NOTICE TO ATTEND THE ANNUAL GENERAL MEETING IN OSSDSIGN AB

The shareholders in OssDsign AB, reg. no. 556841-7546, are hereby given notice to attend the annual general meeting at 10:00 a.m. on Wednesday 1 June 2022. The meeting will be held through postal voting only (see below).

 The board of directors has, in accordance with the Swedish Act (2022:121) on temporary exceptions to facilitate the execution of general meetings in companies and other associations, decided that the annual general meeting shall be held without physical presence of shareholders, proxies and/or external parties and that the shareholders shall only have the opportunity to vote by mail prior to the annual general meeting.

OssDsign welcomes all shareholders to exercise their voting rights at the annual general meeting through postal voting as described below. Information on the resolutions passed at the annual general meeting will be published on Wednesday 1 June 2022, as soon as the result of the postal voting has been finally confirmed.  

Shareholders wishing to participate at the meeting must:

(i) be entered in the shareholders’ register, kept by Euroclear Sweden AB (the Swedish Central Securities Depository & Clearing Organisation), on the record day which is Monday 23 May 2022; and

(ii) notify the company of their attendance no later than Tuesday 31 May 2022 by casting their postal vote in accordance with the instructions under the heading “Postal voting” below so that the postal voting form is received by Setterwalls Advokatbyrå AB no later than that day. Please note that a notification to attend the general meeting can only be done by a postal vote.

A shareholder represented by proxy shall issue a power of attorney. Further instructions regarding this are available below under the heading ”Proxy voting”.

Nominee registered shares

Shareholders who have their shares registered in the name of a nominee must request temporary entry in the transcription of the share register kept by Euroclear Sweden AB (so-called voting rights registration) in order to be entitled to participate and vote for their shares at the meeting through postal voting. The shareholder must inform the nominee well in advance of Monday 23 May 2022, at which time the register entry must have been made. Voting rights registration that has been requested by the shareholder at such time that the registration has been completed by the nominee no later than Wednesday 25 May 2022, will, however, be taken into account in the preparation of the share register.

Postal voting

The shareholders may exercise their voting rights at the annual general meeting only by voting in advance, so-called postal voting, in accordance with Section 22 of the Swedish Act (2022:121) on temporary exceptions to facilitate the execution of general meetings in companies and other associations.

A special form shall be used for postal voting. The form will be available on the company’s website, www.ossdsign.com. The postal voting form is considered as the notification of participation at the annual general meeting.

The completed voting form must be received by Setterwalls Advokatbyrå AB no later than Tuesday 31 May 2022. The form may be submitted by post to Setterwalls Advokatbyrå AB, Attn: Andreas Wårdh, P.O. Box 1050, 101 39 Stockholm, Sweden or via e-mail to andreas.wardh@setterwalls.se.

The shareholder may not provide special instructions or conditions in the voting form. If so, the vote (i.e. the postal vote in its entirety) is invalid. Further instructions and conditions are included in the form for postal voting.  

The shareholders may request in the postal voting form that a resolution on one or several of the matters on the proposed agenda below should be deferred to a so-called continued general meeting, which cannot be conducted solely by way of postal voting. Such general meeting shall take place if the annual general meeting so resolves or if shareholders with at least one tenth of all shares in the company so requests.

Proxy voting

A shareholder represented by proxy shall issue a power of attorney which shall be dated and signed by the shareholder. If the shareholder postal votes by proxy, the power of attorney shall be enclosed to the form. If issued by a legal entity, the power of attorney shall also be accompanied by registration certificate or, if not applicable, equivalent documents of authority. Power of attorney forms for those shareholders wishing to postal vote by proxy will be available on the company’s website www.ossdsign.com.

Processing of personal data

For information regarding how your personal data is processed in connection with the annual general meeting, please refer to the privacy policy on Euroclear Sweden AB’s website, https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf.

Proposed agenda

1. Opening of the meeting and election of chairman of the meeting;

2. Preparation and approval of the voting list;
3. Approval of the agenda;
4. Election of one or two persons who shall approve the minutes of the meeting;
5. Determination of whether the meeting has been duly convened;
6. Submission of the annual report and the auditor’s report as well as of the consolidated financial statements and the auditor’s report on the group;
7. Resolution in respect of adoption of the profit and loss statement and the balance sheet as well as of the consolidated profit and loss statement and the consolidated balance sheet;
8. Resolution in respect of allocation of the company’s result according to the adopted balance sheet;             
9. Resolution in respect of the members of the board of directors’ and the CEO’s discharge from liability;
10. Determination of the number of members of the board of directors as well as of the number of auditors;
11. Determination of the fees payable to the members of the board of directors and the auditors;
12. Election of members of the board of directors and auditors;
13. Resolution on an authorization for the board of directors to increase the share capital;
14. Resolution on changes to the articles of association;
15. Resolution on implementation of a long-term incentive programme for employees and contractors by way of (i) a directed issue of warrants and (ii) approval of transfer of warrants;
16. Resolution on implementation of a long-term incentive programme for board members by way of (i) a directed issue of warrants and (ii) approval of transfer of warrants;
17. Closing of the meeting.

