Notice of EGM

Yoomedia PLC
06 May 2003


                   YooMedia plc ('YooMedia' or 'the Company')

 Notice of Extraordinary General Meeting concerning a proposed Placing of up to
    £2,000,000 variable rate secured convertible loan stock 2008, a Capital
                   Reorganisation and Grant of Share Options


Set out below is an extract from the circular being posted to Shareholders
today, convening an Extraordinary General Meeting concerning a proposed Placing
of up to £2,000,000 variable rate secured convertible loan stock 2008, a Capital
Reorganisation and Grant of Share Options ('the Circular').  Further copies are
available during normal business hours for one month from today, free of charge,
from the Company's registered office 179 Great Portland Street, London W1W 5LS.

Unless otherwise expressly defined, words and expressions defined in the
Circular shall bear the same respective meanings within this announcement.


For further information, please contact:

Michael Sinclair
Chairman and Chief Executive Officer              020 7462 0870

Andrew Fearon
Chief Operating Officer                                       020 7462 0870

Anick Sinclair
Public Relations                                                   020 7462 0870


Letter From The Independent Directors

1. Introduction

Earlier today the Company announced its preliminary financial results for the
year ended 31 December 2002 and that it is raising up to £2,000,000 (before
expenses) by way of the issue of the Loan Stock, of which £1,625,000 has been
conditionally subscribed by certain of the Directors, employees of the Company
and other investors. The purpose of this announcement is to provide further
information on the terms of and the issue of the Loan Stock and convene an EGM
to seek Shareholder approval for the Proposals.

The Company had hoped not to seek additional finance before it reached
profitability, and indeed the Company had announced in its trading statement on
29 January 2003 that it believed it had sufficient funds to reach profitability.
However, since the date of that announcement the Company has reached a
settlement with certain minority Shareholders represented by Edwin Coe, whereby
the Company has paid £750,000 to Edwin Coe on behalf of those Shareholders to
enable them to bring any claims which they consider to be appropriate against
the advisors to the Company on its admission to AIM in March 2000. Further
details relating to the terms of the payment made to Edwin Coe and the
circumstances in which it can be repaid to the Company are set out in the
Chairman's statement contained in the Company's letter in the Annual Report and
Accounts for the year ended 31st December 2002.

In light of the circumstances described above, the Company is therefore raising
up to £2,000,000 (before expenses) pursuant to the Placing. The Directors have
examined a range of suitable fundraising options available to the Company given
its current stage of development and given the current economic climate and,
after careful consideration of all these fundraising options, they believe that
the issue of the Loan Stock is in the best interests of Shareholders. In the
opinion of the Directors, the issue of the Loan Stock represents a cost
effective method of raising funds, together with what the Directors believe will
lead to the least dilution for Shareholders.

The management of the Company, including Dr Michael Sinclair, Andrew Fearon,
Edmund Abrams and Robert de Souza (an employee of the Company) are participating
in the issue of the Loan Stock, together with Foresight Technology VCT plc, Lord
Evans of Watford and David Docherty. As a result of a number of these
participants in the Placing being related parties pursuant to Rule 12 of the AIM
Rules, and in accordance with our obligations, we, being the Independent
Directors, consider, having consulted the Company's Nominated Adviser, that the
terms of the Placing are fair and reasonable as far as the Shareholders are
concerned.

Notice of the EGM, which will be held at 10.15 a.m. on 29 May 2003 (or as soon
thereafter as the AGM convened for 10.00 a.m. on the same date and at the same
place shall have been concluded or adjourned) is set out at the end of the
Circular.

2. Requirement for Shareholder Approval

As the Placing involves the issue of Loan Stock which may in the future convert
up to a maximum of 100,000,000 new Ordinary Shares, the Board has resolved,
because of the size of this potential conversion, to seek an increase in the
Company's authorised share capital and an extension of the Directors' current
authorities to allot shares on a non pre-emptive basis. Accordingly, the
Directors have convened the Extraordinary General Meeting at which Shareholders
will consider and if thought fit pass certain resolutions relating, inter alia,
to the constitution of the Loan Note, the Capital Reorganisation, increasing the
authorised share capital of the Company and authorizing the allotment of new
Ordinary Shares.

