is now a retired partner of Soros Real Estate Partners ( SREP ), recently renamed Grove International Partners. SREP was a global real estate private equity business formed in 1999 by George Soros and Richard Georgi, investing on behalf of Soros Real Estate Investors C.V., a $1 billion real estate private equity fund that targeted Europe and Japan. During Mr. Kambourides tenure, SREP executed total investments of approximately $500 million of equity in complex real estate transactions in Western Europe and Japan, including a significant investment in several master-planned residential developments in Spain through its real estate investment vehicle named MedGroup Inversiones S.L. ( MedGroup ). Through MedGroup, SREP has been one of the biggest foreign investors in Spain in the master-planned leisure-integrated residential sector achieving returns above the minimum returns currently targeted by the Company. While at SREP Mr. Kambourides was primarily responsible for investments relating to property outsourcing in the UK and for the SREP investment strategy in Southeast Europe. He was the deal leader and a founder of Mapeley Limited which became the second largest real estate outsourcing company in the UK after winning two major 20-year multi-billion pound contracts: one with the Inland Revenue and Custom & Excise Departments of the UK and one with Abbey National plc. Mr. Kambourides was the financial architect of both these transactions. Following that, Mr. Kambourides researched the Southeast European markets in depth and developed a broad network of relationships with developers, operators and other key real estate professionals. Prior to joining Soros, Mr. Kambourides spent two years at Goldman Sachs in the Real Estate Principal Investment Area in Europe working on real estate private equity transactions in the UK, France and Spain. In 1998 he received a Goldman Sachs Global Innovation award for his work on the first real estate outsourcing contract in the UK which led to the creation of Trillium, the largest real estate outsourcing company in the UK. Mr. Kambourides graduated from MIT where he received a B.S. and M.S. in Mechanical Engineering and a B.S. in Mathematics. He has received several academic honours and participated twice in the International Mathematical Olympiad (Beijing 1990, Moscow 1992) and once in the Balkan Math Olympiad (Sofia 1990) where he received a bronze medal. Pierre Charalambides Partner, aged 34, is the co-founder and partner of the Investment Manager. Prior to that, Mr. Charalambides worked with Miltos Kambourides as acquisitions director in a SREP initiative to identify and pursue investment opportunities in Southeast Europe. From 1999 to 2003, Mr. Charalambides was a senior mergers and acquisitions associate at JPMorgan where he advised some of Europe s leading corporations and entrepreneurs on financial transactions such as acquisitions, disposals, mergers, private placements, restructurings and leveraged buy-outs totalling over $6 billion across numerous industry sectors including real estate, retail, construction, telecoms, media and technology. Prior to joining JPMorgan, from 1995 to 1998, Mr. Charalambides had been a founding member of (i) Hilton International s corporate development team where for two years he managed the origination and execution of over $150 million of new Hilton International hotel development projects (luxury resort, city centre, distressed and mid-market hotel properties) in Canada, the Caribbean, France, India and Scandinavia; (ii) Insignia Hotel Partners in Europe, now one of Europe s leading hotel investment advisory companies; and (iii) The Hotel Investment Forum in Berlin, one of Europe s most successful annual hotel investment conferences. Mr. Charalambides holds an MBA from INSEAD and two B.S. from the Management School of The Hague where he graduated first in his year. Pedro Miranda Director, aged 33, was from 2002 to 2005 a Vice-President at Edison Advisors, an affiliate of GE Capital, where he advised buy-side clients looking to invest new equity in companies struggling with highly leveraged capital structures and/or undergoing bankruptcy restructuring, in a 23

64 variety of sectors such as real estate, transportation, forest products, manufacturing, food & beverage and shipyard services. He also advised on disposals and recapitalizations of distressed companies that were part of the $7 billion GE Capital Funding loan portfolio. Previously, Mr. Miranda worked in London as an investment banking associate at Credit Suisse First Boston in the mergers and acquisitions group. From 1996 to 1999, Mr. Miranda worked at Citibank International where he was involved in several business expansion initiatives for Citibank s Global Consumer Bank in Argentina, Brazil, Chile, Mexico and Venezuela. Mr. Miranda holds an MBA in Finance from MIT s Sloan School of Management and a B.S. degree in Computer Engineering and Computer Science from the University of Miami. Constantinos Hassabis Director, aged 38, has since 2000 been the general manager of J&P Development, the development subsidiary of J&P Avax, one of the leading construction companies in Southeast Europe and the Middle East. During those years, he led and established J&P Development into a pre-eminent real estate development company in the Region and led and negotiated numerous successful commercial and residential real estate projects ranging in value from A20 million to A350 million. From 1992 to 2000 and prior to founding J&P Development, Mr. Hassabis was the general manager of 3D Development (another division of J&P Avax) where he was responsible for the financing and development of project concepts. During these years, he was also in charge of a holiday home development on the island of Spetses, Greece, which was voted among the three best residential projects in the world at MIPIM (Cannes Annual Real Estate Exhibition) in Mr. Hassabis holds an MBA from MIT s Sloan School of Management and a B.S. in Economics from MIT where he received Phi Beta Kappa and Sigma Xi in recognition of academic achievements and research aptitude. The Investment Manager may look to recruit additional professionals after Admission. Investment Management Agreement Dolphin Capital Partners provides fund management and advisory services to the Company. Its roles under the Investment Management Agreement include, in line with guidelines established by the Board, the following: * analysing market, economic and political conditions and developments in Southeast Europe; * maintaining government relations and undertaking such lobbying in Turkey, Cyprus, Greece and Croatia as may be required; * sourcing of investment opportunities; * evaluating and valuing of investment opportunities; * deal structuring and negotiation of each investment; * presenting investment opportunities to the Board for approval; * co-ordinating professional advisers; * taking board positions in investee companies, monitoring such investments and supporting investee companies as required; * seeking and realising exit strategies for investments; * co-ordinating collection of financial returns due to the Company such as dividends or any proceeds received from invested assets and loans to creditors; * recommending the level of dividend distributions to the Board; * co-ordinating the preparation of accounts and the calculation of the Net Asset Value for approval by the Board; and * providing quarterly reports to Shareholders on the Net Asset Value and the progress of individual investments. The Investment Management Agreement is for a fixed term of ten years commencing on 1 August It may be extended beyond such term with the agreement of the Investment Manager and the Company. The Investment Management Agreement is also capable of summary termination in certain circumstances, including material breach of the terms of the agreement or the occurrence of an insolvency event in respect of the Investment Manager. Further details of the Investment Management Agreement are set out in paragraph 6.6 of Part 11 of this document. Under the terms of the Investment Management Agreement the Investment Manager is required to devote its time and attention to the affairs of the Company and not to manage other funds that are competitive with the Company until such time as 90 per cent. of the Company s funds are committed to Projects. After that time the Investment Manager will be free to manage funds that might be competitive with that of the Company. 24

65 Investment Management Fees The Investment Manager will receive an annual management fee payable quarterly in advance of 2 per cent. per annum of the total funds raised by the Company, being initially the gross proceeds of the Placing and the A5 million subscribed by the Founding Shareholders, and subsequently including the proceeds of any further fund raisings. The Investment Manager will also be paid a performance fee equal to 20 per cent. of the net realised cash profits received by the Company from each Project after achieving a hurdle of 8 per cent. annual compounded return (the Hurdle ) and deducting a sum equal to any realised losses and/or writedowns in respect of any other investments, (together the Relevant Investment Amount ). The performance fee payment is subject to escrow and clawback provisions described below. Escrow Half of any performance fee payable to the Investment Manager shall be placed in an escrow account operated by the Administrator (the Escrow Account ) until the date on which the cumulative distributions made by the Company to its Shareholders first equals or exceeds the total funds raised by the Company as at Admission (being the gross proceeds of the Placing and the A5 million subscribed by the Founding Shareholders) (the Distributions Equalisation Date ). On the Distributions Equalisation Date, 50 per cent. of any escrowed funds will be released to the Investment Manager (meaning that in aggregate the Investment Manager will have received 75 per cent. of the performance fees payable). Upon the Company making cumulative distributions equal to the total funds raised by the Company plus the Hurdle, any remaining funds in the Escrow Account will also be released to the Investment Manager. Clawback If on the earlier of (i) disposal of the Company s interest in a relevant investment or (ii) 1 August 2015, the proceeds realised from that investment are less than the Relevant Investment Amount, the Investment Manager shall pay to the Company an amount equivalent to the difference between the proceeds realised and the Relevant Investment Amount. The payment of the clawback is subject to the maximum amount payable by the Investment Manager not exceeding the aggregate performance fees (net of tax) previously received by the Investment Manager in relation to other investments. All relevant expenses incurred by the Investment Manager in connection with the sourcing, negotiation and implementation of Projects shall also be reimbursed by the Company. The Administrator Anglo Irish Fund Services Limited has been appointed by the Company to act as administrator to the Company with effect from, and conditional upon Admission under the terms of the Administration Agreement. The Administrator is wholly owned by Anglo Irish Bank Corporation plc. The Administrator is responsible for providing administrative services required in connection with the Company s operations, including assistance in the preparation of annual and interim financial statements for the Company and calculation and publication of the Company s Net Asset Value. Further details of the Administration Agreement are set out in paragraph 6.7 of Part 11 of this document. The Custodian Anglo Irish Bank (I.O.M.) P.L.C. has been appointed by the Company to act as custodian with effect from, and conditional upon, Admission under the terms of the Custodian Agreement. The Custodian is wholly owned by Anglo Irish Bank Corporation plc and has been appointed as the Company s custodian and banker. The Custodian is responsible for providing custodial and banking services to the Company. Real-estate interests may be held either directly by the Company or through special purpose vehicles and will not form a part of the assets for which the Custodian is responsible under the terms of the Custodian Agreement. Further details of the Custodian Agreement are set out in paragraph 6.8 of Part 11 of this document. 25

66 PART 4 PROSPECTIVE INVESTMENT PORTFOLIO AND ADDITIONAL INVESTMENT OPPORTUNITIES Location The location of the Projects is one of the key factors in the selection criteria set by the Company. As seen in the map below, both the Prospective Investment Portfolio and the additional investment opportunities are positioned in strategic locations in Southeast Europe. Prospective Investment Portfolio As at the date of this document, the Company has directly or indirectly through the Investment Manager or its subsidiaries, agreed terms and is in the process of completing contractual arrangements in respect of six investments which together comprise the Prospective Investment Portfolio. If completed, these Projects would require a minimum aggregate capital commitment of approximately A66 million. The Company expects to fund these investments from the net proceeds of the Placing. The completion of each investment depends not only upon the completion of the Placing but also, among other things, upon satisfactory completion of due diligence into each of the prospective Project companies and land sites and the execution and delivery of final binding agreements in a form mutually satisfactory to the parties. There can be no guarantee that the Company will complete all or any of the investments. Project Approximate number of hectares Estimated min. no. of residential units Estimated Company investment (Am) Expected Company shareholding % Expected to be fully funded within (months) GREECE Amanmila Kilada Hills * Kyparissia Bay Scorpio Bay CYPRUS Artemis Hills Apollo Heights 492 1, Total 1,054 1, * An additional A9 million may be required if a further option is exercised to acquire adjacent land and expand the Kilada Hills Project. 26

67 1. Project Amanmila, Milos, Greece Project Amanmila involves the development of Europe s first villa-integrated Aman Resort, over 1.4 million square metres of land on the island of Milos (Cyclades), Greece. The Investment Manager believes that Project Amanmila has the potential to become the most exclusive integrated residential resort in the Mediterranean region. Project Amanmila comprises two phases. The first phase includes the development of a 40-room luxury Aman hotel and spa surrounded by 30 Aman villas. The second phase includes the development of other residential complexes on other portions of the site. Aman Resorts and its affiliates will be responsible for the design, management, branding and sales. Project Amanmila is located 15 minutes driving distance from Milos Airport on an unspoilt peninsula with approximately 2 kilometres of shoreline and its own natural harbour. Under a shareholders agreement signed on 31 October 2005, Project Amanmila is owned by three shareholders including the Company, each holding one third of its shares. The other two shareholders are companies wholly-owned by: * Aman Resorts: one of the most exclusive hotel and villa-integrated resort operators in the world; and * The Heah family: represented by John Heah, Project Amanmila s appointed architect. Amongst Heah s work is the Four Seasons Hotel in Bali, voted as the Best Hotel in the World by Travel & Leisure magazine on 15 July Each shareholder of Project Amanmila has committed to invest at least A3 million to fund the acquisition of the land and part of the construction. Project Amanmila is in negotiations to enter into a notarial pre-contract (binding on the seller s side) to acquire the site. The planning application process for Project Amanmila has already begun and is expected to take approximately 18 months. 2. Project Kilada Hills, Peloponnesus, Greece Project Kilada Hills involves the development of a Residential Resort with approximately 200 upscale residential units totalling a minimum of 30,000 buildable square metres, integrated with a private residence club and a championship standard golf course on approximately 1.0 million square metres of land. Other leisure facilities would include a club house, a golf academy, a spa and other supporting retail and sports facilities. Project Kilada Hills is located two hours driving distance from Athens in the area of Porto Heli, which is one of the most upscale second home residential areas in Greece. It is less than one kilometre away from a beach and a small fishing village. The current developer of Project Kilada Hills has already signed notarial pre-contracts to acquire the site, which consists of 724,000 square metres of freehold land and 282,000 square metres of leasehold land (to be used for the golf course). The planning application process for Project Kilada Hills is already at an advanced stage and all planning approvals are expected to be in place by the beginning of The Investment Manager on behalf of the Company has entered into a term sheet with the current developer which grants the Investment Manager exclusivity until the 23 November 2005 (this period has been extended unilaterally by the Investment Manager for a period of 10 working days) to negotiate an investment and shareholders agreement and to fund the acquisition of the site by subscribing for an 80 per cent. shareholding in Project Kilada Hills with a total equity commitment of at least A14 million. An additional amount of A9 million may be required from the Company if it exercises its option to acquire adjacent land and expand the Kilada Hills Project. 3. Project Kyparissia Bay, Peloponnesus, Greece Project Kyparissia Bay is a strategic land acquisition with the capacity to develop up to 120 beach front villas totalling approximately 18,000 buildable square metres. The site comprises 309,000 square metres of land. The Investment Manager further intends to increase the scale of Project Kyparissia Bay by expanding the site through additional acquisitions. The Kyparissia Bay site is located two and a half hours driving distance from Athens and is fronted by approximately 3 kilometres of unspoilt sandy beach to its western border and 3 kilometres of pine forest to its eastern border. The Company (through its subsidiary DolphinCI Two Ltd.) has entered into a notarial pre-contract (binding on the seller s side until 16 January 2006) to acquire the company owning the site for A5 million subject to completing satisfactory due diligence. A further amount of A5 million will be 27