The nomination committee’s and certain major shareholders’ proposed resolutions

The nomination committee is composed of the chairman of the board of directors of the company (i.e. Simon Cartmell), Viktor Drvota (appointed by Karolinska Development AB and elected chairman of the nomination committee), Tommy Nilsson (appointed by Fouriertransform) and Filip Petersson (appointed by SEB). The nomination committee and certain major shareholders have presented the following proposed resolutions in relation to items 1, 10-12 and 16 in the proposed agenda. The nomination committee has found no reason to present any proposal for the amendment of the principles for the appointment of and instructions concerning a nomination committee, adopted at the extraordinary general meeting held on 7 March 2019 and applicable until otherwise decided by the general meeting.

Item 1. Election of chairman

Olof Reinholdsson (lawyer at Setterwalls Advokatbyrå AB) is proposed as chairman of the meeting, or if he is unable to attend the meeting, any other person proposed by the board of directors. 

Items 10-12. Election of and remuneration to the board of directors and auditors

The board of directors today consists of the following five (5) ordinary members without deputy members: Simon Cartmell (chairman), Anders Qvarnström, Håkan Engqvist, Newton Aguiar and Viktor Drvota. It is proposed that the board of directors shall consist of six (6) ordinary members without deputy members until the end of the next annual general meeting. Furthermore, it is proposed that a registered accounting firm shall be elected as auditor. 

It is proposed that the fees payable to the board of directors for the period until the end of the next annual general meeting shall amount to a total of SEK 1,250,000 out of which SEK 350,000 shall be paid to the chairman, SEK 250,000 shall be paid to each of Newton Aguiar, Anders Qvarnstrom and Jill Schiaparelli and SEK 150,000 shall be paid to Håkan Engqvist. No fees are proposed to be paid to Viktor Drvota who represents an institutional investor.

It is proposed that the company’s auditor shall be paid in accordance with approved invoices.

All current board members are proposed to be re-elected until the end of the next annual general meeting. In addition, Jill Schiaparelli is proposed to be new-elected. Furthermore, Simon Cartmell is proposed to be re-elected as chairman of the board of directors.

The accounting firm Ernst & Young Aktiebolag is proposed to be new-elected as auditor. The accounting firm has informed the company that Oskar Wall will be appointed as principally responsible auditor.

Information about board member proposed for new-election: Jill Schiaparelli, born 2/3/1966, MBA in Finance and Business Management from the Stern School of Business at New York University, provides the board with more than 20 years of expertise and experience in the healthcare industry with extensive knowledge of the Spine and Orthobiologics space. Jill has a deep US market understanding, encompassing KOL engagement, global medical device commercialization, emerging technologies, strategic marketing, healthcare consumerism and patient care pathway modeling. During her 20-year-plus career, Jill has held leadership roles with major healthcare companies such as Johnson & Johnson and Baxter, as well as serving as an executive at high-growth, innovative companies such as ApaTech (UK), a company she helped divest to Baxter. Jill has been engaged by the company on consultancy basis during 2022 and is therefore not deemed independent in relation to the company and its management. She is independent in relation to the company’s major shareholders.

Further information regarding all proposed board members’ principal education and work experience, any work performed for the company and any other significant professional commitments etc. is kept available on the company’s website at www.ossdsign.com.

Item 16. Resolution on implementation of a long-term incentive programme for board members by way of (i) a directed issue of warrants and (ii) approval of transfer of warrants

Certain major shareholders in OssDsign AB proposes that the annual general meeting resolves on implementation of a long-term incentive programme (Warrant programme 2022/2025:2) for board members by way of (A) directed issue of no more than 285,371 warrants of series 2022/2025:2 (of which no more than 199,760 warrants of series 2022/2025:2A and no more than 85,611 warrants of series 2022/2025:2B) to the company and/or any of its subsidiaries (the company or a subsidiary, as applicable, hereinafter referred to as the “LTIP Company”, and the group where the company is parent company, hereinafter referred to as the “Group”), as set forth in item A below, and (B) approval of transfer of the issued warrants from the LTIP Company to certain board members as set forth in item B below.

Main terms of the incentive programme

The incentive programme shall encompass four out of the five existing board members and the proposed new board member in the company (the “Participants”). The incentive programme does not encompass Viktor Drvota. Participation in the incentive programme requires election of the board members concerned at the annual general meeting.

The incentive programme entails that Participants, who have entered into an agreement with the LTIP Company (the “Warrant Agreement”), are offered to acquire warrants at market value, calculated as set forth below. Warrants may be transferred to the Participants free-of-charge provided that it does not entail negative tax consequences for the Group (only applicable with respect to Participants in other jurisdictions than Sweden).

The Warrant Agreement will include a so-called vesting structure, a re-purchase right for the LTIP Company applicable under certain circumstances, certain transfer restrictions and other terms and conditions customary for such agreements with some potential differences due to requirements under local law. 

Each warrant shall entitle the warrant holder to subscribe for one (1) new share in the company.

The subscription price per new share is to be determined based on a certain percentage (130%) of the volume weighted average trading price for the company’s share on Nasdaq First North Growth Market during a period of ten (10) trading days before the annual general meeting on 1 June 2022. More detailed provisions for determining the subscription price are set forth below.