3. Summary Terms of the Loan Note

Pursuant to the terms of the Loan Note the Company is proposing to issue up to
£2,000,000 of the Loan Stock of which £1,625,000 has been conditionally
subscribed. The terms of the Loan Note are as follows:

The Loan Note is for £2,000,000 redeemable on 31 May 2008 (or such later date
which is five years and one day from the date of the Loan Note) if not
previously converted or redeemed. The Loan Note carries interest, payable
quarterly in arrears, at 3.25% over LIBOR. The Loan Note is redeemable at any
time by the Company together with a redemption premium, which is payable on a
pro rata basis to each Stockholder's holding of Loan Stock, of 60% of the
Premium in Year 1, 70% of the Premium in Year 2, 80% of the Premium in Year 3,
90% of the Premium in Year 4 and 100% of the Premium in Year 5.

The holders of Loan Stock may convert the whole of their holding of Loan Stock
(but not part of their holding save only where any conversion in whole would
result in the requirement for such holder of the Loan Stock to make an offer in
accordance with Rule 9 of the City Code, further details of which are set out in
paragraph 8 below) at any time at a predetermined price. In Year 1 the
conversion price is 10p per new Ordinary Share, in Year 2 the conversion price
is 8p per new Ordinary Share, in Year 3 the conversion price is 6p per new
Ordinary Share, in Year 4 the conversion price is 4p per new Ordinary Share and
in Year 5 the conversion price is 2p per new Ordinary Share.

The Company can require the holders of the Loan Stock to convert the whole of
their holding (but not part of their holding save only where any conversion in
whole would result in the requirement for such holder of the Loan Stock to make
an offer in accordance with Rule 9 of the City Code, further details of which
are set out in paragraph 8 below) into new Ordinary Shares at any time and at
the conversion prices set out above if the Company's share price has traded on
AIM for a consecutive period of not less than 30 trading days at a middle market
price of 30p or greater.

The new Ordinary Shares issued following conversion of any of the Loan Stock
will rank pari passu in all respects with the Ordinary Shares then in issue. The
Company shall give notice to the holders of Loan Stock if a general offer is
made to all holders of Ordinary Shares. Following such notice, the holders of
the Loan Stock shall be entitled to serve a notice of conversion on the Company
or elect that the Company redeem its Loan Stock including the redemption premium
due at the point the general offer is made to all holders of Ordinary Shares. If
a Stockholder chooses not to serve a notice of conversion or redemption during
that period, then that holder's conversion rights shall cease to apply.

The Directors have not applied, and do not intend to apply to the London Stock
Exchange or any other recognised investment exchange for the Loan Stock to be
admitted to trading. The Loan Stock is transferable in amounts or integral
multiples of £1,000. The Company will use its best endeavours to seek admission
to trading of the new Ordinary Shares issued on conversion of the Loan Stock on
any recognised investment exchange on which the Ordinary Shares are then traded.

In addition the Loan Stock will be secured by a debenture issued by the Company
over the assets of the Company in favour of the holders of Loan Stock from time
to time. Further details regarding the Loan Stock are set out in Part III of the
Circular.

The net proceeds from the issue of the Loan Stock will provide continued working
capital for the Company. The issue of the Loan Stock is conditional on the
approval of Resolutions 3, 4, 7 and 8 at the EGM.

Certain of the Directors and employees of the Company together with a
Shareholder have, inter alia, agreed to participate in the Placing by having
conditionally agreed to subscribe for the amount of Loan Stock set out below:

Name of Stockholder                Amount of Loan Stock

Dr Michael Sinclair                      £250,000
Andrew Fearon                             £62,500
Edmund Abrams                             £62,500
Robert de Souza                           £62,500
David Docherty                            £62,500
Lord Evans of Watford                     £375,000
Foresight Technology VCT plc              £375,000

The remainder of the Loan Stock, which has not been conditionally subscribed at
the date hereof, will remain issuable by the Company until 31 October 2003.  The
Directors will use their reasonable endeavours to place any remaining amounts of
the Loan Stock that have not been subscribed for pursuant to the Placing. The
Company will announce the issue of any of the Loan Stock which is further
subscribed.

4. Details of the Capital Reorganisation

As a result of the Company's share price currently trading at substantially
below the nominal price of each Existing Ordinary Share, the Directors have
decided to effect the Capital Reorganisation. This Capital Reorganisation is
also necessary to put into effect the proposed conversion price set out in the
Loan Note. The closing middle market quotation of an Ordinary Share as derived
from the AIM Appendix to the Daily Official List of the London Stock Exchange as
at 2 May 2003 (being the latest practicable date prior to the publication of
this document) was 1.125 pence. Therefore at no time will any conversion of the
Loan Stock occur at below the current middle-market quotation of an Ordinary
Share and the Loan Note is structured to incentivise the Company to either
redeem the Loan Stock or to force its conversion at the earliest date possible.