68 committed to fund the development process. Completion of the site acquisition in respect of Project Kyparissia Bay is expected to take place in January Project Scorpio Bay, Attica, Greece Project Scorpio Bay represents the development of a Residential Resort over approximately 1.72 million square metres of contiguous land in the region of Skroponeri, Greece with more than 300 upscale residential units integrated with a private marina. Other leisure facilities include a country club, a beach club and other supporting facilities. It is further anticipated to develop a championship standard golf course on adjacent leased land. The site represents a mountainous peninsula of unspoilt natural beauty surrounded by a forest and the sea and 1 hour s drive from Athens International Airport. The site s location is adjacent to an area where many members of the Greek parliament have their holiday residences. The current majority owners of the site represent one of Greece s most influential shipping families and have already initiated the permitting process. The Investment Manager on behalf of the Company has entered into a term sheet with a representative of the owners of the Project Scorpio Bay site with exclusivity until 28 February 2006, to take a 50 per cent. shareholding in Project Scorpio Bay by contributing A9 million to finance the permit application process and the initial phases of the development. 5. Project Artemis Hills, Paphos, Cyprus Project Artemis Hills represents the development of a Residential Resort with approximately 310 residential villas totalling 67,000 buildable square metres and an 18-hole championship standard golf course spread over 1.2 million square metres of land. Additional leisure facilities will include a golf club house, a village square with retail units, swimming pools, and tennis courts. Project Artemis Hills is situated at driving distances of 15 kilometres from Paphos (Cyprus), 5 kilometres from the beach, 4 kilometres north of Paphos International Airport and 20 kilometres away from the current Aphrodite Hills site, a similar project which has to date enjoyed strong demand and is achieving residential sales prices above A4,000 per square metre. One of the current shareholders of Project Artemis Hills is CCA Group, one of the world s leaders in golf integrated communities including Brocket Hall. It has been agreed that CCA will manage the golf operations and operate the resort under a long-term management agreement. The appointed master-planner for Project Artemis Hills is Sasaki Associates, one of the world s leading masterplanners. The golf course will be designed and branded by Nick Faldo, a well-recognised name in the industry and the golf academy will be run by PGA qualified professionals. Final zoning and planning consents have recently been obtained and construction is expected to begin in the first quarter of The Investment Manager on behalf of the Company signed a term sheet on 7 February 2005 and is currently in advanced negotiations to acquire up to 25 per cent. of the shares in Project Artemis Hills from existing shareholders for a consideration of up to A9.4 million. 6. Project Apollo Heights, Limassol, Cyprus Project Apollo Heights represents the development of a Residential Resort with over 1,000 residential villas, integrated with polo fields and potentially a golf course. Other leisure facilities will include a polo club house and academy, equestrian centre and other supporting facilities. The proposed site is spread over 4.9 million square metres of unspoilt land covered with natural herbs and pine trees. It has a stream running through it and is adjacent to the sea with numerous hills offering panoramic mountain and sea views. The site is situated close to both the towns of Limassol and Paphos, 30 kilometres from Paphos International Airport and 50 kilometres from Larnaca International Airport. The Investment Manager on behalf of the Company has entered into a term sheet with the managers of Project Apollo Heights, with exclusivity until 25 December 2005, to acquire (subject to the Project company successfully completing its advanced negotiations to acquire the site) an interest of up to 68.1 per cent. in the Project by committing approximately A19 million to be funded subject to permit progress. Additional Investment Opportunities In addition to the Prospective Investment Portfolio, the Founding Partners of the Investment Manager have over the past two years developed strategic relationships with some of the leading developers in the Region and have advanced a number of additional investment opportunities that 28

69 meet the Company s investment strategy and have the potential to be executed within the next 12 months. In Cyprus, the Investment Manager has entered into a non-binding agreement with Lanitis Development, Cyprus s leading residential resort real estate developer to jointly develop Residential Resorts in Cyprus and Greece. Lanitis Development was the creator of Aphrodite Hills ( in Cyprus, Southeast Europe s best and only completed Master-planned Leisure-integrated Residential Resort. The development started golf course operations on 1 October 2002 and to date has sold over 500 villas and 250 apartments and experienced great success with current average selling prices at A4,300 per square metre and with the maximum around A6,000 per square metre. The Company is considering investing in two new Projects to be developed by Lanitis Development that meet the Company s investment strategy and that are expected to be launched in early In Turkey, the Investment Manager has established a strategic partnership with Kemer Group, Turkey s leading residential resort developer, to jointly develop Residential Resorts in Istanbul and South-Western Turkey. Kemer Group is the owner of Kemer Country in Istanbul, one of Europe s best primary-home communities integrated with a golf and country club. Over the past decade, Kemer Group has developed and completed 17 residential development projects comprising in excess of 1,150 individual homes in the Kemerburgaz area of Istanbul, generating approximately $500 million in sales and establishing Kemer Country as one of Istanbul s most prestigious residential areas. In addition, Kemer Group has invested over $40 million to develop and operate Kemer Golf & Country Club, Turkey s most prestigious golf and country club operation. The Company has already identified a number of potential Projects in Turkey that meet the Company s investment policy and that could be launched in partnership with Kemer Group within On a regional Southeast European basis and for luxury Residential Resort developments, the Investment Manager has developed a strong relationship with Aman Resorts, one of the world s most exclusive hotel and villa integrated resort operators. The Company will invest in Project Amanmila, the first Aman Residential Resort to be launched in Southeast Europe, as described above. As the Directors believe that Southeast Europe can successfully support a number of additional Aman Resort Projects, the Company will consider (subject to each Project meeting the Company s investment strategy) investing in additional such Projects to be launched in the Region in the next 1 to 3 years. In addition to Projects deriving from the above relationships, the Investment Manager has progressed a number of other Projects in each of the targeted markets, Cyprus, Greece, Turkey and Croatia that the Directors and Investment Manager believe could be successfully launched in the next 12 months. Some of the additional investment opportunities currently under negotiation are briefly summarised below. 29

70 The Company has no legally binding contracts in relation to any of these Projects and it does not expect to reach a binding agreement in relation to more than 50 per cent. of these additional investment opportunities. Project GREECE Estimated Company investment (Em) Brief Project description Project A 10 Residential Resort in Crete on 160 hectares, to include over 60,000 square metres of residential units, an 18-hole championship standard golf course, country club, hotel and village hub. Project B 8 Residential Resort in Olympia on one of the largest beach properties zoned for development in Greece, to include an 18-hole championship standard golf course, a world-class spa and a luxury suite-hotel. Project C 15 Residential Resort over 800 hectares of contiguous land in the region Sterea Ellada, 90 minutes drive from Athens International Airport, to include over 1,000 detached private villas and two 18-hole championship standard golf courses. CYPRUS Project D 11 Residential Resort with approximately 515 residential units and an 18- hole PGA championship standard golf course over 140 hectares of land 14 kilometres west of Larnaca International Airport. Project E 10 Residential Resort with golf to be developed by Lanitis Development, adjacent to Aphrodite Hills and leveraging existing leisure facilities. Project F 15 Residential Resort with golf to be developed by Lanitis Development on existing seafront land owned by Lanitis Group of Companies. Project G 15 Residential Resort with golf to be developed in partnership with a leading Cyprus industrial and trading group on 300 hectares of beachfront land to include over 500 residential units. TURKEY Project H 6 Residential Resort in Gocek, in partnership with Kemer Group aiming to replicate the success of Kemer Country in Istanbul. Project I 15 Residential Resort community, master-minded by one of Turkey s leading architects, near Bodrum on site with 1,750 metres of coastline. CROATIA Project J 15 Residential Resort to be developed with leading operator on unspoilt island by the Dalmatian coast, to include a marina and a five-star 80 room hotel. Project K 7 Residential Resort in partnership with a leading operator on Dalmatian coast. Permits for resort development in place. Total 127 If all these Projects were completed, an additional capital commitment of approximately A127 million would be required from the Company, subject to funds being available. When combined with the Prospective Investment Portfolio, the Directors believe that they further underline the Company s strong investment potential in the Residential Resort sector in the Region. 30

71 PART 5 OTHER INFORMATION Expenses Expenses of the Placing and Admission The Company will be incurring costs in connection with the Placing and the application for Admission. These expenses will be met by the Company and will be paid on or around the date of Admission. Such expenses will include fees payable under the Placing, registrar s fees, depositary s fees, admission fees, printing costs, legal, advisory and accounting fees and any other applicable expenses. The Directors do not anticipate that these expenses will exceed 4.0 per cent. of the gross proceeds of the Placing. Ongoing Operating Expenses In addition to costs relating to investments, the Company will incur ongoing operating expenses. These expenses will include, among others, the fees payable to the Investment Manager, the Administrator, the Custodian, and the Non-executive Directors (each Non-executive Director, excluding Miltos Kambourides and Antonios Achilleoudis who are waiving any fees, will initially be paid a fee of A15,000 per annum). Other ongoing operational expenses of the Company will be borne by the Company including, among others, bank fees, regulatory fees, legal fees, insurance costs, audit fees and other expenses. It is estimated that the total expenses of the Company for the year ending 31 December 2006 will not exceed A2,850,000. Shareholder Information The Company s annual report and accounts will be prepared up to 31 December each year after 2005 with the first accounting period of the Company ending on 31 December 2006, and it is expected that copies of the report and accounts will be sent to Shareholders within six months of the year end date. In addition, the first unaudited interim report of the Company will be prepared up to 30 June 2006 and is expected to be despatched on or before 31 August After 2006, Shareholders will receive an unaudited interim report covering the six months to 30 June each year, which is expected to be despatched within three months of that date each year. Under BVI law the Company is not required to hold an annual general meeting in any year. However, it is the current intention of the Directors that, at the time of the publication of the Company s annual report and accounts, Shareholders will be notified of a venue and time at which the Investment Manager will give a presentation to Shareholders concerning the Company s investment portfolio. Valuation Reporting and Policy The first Net Asset Value per Common Share will be calculated as at 30 June The Company s Net Asset Value will be published through a regulatory information service provider to the London Stock Exchange as soon as practicable after 30 June 2006 and at the end of each subsequent quarter. The Company will also disclose the sterling equivalent of the reported Net Asset Value per Common Share based on the prevailing exchange rate. The Net Asset Value and the Net Asset Value per Common Share shall be calculated (and rounded to two decimal places), in Euros by the Administrator on a quarterly basis (or at such other times as the Investment Manager may determine but in any event not less than quarterly). The Net Asset Value shall be the value of all assets of the Company less the liabilities of the Company determined in accordance with the valuation guidelines adopted by the Directors from time to time. Under current valuation guidelines adopted by the Directors, such values shall be determined as follows: * the value of investments made by the Company, whereby the future cashflows to be derived from these investments can be reasonably estimated, will be based on the net present value of the expected future cash flows discounted using an appropriate market discount rate. The Property Valuer, currently Colliers International S.A., will determine the appropriate discount rate on a case by case basis; * the value of the investments made by the Company whereby the future cashflows to be derived from these investments cannot be reasonably estimated will be based on the market value of the land owned by the Project company less any liabilities it may have; 31

72 * the value of any cash in hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash dividends and interest declared or accrued as aforesaid and not yet received shall be deemed to be the full amount thereof, unless in any case the Directors shall have determined that the same is unlikely to be paid or received in full, in which case the value thereof shall be arrived at after making such discount as the Directors may consider appropriate in such case to reflect the true value thereof; * any other assets and liabilities shall be valued at their respective fair values as determined in good faith by the Directors and in accordance with generally accepted valuation principles and procedures; and * any value other than in Euros shall be translated at any officially set exchange rate or appropriate spot market rate as the Directors deem appropriate in the circumstances having regard, inter alia, to any premium or discount which may be relevant and to costs of exchange. If the Directors consider that any of the above bases of valuation are inappropriate in any particular case or generally, they may adopt such other valuation or valuation procedure as they consider is reasonable in the circumstances provided that such other valuation or valuation procedure has been approved by the Company s auditors. The Directors may delegate to the Investment Manager any of their discretions under the valuation guidelines. Life of the Company The Company does not have a fixed life, however, shortly before the tenth anniversary of Admission (or earlier if appropriate) the Board will convene a Shareholders meeting at which a resolution will be proposed to determine the future of the Company. Currency Issues and Cash Investment The Directors anticipate that the Company s investments will be made in Euros and that the revenue on the Project investments (sales proceeds and any other income) will also be in Euros. Accordingly, the Company will convert the sterling proceeds of the Placing into Euros after Admission as required by its investment programme. Any dividends or other distributions made to Shareholders will be paid in Euros. All reporting by the Company in terms of its NAV announcements, interim and audited accounts will be in Euros. The base currency of the Company for accounting purposes will be Euros. Any cash held by the Company may be held on deposit or invested in money-market funds or other near-cash investments. To minimise currency risk, particularly in Croatia and Turkey (where investments are made in Turkish Lira or Croatian Kuna), the Company may enter into currency hedging programmes. Cash pending investment, reinvestment or distribution will be placed in Euro or pound sterling bank deposits, bonds or treasury securities, for the purpose of protecting the capital value of the Company s cash assets. In order to hedge against interest rate risks or currency risk, the Company may also enter into forward interest rate agreements, forward currency agreements, interest rate and bond futures contracts and interest rate swaps and purchase and write (sell) put or call options on interest rates and put or call options on futures on interest rates. The Company does not intend to have any significant exposure to margin positions. Further Issues of Common Shares The Directors will have authority to allot the authorised but unissued share capital of the Company following Admission on a non-pre-emptive basis. There is no limit on the number of Common Shares that the Directors may allot. Such authority shall only be exercised at a subscription price which is not less than the then prevailing Net Asset Value per Common Share. Distributions to Shareholders The Company s intention is to maximise the IRR of each Project investment and therefore it intends to return capital profits as soon as they are realised. For the first three years following Admission only, the profits realised from Projects could be made available for reinvestment into further Projects as determined by the Board (net of any performance fees due). Distributions may be made by way of dividend or a redemption or repurchase of Common Shares, at the Directors discretion. Distributions may give rise to a liability to tax on income or capital gains, depending on a Shareholder s individual tax position. To date, the Company has not paid any dividends. 32