The warrants may be exercised for subscription of new shares during the period from and including 1 July 2025 until and including 31 December 2025. Subscription of new shares may however not take place during so-called closed periods according to the EU Market Abuse Regulation, or otherwise in breach of relevant insider rules and regulations (including the company’s internal guidelines in this respect). Warrants that have not been exercised for subscription of new shares by 31 December 2025 shall lapse.

The rationale for the incentive programme

This proposal has been presented considering that the company competes for qualified board members in an internationally competitive market. The overall purpose is to align the interests of the members of the board of directors with those of the shareholders and thereby create maximum long-term value adding commitment. The incentive programme is also intended to create a long-term focus on increase in earnings and growth amongst the Participants.

As of today, there are two share related incentive programmes board members in the form of warrants issued in 2019, which will expire in 2022 (“Warrant programme 2019/2022:2”) and warrants issued in 2021, which will expire in 2024 (“Warrant programme 2021/2024:2”). Please refer to “Existing share related incentive programmes” in the board of directors’ proposal on implementation of a long-term incentive programme for employees and contractors for more information.    

This proposal has been presented as a complement to Warrant Programme 2021/2024:2 and in view of the share price development and the assessment that Warrant programme 2019/2022:2 no longer fulfils its purpose and will not entail any dilution for existing shareholders.

Existing share related incentive programmes

As of today, there are three different share related incentive programmes for employees and contractors out of which there are two different warrant programmes from 2019 (divided into 2019/2022:1A and 2019/2022:1B) and 2021 (divided into 2021/2024:1A and 2021/2024:1B), respectively, expiring in 2022 and 2024, respectively, and one employee stock option programme (so called qualified employee stock options which are held by Swedish employees only) from 2019 which expires in 2022. In addition, there are two share related incentive programmes for board members in the form of warrants issued in 2019, which will expire in 2022 (Warrant programme 2019/2022:2), and warrants issued in 2021, which will expire in 2024 (Warrant programme 2021/2024:2). Please refer to “Existing share related incentive programmes” in the board of directors’ proposal on implementation of a long-term incentive programme for employees and contractors for more information.    

Costs, dilution, etc.

There are costs associated with the incentive programme in respect of valuation, consultancy services and costs for registration and practical management of the programme.

In addition to the above, the company’s costs for the programme may include social security costs and Medicare Tax in relation to the part directed to Participants resident in the U.S (i.e. warrants of series 2022:2025:2B). Potential social security costs and Medicare Tax are calculated on the difference between the acquisition cost for new shares and the value of the company’s shares at the time of exercising the warrants. The tax rate for social security costs is currently 6.20 percent and the Medicare Tax is currently 1.45 percent. Social security costs are only payable in respect of a certain yearly income (currently USD 147,000) whilst Medicare Tax does not have a similar limit. The potential costs in respect of U.S. participants will thus be dependent on the development of the share price as well as the U.S. Participants’ other income from the Group and will not be payable at all should the warrants not be exercised for subscription of new shares. The total cost for the incentive programme will thus depend on the outcome of the programme.

U.S. Participants are expected to be offered the possibility to acquire a maximum of 85,611 warrants under the incentive programme. Potential costs in relation to Participants resident in the U.S. are appraised to a maximum of approximately SEK 1.57 per warrant (approximately TSEK 135 in total) based on today’s tax rates and the assumption that the value of the company’s shares at the time of exercise of the warrants is SEK 30 per share and an assumed subscription price of SEK 9.53 per new share (the calculation is based on the maximum total tax rate as of today, i.e. 7.65 percent). The potential costs are appraised to a maximum of approximately SEK 2.33 per warrant (approximately TSEK 200 in total) should the value of the company’s shares at the time of exercise of the warrants instead be SEK 40 per share with the same subscription price (please note that the aforementioned examples are only intended to illustrate the costs in different scenarios and are not a reflection of any appraised development of the share price).

Other than the warrants and employee stock options described under “Existing share related incentive programmes” above, there are no share or share price related incentive programmes outstanding in the company as of today.

Upon full subscription, transfer and exercise of all 285,371 issued warrants, a total of 285,371 new shares will be issued in the company (subject to potential recalculations in accordance with customary terms and conditions applicable for the warrants). This would lead to a dilution corresponding to approximately 0.5 percent of the total share capital and number of shares and votes in the company as of today. The dilution calculation does not take into account potential new shares as a result of existing incentive programmes or the incentive programme for employees and contractors proposed to be adopted at the annual general meeting meaning that the potential dilution may be lower than the aforementioned.

Accounting for the new shares that may be issued under the proposed incentive programme, the key ratio earnings per share for the full year 2021 had then been changed in such way that the result per share had been changed with SEK 0.02 (the calculation excludes other share related incentive programmes and is based on the dilutive effect only without taking costs associated with the proposed incentive programme into consideration).

Costs related to the warrants for U.S. participants will be accounted for in accordance with IFRS 2 according to which the warrants shall be expensed as a personnel cost over the vesting period. The total costs for the warrants are estimated to a maximum of TSEK 51 during the term of the programme (according to IFRS) based on the maximum dilutive effect in relation to the total number of shares in the company as of today.

The above calculations regarding costs, dilution and impact on key ratios are subject to potential recalculations in accordance with the customary recalculation terms set out for the programme. 