At present the authorised share capital of the Company is £10,000,000 divided
into 100,000,000 ordinary shares of 10 pence each of which 76,758,071 are
currently issued and fully paid. It is proposed that each issued and unissued
ordinary share of 10 pence each be subdivided into one Ordinary Share and nine
Deferred Shares. The Ordinary Shares will replace the Existing Ordinary Shares
under the articles of association of the Company and will carry equal rights
(the effect of the Capital Reorganisation is detailed below). The Deferred
Shares will have no rights to vote and will carry limited rights as to income
and on any return of capital (whether on a liquidation or otherwise). The rights
of the Deferred Shares are set out in full in the notice of the EGM at the end
of the Circular.

Conditional upon the approval of the Capital Reorganisation and constitution by
the Company of the Loan Note, the Directors' propose that the authorised share
capital of the Company is increased from £10,000,000 to £11,200,000 by the
creation of an additional 120,000,000 new Ordinary Shares of 1 penny each.

The table below shows both the authorised and the issued share capital of the
Company at the date of this document and immediately following the passing of
the Resolutions:

Authorised Share Capital
                                          At present              After passing Resolutions
                                                                  Number
        £                          Number         £

Existing Ordinary Shares of 10p    100,000,000    10,000,000      -                 -
Deferred Shares of 1p              -              -               900,000,000       9,000,000
Ordinary Shares of 1p              -              -               220,000,000       2,200,000


Issued Share Capital

                                          At present              After passing Resolutions
                                                                  Number
        £                          Number         £

Existing Ordinary Shares of 10p    76,758,071     7,675,807       -                 -
Deferred Shares of 1p              -              -               690,822,639       6,908,226
Ordinary Shares of 1p              -              -               76,758,071        767,581


5. Share Options

At the extraordinary general meeting of the Company held on 5 April 2002, the
shareholders of the Company granted the directors authority to issue options
under the enterprise management incentive legislation of Schedule 14 of the
Finance Act 2000 (the then applicable statutory provisions) for up to 1,000,000
Existing Ordinary Shares ('the EMI Options'). As at 2 May 2003 (being the latest
practicable date prior to the publication of this document) EMI Options in
respect of 630,000 Existing Ordinary Shares, which have been issued to employees
of the Company, remain outstanding. The Capital Reorganisation may result in the
EMI Options becoming disqualified for the purposes of Chapter 9 and Schedule 5
of the Income Tax (Earnings and Pensions) Act 2003 (the currently applicable
enterprise management incentive legislation) ('the Legislation'). Accordingly
the Directors have decided to replace the EMI Options with new options to be
issued to the holders of the EMI Options in accordance with the Legislation.

It is now proposed that the Company issue options in respect of 3,130,000
Ordinary Shares in accordance with the Legislation and substantially on the same
terms as the EMI Options. The New EMI Options will be granted to Dr Michael
Sinclair and Andrew Fearon and to certain employees of the Company and to the
holders of the EMI Options following their surrender as detailed in the above
paragraph. Resolution 5 seeks the approval of Shareholders to allow the
Directors to grant the New EMI Options. The principal terms of the New EMI
Options are identical to the summary of the terms of the EMI Options which are
set out in paragraph 4.3(C) of Part II of this document save only that the New
EMI Options will vest as to 25 per cent. on the sixth month anniversary of the
date of grant and thereafter as to a further 25 per cent. every six months
thereafter (until fully vested) and the statutory reference should now be to
Chapter 9 and Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003. It
is proposed that, subject to the passing of Resolution 5, each of Dr Michael
Sinclair and Andrew Fearon be granted a New EMI Option in respect of 700,000
Ordinary Shares each and that New EMI Options in respect of a further 1,730,000
Ordinary Shares be granted to employees of the Company. All of these New EMI
Options will be granted at the middle market price for an Ordinary Share on the
date of grant.

In addition the Board has decided to grant an option to Edmund Abrams. It is not
possible to grant an option to Edmund Abrams in accordance with the Legislation
as he has previously been granted options up to the maximum permitted individual
limit. However, as detailed above, the Capital Reorganisation may result in the
Abrams Option becoming disqualified for the purposes of the Legislation.
Accordingly it is proposed, subject to the passing of Resolution 6 at the EGM,
that Edmund Abrams be granted an unapproved option to subscribe for up to
1,050,000 Ordinary Shares at a subscription price per Ordinary Share equal to
the middle market price for an Ordinary Share on the date of grant. In the event
that the Abrams Option is not disqualified for the purposes of the Legislation
the number of Ordinary Shares under the Second Abrams Option will be reduced to
700,000 and none will vest on the date of grant.

