• TAKEOVERS CODE (CYNOTECH HOLDINGS LIMITED) EXEMPTION NOTICE (NO 2) 2009

Takeovers Code (Cynotech Holdings Limited) Exemption Notice (No 2) 2009

Pursuant to section 45 of the Takeovers Act 1993, the Takeovers Panel gives the following notice (to which is appended a statement of reasons of the Takeovers Panel)..

1. Title
2. Application
3. Expiry
4. Interpretation
5. Exemptions from rule 6(1) of Code
6. Exemption from rule 35 of Code
7. Condition of exemption in clause 6

Title
This notice is the Takeovers Code (Cynotech Holdings Limited) Exemption Notice (No 2) 2009.

2

Application
This notice applies to acts or omissions occurring on or after 8 January 2010.

3

Expiry

This notice expires on the close of 31 March 2013.

4

Interpretation

(1)

In this notice, unless the context otherwise requires,-

Act means the Takeovers Act 1993

Code means the Takeovers Code under the Act

convertible preference shares means convertible preference shares issued by Cynotech Holdings

convertible securities means convertible preference shares and warrants

CSGL means Cynotech Securities Group Limited

Cynotech Holdings means Cynotech Holdings Limited

offer means a full takeover offer to be made by CSGL for all the equity securities in Cynotech Holdings, including all convertible securities

ordinary shares means the ordinary shares in Cynotech Holdings

specified security holders means Cynotech Securities Limited, Glenn Matthew Hawkins, Laurel Anne Hawkins, Newmarket Securities Limited, and Sonja Anne Hawkins

warrants means warrants issued by Cynotech Holdings that each give the right to subscribe for an ordinary share at a price of 30 cents per share exercisable on 27 June 2010 or 27 June 2011.

(2)

In this notice, a reference to a person increasing voting control is a reference to the person becoming the holder or controller of an increased percentage of the voting rights in Cynotech Holdings.

(3)

Any term or expression that is defined in the Act or the Code and used, but not defined, in this notice has the same meaning as in the Act or the Code.

5

Exemption from rule 6(1) of Code

CSGL is exempted from rule 6(1) of the Code in respect of any increase in its voting control as a result of the conversion, after the offer becomes unconditional, of convertible securities acquired by it under the offer.

6

Exemption from rule 35 of Code

The specified security holders are each exempted from rule 35 of the Code in respect of the offer.

7

Condition of exemption in clause 6

The exemption in clause 6 is subject to the condition that none of the specified security holders, nor any person acting jointly or in concert with any of them, may dispose of any equity securities in Cynotech Holdings during the offer period other than to-

1. CSGL under the offer; or
2. an offeror under another offer that is made under the Code.

Dated at Wellington 15^th day of December 2009.

The Common Seal of the Takeovers Panel was affixed in the presence of:

This notice applies to acts or omissions occurring on or after 8 January 2010 and expires on 31 March 2013.

Cynotech Holdings Limited (Cynotech Holdings) is a code company under the Takeovers Code (the Code). Cynotech Securities Group Limited (CSGL) has given notice of its intention to make a full takeover offer for all of the equity securities of Cynotech Holdings (the offer).

Exemption from rule 6(1) of Code

Cynotech Holdings has the following 3 classes of equity securities on issue:

• ordinary shares:
• convertible preference shares:
• warrants.

Only the ordinary shares carry voting rights under the Code. The convertible preference shares are convertible by the holder to ordinary shares (on a 1-for-1 basis) on giving 30 days' written notice to Cynotech Holdings. Each warrant gives the right to subscribe for an ordinary share at a price of 30 cents per share, that right being exercisable on 27 June 2010 or 27 June 2011.

The Takeovers Panel (the Panel) has exempted CSGL from compliance with rule 6(1) of the Code in relation to the conversion, after the offer becomes unconditional, of convertible preference shares and warrants (together, the convertible securities) it acquires under the offer.

The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemption from rule 6(1) of the Code for the following reasons:

• the increase will be the result of the exercise of rights attaching to the convertible securities obtained under the offer which, under the Code, CSGL will have been obliged to make an offer for; and
• the resulting increase will be the same as if the holders of the convertible securities had converted those convertible securities and then accepted the offer in respect of the resulting ordinary shares.

Exemption from rule 35 of Code

Cynotech Securities Limited, Glenn Matthew Hawkins, Laurel Anne Hawkins, Newmarket Securities Limited, and Sonja Anne Hawkins (the specified security holders) each hold equity securities in Cynotech Holdings. It is possible that the specified security holders may be acting jointly or in concert with CSGL for the purposes of the offer. Rule 35 of the Code prevents them from accepting the offer.

Rule 35 of the Code is intended to prevent an offeror, or persons acting jointly or in concert with an offeror, from selling shares in the target company other than to a competing bidder. However, rule 35 of the Code also prevents persons who are acting jointly or in concert with an offeror from accepting the offer made by that offeror in respect of any securities that they hold in the target company.

The Panel has granted an exemption from rule 35 of the Code to enable each of the specified security holders to accept the offer.

The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemption from rule 35 of the Code for the following reasons:

• it would avoid an unintended consequence of the Code; and
• it would not disadvantage other security holders of Cynotech Holdings or prevent them from deciding the merits of the offer for themselves.

Issued under the authority of the Acts and Regulations Publication Act 1989.
Date of notification in Gazette: []
This notice is administered by the Takeovers Panel.