Preparation of the proposal

This proposal has been prepared by certain major shareholders together with external consultants. The final proposal has been presented by said shareholders.

Majority requirements

The proposed incentive programme is subject to the provisions in Chapter 16 of the Swedish Companies Act (Sw. Aktiebolagslagen (2005:551)), and a valid resolution therefore requires that the proposal is supported by shareholders representing at least nine-tenths (9/10) of the votes cast as well as of all shares represented at the annual general meeting.

1. Directed issue of warrants
    

1. The company shall issue no more than 285,371 warrants of series 2022/2025:2 (of which no more than 199,760 warrants of series 2022/2025:2A and no more than 85,611 warrants of series 2022:2025:2B).
    
2. Each warrant entitles to subscription of one (1) new share in the company, each with a quotient value of SEK 0.0625. If all warrants are subscribed, transferred to and exercised by the Participants for subscription of new shares, the company’s share capital will increase by SEK 17,835.6875 of which SEK 12,485 in relation to warrants of series 2022/2025:2A and SEK 5,350.6875 in relation to warrants of series 2022:2025:2B (subject to potential recalculations in accordance with customary terms and conditions to be applicable in relation to the warrants).
    
3. The warrants may, with deviation from the shareholders’ preferential rights, only be subscribed for by the company and/or any of its subsidiaries after which they are to be transferred to the Participants in accordance with the resolution adopted by the general meeting. The reason for the deviation from the shareholders’ preferential rights is that the warrants are to be used within the proposed incentive programme.
    
4. Subscription of warrants shall be made on a subscription list on 30 June 2022 at the latest. The board of directors shall be entitled to prolong the subscription period.
    
5. The company is not to pay any subscription price for the warrants. Any subsidiary subscribing for warrants shall pay a subscription price corresponding to the theoretical market value of the warrants, calculated by an independent valuation agent engaged by the company by use of the Black & Scholes valuation model. The value of the underlying share shall be determined by use of the same period for measurement as used in relation to the establishment of the subscription price for new shares in accordance with item 7 below. Payment is to be made in connection with subscription of warrants and not later than on 30 June 2022. The board of directors shall be entitled to prolong the time period for payment.
    
6. The warrants may be exercised for subscription of new shares during the period from and including 1 July 2025 until and including 31 December 2025.
    
7. The subscription price per new share is to be determined based on a certain percentage (130%) of the volume weighted average trading price for the company’s share on Nasdaq First North Growth Market during a period of ten (10) trading days before the annual general meeting on 1 June 2022. If no trading price is recorded for a particular trading day within the specified period, such day shall not be taken into account, but the period shall instead be extended forwards in time with the number of succeeding trading days required for the period to comprise ten (10) trading days with a recorded trading price. The subscription price thus calculated shall be rounded off to the nearest whole SEK 0.01, whereupon SEK 0.005 shall be rounded upwards. The subscription price may never be below the quotient value of the shares.
    
8. Warrants of series 2022/2025:2A and series 2022:2025:2B shall also be subject to the terms and conditions set forth in the schedules to the complete proposal.
    
9. The chairman of the board of directors, the CEO or a person appointed by the board of directors shall be authorised to make any minor adjustments required to register the resolution with the Swedish Companies Registration Office.
    

2. Approval of transfer of warrants to the Participants

A resolution to issue warrants in accordance with this proposal also includes an approval of the transfer of warrants to the Participants.

The warrants are to be transferred to the Participants against a premium payable by the Participants corresponding to the theoretical market value of the warrants as of the date of transfer, calculated by an independent valuation agent engaged by the company by use of the Black & Scholes valuation model. Warrants may be transferred to the Participants free-of-charge provided that it does not entail negative tax consequences for the Group (only applicable with respect to Participants in other jurisdictions than Sweden). The market value is preliminary estimated to SEK 0.55 per warrant, based on a market value of the underlying share corresponding to SEK 7.33 and assuming a subscription price of SEK 9.53 per new share.

The Participants may be allocated warrants as set forth below. No Participant may be offered a higher number of warrants than the maximum allocation set forth below.
 

A Participant can choose to acquire a lower but not a higher number of warrants than offered to the Participant. 

For Participants in other jurisdictions than Sweden, it is implied that transfer of warrants is legally possible and that transfer, in the company’s opinion, can be carried out with reasonable administrative and financial efforts. The company shall have the right to adjust the terms of the Warrant Programme 2022/2025:2 to the extent required in order for allotment of warrants to participants in other jurisdictions, to the extent practically possible, to be made under the same conditions imposed by the Warrant Programme 2022/2025:2.

The board of directors’ proposed resolutions

The board of directors of the company has presented the following proposed resolutions in relation to items 2, 4, 8, and 13-15 in the proposed agenda.             

Item 2. Preparation and approval of the voting list

The voting list that is proposed for approval is the voting list to be prepared by Setterwalls Advokatbyrå AB on behalf of the company, based on the shareholders’ register for the general meeting kept by Euroclear Sweden AB, and postal votes received, and approved by the persons appointed to approve the minutes.