73 Repurchase of Common Shares If Common Shares are trading at a discount to Net Asset Value per Common Share (based on the latest published NAV), the Company may purchase Common Shares for cancellation. The purchase of Common Shares on this basis may address the imbalance between supply and demand indicated by the presence of a discount, and would be beneficial to the Net Asset Value per Common Share of the remaining Common Shares. The Directors will have the authority to repurchase the Common Shares in issue immediately following Admission. There is no present intention to exercise such authority. Any repurchase of Common Shares will be made subject to BVI law and within guidelines established from time to time by the Board (which will take into account the income and cash flow requirements of the Company) and the making and timing of any repurchases will be at the absolute discretion of the Board. Purchases of Common Shares will only be made through the market for cash at prices below the prevailing Net Asset Value per Common Shares where the Directors believe such purchases will enhance Shareholder value. 33

74 PART 6 COUNTRY PROFILES GREECE Greece experienced a GDP growth of above 3.5 per cent. in 2004 and the year-on-year increase at the end of Quarter 3, 2005 was 3.9 per cent. This significantly outperforms the Eurozone average for nine consecutive years. The Athens 2004 Olympics encouraged the Greek government to significantly invest in infrastructure (new airport, highways and hotels) and boosted Greece s profile as a leading tourist destination in the Region. The Directors and the Investment Manager believe that Greece, being an Euro denominated country since 2001, has all the prerequisites to become a prime holiday home destination for Northern Europeans. Greece is maturing as a key member of the European Union. Year-on-year inflation (EU harmonised) is currently at 3.9 per cent. (2004: 2.9 per cent.) partly due to tax effects and high international oil prices. In addition, the trade and fiscal deficits are being addressed through measures to curtail spending pressures as the Euro Stability and Growth Pact requires. The national government of Greece is the centre-right New Democracy (ND) elected in March Whilst facing certain challenges, notably the trade deficit, the government is progressive in its desire to introduce market reforms as exemplified through cautious reform policies on privatisation, labour laws and pensions. The government is also placing the development of golf resorts and other tourism infrastructure as one of its top priorities in its economic policy. CYPRUS Although not a full member of the European Monetary Union, Cyprus has joined the EU s system of pegged exchange rates requiring the associated fiscal and monetary discipline. GDP growth was 3.2 per cent. in 2004, with inflation (EU harmonised) running at a moderate 2.76 per cent. to the end of April Cyprus entered the European Union on 1 May 2004 and offers one of the most competitive taxation environments in Europe. The country further benefits from an excellent climate with long seasonality and is already a very popular second home/retirement destination for British citizens who established Cyprus as the most vibrant holiday home market in the Region. This market leadership was further strengthened on 27 May 2005, when a new law was passed paving the way for 11 golf-integrated residential resorts by allowing such developments on un-zoned land subject to certain criteria. The Investment Manager has been aware of the prospect of this law since early 2004 and is in discussions in relation to the majority of these developments. The current Cypriot government comprises representatives of Progressive Party of the working People (AKEL), Democratic Party (DIKO) and the Socialist Party of Cyprus (EDEK) and independents. The Government is planning the reform of public administration but the main area of attention remains the tensions with Turkey over recognition. It should be noted, however, that Turkey has recently signed a key protocol extending a customs union to the Republic of Cyprus. With the recent relative strength of the Euro, the current account deficit could remain an issue but monetary and fiscal discipline should curtail inflationary pressures. Furthermore, Euro adoption aspirations are expected to enhance Cyprus business environment and benefit the Company s investments. 34

75 TURKEY Whilst Turkish real GDP growth has slowed in the twelve months to June 2005 it remains at a healthy 4.2 per cent. Inflation, which has historically been at extremely high levels, has been curtailed in recent years falling to 8 per cent. in the year to 30 September In 2004 the country experienced its highest ever number of tourist arrivals (currently estimated to be in excess of 17 million) and land and property values remain low relative to Greece and Cyprus. Certainly risks remain, including the size of the current account deficit and the vagaries of investor sentiment but, the Directors anticipate that tight monetary and fiscal policies and the reform terms of the new IMF standby agreement will support the investment case for the Company. The current Turkish government is led by the Justice and Development Party (AKP). European Union accession negotiations commenced on 3 October 2005 and are expected to be protracted. Negotiations may be hampered by the Cyprus issue but the current extension of the customs union agreement offers a tentative rapprochement. The government will need to continue to address the reforms required by IMF conditions and EU accession requirements. The Directors believe that the measures taken by Turkey to address its economic and structural issues to date and its desire to advance swiftly with EU accession negotiations indicate an ongoing process of reforms that will underpin the Company s activities. CROATIA Real GDP growth dropped sharply in the first quarter of 2005 and unemployment remains stubbornly high. In addition, the current account deficit remains in negative territory. To offset the effects of slowing economic growth, the IMF agreed in July 2005 to allow the authorities to overshoot its fiscal deficit target for the current year. The Balkan Wars of the 1990s resulted in the destruction of the country s infrastructure and the tourism inflow has only recently returned to the levels of the 1980s. The current Croatian government is led by the Croatian Democratic Union. The government remains under pressure from both the EU and the IMF to carry out political and economic reforms, however local elections in May 2005 passed relatively successfully. Croatia s membership negotiations with the EU requires movement on co-operation with the International Criminal Tribunal for former Yugoslavia (ICTY). The Directors believe that the current fiscal and monetary management policies and EU membership aspirations of Croatia revamped on 3 October 2005 provide the political and economic conditions to enhance the current investment opportunity for the Company. In addition, the Directors have noted signs of a growing demand for leisure-integrated real estate along the entire Dalmatian coast, and particularly for upscale projects near Dubrovnik. 35

76 Some of the Region s key demographic and macro-economic indicators are summarised in the following table: Indicator Greece Cyprus Turkey Croatia Population (millions) Area (square kilometres) 131,940 9, ,580 56,542 Coastline (kilometres) 13, ,200 5,835 GDP (PPP) $ billion (2004 estimate) GDP growth (2004 estimate) 3.7% 3.2% 8.2% 3.7% Inflation (2004 estimate) 2.9% 2.4% 9.3% 2.5% Unemployment (2003) 10.0% 3.2% 9.3% 13.8% Government debt (% of GDP 2004 estimate) 101% 75% 74.3% 41.7% Tourist arrivals 2004 (million) Corporate tax rate 32% 10% 30% 20% 36

77 PART 7 THE PLACING Shares Subject to the Placing The Placing comprises an offer by the Company of the Placing Shares to raise net proceeds of approximately 67,864,000 (A99,800,000). The Placing is arranged by Panmure Gordon in accordance with the terms of the Placing Agreements further details of which are set out under Placing Arrangements below and in paragraph 6.1 of Part 11 of this document. Placing Arrangements On 6 December 2005, the Company, the Investment Manager, the Directors, Panmure Gordon and Grant Thornton Corporate Finance entered into the Placing Agreement pursuant to which Panmure Gordon agreed, subject to certain conditions, to use reasonable endeavours to procure subscribers for the Placing Shares which are allocated pursuant to the Placing. All such subscriptions will be at the Placing Price. For the avoidance of doubt, Panmure Gordon is not itself obliged under the Placing Agreement to subscribe for any Placing Shares for which it is unable to procure subscribers. Under the Placing, the Placing Shares have been offered to institutional and certain other investors in the UK and certain other European jurisdictions. No Placing Shares have been sold or are available in whole or in part to the public in the UK or elsewhere in connection with the Placing. The Common Shares have not been and will not be registered under the Securities Act and, subject to certain exceptions, may not be offered or sold within the United States. The Placing is subject to the satisfaction of conditions contained in the Placing Agreement, including Admission occurring on or before 8 December 2005 (or such later date as Panmure Gordon and the Company may agree (not being later than 16 December 2005)). Certain conditions are not capable of waiver. The Placing Agreement contains provisions entitling Panmure Gordon to terminate the Placing (and the arrangements associated with it) at any time prior to Admission in certain circumstances. If this right is exercised, the Placing will lapse and any monies received in respect of the Placing will be returned to applicants without interest. The Placing Agreement provides for Panmure Gordon to be paid (inter alia) commissions in respect of the Placing Shares to be allotted pursuant to the Placing. Any commissions received by Panmure Gordon in connection with the placing may be retained for its own benefit. Further details of the terms of the Placing Agreement are set out in paragraph 6.1 of Part 11 of this document. Lock-in Arrangements Each of the Company s Directors and all related parties for the purposes of the AIM Rules have agreed not to dispose of any interest in their Common Shares for a period of one year following Admission except in certain restricted circumstances. Each of the Founding Shareholders have agreed not to dispose of any interest in their Common Shares before the date of lapse of the Founding Shareholder Warrants. Details of these lock-in arrangements are set out in paragraph 6.2 of Part 11 of this document. Admission, Settlement, Dealings and CREST Admission of the entire share capital of the Company to trading on AIM is expected to take place and dealings in the Common Shares are expected to commence at 8.00 a.m. on 8 December The earliest date for settlement will be on that date. Dealings on AIM before Admission will only be settled if Admission takes place. All dealings in Common Shares prior to commencement of unconditional dealings will be at the sole risk of the parties concerned. The Common Shares will be issued in registered form. The Registrar will be responsible for the maintenance of the register of Shareholders. CREST is a UK computerised paperless share transfer and settlement system, which allows shares and other securities, including depositary interests, to be held in electronic form rather than in paper form. Shares of certain non-uk companies, such as the Company, cannot be held and transferred directly into the CREST system. Shareholders who wish to hold and transfer Common Shares in uncertificated form may do so pursuant to a Depository Interest arrangement to be established by the Company. The Common Shares will not themselves be admitted to CREST. Instead Computershare will issue Depository Interests in respect of the Common Shares. The Depository Interests will be independent securities constituted under English law that may be held and transferred through the CREST system. 37

78 The Depository Interests will have the same security code (ISIN) as the underlying Common Shares. The Depository Interests will be created and issued pursuant to a deed poll entered into by Computershare on 21 November 2005, which will govern the relationship between Computershare and the holders of the Depository Interests. Common Shares represented by Depository Interests will be held on bare trust for the holders of the Depository Interests. To the fullest extent permitted by BVI Law, each Depository Interest will be treated as one Common Share for the purposes of determining eligibility for dividends, issues of bonus stock and voting entitlements. In respect of dividends, the Company will put Computershare (or custodian if appointed) in funds for the payment and Computershare will transfer the money to the holders of the Depository Interests. In respect of any bonus stock, the Company will allot any bonus stock to Computershare and will issue such bonus stock to the holder of the Depository Interest (or as such holder may have directed) in registered form. In respect of voting, Computershare will cast votes in respect of the Common Shares as directed by the holders of the Depository Interests which the relevant Common Shares represent. Application has been made for the Depository Interests in respect of the underlying Common Shares to be admitted to CREST with effect from Admission. Further information regarding the depository arrangement and the holding of Common Shares in the form of Depository Interests is set out in paragraph 10 of Part 11 of this document and is available from the Depositary. The Depositary may be contacted at Computershare Investor Services Plc, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH, United Kingdom. 38

79 PART 8 LETTER FROM ECONOMICS RESEARCH ASSOCIATES Economics Research Associates is one of the world s oldest and largest leisure and tourism industry consulting firm. ERA has conducted over 15,000 studies for public and private, sector clients around the world. ERA is an Anglo-American company with the European headquarters in London, and offices throughout the US. During its 45-year history, ERA has acquired an extensive depth of consulting experience in leisure and tourism within the industry. The firm has been instrumental in the planning, development and operational phases of many of the most well known recreation, entertainment, cultural, educational and tourist attractions in the world. ERA s services include market research, economic feasibility studies, concept development, repositioning and market adjustment strategies, valuations, operational consulting, expansion planning, economic impact analyses, and marketing programmes. ERA London has an active integrated resort practice and has worked extensively throughout Europe, Africa and the Middle East. Studies recently completed by staff based in the London Office of ERA include a detailed market and financial feasibility for the Aphrodite Hills Resort project in Cyprus for the Lanitis Group. In Spain, ERA London has over many years advised Soros Real Estate on their golf and real estate development strategy and assisted in concept development. In Greece and Turkey, ERA London is working on both golf and non-golf resort concepts and in the Middle East is working on both urban and coastal resort and real estate concepts. In Scotland, ERA London has been working on an integrated resort concept on the Banks of Loch Lomond as well as advising The Gleneagles Hotel on their peripheral land use expansion plans including development concept work for the proposed Gleneagles Seasonal Ownership product. Resort clients of ERA include Ritz-Carlton, Serena Hotels, Four Seasons and Aman Resorts. The Directors Dolphin Capital Investors Limited Vanterpool Plaza 2nd Floor Wickhams Cay 1 Road Town Tortola British Virgin Islands Economics Research Associates 25 Hosier Lane London EC1A 9DW 2 November 2005 Dear Sirs THE INTEGRATED RESORT REAL ESTATE MARKET The appreciation of property prices in many Northern European markets, but notably in the UK and Ireland, has created wealth and the desire and ability to purchase a second home across a large stratum of middle and upper income society. It is largely UK and Irish buyers who have fuelled demand for second homes throughout the Southern Mediterranean and, increasingly in the Eastern Mediterranean (Turkey, Greece, Cyprus, and Croatia). Germany, dogged by a deflated property market has remained a secondary demand source for some time, but we anticipate revived growth in the medium term. Italian and French buyers have traditionally not bought property overseas but we have observed recent buyer activity from the Italian market in Egypt and Costa Rica and from the French market in Morocco and Mauritius indicating that a modest, price sensitive but pioneering market is emerging. Spain and Portugal have always been the strongest second home destinations in Europe. According to research commissioned by the Abbey National (Building Society) over 700,000 British people own 39