The Second Abrams Option vests as to 350,000 Ordinary Shares on the date of
grant (subject to the above considerations) and thereafter as to 175,000
Ordinary Shares every six months thereafter (until fully vested). If Edmund
Abrams ceases to be a director or employee of the Company other than for cause
or death, Edmund Abrams would have six months from the date of such cessation to
exercise the Second Abrams Option. If the Second Abrams Option or any part of it
has not been exercised at the end of that six month period, the option or part
remaining lapses. If Edmund Abrams ceases to be a director or employee of the
Company for cause the Second Abrams Option lapses immediately subject to a
discretion of the Directors to permit exercise within six months of cessation.
On death, Edmund Abram's personal representatives would have 12 months to
exercise the Second Abrams Option, after which the Second Abrams Option would
lapse if unexercised. The Second Abrams Option contains no performance target
requirements. It is proposed that, subject to the passing of Resolution 6, the
Second Abrams Option will be issued (with such adjustment to the number of
Ordinary Shares the subject of such option as may be necessary in accordance
with the preceding paragraph).

6. Increase in authorised share capital and Directors' authority to allot shares

Resolution 4 seeks Shareholder approval to increase the authorised share capital
of the Company from

£10,000,000 to £11,200,000 by the creation of an additional 120,000,000 Ordinary
Shares.

Resolution 7 seeks Shareholder approval to give the Directors general authority
to allot shares. Accordingly other than pursuant to the conversion of any of the
Loan Stock in accordance with the terms of the Loan Note (based on the
assumption that the Loan Stock converts at the highest rate of conversion) and
the exercise in full of existing options (further details of which are set out
in Part II of this document), the Second Abrams Option and the New EMI Options,
if approved, Resolution 7 will give the Directors general authority to issue a
further 33,000,000 Ordinary Shares, which is equivalent to approximately 17.7
per cent. of the Ordinary Share capital of the Company as enlarged by the
conversion in full of the Loan Stock (based on the assumption that the Loan
Stock converts at the highest rate of conversion) and the exercise of all
subsisting options, the Second Abrams Option and the New EMI Options.

7. Disapplication of pre-emption rights

Resolution 8, which is a special resolution, seeks Shareholder approval to give
the Directors authority to allot shares for cash to persons other than
Shareholders. This authority is in respect of the allotment of Ordinary Shares
on the conversion, in full, of the Loan Stock in accordance with the terms of
the Loan Note (based on the assumption that the Loan Stock converts at the
highest rate of conversion) and on the exercise, in full, of existing options,
the Second Abrams Option and the New EMI Options and thereafter is limited to a
maximum of a further 33,000,000 Ordinary Shares, which is equivalent to
approximately 17.7 per cent. of the share capital of the Company as enlarged by
the conversion in full of the Loan Stock (based on the assumption that the Loan
Stock converts at the highest rate of conversion) and the exercise of all
subsisting options, the Second Abrams Option and the New EMI Options.

8. City Code

The issue of Loan Stock to certain Shareholders gives rise to considerations
under the City Code.

Under Rule 9 of the City Code ('Rule 9'), where (i) any person acquires shares
which, when taken together with shares already held by him or shares acquired by
persons acting in concert with him, carry 30 per cent. or more of the voting
rights of a company subject to the City Code (which includes the Company) or
(ii) any person who, together with persons acting in concert with him, holds not
less than 30 per cent. but not more than 50 per cent. of the voting rights of a
company subject to the City Code and such person, or persons acting in concert
with him, acquires any additional shares which increase that person's percentage
of voting rights, that person is normally obliged to make a general offer in
cash to all shareholders to purchase their shares at no less than the highest
price paid by him, or any person acting in concert with him, within the
preceding 12 months.

The Loan Stock, further details of which are set out in Part III of the
Circular, includes certain rights of conversion into Ordinary Shares. The
exercise of any of the rights of conversion by any of the holders of the Loan
Stock would constitute the acquisition of shares in the Company for the purposes
of Rule 9. Accordingly it is possible that following the conversion of any of
the Loan Stock an obligation could arise for a Shareholder to make an offer in
accordance with Rule 9 if, as a result of such conversion, the holder of such
Loan Stock is then entitled to exercise not less than 30 per cent. of the voting
rights of the Company in general meeting. It is likely that Rule 9 will only be
of potential significance for Dr Michael Sinclair and Foresight Technology VCT
plc who hold 29.9% and 18.6% respectively of the issued Existing Ordinary Share
capital of the Company at the date of the Circular.