Item 4. Election of one or two persons who shall approve the minutes of the meeting

The board of directors proposes that the person representing Karolinska Development AB (Johan Dighed) at the meeting is to be appointed as person verifying the minutes together with the chairman of the general meeting, or in the event the aforementioned is prevented from doing so, the person(s) the board of directors appoints instead. A person appointed to verify the minutes shall, apart from approving the minutes of the general meeting together with the chairman of the general meeting, check the voting list and that the result of received votes are correctly reflected in the minutes of the general meeting.

Item 8. Allocation of the company’s result

The board of directors proposes that the company’s result shall be carried forward in new account and that no dividend shall be paid for the financial year 2021.

Item 13. Resolution on an authorisation for the board of directors to increase the share capital

The board of directors proposes that the annual general meeting resolves on an authorisation for the board of directors to – for the period up to the next annual general meeting, with or without deviation from the shareholders’ preferential rights and at one or more occasions – resolve upon issuance of new shares, warrants and/or convertible debentures. Payment may be made in cash, in kind, through set-off of claims or otherwise be conditional. The company’s share capital may by support of the authorisation be increased by an amount corresponding to not more than twenty (20) per cent of the share capital after such issue(s). Deviation from the shareholders’ preferential rights shall be allowed in situations where a directed issue is deemed more appropriate for the company due to timing, commercial or similar reasons, and in order to enable acquisitions.

The chairman of the board of directors, the CEO or a person appointed by the board of directors shall be authorised to make any minor adjustments required to register the resolution with the Swedish Companies Registration Office. A valid resolution requires that the proposal is supported by shareholders representing at least two-thirds (2/3) of the votes cast as well as of all shares represented at the meeting.

Item 14. Resolution on changes to the articles of association

The board of directors proposes to change the limits in the articles of association with respect to share capital and number of shares in §§ 4 and 5. § 4 is proposed to be changed from “The company’s share capital shall be not less than SEK 1,300,000 and not more than SEK 5,200,000” to “The company’s share capital shall be not less than SEK 3,437,500 and not more than SEK 13,750,000”. § 5 is proposed to be changed from “The number of shares shall be no less than 22,000,000 and no more than 88,000,000” to “The number of shares shall be no less than 55,000,000 and no more than 220,000,000”.

The chairman of the board of directors, the CEO or a person appointed by the board of directors shall be authorised to make any minor adjustments required to register the resolution with the Swedish Companies Registration Office. A valid resolution requires that the proposal is supported by shareholders representing at least two-thirds (2/3) of the votes cast as well as of all shares represented at the meeting.

Item 15. Resolution on implementation of a long-term incentive programme for employees and contractors by way of (i) a directed issue of warrants and (ii) approval of transfer of warrants

The board of directors proposes that the annual general meeting resolves on implementation of a long-term incentive programme (Warrant programme 2022/2025:1) for employees and contractors by way of (A) directed issue of no more than 2,054,677 warrants of series 2022/2025:1 (of which no more than 1,483,934 warrants of series 2022/2025:1A and no more than 570,743 warrants of series 2022:2025:1B) to the company and/or any of its subsidiaries (the company or a subsidiary, as applicable, hereinafter referred to as the “LTIP Company”), as set forth in item A below, and (B) approval of transfer of the issued warrants from the LTIP Company to certain employees and contractors in the group where the company is parent company (the “Group”) as set forth in item B below.

Please note that the maximum number of warrants pursuant to the proposed issue resolution is 342,447 more than the maximum number of warrants that may be transferred and used under Warrant programme 2022/2025:1. The reason for this is that 342,447 warrants are intended for new-recruits and may, depending on the participants jurisdiction, be warrants of series 2022/2025:1A or 2022:2025:1B, respectively. Hence, a maximum of 1,712,230 warrants may be transferred to participants and exercised for subscription of new shares under Warrant programme 2022/2025:1.

Main terms of the incentive programme

The incentive programme shall encompass existing and future employees in and contractors of the Group (the “Participants”). Board members of the company will not be allowed to participate. The incentive programme will comprise around 11 Participants in total.

The incentive programme entails that Participants, who have entered into an agreement with the LTIP Company (the “Warrant Agreement”), are offered to acquire warrants at market value, calculated as set forth below. Warrants may be transferred to the Participants free-of-charge provided that it does not entail negative tax consequences for the Group (only applicable with respect to Participants in other jurisdictions than Sweden).

The Warrant Agreement will include a so-called vesting structure, a re-purchase right for the LTIP Company applicable under certain circumstances, certain transfer restrictions and other terms and conditions customary for such agreements with some potential differences due to requirements under local law. 

Each warrant shall entitle the warrant holder to subscribe for one (1) new share in the company.

The subscription price per new share is to be determined based on a certain percentage (130%) of the volume weighted average trading price for the company’s share on Nasdaq First North Growth Market during a period of ten (10) trading days before the annual general meeting on 1 June 2022. More detailed provisions for determining the subscription price are set forth below.

The warrants may be exercised for subscription of new shares during the period from and including 1 July 2025 until and including 31 December 2025. Subscription of new shares may however not take place during so-called closed periods according to the EU Market Abuse Regulation, or otherwise in breach of relevant insider rules and regulations (including the company’s internal guidelines in this respect). Warrants that have not been exercised for subscription of new shares by 31 December 2025 shall lapse.

