At its meeting on 13 March 2000 the Board of Directors of Sponda Plc (the "Company") has decided to propose to the General Meeting of the Shareholders to be held on 27 March 2000 to issue a convertible loan to the Company's employees, including the Managing Director and to a subsidiary fully owned by the Company. The amount of the convertible loan is 3,780,000 FIM. The loan will be issued in 3,780 promissory notes with a par value of 1,000 FIM each. The promissory notes will be issued in series A, B and C so that 1,260 promissory notes will be issued in each series. An interest of four (4) per
cent p.a. shall be paid on the loan. The promissory notes that have not been converted shall be repaid in one instalment on 28 April 2006.
Each promissory note of one thousand (1,000) FIM entitles its holder to convert the promissory note into five hundred (500) shares in the Company through a payment of a conversion fee at conversion. The conversion fee for A-series promissory notes is 16,000 FIM (32 FIM/ share), for B-series promissory notes 17,500 FIM (35 FIM/ share), and for C-series promissory notes 19,000 FIM (38 FIM/ share). During the period from 28 April 2000 to the date of conversion, the conversion fee shall be reduced on every record date of dividend payments so that the conversion fee for the shares subject to conversion is reduced with the total amount of dividends distributed for those shares.
The promissory notes may be converted into shares in accordance with the following schedule: the conversion period for A-series promissory notes shall commence on 28 April 2003, for B-series promissory notes on 28 April 2004, and for C-series promissory notes on 28 April 2005. For every type of promissory notes the conversion period shall end on 28 April 2006.
The convertible loan is issued in order to motivate and engage the personnel in long-range work in order to increase the shareholder value in Sponda-group. The convertible loan is also aimed at increasing the commitment of the personnel to the
Company, since an employee whose employment relationship ends prior to 28 April 2005 has to offer the promissory notes to the Company at their par value, increased with the accrued but not yet due interest.
Appendices The proposal of the Board of Directors
Terms and conditions of the convertible loan
THE PROPOSAL OF THE BOARD OF DIRECTORS TO THE GENERAL MEETING OF SHAREHOLDERS CONCERNING THE ISSUE OF A CONVERTIBLE LOAN
The Board of Directors proposes to the General Meeting of the Shareholders to issue a convertible loan to the employees of Sponda Plc on the terms and conditions as attached.
Deviating from the shareholders' pre-emptive right of subscription, the convertible loan is issued to the employees of the Sponda-Group, including the Managing Director and to a wholly-owned subsidiary of Sponda Plc. It is proposed to deviate from the shareholders' pre-emptive right of subscription due to the fact that the convertible loan is intended as part of an incentive programme of the personnel.
Each promissory note with a par value of 1,000 FIM entitles its holder to convert it into 500 Sponda Plc shares by a payment of a conversion fee at conversion. At the conversion, the conversion fee is 16,000 FIM for A-series promissory notes (32 FIMM/share), 17,500 FIM for B-series promissory notes (35 FIM/share) and 19,000 FIM for C-series promissory notes (38 FIM/share). The conversion fee is during the period after 28 April 2000 through the date of conversion reduced with the amount of distributed dividends so that the conversion fee for the shares subject to conversion on every record date of dividend payments is reduced with the total amount of distributed dividends for such shares. The rate of conversion clearly exceeds the current trading price of the share.
Some of the subscribers belong to the inner circle of the company. Parties who belong to this group and who are entitled to subscribe own altogether less than 0, x % of the company's outstanding shares. The portion of shares convertible on the basis of this loan correspond to a maximum of 2,5 % of the total number and voting rights of the company's shares.
In Helsinki, 13 March 2000
Board of Directors
Appendice Terms and Conditions of the Convertible Loan
TERMS AND CONDITIONS OF THE CONVERTIBLE LOAN
At its meeting on 13 March 2000 the Board of Directors of Sponda Plc (the "Company") has decided to propose to the Annual General Meeting of the Shareholders to be held on 27 March 2000 to issue a convertible loan on the following terms and conditions:
I TERMS AND CONDITIONS OF THE LOAN
1. The Amount of the Loan
The amount of the loan is three million seven hundred eighty thousand (3,780,000) FIM.
2. Promissory notes
The Company will issue three thousand seven hundred and eighty (3,780) promissory notes with a par value of one thousand (1,000) FIM each. The promissory notes will be issued in series A, B and C so that one thousand two hundred and sixty (1,260) promissory notes in each series will be issued. The Company has the right to keep the promissory notes in custody on behalf of the subscribers as security for the prohibition of transfer and the obligation to offer as stipulated in Clause I.11 until the commencement of the conversion period of each promissory note.
3. Subscription Rights
The loan will be offered for subscription to the employees of the Sponda Group, including the Managing Director, and Tamsoil Oy, a subsidiary fully owned by the Company. It is proposed to deviate from the shareholders' pre-emptive right to
subscription due to the fact that the convertible loan is intended as part of an incentive programme of the personnel.
4. Term
The term of the loan is from 28 April 2000 through 28 April 2006. Unconverted promissory notes will be repaid in one single instalment on 28 April 2006.
5. Rate of Issue
The rate of issue of the loan is one hundred (100) percent.