It is possible for the consent of the Panel to be sought to waive the
obligations on any person to make an offer in accordance with Rule 9 if at the
time any new ordinary shares are issued by a company, and are therefore acquired
by a particular shareholder for the purposes of Rule 9, the independent
shareholders of the company concerned waive the requirement to make such an
offer by the passing of an ordinary resolution on a poll at a general meeting of
the company. It is only possible for the approval of the independent
shareholders of the Company to be sought for the waiver of any obligation of any
holder of the Loan Stock to make an offer in accordance with Rule 9 following
any conversion into Ordinary Shares, at the time that the Loan Stock is
constituted and issued. We, being the Independent Directors, have been advised
by Dr Michael Sinclair and Foresight Technology VCT plc that they do not wish to
seek the waiver of any obligation to make an offer in accordance with Rule 9 if,
as a result of the conversion of any of the Loan Stock which they may hold,
there is an obligation on them to make such an offer in accordance with Rule 9.

9. Irrevocable undertakings

The Company has received an irrevocable undertaking to vote in favour of the
Resolutions from Foresight

Technology VCT Plc, which has a beneficial interest in respect of 14,260,000
Existing Ordinary Shares representing approximately 18.6 per cent. of the
current issued share capital of the Company.

The Company has received an irrevocable undertaking to vote in favour of the
Resolutions from Swiftventure Limited, which has a beneficial interest in
respect of 8,329,100 Existing Ordinary Shares representing approximately 10.9
per cent. of the current issued share capital of the Company.

The Company has received an irrevocable undertaking to vote in favour of the
Resolutions from Frank Lewis, who has a beneficial interest in respect of
4,237,050 Existing Ordinary Shares representing approximately 5.5 per cent. of
the current issued share capital of the Company

Dr Michael Sinclair, Lord Evans of Watford, Andrew Fearon, Bernard Fairman and I
have also undertaken to vote in favour of the Resolutions in respect of their
aggregate holdings of 23,555,762 Existing Ordinary Shares representing
approximately 30.7 per cent. of the current issued share capital of the Company.

In aggregate irrevocable undertakings to vote in favour of the Resolutions
received by the Company in respect of 50,381,912 Existing Ordinary Shares
representing approximately 65.6 per cent. of the current issued share capital of
the Company.

10. The Extraordinary General Meeting

Set out at the end of the Circular is a notice convening the Extraordinary
General Meeting of the Company to be held at First Floor, Northumberland House,
155-157 Great Portland Street, London W1W 6QP on 29 May 2003 at 10.15 a.m. (or
as soon thereafter as the AGM convened for 10.00 a.m. on the same date and at
the same place shall have been concluded or adjourned). At this meeting
resolutions will be proposed to:

  • undertake the Capital Reorganisation;
  • amend the articles of association in relation to the Deferred Shares;
  • approve the entering into of the Loan Note;
  • increase the authorised share capital of the Company;
  • approve and adopt the New EMI Options;
  • approve and adopt the Second Abrams Option;
  • grant the Directors authority to allot shares pursuant to Section 80 of
    the Act; and
  • grant the Directors authority to allot shares pursuant to Section 95 of
    the Act as if Section 89(1) of the Act did not apply to such allotment.

11. Action to be taken by Shareholders

Shareholders will find enclosed with the Circular a Form of Proxy for use at the
Extraordinary General Meeting. The Form of Proxy should be completed and
returned in accordance with the instructions printed thereon so as to arrive at
the Company's registrars, Capita IRG Plc, New issues Department, Balfour House,
390-398 High Road, Ilford, Essex IG1 1NQ as soon as possible and in any event
not later than 10.15 a.m. on 27 May 2003. Completion and return of a Form of
Proxy will not prevent Shareholders from attending and voting in person at the
Extraordinary General Meeting should they so wish.

12. Recommendation

Dr Michael Sinclair, Andrew Fearon, Edmund Abrams, David Docherty, Lord Evans of
Watford and Bernard Fairman (who, as a director of that company, is deemed to be
connected with Foresight Technology VCT Plc which has itself indicated an
interest in participating in the subscription for part of the Loan Stock) have
all irrevocably undertaken to participate in the subscription for part of the
Loan Stock. Accordingly they have taken no part in the deliberation by the Board
with regard to the Loan Note and the issue of the Loan Stock.

We, being the Independent Directors, believe that the Proposals are in the best
interests of the Company and its Shareholders and recommend you to vote in
favour of the Resolutions as Paul Stacey and I intend to do in respect of our
shareholding of 5,128 Existing Ordinary Shares, representing approximately 0.01
per cent. of the issued ordinary share capital of the Company.

Yours faithfully


Richard John Bowden Blake
Non Executive Director


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