The rationale for the incentive programme

The board of directors is of the opinion that share related incentive programmes strengthens the retention of those participating and motivates them to create shareholder value. The board of directors assess that these objectives are in line with all shareholders’ interests.

As of today, there are three different share related incentive programmes for employees and contractors out of which there are two different warrant programmes from 2019 and 2021, respectively, expiring in 2022 and 2024, respectively, and one employee stock option programme (so called qualified employee stock options) from 2019 which expires in 2022. Please refer to “Existing share related incentive programmes” below for more information.   

This proposal has been presented to enable new-recruits the possibility to participate in a share related incentive programme and, as regards persons already participating in existing share related incentive programmes, as a complement to Warrant Programme 2021/2024:1 and in view of the share price development and the board of directors’ assessment that the share related incentive programmes from 2019 no longer fulfil their purpose and will not entail any dilution for existing shareholders.

Support for participation

The LTIP Company or another company in the Group shall be allowed to support participation through offering a loan corresponding to the amount that a Participant in the incentive programme shall pay for the warrants. Such loan shall carry market interest and be repaid during the term of the incentive programme. If a Participant leaves the Group before the warrants are exercisable for new shares, the repayment period may be accelerated. A loan may only be granted provided it’s allowed pursuant to applicable law.

The LTIP Company or another company in the Group shall also be allowed to offer re-payment of an amount corresponding to not more than 50 percent of the amount (net of tax) that a Participant in the incentive programme has paid for the warrants. Such repayment may only be offered if the market value of the company’s share, during the period under which the warrants may be exercised, is lower than the sum of the amount paid per warrant and the subscription price per new share. Repayment shall further be conditional upon continued employment or assignment (as applicable). The board of directors shall have the right to reduce the amount or decide that no repayment is to be made if not deemed justified in the light of the company’s financial position.

Existing share related incentive programmes

As of today, there are three different share related incentive programmes for employees and contractors out of which there are two different warrant programmes from 2019 (divided into 2019/2022:1A and 2019/2022:1B) and 2021 (divided into 2021/2024:1A and 2021/2024:1B), respectively, expiring in 2022 and 2024, respectively, and one employee stock option programme (so called qualified employee stock options which are held by Swedish employees only) from 2019 which expires in 2022. In addition, there are two share related incentive programmes for board members in the form of warrants issued in 2019, which will expire in 2022 (“Warrants 2019/2022:2” in the table set forth below), and warrants issued in 2021, which will expire in 2024 (“Warrants 2021/2024:2” in the table set forth below).    

When issued, each warrant and employee stock option entitled to one share. The different programmes are subject to so called recalculation terms pursuant to which the number of shares each warrant and employee stock option entitles to and the amount to be paid for such shares may be adjusted. The table below sets forth the total number of warrants and employee stock options outstanding as of today as well as the number of new shares in the company in the event such warrants and employee stock options were to be exercised, whereby adjustments in accordance with applicable recalculation terms until the date hereof have been taken into account.

* Pursuant to the Swedish Companies Act, it is not possible to issue fractions of new shares meaning that any excess fractions will be disregarded in the event that warrants and employee stock options are exercised leading to a lower maximum number of new shares. Where applicable, the maximum number of shares have been rounded off downwards to the nearest whole number.  

If all warrants and employee stock options were to be exercised, the company’s share capital would increase with SEK 295,559 through the issuance of 4,728,944 new shares (subject to potential recalculations in accordance with applicable terms and conditions), each with a quotient value of SEK 0.0625. This would lead to a dilution corresponding to approximately 7.65 percent of the total share capital and number of shares and votes in the company (calculation based on the share capital and number of shares and votes in the company as of today). The dilution calculation does not take into account potential new shares as a result of the incentive programmes proposed to be adopted at the annual general meeting or any excess fractions in respect of individual holdings (see footnote below the table above) meaning that the potential dilution may be lower than the aforementioned.

Costs, dilution, etc.

There are costs associated with the incentive programme in respect of valuation, consultancy services and costs for registration and practical management of the programme.

In addition to the above, the company’s costs for the programme may include social security costs and Medicare Tax in relation to the part directed to Participants resident in the U.S (i.e. warrants of series 2022:2025:1B) as well as in relation to any repayment of up to 50 percent of the acquisition cost for the warrants (net of tax and as described under “Support for participation” above).

Potential social security costs and Medicare Tax are calculated on the difference between the acquisition cost for new shares and the value of the company’s shares at the time of exercising the warrants. The tax rate for social security costs is currently 6.20 percent and the Medicare Tax is currently 1.45 percent. Social security costs are only payable in respect of a certain yearly income (currently USD 147,000) whilst Medicare Tax does not have a similar limit. The potential costs in respect of U.S. participants will thus be dependent on the development of the share price as well as the U.S. Participants’ other income from the Group and will not be payable at all should the warrants not be exercised for subscription of new shares. The total cost for the incentive programme will thus depend on the outcome of the programme.