80 properties in Spain and over 50,000 in Portugal. However, our research amongst international agents indicates a fatigue with both destinations as they are increasingly perceived to be both overcrowded and expensive. According to The Economist, in 2004 some 180,000 holiday homes were built along the coast of Spain and a million more are planned for the Costa Blanca alone over the next decade. As much as one third of Spain s coastline is now under concrete. Core generating markets are now seeking out new destinations where property prices are more attractive, where there is still an unspoilt coastline and a stronger sense of place, such as in the Southern European countries. Cyprus is an interesting case study; pent-up demand for high quality leisure-integrated resorts was clearly demonstrated when Aphrodite Hills was launched onto the market a few years ago. Sales velocity of second home products within this integrated golf development was higher than any other development on the island at premiums in excess of 30 per cent. above non-golf product elsewhere in Cyprus. In Croatia, development to date has been largely speculative in nature and characterised by small parcel development. There are no upscale master-planned communities, but there is strong potential to develop this market. In Turkey, poor quality modestly proportioned real estate is selling well to British and Irish buyers. We believe that integrated resorts offering multiple amenities and a quality environment can develop the market in Turkey away from middle market speculators towards a more lucrative lifestyle and investment buyer. Areas of particular opportunity include Antalya, Izmir and Bodrum. In Greece, restrictive planning frameworks to date have hindered the development of high quality master-planned communities. There is strong evidence of pent up demand and we are aware of a number of projects now successfully navigating the bureaucratic hurdles. ERA see additional potential in other emerging markets such as Montenegro and Bulgaria. The depth of the market for second homes is difficult to quantify. Alliance & Leicester in their 2004 report on retirement migration calculated that by 2020 over six million Britons alone will venture overseas to work and live. Such projections are supported by both demographic trends and lifestyle characteristics. Recovery in the German economy will help to revitalise a second home market that was once the driver of real estate sales in key resort destinations. There is also growing potential in other geographic source markets particularly the growing economies of Central Europe. The traditional lifestyle-driven purchase of a second home has been supplemented by the desire of buyers to find investment vehicles beyond faltering stock market and pension fund investments. In addition, the cash rich/time poor generation wants a property that is low hassle and has strong leisure elements to it. Thus we see the emergence of investor products such as condo-hotels and seasonal ownership products such as fractionals, private residential clubs and destinations clubs. These hybrid real estate products have broadened the market and added greater choice for the buyer and greater opportunity for the developer. Yours faithfully Muriel Muirden Managing Director 40

81 PART 9 ACCOUNTANTS REPORT Grant Thornton UK LLP Chartered Accountants UK member of Grant Thornton International The Directors Dolphin Capital Investors Limited Vanterpool Plaza 2nd Floor Wickhams Cay 1 Road Town Tortola British Virgin Islands 6 December 2005 Dear Sirs Dolphin Capital Investors Limited (the Company ) Introduction We report on the financial information set out in paragraphs 1 to 6 of Part 9 of this document. This financial information has been prepared for inclusion in the AIM admission document dated 6 December 2005 of Dolphin Capital Investors Limited on the basis of the accounting policies set out in the notes to the financial information. This report is required by paragraph 20.1 of Annex 1 of the AIM Rules and is given for the purpose of complying with that paragraph and for no other purpose. Responsibilities The Directors of Dolphin Capital Investors Limited are responsible for preparing the financial information on the basis of preparation set out in note 1 to the financial information and in accordance with the International Financial Reporting Standards ( IFRS ). Such financial information is the responsibility of the Directors of the Company who approve its issue. It is our responsibility to form an opinion on the financial information as to whether the financial information gives a true and fair view, for the purposes of the AIM admission document, and to report our opinion to you. Gatwick Office The Explorer Building Fleming Way Crawley RH10 9GT T +44 (0) F +44 (0) Grant Thornton UK LLP is a limited liability partnership registered in England and Wales: No. OC Registered office: Grant Thornton House, Melton Street, Euston Square, London NW1 2EP. A list of members is available from our registered office. Grant Thornton UK LLP is authorised and regulated by the Financial Services Authority for investment business. 41

82 Basis of Opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of the significant estimates and judgements made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the Company s circumstances, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement, whether caused by fraud or other irregularity or error. Opinion In our opinion, the financial information set out in paragraphs 1 of 6 of Part 9 of the AIM admission document gives, for the purposes of the AIM admission document dated 6 December 2005, a true and fair view of the state of affairs of Dolphin Capital Investors Limited as at 30 September 2005 and of its profits, cash flows and changes in equity for the period then ended in accordance with the basis of preparation set out in the notes to the financial information and in accordance with IFRS. Declaration For the purposes of Paragraph (a) of Schedule Two of the AIM Rules we are responsible for this report as part of the AIM admission document and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration may be included in the AIM admission document dated 6 December 2005 of Dolphin Capital Investors Limited in compliance with Schedule Two of the AIM Rules. Yours faithfully GRANT THORNTON UK LLP 42

83 UNAUDITED FINANCIAL INFORMATION ON DOLPHIN CAPITAL INVESTORS LIMITED 1 ACCOUNTING POLICIES Basis of preparation The financial information has been prepared in accordance with International Financial Reporting Standards (IFRS). The financial information has been prepared on the historical cost basis. The principal accounting policies adopted are set out below. All amounts have been rounded to the nearest Euro. Cash and cash equivalents Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand. Financial Instruments Financial assets are recognised in the balance sheet initially at fair value net of transaction costs and subsequently at amortised cost. All financial assets fall within the category of loans and receivables. Provision is made for impairment where appropriate. Income and expenditure arising on financial instruments is recognised on the accruals basis under the effective interest method and credited or charged to the profit and loss account in the financial period to which it relates. Trade receivables are initially stated at fair value. They do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables are not interest bearing and are initially stated at their nominal value and subsequently measured at amortised cost less settlement payments. Foreign currencies The Company s functional and presentation currency is Euros. Transactions in currencies other than Euros are recorded at the rates of exchange prevailing on the dates of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value is determined. Gains and losses arising on retranslation are included in net profit or loss for the year, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity. 43

84 2 BALANCE SHEET At 30 September 2005 Note A Current assets Cash 4,924,267 Total assets 4,924,267 Equity and liabilities Equity Share capital ,000 Share premium account 4,950,000 Retained earnings deficit (81,939) Total equity 4,918,061 Current liabilities Trade and other payables 6.5 6,206 Total current liabilities 6,206 Total equity and liabilities 4,924,267 3 INCOME STATEMENT Period ended 30 September 2005 Note A Administrative expenses (88,461) Staff costs 6.2 (5,001) Loss from operations 6.1 (93,462) Finance income ,523 Loss before tax (81,939) Tax 6.4 Loss for the financial period (81,939) 4 STATEMENT OF CHANGES IN EQUITY Note Share capital A Share premium account A Retained earnings A Shares issued in the period ,000 4,950,000 5,000,000 Retained loss for the period (81,939) (81,939) At 30 September ,000 4,950,000 (81,939) 4,918,061 Total A 44

85 5 CASH FLOW STATEMENT Period ended 30 September Note 2005 Operating activities Loss before tax (81,939) Adjustments for: Increase in payables 6,206 Cash expended from operations (75,733) Net finance income (11,523) Net cash outflow from operating activities (87,256) Investing activities Interest received 11,523 Net cash inflow from investing activities 11,523 Cash outflow before financing (75,733) Financing activities Issue of shares 6.6 5,000,000 Increase in cash and cash equivalents in period 4,924,267 Cash and cash equivalents at start of the period Cash and cash equivalents at end of the period 4,924,267 6 NOTES TO THE FINANCIAL INFORMATION 6.1 Loss from operations Dolphin Capital Investments Limited is a company incorporated in the British Virgin Islands under the International Business Companies Act (Cap. 291) as an International Business Company. The loss from operations is attributable to the principal activity, that of an investment company. 6.2 Remuneration of directors The remuneration in respect of the directors was as follows: Period ended 30 September 2005 A Directors remuneration 5,001 Staff costs The average number of persons employed by the Company (including directors) during the period was three. The aggregate fees paid in respect of services provided by these persons is disclosed above. 6.3 Finance income Period ended 30 September 2005 A Bank interest receivable 11,523 45

86 6.4 Tax As a company incorporated under the BVI International Business Companies Act (Cap. 291), the Company is exempt from taxes on profit, income or dividends. Each company is required to pay an annual government fee which is determined by reference to the amount of the Company s authorised share capital. 6.5 Trade and other payables At 30 September 2005 A Accruals and deferred income 6, Share capital At 30 September 2005 A Authorised Equity: 200,000,000 Common Shares of A0.01 each 2,000,000 Allotted, called up and fully paid Equity: 5,000,000 Common Shares of A0.01 each 50,000 Share issues On 7 June 2005, 1 Common Share with nominal value of A0.01 was allotted to the Investment Manager as the initial subscriber of the Company for A1. On 15 July 2005, 99 Common Shares of A0.01 each were allotted to the Investment Manager for A1 per Common Share. On 1 August 2005, 4,999,900 Common Shares of A0.01 each were allotted for A1 per Common Share. 6.7 Post Balance Sheet Events The following events occurred between 30 September 2005 and the date of the Admission Document. Subsidiary Undertakings The following undertakings in which the Company s interest is more than 20 per cent., were incorporated since 30 September 2005: Subsidiary undertakings Country of incorporation Principal activity DolphinCI One Ltd. DolphinCI Two Ltd. DolphinCI Three Ltd. DolphinCI Four Ltd. Dolphin Holdings One Ltd. Dolphin Holdings Two Ltd. Cyprus Cyprus Cyprus Cyprus British Virgin Islands British Virgin Islands Dormant shell Project company Dormant shell Dormant shell Dormant shell Dormant shell Class and percentage of shares held 100 per cent. Ordinary 100 per cent. Ordinary 100 per cent. Ordinary 100 per cent. Ordinary 100 per cent. Common 100 per cent. Common Warrants On 6 December 2005 the Founding Shareholder Warrants were issued. The Founding Shareholder Warrants entitle the Founding Shareholders to subscribe, at nominal value per Common Share of A0.01, for such number of Common Shares (capped at 12.5 million Common Shares) which when multiplied by the Placing Price of 68p (A1.00) equals 50 per cent. of the difference between the market value of the Company s legal interests in the Prospective Investment Portfolio at acquisition and its cost of investment. The valuation of the Company s legal interests in the Prospective Investment Portfolio will be carried out by the Property Valuer as at 30 June Accounting period The accounting period is for the period from incorporation on 7 June 2005 to 30 September

87 PART 10 TAXATION The information below, which relates only to United Kingdom and BVI taxation, is applicable to the Company and to persons who are resident or ordinarily resident in those jurisdictions (except where indicated) and who hold Common Shares as investments and in the circumstances indicated below to nonresidents carrying on a trade in the United Kingdom. It is based on existing law and practice and is subject to subsequent changes therein. If you are in any doubt as to your tax position, you should consult your own professional adviser without delay. BVI The Company As a company incorporated under the IBCA, the Company is exempt from taxes on profit, income or dividends. The Company is required to pay an annual government fee which is determined by reference to the amount of the Company s authorised share capital. Non-BVI Resident Investors Shareholders are exempt from all BVI income taxes on dividends and other payments received from the Company provided that the Shareholder is not resident in the BVI. There are no applicable capital gains taxes, capital transfer taxes, estate duties or inheritance duties in the BVI. United Kingdom The Company The Company intends to conduct its affairs so that, for United Kingdom corporation tax purposes, it will not be regarded as resident within the United Kingdom nor as carrying on a trade through a permanent establishment located in the United Kingdom. On that basis and on the assumption that it has no United Kingdom source income the Company will have no liability in respect of United Kingdom corporation tax on its income or capital gains. United Kingdom Resident Investors Shareholders who are resident in the United Kingdom may be liable to United Kingdom income tax or corporation tax in respect of dividend income received from the Company and to United Kingdom capital gains tax or corporation tax on chargeable gains in respect of capital gains realised on a disposal of Common Shares. (a) Taxation of dividends A distribution by the Company with respect to the Common Shares in the form of a dividend may give rise to income chargeable in the United Kingdom to either income tax or corporation tax on income. In the case of a dividend, individuals domiciled and ordinarily resident for tax purposes in the United Kingdom who are liable to income tax at the starting or basic rate will be taxed at the ordinary rate (10 per cent.) under Schedule D Case V of the Income and Corporation Taxes Act 1988 (the UK Taxes Act ). An individual who is a higher rate tax payer will be chargeable to tax at the upper rate (32.5 per cent.) under Schedule D Case V of the UK Taxes Act. Non-taxpayers will have no liability to income tax. United Kingdom resident corporate shareholders will normally be liable for corporation tax on any dividends paid by the Company. No withholding tax will be deducted from dividends paid by the Company. (b) Taxation of capital gains The Company will not be a collective investment scheme for the purposes of the United Kingdom offshore funds legislation. Accordingly, any gain realised by a United Kingdom resident holder of Common Shares or a holder of Common Shares who carries on a trade in the United Kingdom through a permanent establishment with which their investment in the Company is connected on a sale or other disposal (including from liquidation or dissolution of the Company) of their Common Shares may, depending on their circumstances and subject as mentioned below, be subject to United Kingdom capital gains tax or corporation tax on chargeable gains. The amount of the gain will be the difference between the acquisition cost of the Common Shares and the disposal proceeds. On a disposal of Common Shares by an individual investor who is resident or ordinarily resident in the United Kingdom for tax purposes, the Common Shares may attract taper relief which reduces the amount of chargeable gain according to how long, measured in years, the Common Shares have been 47