6. Interest
A fixed interest of four (4,0) percent per annum shall paid on the loan. The interest will be paid annually on April 28. The first interest payment is made on 28 April 2001 and the last one in connection with the repayment of the loan. Accrued but not yet due interest is not compensated at the conversion.
7. Security
The loan is not secured by any collateral.
8. Subscription of the Loan
The loan is offered for subscription beginning on 12 April 2000 and ending on 18 April 2000. Subscription takes place at the head office of Sponda Plc in Helsinki. The subscription lists can also be returned to the place of subscription by mail.
9. Acceptance of the Subscriptions and Events of Oversubscription and Undersubscription
The Board of Directors decides on the acceptance of the subscriptions. If the loan is oversubscribed, the Board of Directors decides on reducing the amounts of subscription. If the loan is undersubscribed, the unsubscribed promissory notes will be
offered to Tamsoil Oy for subscription. The Board of Directors informs each subscriber of its decision regarding his ubscription.
10. Payment of Subscriptions
The promissory notes shall be paid no later than on 28 April 2000 to a bank account specified by the Company.
11. Prohibition of Transfer and Obligation to Offer
The promissory notes can be transferred without restriction after the commencement of their respective conversion periods. Notwithstanding this, the Board of Directors may, however, approve a transfer of promissory notes prior to this date.
If the employment of a subscriber in the Sponda Group expires before 28 April 2005 for any other reason than death or retirement, the said subscriber shall without delay offer such promissory notes, which period of conversion has not begun by the date of expiry of the employment, to be purchased by the Company or order. The promissory notes shall be offered to be purchased at their par value increased with any accrued but not yet due interest.
II. TERMS AND CONDITIONS OF CONVERSION
1. Rate of Conversion
Each promissory note of one thousand (1,000) FIM entitles its holder to convert the promissory note into five hundred (500) shares in Sponda Plc with a par value of five (5) FIM by paying the conversion fee at conversion. The conversion fee is
- For A-series promissory notes sixteen thousand (16,000) FIM (32 FIM/share);
- For B-series promissory notes seventeen thousand five hundred (17,500) FIM (35 FIM/share); and
- For C-series promissory notes nineteen thousand (19,000) FIM (38 FIM/share).
The conversion fee is during the period from 28 April 2000 through the date of conversion reduced with the amount of distributed dividends so that the conversion fee for the shares subject to conversion on every record date of dividend payments is reduced with the total amount of distributed dividends for such shares.
As a result of the conversions the share capital of Sponda Plc may be increased by a maximum of 1,890,000 new shares, i.e. by a maximum of 9,450,000 FIM.
2. Period of Conversion
The periods of conversion of the promissory notes into shares are
- For A-series promissory notes from 28 April 2003 through 28 April 2006;
- For B-series promissory notes from 28 April 2004 through 28 April 2006; and
- For C-series promissory notes from 28 April 2005 through 28 April 2006.
3. Place of Conversion
The conversion shall take place at the head office of Sponda Plc and possibly at another location to be notified later on. The converted shares are registered in the book-entry account of the converter. Should the number of shares based on the conversion be a fractional number, the said fractional part shall be paid in cash on the basis of the trading price of the shares on the date of conversion as determined by the Board of Directors.
4. Shareholder Rights
The shares shall entitle to profit distribution for the financial year during which the conversion has taken place. Other shareholder rights shall commence when the increase of the share capital has been registered in the trade register.
5. Increase of Share Capital prior to Conversion
Should the Company prior to a conversion of the promissory notes increase its share capital through an issue of new shares, or resolve to issue new convertible loans or options, a promissory note holder shall have the same or an equal right to that of a shareholder. Equality shall be implemented in a manner determined by the Board of Directors by adjusting the rate of conversion.
Should the Company prior to a conversion of the promissory notes increase its share capital by means of a bonus issue, the rate of conversion shall be adjusted so that the relative ratio of the shares subscribed at conversion remains unchanged in proportion to the share capital.
6. The Rights of Promissory Note holders in Certain Special Situations
If the Company prior to conversion decreases its share capital, the rate of conversion shall be adjusted accordingly as specified in the resolution to decrease the share capital. If the Company during the term of the loan is placed in liquidation, the loan will fall due for payment in ninety (90) days from the date when the liquidation was registered in the trade register.
If the Company resolves to acquire its own shares by an offer made to all shareholders, the promissory note holder shall be made an equivalent offer. Acquisitions of the Company's own shares in other cases do not require the Company to take any action in relation to a promissory note holder. If a shareholder according to the Companies Act is entitled to redeem the shares of other shareholders, a promissory note holder shall be given a right equal to that of a shareholder to sell his promissory notes to the redeeming shareholder.
If the Company resolves to merge into another company or into a company to be established in a combination merger or if the Company resolves to divide, the promissory note holders shall prior to the merger or division and during a period to be
determined by the Board of Directors be entitled to convert the promissory notes into shares. After such a period there is no right of conversion.
If the par value of the share is changed so that the share capital remains unaffected, the terms and conditions of conversion shall be amended so that the total par value and the total conversion price of the shares subject to conversion remain unaffected. Changing the Company from a public company into a private company will not affect these terms and conditions.
7. Other issues
The Board of Directors may decide on other matters relating to the convertible loan and the conversion. The loan documentation is kept available for inspection at the head office of Sponda Plc in Helsinki.