U.S. Participants are expected to be offered the possibility to acquire a maximum of 570,743 warrants under the incentive programme. Potential costs in relation to Participants resident in the U.S. are appraised to a maximum of approximately SEK 1.57 per warrant (approximately TSEK 896 in total) based on today’s tax rates and the assumption that the value of the company’s shares at the time of exercise of the warrants is SEK 30 per share and an assumed subscription price of SEK 9.53 per new share (the calculation is based on the maximum total tax rate as of today, i.e. 7.65 percent). The potential costs are appraised to a maximum of approximately SEK 2.33 per warrant (approximately SEK 1.33 million in total) should the value of the company’s shares at the time of exercise of the warrants instead be SEK 40 per share with the same subscription price (please note that the aforementioned examples are only intended to illustrate the costs in different scenarios and are not a reflection of any appraised development of the share price).

Costs in relation to any repayment of up to 50 percent of the acquisition cost for the warrants are appraised to a maximum of approximately SEK 1.28 million based on today’s tax rates and the assumption all warrants are acquired against the preliminary estimated market value as set out below under “Approval of transfer of warrants to the Participants”. The appraised costs include potential new-recruits and has been based on the assumption that all new-recruits will be subject to Swedish taxation. The actual outcome will depend on the actual jurisdiction of such new-recruits and there may also be social security costs payable by the Group in relation to the participation as such (typically in respect of the difference between the exercise price and the value of the company’s shares at the time of exercise of the warrants). 

Other than the warrants and employee stock options described under “Existing share related incentive programmes” above, there are no share or share price related incentive programmes outstanding in the company as of today.

Upon full subscription, transfer and exercise of all 1,712,230 warrants that may be transferred and exercised for subscription of new shares under Warrant programme 2022/2025:1, a total of 1,712,230 new shares will be issued in the company (subject to potential recalculations in accordance with customary terms and conditions applicable for the warrants). This would lead to a dilution corresponding to approximately 2.91 percent of the total share capital and number of shares and votes in the company as of today. The dilution calculation does not take into account potential new shares as a result of existing incentive programmes or the incentive programme for board members proposed to be adopted at the annual general meeting meaning that the potential dilution may be lower than the aforementioned.

Accounting for the new shares that may be issued under the proposed incentive programme, the key ratio earnings per share for the full year 2021 had then been changed in such way that the result per share had been changed with SEK 0.07 (the calculation excludes other share related incentive programmes and is based on the dilutive effect only without taking costs associated with the proposed incentive programme into consideration).

Costs related to the warrants for U.S. participants will be accounted for in accordance with IFRS 2 according to which the warrants shall be expensed as a personnel cost over the vesting period. The total costs for the warrants are estimated to a maximum of TSEK 338 during the term of the programme (according to IFRS) based on the maximum dilutive effect in relation to the total number of shares in the company as of today.

The above calculations regarding costs, dilution and impact on key ratios are subject to potential recalculations in accordance with the customary recalculation terms set out for the programme.

Preparation of the proposal

This proposal has been prepared by the board of directors together with external consultants. The final proposal has been presented by the board of directors.

Majority requirements

The proposed incentive programme is subject to the provisions in Chapter 16 of the Swedish Companies Act (Sw. Aktiebolagslagen (2005:551)), and a valid resolution therefore requires that the proposal is supported by shareholders representing at least nine-tenths (9/10) of the votes cast as well as of all shares represented at the annual general meeting.

1. Directed issue of warrants
    

1. The company shall issue no more than 2,054,677 warrants of series 2022/2025:1 (of which no more than 1,483,934 warrants of series 2022/2025:1A and no more than 570,743 warrants of series 2022/2025:1B). However, a maximum of 1,712,230 warrants may be transferred to Participants under Warrant programme 2022/2025:1 and any additional warrants subscribed by the LTIP Company shall be kept by the Group or cancelled but shall in no event be exercised for subscription of new shares (please refer to the introduction of this proposed resolution for more information).
    
2. Each warrant entitles to subscription of one (1) new share in the company, each with a quotient value of SEK 0.0625. The maximum number of warrants under the proposed issue resolution may entail a share capital increase of SEK 128,417.3125 of which SEK 92,745.875 in relation to warrants of series 2022/2025:1A and SEK 35,671.4375 in relation to warrants of series 2022/2025:1B (subject to potential recalculations in accordance with customary terms and conditions to be applicable in relation to the warrants). However, a maximum of 1,712,230 warrants may be transferred to Participants under Warrant programme 2022/2025:1 meaning that the maximum share capital increase, if all warrants are transferred to and exercised by Participants for subscription of new shares, is SEK 107,014.375 (subject to potential recalculations in accordance with customary terms and conditions to be applicable in relation to the warrants). Please refer to item 1 above and the introduction of this proposed resolution for more information.
    
3. The warrants may, with deviation from the shareholders’ preferential rights, only be subscribed for by the company and/or any of its subsidiaries after which they are to be transferred to the Participants in accordance with the resolution adopted by the general meeting and instructions from the company’s board of directors. The reason for the deviation from the shareholders’ preferential rights is that the warrants are to be used within the proposed incentive programme.
    
4. Subscription of warrants shall be made on a subscription list on 30 June 2022 at the latest. The board of directors shall be entitled to prolong the subscription period.
    
5. The company is not to pay any subscription price for the warrants. Any subsidiary subscribing for warrants shall pay a subscription price corresponding to the theoretical market value of the warrants, calculated by an independent valuation agent engaged by the company by use of the Black & Scholes valuation model. The value of the underlying share shall be determined by use of the same period for measurement as used in relation to the establishment of the subscription price for new shares in accordance with item 7 below. Payment is to be made in connection with subscription of warrants and not later than on 30 June 2022. The board of directors shall be entitled to prolong the time period for payment.
    