88 held. An investor which is a body corporate resident in the United Kingdom for tax purposes will benefit from indexation allowance which, in general terms, increases the capital gains tax base cost of an asset in accordance with the rise in the Retail Prices Index. Stamp Duty and Stamp Duty Reserve Tax ( SDRT ) No United Kingdom stamp duty or SDRT will arise on the issue of Common Shares. Generally, no United Kingdom stamp duty or SDRT is payable on a transfer of or agreement to transfer Common Shares executed outside of the United Kingdom. Transfers of Depositary Interests within CREST will be subject to stamp duty reserve tax at the rate of 0.5 per cent. of the amount or value of the consideration. Section 739 UK Taxes Act Individual investors ordinarily resident in the UK for tax purposes should note that Chapter III (Sections 739 and 740) of Part XVII of the UK Taxes Act may render them liable to income tax in respect of undistributed income or profits of the Company. These provisions are aimed at preventing the avoidance of income tax by individuals through a transaction resulting in the transfer of assets or income to persons (including companies) resident or domiciled abroad. However, these provisions will not apply if the investor can satisfy the Inland Revenue that either: (1) the purpose of avoiding liability to United Kingdom taxation was not the purpose or one of the purposes of his investment in the Company; or (2) the investment was a bona fide commercial transaction and was not designed for the purpose of avoiding United Kingdom taxation. Controlled Foreign Companies Legislation The attention of companies resident in the United Kingdom is drawn to the fact that the controlled foreign companies provisions contained in Sections 747 to 756 of the UK Taxes Act could be material to any company so resident that has an interest in the Company such that 25 per cent. or more of the Company s profits for an accounting period could be apportioned to them, if at the same time the Company is controlled by companies or other persons who are resident in the United Kingdom for taxation purposes. The effect of such provisions could be to render such companies liable to United Kingdom corporation tax in respect of their share of the undistributed income and profits of the Company. Section 13 Taxation of Chargeable Gains Act 1992 ( TCGA ) The attention of United Kingdom investors resident or ordinarily resident and, if an individual, domiciled in the United Kingdom is drawn to the provisions of Section 13 TCGA under which, in certain circumstances, a portion of capital gains made by the Company can be attributed to an investor who holds, alone or together with associated persons, more than 10 per cent. of the Common Shares. The capital gains attributed to the investor may (in certain circumstances) be liable to United Kingdom tax on capital gains in the hands of the investor. Other Jurisdictions Potential purchasers of Common Shares should consult their own professional tax advisors as to the tax consequences of the purchase, ownership and disposition of Common Shares. Any person who is in any doubt as to his tax position or requires more detailed information than the general outline above should consult his professional advisers. 48

89 PART 11 ADDITIONAL INFORMATION 1 The Company 1.1 The Company was incorporated on 7 June 2005 in the British Virgin Islands under the IBCA as an International Business Company with registered number The principal legislation under which the Company operates is the IBCA and regulations made thereunder. 1.3 The Company s main activity is that of an investment company. 1.4 The registered office of the Company is at Vanterpool Plaza, 2nd Floor, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands (telephone number ). 1.5 The liability of the members of the Company is limited. 1.6 The Company is the holding company of the following subsidiaries all of which are whollyowned: Name DolphinCI One Ltd Cyprus DolphinCI Two Ltd Cyprus DolphinCI Three Ltd Cyprus DolphinCI Four Ltd Cyprus Date of Incorporation and Country of Incorporation Dolphin Holdings One Ltd British Virgin Islands Dolphin Holdings Two Ltd British Virgin Islands Registered Office G.Kranidioti 6th Floor Nice Day House P.C Nicosia Cyprus As above As above As above Vanterpool Plaza 2nd Floor Wickhams Cay 1 Road Town Tortola British Virgin Islands As above Issued Share Capital 1,000 shares of CYP1.00 each 1,000 shares of CYP1.00 each 1,000 shares of CYP1.00 each 1,000 shares of CYP1.00 each 10,000 common shares of A1.00 each 10,000 common shares of A1.00 each The directors of the above subsidiaries are Miltos Kambourides and Pierre Charalambides. At the date of this document all of the above subsidiaries other than DolphinCI Two Ltd. are dormant. 2 Share Capital 2.1 The authorised share capital and issued share capital of the Company (i) as at the date of this document and (ii) as it will be immediately following Admission is set out below: Authorised Issued No. of Common Shares Nominal Value A No. of Common Shares Nominal Value A (i) 500,000,000 5,000,000 5,000,000 50,000 (ii) 500,000,000 5,000, ,000,000 1,090,000 49

90 2.2 The authorised share capital of the Company on its incorporation was A100,000 divided into 10,000,000 Common Shares of A0.01 each. Since the date of incorporation the following changes have occurred to the Company s authorised and issued share capital: on the 7 June 2005, 1 Common Share was allotted to the Investment Manager as the initial subscriber of the Company, which share was paid up as to A on 15 July 2005, 99 Common Shares were allotted to the Investment Manager, which were paid up as to A1.00 per share; on 1 August 2005, 4,999,900 Common Shares were allotted for an aggregate consideration of A4,999,900; and on 7 December 2005, the authorised share capital of the Company was increased to A5,000,000 divided into 500,000,000 Common Shares. 2.3 As at the date of this document the authorised share capital of the Company is A5,000,000 divided into 500,000,000 Common Shares of which 5,000,000 Common Shares are in issue and are fully paid. 2.4 The Common Shares have been created by the Company under the provisions of the IBCA and have been assigned with ISIN VGG2803G1028 and CUSIP G2803G102. The Depository Interests have been credited by the Depositary pursuant to a deed poll dated 21 November 2005 and have been assigned the same ISIN number as the Common Shares. 2.5 On 6 December 2005, the Founding Shareholder Warrants were issued to the Founding Shareholders. 2.6 Save as referred to in paragraphs 2.2 to 2.4 above and pursuant to the Placing, since the date of its incorporation no share or loan capital of the Company has been issued or agreed to be issued, or is now proposed to be issued, for cash or any other consideration and no commissions, discounts, brokerages or other special terms have been granted by the Company in connection with the issue of any such capital. 2.7 Save for the Founding Shareholder Warrants, no share or loan capital of the Company is under option or has been agreed, conditionally or unconditionally, to be put under option. 2.8 The issue of the Placing Shares will dilute the holdings of the Founding Shareholders by 95.4 per cent. 3 Memorandum and Articles of Association The Memorandum of Association of the Company provides that the Company s principal object is to carry on the business, amongst other things, of an investment company. The objects of the Company are set out in full in clause 4 of its Memorandum of Association. The Articles of Association of the Company contain, inter alia, provisions to the following effect: 3.1 Voting Section 62 (1) of the IBCA deals with the voting rights of shareholders. This section provides that except as otherwise provided in the Memorandum or Articles of Association, all shares vote as one class and each whole share has one vote. There are no contrary provisions in the Memorandum or Articles of Association of the Company. 3.2 Return of Capital on Winding-Up Section 92(1) of the IBCA deals with the distribution of assets by a liquidator on a winding-up of the Company. Subject to payment of, or to discharge of, all claims, debts, liabilities and obligations of the Company any surplus shall then be distributed amongst the members according to their rights and interests in the Company according to the Memorandum and Articles of Association of the Company. Subject to the rights of the holders of shares issued upon special conditions if the assets available for distribution to members shall be insufficient to pay the whole of the paid up capital such assets shall be shared on a pro rata basis amongst members entitled to them by reference to the number of fully paid up shares held by such members respectively at the commencement of the winding up. 3.3 Variation of Class Rights If at any time the authorised capital is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may, whether or not the Company is being wound up, be varied with the consent in 50

91 writing of the holders of not less than three-fourths of the issued shares of that class or series and of the holders of not less than three-fourths of the issued shares of any other class or series of shares which may be affected by such variation. 3.4 Reduction or Increase in Authorised Capital or Capital The Company may by a resolution of the Directors amend the Memorandum of Association to increase or reduce its authorised capital and in connection therewith the Company may in respect of any unissued shares increase or reduce the number of such shares, increase or reduce the par value of any such shares or effect any combination of the foregoing. The Company may amend the Memorandum of Association to: (a) (b) divide the shares, including issued shares, of a class or series into a larger number of shares of the same class or series; or combine the shares, including issued shares, of a class or series into a smaller number of shares of the same class or series, provided, however, that where shares are divided or combined under paragraph (a) or (b) above, the aggregate par value of the new shares must be equal to the aggregate par value of the original shares. The capital of the Company may by a resolution of Directors be increased by transferring an amount of the surplus of the Company to capital. The share capital Company may by resolution of the Directors be reduced by: (a) (b) (c) returning to Shareholders any amount received by the Company upon the issue of any of its shares, the amount being surplus to the requirements of the Company, cancelling any capital that is lost or not represented by assets having a realisable value, or transferring capital to surplus for the purpose of purchasing, redeeming or otherwise acquiring shares that the Directors have resolved to purchase, redeem or otherwise acquire. No reduction of capital shall be effected that reduces the capital of the Company to an amount that immediately after the reduction is less than the aggregate par value of all outstanding shares with par value and all shares with par value held by the Company as treasury shares and the aggregate of the amounts designated as capital of all outstanding shares without par value and all shares without par value held by the Company as treasury shares that are entitled to a preference, if any, in the assets of the Company upon liquidation of the Company. No reduction of capital shall be effected unless the Directors determine that immediately after the reduction the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and that the realisable assets of the Company will not be less than its total liabilities, other than deferred taxes, as shown in the books of the Company and its remaining capital, and, in the absence of fraud, the decision of the directors as to the realisable value of the assets of the Company is conclusive, unless a question of law is involved. 3.5 Transfer of Shares Registered shares in the Company may be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee, but in the absence of such written evidence of transfer the directors may accept such evidence of a transfer of shares as they consider appropriate. The Company may also issue shares in uncertificated form. The Company shall not be required to treat a transferee of a registered share in the Company as a member until the transferee s name has been entered in the share register. The board of Directors may, in its absolute discretion, and without assigning any reason therefore, refuse to register any transfers of shares which are not fully paid provided that such discretion may not be exercised in such a way as to prevent dealings in the shares of a class from taking place on an open and proper basis. The Company must on the application of the transferor or transferee of a registered share in the Company enter in the share register the name of the transferee of the share save that the registration of transfers may be suspended and the share register closed at such times and for such periods as the Company may from time to time by resolution determine provided always that such registration shall not be suspended and the share register closed for more than 60 days in any period of 12 months. 51

92 3.6 Dividends The Company may by a resolution of Directors declare and pay dividends in money, shares, or other property but dividends shall only be declared and paid out of surplus. In the event that dividends are paid in specie the Directors shall have responsibility for establishing and recording in the resolution of directors authorising the dividends, a fair and proper value for the assets to be so distributed. There are no fixed dates on which an entitlement to dividends arises. The Directors may from time to time pay to the Shareholders such interim dividends as appear to the Directors to be justified by the profits of the Company. The Directors may, before declaring any dividend, set aside out of the profits of the Company such sum as they think proper as a reserve fund, and may invest the sum so set apart as a reserve fund upon such securities as they may select. No dividends shall be declared and paid unless the Directors determine that immediately after the payment of the dividend the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in its books of account, and its capital. In the absence of fraud, the decision of the Directors as to the realisable value of the assets of the Company is conclusive, unless a question of law is involved. All dividend payments shall be non-cumulative. Notice of any dividend that may have been declared shall be given to each member in the manner hereinafter mentioned and all dividends unclaimed for 3 years after having been declared may be forfeited by resolution of the Directors for the benefit of the Company. No dividend shall bear interest as against the Company and no dividend shall be paid on treasury shares or shares held by another company of which the Company holds directly or indirectly, shares having more than 50 per cent. of the vote in electing directors. A share issued as a dividend by the Company shall be treated for all purposes as having been issued for money equal to the surplus that is transferred to capital upon the issue of the share. In the case of a dividend of authorised but unissued shares with par value, an amount equal to the aggregate par value of the shares shall be transferred from surplus to capital at the time of the distribution. In the case of a dividend of authorised but unissued shares without par value, the amount designated by the Directors shall be transferred from surplus to capital at the time of the distribution, except that the Directors must designate as capital an amount that is at least equal to the amount that the shares are entitled to as a preference, if any, in the assets of the Company upon liquidation of the Company. A division of the issued and outstanding shares of a class or series of shares into a larger number of shares of the same class or series having a proportionately smaller par value does not constitute a dividend of shares. Subject to any resolution by the Shareholders the unissued shares of the Company shall be at the disposal of the Directors who may without prejudice to any rights previously conferred on the holders of any existing shares or class or series of shares offer, allot, grant options over or otherwise dispose of shares to such persons, at such times and upon such terms and conditions as the Company may by resolution of the Directors determine. 3.7 Pre-emption Rights There is no provision of BVI law or the Articles which confer rights of pre-emption upon the issue or sale of any Common Shares. 3.8 Suspension of rights (transfers, meetings and dividends) If a Shareholder or any other person appearing to be interested in shares of the Company fails after the date of service of a notice to comply with the disclosure requirements (as summarized in paragraph 3.9 below) then from the time of such failure until after the earlier of (a) receipt by the Company of notice that there has been a transfer of the shares by an arms length sale and (b) due compliance, to the satisfaction of the Company, with the disclosure requirements (if the Directors so resolve) such Shareholder shall not be entitled to attend or vote or to exercise any right conferred by membership at meetings of the Company in respect of the shares which are the subject of such notice. Where the holding represents more than 0.25 per cent. of the issued shares of that class, the payment of dividends may be withheld, and such Shareholder shall not be entitled to transfer such shares otherwise than by an arms length sale. This provision is more stringent than any requirement of BVI law. 52

93 3.9 Ownership Threshold for Shareholder Disclosure A Shareholder is required to notify the Company when he acquires or disposes of a material interest in shares in the capital of the Company equal to or in excess of 3 per cent. of the aggregate nominal value of that share capital. This provision is more stringent than any requirement of BVI law General Meetings The Company is not required to hold an annual general meeting in any year. The Directors may convene meetings of the Shareholders of the Company at such times and in such-manner and places within or outside the British Virgin Islands as the Directors consider necessary or desirable. Upon the written request of Shareholders holding 10 per cent. or more of the outstanding voting shares in the Company the Directors shall convene a meeting of Shareholders. The Director shall give not less than 7 days notice of a meetings of Shareholders to those persons whose names at the close of business on a day to be determined by the Directors appear as Shareholders in the share register of the Company and are entitled to vote at the meeting. A meeting of Shareholders may be called on short notice: (a) if Shareholders holding not less than 90 per cent. of the total number of shares entitled to vote on all matters to be considered at the meeting, or 90 per cent. of the votes of each class or series of shares where Shareholders are entitled to vote thereon as a class or series together with not less than a 90 per cent. majority of the remaining votes, have agreed to short notice of the meeting, or (b) if all Shareholders holding shares entitled to vote on all or any matters to be considered at the meeting have waived notice of the meeting; and for this purpose presence at the meeting shall be deemed to constitute waiver. A meeting of Shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than 50 per cent. of the votes of the shares or class or series of share entitled to vote on resolutions of Shareholder to be considered at the meeting. If a quorum be present, notwithstanding the fact that such quorum may be represented by only one person then such person may resolve any matter and a certificate signed by such person accompanied where such person be a proxy by a copy of the proxy form shall constitute a valid resolution of Shareholders. If within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Shareholders, shall be dissolved; in any other case it shall stand adjourned to the next business of the day at the same time and place or to such other time and place as the Directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the shares of each class or series of shares entitled to vote on the resolutions to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved. The Chairman, may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. An action that may be taken by the Shareholders at a meeting may also be taken by a resolution of Shareholders consented to in writing or by telex, telegram, cable, facsimile or other written electronic communications, without the need for any notice, but if any resolution of Shareholders is adopted otherwise than by the unanimous written consent of all Shareholders, a copy of such resolution shall forthwith be sent to all Shareholders not consenting to such resolution Directors The Directors shall be elected by the Shareholders for such term as the Shareholders determine. The minimum number of Directors shall be one and the maximum number shall be seven. At no time shall a majority of Directors be resident in the United Kingdom. The business and affairs of the Company shall be managed by the Directors who may exercise all such powers of the Company as are not by the IBCA or by the Memorandum or the Articles required to be exercised by the Shareholders of the Company, subject to any delegation of such powers as may be authorised by the Articles and to such requirements as may be prescribed by a resolution of Shareholders. The Directors or any committee thereof may meet at such times and in such manner and places within or outside the British Virgin Islands as the Directors may determine to be necessary or desirable. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the Chairman at the meeting shall have a second or casting vote, but only if the effect of the exercise of such a vote is not to render a decision or vote in question one which is 53