6. The warrants may be exercised for subscription of new shares during the period from and including 1 July 2025 until and including 31 December 2025.
    
7. The subscription price per new share is to be determined based on a certain percentage (130%) of the volume weighted average trading price for the company’s share on Nasdaq First North Growth Market during a period of ten (10) trading days before the annual general meeting on 1 June 2022. If no trading price is recorded for a particular trading day within the specified period, such day shall not be taken into account, but the period shall instead be extended forwards in time with the number of succeeding trading days required for the period to comprise ten (10) trading days with a recorded trading price. The subscription price thus calculated shall be rounded off to the nearest whole SEK 0.01, whereupon SEK 0.005 shall be rounded upwards. The subscription price may never be below the quotient value of the shares.
    
8. Warrants of series 2022/2025:1A and series 2022:2025:1B shall also be subject to the terms and conditions set forth in the schedules to the board of directors´ complete proposal.
    
9. The chairman of the board of directors, the CEO or a person appointed by the board of directors shall be authorised to make any minor adjustments required to register the resolution with the Swedish Companies Registration Office.
    

2. Approval of transfer of warrants to the Participants

A resolution to issue warrants in accordance with this proposal also includes an approval of the transfer of warrants to the Participants.

The warrants are to be transferred to the Participants against a premium payable by the Participants corresponding to the theoretical market value of the warrants as of the date of transfer, calculated by an independent valuation agent engaged by the company by use of the Black & Scholes valuation model. Warrants may be transferred to the Participants free-of-charge provided that it does not entail negative tax consequences for the Group (only applicable with respect to Participants in other jurisdictions than Sweden). The market value is preliminary estimated to SEK 0.55 per warrant, based on a market value of the underlying share corresponding to SEK 7.33 and assuming a subscription price of SEK 9.53 per new share.

The board of directors of the company shall resolve upon allocation to Participants in accordance with the guidelines set forth below. The Participants’ right to warrants shall be differentiated based on position, responsibility, and work performance in the Group. The Participants are divided into different categories. Only persons in the mentioned categories, or new recruits with similar positions and responsibility, shall be offered warrants. The board of directors shall have the right to decide on the persons to be included in the different categories and who shall be offered warrants subject to the guidelines set forth below and the overall intention with the incentive programme. Warrants not acquired by Participants, primary purchase right, may be offered to Participants who have notified their interest in acquiring additional warrants (secondary purchase right) pro rata in proportion to the number warrants offered to the Participant pursuant to the primary purchase right or, if and to the extent not possible, by the drawing of lots. The secondary purchase right may not exceed 50 percent of the number of warrants offered to the Participant pursuant to the primary purchase right. The maximum allocation pursuant to the primary purchase right is set forth below.
 

In respect of new recruits, the board of directors shall have the right to take last year’s share related incentive programme for employees and contractors (Warrant programme 2021/2024:1) into account meaning that new recruits may be offered a higher number of warrants in Warrant Programme 2022/2025:1 as long as the total allocation is consistent with the guidelines adopted by the general meeting in respect of Warrant programme 2021/2024:1 and Warrant programme 2021/2025:1, respectively (i.e. as if the new recruit had been offered to participate in both incentive programmes). The maximum individual allocation pursuant to Warrant programme 2021/2024:1 was 1,712,235 (CEO), 428,058 (CFO) and 142,686 (other senior management and key individuals), respectively.  

For Participants in other jurisdictions than Sweden, it is implied that transfer of warrants is legally possible and that transfer, in the board of directors’ opinion, can be carried out with reasonable administrative and financial efforts. The board of directors shall have the right to adjust the terms of the Warrant Programme 2022/2025:1 to the extent required in order for allotment of warrants to participants in other jurisdictions, to the extent practically possible, to be made under the same conditions imposed by the Warrant Programme 2022/2025:1.

Number of shares and votes in the company

The total number of shares in the company at the time of issuance of this notice is 57,074,504. The company does not hold any of its own shares.             

Shareholders’ right to request information

The board of directors and the CEO shall, if any shareholder so requests and the board of directors believe that it can be done without material damage to the company, provide information regarding circumstances that may affect the assessment of an item on the agenda or of the company’s economic situation. Such duty to provide information also comprises the company’s relation to the other group companies, the consolidated financial statements and such circumstances regarding subsidiaries which are set out in the foregoing sentence. A request for such information shall be made in writing no later than on Sunday 22 May 2022. The information will be made available at the company’s office from Friday 27 May 2022, at the latest. The information will, from the same date, also be available on the company’s website www.ossdsign.com. The information will also be sent, within the same period of time, to the shareholder who has requested it and stated its address.

Documentation

The financial accounts, auditor’s report, complete proposals and other documents to be dealt with at the general meeting will be kept available at the company’s office not later than three weeks before the meeting. The documents will be sent free of charge to shareholders who so request and state their postal address. The documents will also be made available not later than the aforementioned date on the company’s website www.ossdsign.com. All the above mentioned documents will also be presented at the general meeting.

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Stockholm, April 2022

The board of directors

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