94 reached or passed by a majority of the Directors who are resident in the United Kingdom. All meetings of Directors shall take place outside the United Kingdom and any decision reached or resolution passed by the Directors at any meeting not held outside the United Kingdom or at which a majority of Directors resident in the United Kingdom is present shall be invalid and of no effect. An action that may be taken by the Directors or a committee of Directors at a meeting may also be taken by a resolution of Directors or a committee of Directors consented to in writing or by telex, telegram, cable, facsimile or other written electronic communication by all Directors or the committee as the case may be, without the need for any notice. No such resolution shall be valid if a majority of the Directors sign the resolution in the United Kingdom. No agreement or transaction between the Company and one or more of its Directors or any person in which any Director has a financial interest or to whom any Director is related, including as a Director of that other person, is void or voidable for this reason only or by reason only that the Director is present at the meeting of Directors or at the meeting of the committee of Directors that approves the agreement or transaction or that the vote or consent of the Director is counted for that purpose if the material facts of the interest of each Director in the agreement or transaction and his interest in or relationship to any other party to the agreement or transaction are disclosed in good faith or are known by the other Directors. 4 Summary of British Virgin Islands Company Law The Company is incorporated in the BVI as an International Business Company ( IBC ) and is subject to BVI law. Certain provisions of BVI company law are summarised below. The following is not intended to provide a comprehensive review of the applicable law, or of all provisions which differ from equivalent provisions in jurisdictions with which interested parties may be more familiar. This summary is based upon the law and the interpretation thereof applicable as at the date hereof and is subject to change. 4.1 Share Capital The IBCA places unissued shares and treasury shares in an IBC under the control of its directors. Subject to provisions to the contrary contained in the memorandum of association ( memorandum ) or articles of association ( articles ) and without affecting rights previously conferred upon shareholders, the directors have the power to offer, allot, grant options over or otherwise dispose of such shares. The IBCA requires that shares in IBCs may not be issued until they are fully paid up. Shares may be issued for money, services rendered, personal property, an estate in real property, a promissory note or other binding obligation to contribute money or property (subject to forfeiture), or any combination thereof. The value of the consideration must be at least in the amount of the par value of shares having a par value. Shares may also be created without par value. If shares are issued at an amount in excess of the par value, the difference between the par value and the amount of consideration paid for the share constitutes surplus. Consideration paid for treasury shares is also added to surplus. Shares may be issued by way of a dividend and are treated as having been issued for an amount equal to the amount transferred from surplus to capital. Under BVI law, provision may be made in the memorandum or articles for a company to forfeit shares, for which the consideration was a promissory note or other binding obligation to pay a debt for which payment is not made upon proper notice. There is no requirement that payment for cancelled shares be refunded. Subject to any contrary provisions in an IBC s memorandum and articles, an IBC may amend its memorandum and articles to increase or reduce its authorised capital and/or the par value of any of its shares. A company may also amend its Memorandum to divide shares into a larger number of classes or series or to combine shares into a smaller number of classes or series. Subject to any contrary provisions in an IBC s memorandum and articles an IBC may issue shares with or without voting rights or with different voting rights; common, preferred, limited or redeemable shares; options warrants or similar rights to acquire any securities of the IBC; and securities convertible into or exchangeable for other securities or property of the IBC. 4.2 Financial Assistance to Purchase Shares of an IBC or its Holding Company Financial assistance to purchase shares of an IBC or its holding company is not prohibited or controlled by the IBCA. However, practice is to treat it as a reduction of capital. Such financial assistance may therefore only be made out of surplus and subject to certain other conditions and if the directors determine that immediately following the grant of the assistance, the IBC will be able to 54

95 meet its debts as they fall due and that the realisable value of its assets will exceed or equal its liabilities. This determination will need to be supported by a declaration of solvency and a balance sheet. 4.3 Purchase of own Shares by an IBC An IBC may purchase its own shares out of surplus or in exchange for newly issued shares of equal value, subject to provisions to the contrary in the IBC s memorandum or articles. The consent of the member whose shares are to be purchased is required, unless the memorandum and articles or the conditions attached to the shares or the subscription agreement based upon which the shares were issued specify that no such consent is required. Furthermore, for the purchase to be permissible in most cases the directors must determine that the IBC will be able to meet its liabilities and that the IBC s realisable assets will equal or exceed its liabilities immediately after the purchase. Any purchase of its own shares at a price lower than the fair value must be authorised by the IBC s memorandum or articles or by a written subscription agreement. A subsidiary may hold shares in its parent company but if it does so, such shares carry no voting or dividend rights and are not treated as outstanding, except for the purpose of determining the capital of the parent. 4.4 Dividends and Distribution Dividends in money, shares or other property may be declared by the directors and paid out of surplus, subject to an IBC s memorandum and articles, provided that the directors determine that the IBC will be solvent and able to satisfy its liabilities immediately after payment of the dividend. Surplus is defined as the excess of assets over liabilities, plus capital. 4.5 Protection of Minorities BVI law generally does not permit class actions or derivative actions by shareholders. However, the courts may consider claims by shareholders alleging that an IBC has acted ultra vires, illegally or fraudulently, or that (subject to certain conditions) a particular transaction involving a director is unfairly prejudicial to one or more of its members. A member may apply to the court for an order to inspect the IBC s books if a written requires to do so is improperly refused by the directors. A majority of the shareholders must approve any proposed merger of the IBC or the disposal of more than 50 per cent. of its assets, outside of the ordinary course of business, unless the same is approved by a court order for a statutory arrangement. Shareholders dissenting from the proposal or from any arrangement (which may cover other types of reorganisation or reconstruction of the IBC) are entitled to require the IBC to pay the fair value of their shares, in accordance with the procedures and conditions laid down by the IBCA. The IBCA does not prescribe procedures for variation of the rights of different classes of shareholders, the rights of such shareholders to be consulted prior to any adverse change are governed by common law, however the articles of the Company contain specific provisions. See paragraph 3.3 above. 4.6 Management Subject to the memorandum and articles, an IBC is managed by its board of directors, who each have full authority to bind the company. Directors are required under BVI law to act honestly and in good faith with a view to the best interests of the IBC, and to exercise the care, diligence and skill of a reasonably prudent person. As mentioned above, certain actions require prior approval of the shareholders, as a matter of statute. 4.7 Accounting and Auditing Requirements BVI law makes no specific provision for the types of books and records to be maintained. It requires only that an IBC keep such accounts and records as the directors of the IBC consider necessary or desirable in order to reflect the financial position of the IBC. There is no statutory requirement to audit or file annual accounts unless the IBC is engaged in certain businesses, which require a licence under BVI law. 4.8 Exchange Control BVI IBCs are not subject to any exchange control regulations in the BVI. 4.9 Stamp Duty No stamp duty is payable in the BVI in respect of instruments relating to transactions involving IBCs. An IBC cannot hold real property in the BVI. 55

96 4.10 Loans to and Transactions with Directors Subject to the memorandum and articles, and to the proviso that the transaction is not unfairly prejudicial to one or more members or to the creditors of the IBC, the IBCA permits directors to enter in transactions with the IBC in either of the two following circumstances; (i) the agreement or transaction is approved at a meeting of directors, where the material facts of the director s interest are fairly disclosed or are otherwise known to the directors, and where approval of the transaction does not require the vote of the interested director(s), or it is approved by the unanimous vote of the disinterested directors; or (ii) the transaction is approved or ratified by a shareholders resolution, where the material facts or the director s interest are fairly disclosed or are otherwise known to the members Inspection of Corporate Records Members of an IBC may inspect the IBC s books and records, pursuant to a written request and in furtherance of a proper purpose (i.e. a purpose reasonably related to the member s interest as a member). However, the directors have power to refuse the request on the grounds that the inspection is not in the best interest of the IBC or of any other member of the IBC. The only corporate records generally available for inspection by members of the public are those required to be maintained at the BVI Companies Register, namely the Certificate of Incorporation and memorandum and articles together with any amendments thereto. An IBC may elect to maintain a copy of its share register, register or directors and/or register of mortgages, charges and other encumbrances (if any) at the Registry, but this is not required under BVI law. These documents are, however, maintained in the office of the company s registered agent and may be inspected with the IBC s consent, or in limited circumstances pursuant to a court order Winding-Up The IBCA and the BVI Companies Act (Cap. 285) (in the case of insolvency) make provision for both voluntary and compulsory winding-up of an IBC, and for appointment of a liquidator. The members or the directors may resolve to wind-up the IBC voluntarily. If it is the directors who resolve to commence the winding-up, they must present a plan of dissolution for approval by the members, incorporation the matters set forth in the statute. The IBC, any contributory and any creditor may petition the court pursuant to the Companies Act (Cap. 285), for the winding-up of the IBC upon various grounds, inter alia, that the IBC is unable to pay its debts or that it is just and equitable that the IBC should be wound up Takeovers Generally the merger or consolidation of an IBC requires shareholder approval. However an IBC parent company may merge with one or more BVI subsidiaries without member approval, provided that the surviving company is also an IBC. Members dissenting from a merger are entitled to payment of the fair value of their shares unless the IBC is the surviving company and the members continue to hold a similar interest in the surviving company. The IBCA permits IBCs to merge with companies incorporated outside the BVI, provided the merger is lawful under the laws of the jurisdiction in which the non-bvi company is incorporated. Under the IBCA which is modelled on US corporate statutes, following a statutory merger, one of the companies is subsumed into the other (the surviving company) or both are subsumed into a third company (a consolidation). In either case, with effect from the effective date of the merger, the surviving company assumes all of the assets and liabilities of the other entity(ies) by operation of law and other entities cease to exist. There is no takeover code or similar regulations governing takeover offers applicable in the BVI. 5 Directors and Others Interests 5.1 The interests of the Directors, all of which are beneficial, in the issued share capital of the Company as at the date of publication of this document and as they are expected to be immediately following Admission, are as follows: Name Common Shares as at the date of this document % of issued share capital Common Shares following Admission % of issued share capital Miltos Kambourides 233,100 * ,100 * Nicholas Moy 50,000 Andreas Papageorghiou 5,000 56

97 * These Common Shares are held by the Investment Manager the ultimate beneficial owners of which are Miltos Kambourides and Pierre Charalambides. 5.2 Save as disclosed above, none of the Directors has any interests, beneficial or otherwise, in the share capital of the Company nor does (so far as is known to, or could with reasonable diligence be ascertained by, the Directors) any person connected with the Directors have any interests in such share capital, in each case whether or not held through another party. 5.3 The services of the Non-executive Directors are provided under the terms of letters of appointment between the Company and each of them effective from 1 August With the exception of Mr Moy and Mr Kambourides, the appointment of each Director is terminable immediately by a resolution of the board of Directors. Mr Moy s appointment cannot be terminated without good cause in the first 12 months. Mr Kambourides may only be removed as a Director pursuant to a vote of the Shareholders in accordance with the Articles. From Admission each Director shall be paid a fee of A15,000 per annum. These fees may be waived at the discretion of each Director. Mr Kambourides has waived such fees for as long as he is interested in any Investment Manager. Mr Achilleoudis has also waived such fees. In the event that the agreements are terminated otherwise than for good cause each Director is entitled to receive 25 per cent. of his annual fee as a termination payment. 5.4 Details of the length of time in which the Directors in the first financial period of the Company to 31 December 2005 have been in office and the period of their term of office are set out below: Name Commencement of period of office Date of expiration of term of office Andreas Papageorghiou 1 August 2005 until removed Nicholas Moy 1 August 2005 until removed Cem Duna 1 August 2005 until removed Antonios Achilleoudis 1 August 2005 until removed Miltos Kambourides 1 August 2005 until removed 5.5 There are no service contracts in existence between the Company and any of its Directors, nor are any such contracts proposed. 5.6 In addition to their directorships in the Company, the Directors have held the following directorships and/or been a partner in the following partnerships within the five years prior to the date of this document: (i) Andreas Papageorghiou Current: A. N. Papageorghiou & Associates (Partnership) Nicosia Old People Home Past: Quantum Corporation Nicosia Race Club (ii) Nicholas Moy Current: Gryphon Central Europe Ltd. Rother Meads Tennis & Games Clubs Ltd Greenpark Capital Ltd. The Tunisia Fund Ltd. Callander Granville Euromanagement Fund SICAF (Luxembourg) Past: Tasking B.V. (Netherlands) Viscount Catering Equipment Group Limited Gryphon Emerging Markets Ltd. GranIberia Fund SICAV (Luxembourg) (iii) Cem Duna Current: AB Consultancy Investment Services Co. Boynar Holding Co. Dogan Media Holding Co. C ayeli Bakýr Ýþletmeleri Co. Past: None (iv) Antonios Achilleoudis Current: Axia Ventures Limited Axia Asset Management Limited Past: Gruntal & Co. LLC (v) Miltos Kambourides Current: Dolphin Capital Partners Limited 57

98 Past: Soros Real Estate Partners (partnership) Mapeley Limited Mapeley STEPS Contractors Limited Hellenic Land International S.A. Hellenic Land Holdings B.V. 5.7 Nicholas Moy was a former non-executive director of Viscount Catering Equipment Group Ltd which went into administrative receivership in January 1992 and which was formally dissolved in November Mr Moy was acting as the board representative of certain private equity investor groups. 5.8 Save as disclosed above, no Director: has any unspent convictions in relation to indictable offences; or has been bankrupt or the subject of an individual voluntary arrangement, or has had a receiver appointed to any asset of such director; or has been a director of any company which, while he was a director or within 12 months after he ceased to be a director, had a receiver appointed or went into compulsory liquidation, creditors voluntary liquidation, administration or company voluntary arrangement, or made any composition or arrangement with its creditors generally or with any class of its creditors; or has been a partner of any partnership which, while he was a partner or within 12 months after he ceased to be a partner, went into compulsory liquidation, administration or partnership voluntary arrangement, or had a receiver appointed to any partnership asset; or has had any public criticism by statutory or regulatory authorities (including recognised professional bodies); or has been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company. 5.9 Save as disclosed in paragraph 5.1 above, and as set out below, the Directors are not aware of any person, directly or indirectly, jointly or severally, who exercises or could exercise control over the Company or who is interested directly or indirectly in 3 per cent. or more of the issued share capital of the Company as at the date of the publication of this document and immediately following Admission: 58

99 Name Common Shares as at the date of this Document % of issued share capital Common Shares following Admission % of issued share capital Henderson Global Investors Ltd. 10,125, Trafelet & Co. UK LLP 10,125, Lansdowne Partners Ltd. 8,325, Framlington Investment Management Ltd. 7,000, National Bank of Greece (Client Portfolio) 6,800, M&G Investment Management Ltd. 6,475, Cazenove Capital Management Ltd. 6,397, Goldman Sachs International 5,000, National Bank of Greece 5,000, SVM Asset Management Ltd. 4,500, UBS AG 4,300, Drawbridge Global Macro Fund Ltd.* 2,195, ,195, Wesley R. Edens 605, , George Dimitropoulos 500, , R&H Trust Co. (Jersey) Limited as Trustee of the De Conick Trust 365, , Euro-Inn Investments S.A. 300, , Constantine Dakolias 200, , Sparta Asset Management Ltd 160, , Athanasios Pipilis 150, , * Fund managed by Fortress 5.10 Neither the Directors nor the persons set out above will have upon Admission voting rights in respect of the share capital of the Company which differ from those of any other Shareholder No loans have been made or guarantees granted or provided by the Company to or for the benefit of any Director Save as set out in this document, the Directors are not aware of any arrangements which may at a subsequent date result in a change of control of the Company Save as set out in this document, no Director is or has been interested whether directly or indirectly in any transaction which is or was unusual in its nature or conditions or significant to the business of the Company and which was effected by the Company and remains in any respect outstanding or unperformed. 6 Material Contracts The following contracts, not being contracts entered into in the ordinary course of business, have been entered into by the Company since incorporation and are or may be material: 6.1 A placing agreement dated 6 December 2005 between the Company, the Directors, the Investment Manager, Panmure Gordon and Grant Thornton Corporate Finance whereby Panmure Gordon was appointed as the agent of the Company for the purpose of managing the Placing and has agreed to use reasonable endeavours to procure placees to subscribe for the Placing Shares at the Placing Price. Pursuant to the Placing Agreement, the Company and its Directors have given certain warranties and indemnities to Panmure Gordon and Grant Thornton Corporate Finance regarding, inter alia, the accuracy of the information in this document. The Placing Agreement is conditional, inter alia, on Admission taking place no later than 8.00 a.m. on 8 December 2005, or such later date as the Company and Panmure Gordon may agree being no later than 16 December 2005 and the Company and the Directors complying with certain obligations under the Placing Agreement. Under the Placing Agreement, 59

100 the Company has agreed to pay to Panmure Gordon a commission of 3.5 per cent. on the aggregate value of the Placing Shares at the Placing Price, together with all costs and expenses and VAT thereon, where appropriate. Panmure Gordon is entitled in certain limited circumstances to terminate the Placing Agreement prior to Admission. The Placing Agreement also contains a lock-in undertaking from each of the Directors, and the Investment Manager (including any of their associates within the meaning of the AIM Rules) pursuant to Rule 7 of the AIM Rules, under which the covenanting parties have agreed not to sell or otherwise dispose of, or agree to sell or dispose of, any of their interests in the Common Shares held by them respectively at Admission (or resulting from their holding of such shares) for a period of 12 months from Admission. The agreement is governed by English law. 6.2 Lock-in agreement dated 6 December 2005 between the Company, Panmure Gordon, Grant Thornton Corporate Finance and each of the Founding Shareholders (with the exception of the Investment Manager which is subject to the lock-in agreement contained in the placing agreement as summarised at paragraph 6.1 above) pursuant to the terms of which each such contracting Founding Shareholder has agreed not to dispose of any Common Shares held by them at Admission until the date on which of the Founding Shareholder Warrants lapse subject to certain exceptions including transfers or disposals made with the written consent of the Company, Grant Thornton Corporate Finance and Panmure Gordon, transfers to their associates or family trusts and transfers in acceptance of certain takeover offers for the Company. These agreements are governed by English law. 6.3 The Founding Shareholder Warrant Instrument (the Instrument ) dated 5 December 2005 whereby the Company constituted the Founding Shareholder Warrants. Under the terms of the Instrument a series of warrants have been issued to the Founding Shareholders which entitle the Founding Shareholders to subscribe at par value per Common Share of A0.01, for such number of Common Shares (capped at 12.5 million Common Shares) which when multiplied by the Placing Price of A1 equals 50 per cent. of the difference between the market value of the Company s legal interest in the Prospective Investment Portfolio at acquisition and its cost of investment. The valuation of the Company s legal interest in the Prospective Investment Portfolio (the Valuation ) will be carried out by the Company s Property Valuer and the Valuation will be approved by the Board. In carrying out such valuation the Property Valuer will be able to adopt such valuation methodology as it thinks fit and, at the Company s expense, retain the services of any appropriate third parties. In the absence of manifest error the Valuation shall be final and binding on the Founding Shareholders and the Company. The Founding Shareholder Warrants must be exercised within 30 days of the date of the Valuation or else they will lapse. The Founding Shareholder Warrants are not capable of assignment or transfer and are subject to English Law. 6.4 An engagement letter dated 3 November 2005 between the Company and Panmure Gordon pursuant to which the Company has appointed Panmure Gordon to act as Broker to the Company for the purposes of AIM commencing on the date of the agreement. The Company has agreed to pay Panmure Gordon a fee of 40,000 per annum payable in advance. The agreement may be terminated immediately by either party on written notice. The agreement contains various undertakings and indemnities from the Company. The agreement is governed by English law. 6.5 An engagement letter dated 6 December 2005 between the Company and Grant Thornton Corporate Finance pursuant to which the Company has appointed Grant Thornton Corporate Finance to act as nominated adviser to the Company. The agreement contains certain undertakings and indemnities from the Company. The agreement is terminable on 30 days notice in writing by either party. The agreement is governed by English law. 6.6 An Investment Management Agreement dated 1 August 2005 between the Company and the Investment Manager (which will be amended and restated with effect from Admission) whereby the Investment Manager was appointed to manage the investments of the Company in accordance with the investment policy from time to time approved by the Directors. Under the terms of the agreement the Investment Manager has discretionary authority to manage the assets of the Company and, subject to the approval of the Directors, the authority to purchase and dispose of investments for the account of the Company. 60

101 The Investment Manager will receive an annual management fee payable quarterly in advance equivalent to 2 per cent. per annum of the total funds raised by the Company, being initially the gross proceeds of the Placing and the A5 million subscribed by the Founding Shareholders, and subsequently including the proceeds of any further fund raisings. In addition, in relation to any investment made by the Company the Investment Manager is potentially entitled to a performance fee based on the net realised cash profits made by the Company subject to the Company receiving the Relevant Investment Amount which is defined as an amount equal to: (i) the total cost of the investment; plus (ii) a hurdle amount equal to an annualised percentage return of 8 per cent. compounded for each year or fraction of a year during which such investment is held (the Hurdle ); plus (iii) a sum equal to the amount of any realised losses and/or write-downs in respect of any other investment which has not already been taken into account in determining the Investment Manager s entitlement to a performance fee. In the event that the Company has received distributions from an investment equal to the Relevant Investment Amount any subsequent net realised cash profits arising shall be distributed in the following order of priority: (i) first, 60 per cent. to the Investment Manager and 40 per cent. to the Company until the Investment Manager shall have received an amount equal to 20 per cent. of such profits; and (ii) second, 80 per cent. to the Company and 20 per cent. to the Investment Manager, such that the Investment Manager shall receive a total performance fee equivalent to 20 per cent. of the net realised cash profits. Entitlement to a performance fee accrues upon the Company committing to an investment and becomes payable regardless of whether or not the Investment Manager s appointment has been terminated prior to such disposal. In relation to each investment, if on the earlier of (i) disposal of the Company s interest in that investment or (ii) 1 August 2015, the net realised cash proceeds from that investment are less than the Relevant Investment Amount the Investment Manager shall pay to the Company an amount equivalent to the difference between the net realised cash proceeds and the Relevant Investment Amount. The maximum global amount payable by the Investment Manager in relation to all investments where the clawback mechanism applies will not exceed the aggregate performance fees previously received (net of tax) by the Investment Manager in relation to other investments. Half of any performance fee payable to the Investment Manager shall be placed in an escrow account operated by the Administrator (the Escrow Account ) until the date on which the cumulative distributions made by the Company to its Shareholders first equals or exceeds the total funds raised by the Company as at Admission (being the gross proceeds of the Placing and the A5 million subscribed by the Founding Shareholders) (the Distributions Equalisation Date ). On the Distributions Equalisation Date, 50 per cent. of any escrowed funds will be released to the Investment Manager (meaning that in aggregate the Investment Manager will have received 75 per cent. of the performance fees payable). Upon the Company making cumulative distributions equal to the total funds raised by the Company plus the Hurdle, any remaining funds in the Escrow Account will also be released to the Investment Manager. The Investment Management Agreement contains an indemnity from the Company in favour of the Investment Manager against claims by third parties except to the extent the claim is due to the gross negligence, wilful default, fraud, bad faith or material violation of the laws of any relevant jurisdiction by the Investment Manager, or any of its associates or delegates. The Investment Management Agreement is for a fixed term of ten years commencing on 1 August It may be extended beyond such term with the agreement of the Investment Manager and the Company. Under the terms of the Investment Management Agreement the Investment Manager is required to devote its time and attention to the affairs of the Company and not to manage other funds that are competitive with the Company until such time as 90 per cent. of the Company s funds are committed to Projects. After that time the Investment Manager will be free to manage funds that might be competitive with that of the Company. Under the terms of the Investment Management Agreement, the Company is licensed to use the Dolphin Capital Investors name for so long as the agreement continues but must within one month of its termination cease to use the name. 61

102 The Company may summarily terminate the agreement immediately at any time without penalty by notice in writing in circumstances (inter alia) where the Investment Manager has entered into insolvency proceedings, is found liable for material breach of duty, gross negligence, wilful default, fraud, bad faith, or a material violation of applicable laws in connection with the performance of its duties under the Agreement or a material breach of the agreement which is either irremediable or not remedied within 60 days of receipt by the Investment Manager of a notice from the Company. In addition, if at any time there is any change of control of the Investment Manager the Company may within 90 days of becoming aware of any such event give not less than three months written notice to terminate the Agreement and for the purposes of this provision change of control means Miltos Kambourides being replaced in his role as the Managing Partner of the Investment Manager by someone who is not reasonably acceptable to the Company. This agreement is governed by English law. 6.7 The Administration Agreement dated 6 December 2005, between the Company and the Administrator pursuant to the terms of which the Administrator is appointed to act as administrator to the Company. The Administrator will be entitled to receive a fee of 6 basis points of the net assets of the Company plus borrowings, subject to a minimum monthly fee of A4,000 payable quarterly in arrears. In addition the Administrator will be entitled to a fee of A2,500 for assistance in the preparation of each set of financial reports and accounts, and a minimum annual fee of A2,500 for corporate secretarial services. The Administrator shall be entitled to receive reimbursement of reasonable out-of-pocket expenses on an ongoing basis. The agreement contains provisions under which the Company exempts the Administrator from liability in the absence of fraud, wilful default, bad faith or gross negligence for any liabilities, obligations, losses, or damages arising out of or in connection with its performance of its duties under the agreement. Similarly, the Company has agreed to indemnify the Administrator in respect of losses it may suffer in connection with the performance of its duties under the agreement save to the extent that such losses are due to fraud, wilful default, bad faith or negligence on the part of the Administrator. The agreement may be terminated on not less than 90 days written notice by either party, provided that termination may be made immediately in certain specified circumstances. The agreement is governed by the law of the Isle of Man. 6.8 The Custodian Agreement dated 6 December 2005, between the Company and the Custodian pursuant to the terms of which the Custodian is appointed to act as custodian to the Company. The Custodian will be entitled to receive a fee of 3 basis points per annum of the value of the non-real estate assets held on behalf of the Company, subject to a minimum monthly fee of A1,000, payable quarterly in arrears together with other agreed transaction settlement charges. The Custodian shall be entitled to receive reimbursement of reasonable out-of-pocket expenses on an ongoing basis. The agreement contains provisions under which the Company exempts the Custodian from liability in the absence of fraud, wilful default, bad faith or gross negligence for any liabilities, obligations, losses, or damages arising out of or in connection with its performance of its duties under the agreement. Similarly, the Company has agreed to indemnify the Custodian in respect of losses it may suffer in connection with the performance of its duties under the agreement save to the extent that such losses are due to fraud, wilful default, bad faith or negligence on the part of the Custodian. The agreement may be terminated on not less than 90 days written notice by either party, provided that termination may be made immediately in certain specified circumstances. The agreement is governed by the law of the Isle of Man. 6.9 The depositary and custody services agreement dated 6 December 2005 between the Company and the Depositary. CREST does not provide for the direct holding and settlement of foreign securities such as shares in the Company. To enable shares in the Company to be indirectly held and traded through CREST, under the terms of this agreement and a separate deed of trust, the Depositary agrees to hold securities in the Company and issue depositary interests in the ratio of one for one for each such security. These depositary interests, representing securities in the Company, can be held and traded through CREST. The depositary services provided by the Depositary also include maintaining in the United Kingdom a register of holders of the depositary interest, issuing the depositary interests in uncertificated form and other related registry services. The custody services provided by the Depositary also include executing instructions received from CREST members. Subject to earlier termination in 62

103 accordance with the agreement, the initial term of the agreement is fixed for 3 years and may thereafter be terminated by either party on six months notice. Fees payable by the Company include a start up fee of 8,000, an annual fee of 6,000 payable monthly in arrears and a fee of 1 per deposit, transfer or cancellation of depositary interests. 7 Working Capital The Directors are of the opinion, having made due and careful enquiry, that the working capital available to the Group will be sufficient for its present requirements, that is for at least twelve months from the date of Admission. 8 Litigation There are no governmental, legal or arbitration proceedings active, pending or threatened against, or being brought by, the Company. 9 General 9.1 There are no patents or other intellectual property rights, licences or particular contracts which are of fundamental importance to the Company s business. 9.2 The costs and expenses of, and incidental to, Admission will be borne by the Company and will be approximately A4.2 million ( 2.85 million). 9.3 Mr Papageorghiou is the Managing Partner of A.N. Papageorghiou & Associates which firm has earned fees from the Company for the provision to the Company of Cypriot law legal services. 9.4 Axia Ventures Limited ( Axia ) and Gryphon Central Europe Ltd. ( Gryphon ) of which Mr Achilleoudis and Mr Moy are directors respectively have entered into agreements with Panmure Gordon in relation to the Placing. Pursuant to the terms of these agreements Axia and Gryphon have agreed to procure investors to take part in the Placing and Panmure Gordon have agreed to allocate a number of Placing Share at the Placing Price to investors procured by Axia and Gryphon subject in the case of Axia to a global cap of A10 million and in the case of Gryphon to a global cap of A20 million. Axia and Gryphon shall receive a commission of 2.5 per cent. and 1.0 per cent. respectively of the funds raised, in both cases to be paid out of Panmure Gordon s gross Placing commission of 3.5 per cent. 9.5 Save as set out in paragraphs 9.3 and 9.4 above, and except for fees payable to the professional advisers whose names are set out on pages 5 and 6 of this document and the Founding Shareholder Warrants issued to the Founding Shareholders as set out in paragraph 6.3 above, no person has received fees, securities in the Company or other benefit to a value of 10,000 (or its currency equivalent) whether directly or indirectly, from the Company within the 12 months preceding the application for Admission, or has entered into any contractual arrangement to receive from the Company, directly or indirectly, any such fees, securities or other benefit on or after Admission. 9.6 On 6 December 2005 the Company issued the Founding Shareholder Warrants to the Founding Shareholders. Save for the issue of the Founding Shareholder Warrants, there has been no significant change in the financial or trading position of the Company since 30 September The Company does not have, nor has it had since its incorporation, any employees and does not own any premises. 9.8 The Directors undertake to propose a resolution for the winding-up of the Company if no investments have been made within two years of Admission. 9.9 Where information has been sourced from a third party this information has been accurately produced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading The Investment Manager is or may be a promoter of the Company and save as disclosed in paragraph 6.6 above, no amount or benefit has been paid, or given to the Investment Manager or any of their subsidiaries since the incorporation of the Company and, save for under the Founding Shareholder Warrant Instrument, none is intended to be paid, or given The Company s auditors are KPMG of Elma House, 10 Mnasiadou Street, 1065 Nicosia, Cyprus. KPMG were appointed as auditors to the Company on 5 October 2005 and are members of the Institute of Certified Public Accountants of Cyprus. 63

104 9.12 Grant Thornton UK LLP have given and have not withdrawn their written consent to the issue of this document with the inclusion of their Accountants Report in Part 9 of this document and the references to such report and to their name in the form and context in which they appear ERA have given and have not withdrawn their written authorisation and consent to the issue of this document with the inclusion of their letter in Part 8 of this document and the references to such report and to their name in the source and context in which they appear The Investment Manager, Grant Thornton Corporate Finance and Panmure Gordon have given and not withdrawn their written consent to the issue of this document with their names and the references to them in the form and context in which such references are included The period within which placing participations may be accepted pursuant to the Placing and arrangements for the payment and holding of subscription monies pending Admission are set out in the Placing Agreement and in the placing letters sent to prospective placees (the Placing Letters ). The Placing Shares are not being offered generally and no applications have or will be accepted other than under the terms of the Placing Agreement and the Placing Letters. All monies received from applicants will be held by Panmure Gordon prior to issue of the Placing Shares. If the placing agreement does not become unconditional or is terminated, any monies returned will be sent by cheque crossed A/C Payee in favour of the relevant placee by first class post at the risk of the addressee within three days of the date of termination or last date for satisfaction of the Conditons. 10. Depositary Interests In summary, the Deed Poll contains, amongst others, provisions to the following effect, which are binding upon holders of Depositary Interests: Holders of Depositary Interests warrant, amongst other matters, that Common Shares transferred or issued to the Depositary or the custodian (on behalf of the Depositary) are free and clear of all liens, charges, encumbrances or third party interests and that such transfers or issues are not in contravention of the Company s constitutional documents or any contractual obligation, law or regulation. Holders of Depositary Interests agree to indemnify Computershare in respect of any costs or liabilities which it may suffer by reason of any breach of any such warranty. It should be noted that holders of Depositary Interests may not have the opportunity to exercise all of the rights and entitlements available to holders of Common Shares including, for example, the ability to vote on a show of hands. In relation to voting, it will be important for holders of Depositary Interests to give prompt instructions to the Depositary or its nominated custodian, in accordance with any voting arrangements made available to them, to vote the underlying Common Shares on their behalf or, to the extent possible, to take advantage of any arrangements enabling holders of Depositary Interests to vote such Common Shares as a proxy of the Depositary or its nominated custodian. The Depositary will be entitled to cancel Depositary Interests and withdraw the underlying Common Shares in certain circumstances including where a holder of Depositary Interests has failed to perform any obligation under the Deed Poll or any other agreement or instrument with respect to the Depositary Interests. The Deed Poll contains provisions excluding and limiting the Depositary s liability. For example, the Depositary shall not be liable to any holder of Depositary Interests or any other person for liabilities in connection with the performance or non-performance of obligations under the Deed Poll or otherwise except as may result from its negligence or wilful default or the fraud of any custodian or agent which is not a member of its group unless it has failed to exercise reasonable care in the appointment and continued use and supervision of such custodian or agent. Furthermore, except in the case of personal injury or death, the Depositary s liability to a holder of Depositary Interests will be limited to the lesser of; (a) the value of the Common Shares and other deposited property properly attributable to the Depositary Interests to which the liability relates; and (b) that proportion of 5 million which corresponds to the portion which the amount the Depositary would otherwise be liable to pay to the holder of Depositary Interests bears to the aggregate of the amounts the Depositary would otherwise be liable to pay to all such holders in respect of the same act, omission or event which gave rise to such liability or, if there are no such amounts, 5 million. The Depositary is entitled to charge fees and expenses for the provision of its services under the Deed Poll without passing any profit from such fees to holders of Depositary Interests. Each holder of Depositary Interests is liable to indemnify the Depositary and any custodian (and their agents, officers and employees) against all costs and liabilities arising from or incurred in connection with, or arising 64

105 from any act related to, the Deed Poll so far as they relate to the property held for the account of Depositary Interests held by that holder, other than those resulting from the wilful default, negligence or fraud of the Depositary, or the custodian or any agent, if such custodian or agent is a member of the Depositary s group, or, if not being a member of the same group, the Depositary shall have failed to exercise reasonable care in the appointment and continued use and supervision of such custodian or agent. The Depositary may terminate the Deed Poll by giving not less than 90 days prior notice. During such notice period holders may cancel their Depositary Interests and withdraw their deposited property and, if any Depositary Interests remain outstanding after the Deed Poll has terminated, the Depositary must, among other things, deliver the deposited property in respect of the Depositary Interests to the relevant holders of Depositary Interests or, at its discretion, sell all or part of such deposited property. It shall, as soon as reasonably practicable, deliver the net proceeds of any such sale, after deducting any sums due to the Depositary, together with any other cash held by it under the Deed Poll pro rata to holders of Depositary Interests in respect of their Depositary Interests. The Depositary may require from any holder, or former or prospective holder of Depositary Interests, information as to the capacity in which such Depositary Interests are, were, or are to be owned or held and the identity of any other person with any interest of any kind in such Depositary Interests or the underlying Common Shares and holders are bound to provide such information requested. Furthermore, to the extent that, amongst other requirements, the Company s constitutional documents require disclosure to the Company of, or limitations in relation to, beneficial or other ownership of, or interests of any kind whatsoever, in the Common Shares, the holders of Depositary Interests are to comply with such provisions and with the Company s instructions with respect thereto. 11 Availability of Documents Copies of this document will be available free of charge to the public at the offices of Grant Thornton Corporate Finance, Grant Thornton House, Melton Street, Euston Square, London NW1 2EP, during normal business hours on any weekday (Saturdays and public holidays excepted) until the date falling one month after the date of Admission. Dated: 6 December

106 DEFINITIONS The following definitions apply throughout this document unless the context requires otherwise: Administration Agreement the administration agreement between the Company and the Administrator, dated 6 December 2005, a summary of which is set out in paragraph 6.7 of Part 11 of this document Administrator Anglo Irish Fund Services Limited Admission admission of the entire issued and to be issued common share capital of the Company to trading on AIM becoming effective in accordance with the AIM Rules AIM the market of that name operated by the London Stock Exchange AIM Rules the rules for AIM companies and their nominated advisers published by the London Stock Exchange (as updated or amended from time to time) Articles the Articles of Association of the Company Business Day a day, other than a Saturday or Sunday, on which banks are open for business in London BVI British Virgin Islands City Code the City Code on Takeover and Mergers Colliers International Colliers International S.A. Common Shareholders or Shareholders Common Shares Company CREST CRESTCo Custodian CYP Deed Poll Depositary or Computershare Depositary Interests Directors or Board EU Financial Services Authority or FSA Fortress Investment Group or Fortress Founding Partners Founding Shareholders registered holders of Common Shares or Depositary Interests, as the case may be common shares of A0.01 each in the Company and, save where the context requires otherwise, Depositary Interests representing such shares Dolphin Capital Investors Limited the computerised settlement system (being the relevant system as defined in the Uncertificated Securities Regulations 2001 (S.I 2001/ 3755) to facilitate the transfer of title of shares in uncertificated form operated by CRESTCo Limited CRESTCo Limited Anglo Irish Bank Corporation (I.O.M.) P.L.C. Cypriot Pounds the deed poll dated 21 November 2005 entered into by the Depositary and which constituted the Depositary Interests Computershare Investor Services PLC independent securities to be issued by the Depositary representing Common Shares which may be held and transferred through the CREST system the directors of the Company including any duly appointed committee thereof European Union the Financial Services Authority of the UK Fortress Investment Group LLC Miltos Kambourides and Pierre Charalambides, the founders of the Investment Manager the 13 parties, including the Investment Manager and Fortress, who in June 2005 subscribed a total of A5 million for Common Shares in the Company 66

107 Founding Shareholder Warrants Founding Shareholder Warrant Instrument Grant Thornton Corporate Finance the warrants to subscribe for Common Shares, subject to the terms and conditions set out in the Founding Shareholder Warrant Instrument and issued to the Founding Shareholders the instrument of the Company dated 6 December 2005 constituting the Founding Shareholder Warrants, a summary of which is set out in paragraph 6.3 of Part 11 of this document the corporate finance division of Grant Thornton UK LLP which is authorised and regulated by the FSA to carry on investment business Group the Company and its subsidiary undertakings IBCA the BVI International Business Companies Act (Cap. 291) 1984 Investment Management Agreement Investment Manager Internal Rate of Return or IRR Listing Rules London Stock Exchange Master-planned Leisureintegrated Residential Resort(s), Residential Resorts or Project(s) NAV or Net Asset Value Net Asset Value per Common Share Panmure Gordon Placing Placing Agreement Placing Price Placing Shares the investment management agreement between the Company and the Investment Manager dated 1 August 2005 (which will be amended and restated with effect from Admission), a summary of which is set out in paragraph 6.6 of Part 11 of this document Dolphin Capital Partners Limited with respect to each Project, the total quarterly compounded internal rate of return to the Company calculated after deduction of any tax payable by the Company or any subsidiary on its operations related to the Project and before deduction of any tax payable by the Company on distributions made to its Shareholders and any performance fee payable to the Investment Manager (including sums paid into escrow), taking into account the amount and timing of all distributions made by the Company to its Shareholders related to the Project up to and including such date and all capital contributions made by the Company related to that Project up to and including such date. For the purposes of calculating such IRR all capital contributions by the Company and all distributions to the Shareholders made at any time during a month shall be deemed to be paid or made on the first day of such month. All calculations relating to the IRR will be on an annualised basis and expressed in Euros. the listing rules published by the FSA under section 73A of the Financial Services and Markets Act 2000 London Stock Exchange plc. master-planned residential resort developments which incorporate a combination of, but not limited to, leisure facilities such as hotels, golf courses, polo fields, country clubs, spas and marinas the value of the assets of the Company less its liabilities, determined in accordance with the accounting principles and valuation guidelines adopted by the Company from time to time the Net Asset Value divided by the number of Common Shares in issue from time to time Panmure Gordon (Broking) Limited means the conditional placing by Panmure Gordon as described in this document the conditional placing agreement dated 6 December 2005 and entered into between the Company, the Directors, the Investment Manager, Panmure Gordon and Grant Thornton Corporate Finance, a summary of which is set out in paragraph 6.1 of Part 11 of this document 68 pence (A1.00) per Common Share the 104,000,000 new Common Shares to be placed with investors pursuant to the Placing 67

108 Property Valuer Prospective Investment Portfolio Region or Southeast Europe Registrar Shareholder UK or United Kingdom US or USA or United States the expert retained by the Company from time to time to provide Property and/or property related asset valuation services, currently being Colliers International the identified Projects in respect of which the Company, is currently negotiating a participation, as described in Part 4 of this document Greece, Cyprus, Turkey and Croatia Computershare Investor Services (Channel Islands) Limited a holder of Common Shares the United Kingdom of Great Britain and Northern Ireland the United States of America (including the States thereof and the District of Columbia), its territories and possessions In this document, unless otherwise specified, all references to pounds or are to United Kingdom pounds sterling, all references to dollars or $ are to US dollars and all references to Euro or A are to the unit of money used in all European Union countries which have adopted the single European currency unit. 68

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