OUTOKUMPU'S AGM TO CONVENE ON APRIL 3, 2
OUTOKUMPU OYJ STOCK EXCHANGE RELEASE February 17, 2003 at 1.45 pm
OUTOKUMPU'S AGM TO CONVENE ON APRIL 3, 2003 The Board of Directors of Outokumpu Oyj has today decided to convene an Annual General Meeting of shareholders that will be held on Thursday April 3, 2003 at 1.00 pm, at Dipoli Congress Centre, Espoo, Finland. In addition to the ordinary items the agenda for the Meeting will include proposals to amend the Articles of Association of the Company, to authorize the Board to decide on repurchase and transfer of the Companys own shares, to cancel the authorization to increase the Companys share capital given on April 8, 2002 and to authorize the Board to increase the Companys share capital. The agenda also includes a proposal that the AGM would decide on issuing stock options. In addition to items prescribed in Article 15 of the Companys Articles of Association, the Meeting will be asked to decide on the following proposals by the Board of Directors: Amendments to the Articles of Association The Board of Directors proposes following amendments to the Company's Articles of Association: - To amend article 3 of the Articles of Association in the effect that the maximum capital of the company be increased from EUR 600 000 000 to EUR 1 200 000 000. - To amend article 5 of the Articles of Association in the effect that the maximum number of shares be increased from 400 000 000 shares to 800 000 000 shares. - To amend article 7 of the Articles of Association in the effect that number of members of the Board of Directors be increased from eight of twelve members at most. Authorization of the Board of Directors to repurchase of the Companys own shares The Board of Directors proposes that the Annual General Meeting of shareholders to authorize the Board of Directors to decide on the repurchase of the Companys own shares subject to the following terms: - Own shares can be repurchased for improving the Company's equity structure or to be used as consideration when acquiring assets for the Company's business or as consideration in possible corporate acquisitions, in the manner and to the extent decided by the Board of Directors. Repurchased shares may also be used as a part of incentive and bonus schemes directed to the personnel of the Company. - The maximum number of shares to be repurchased is 8 632 955, however the maximum number of shares which the Company has in its possession may not exceed 5% of the total 172 659 119 shares issued and outstanding in the capital of the Company. - Shares will be repurchased pursuant to a decision of the Board of Directors, through purchases in public trading on the Helsinki Exchanges at the market price prevailing at the time of purchase. The purchase price shall be paid to the sellers within the time limit provided in the Rules of the Helsinki Exchanges and the Rules of the Finnish Central Securities Depository Ltd. - Because the number of shares to be repurchased may not exceed 5% of the total number of shares outstanding and votes that can be cast in a General Meeting of the Company and because the Company has only one class of shares, a repurchase of own shares through the Stock Exchange is not likely to have a significant impact on the proportions of share ownership or voting rights between shareholders of the Company. - Own shares shall be repurchased with distributable assets and accordingly repurchasing will reduce distributable equity of the Company. - The Board of Directors shall decide on matters and measures related to the repurchase of own shares. - The authorization shall be valid until the Annual General Meeting in 2004, however, no longer than 12 months from the decision of the Annual General Meeting. Authorization of the Board of Directors to transfer the Companys own shares The Board of Directors proposes that the Annual General Meeting of shareholders to authorize the Board of Directors to decide on the transfer of the Companys own shares subject to the following terms: - A maximum of 8 632 955 own shares acquired by the Company can be transferred. - The Board of Directors shall be authorized to decide on the recipients of such transfers and the procedure and terms to be applied in such transfers. The Board of Directors may decide to allow the transfer of shares in deviation of the pre-emptive right of the shareholders to acquire shares that have been repurchased and are being re-transferred. - Shares can be transferred as consideration when acquiring assets for the Company's business or as consideration in possible corporate acquisitions, in the manner and to the extent decided by the Board of Directors. The Board of Directors may also decide to sell shares through public trading on the Helsinki Exchanges in order to obtain funds for the Company for investments and possible corporate acquisitions. Shares can also be transferred as a part of incentive and bonus schemes directed to the personnel of the Company. - The transfer price shall not be less than the fair market value of the shares at the time of the transfer determined in public trading on the Helsinki Exchanges. The consideration can be paid in cash or in kind. - The Board of Directors shall decide on matters and measures related to the transfer of own shares. - The authorization shall be valid until the Annual General Meeting in 2004, however, no longer than 12 months from the decision of the Annual General Meeting. Cancellation of the authorization to increase the Companys share capital given on April 8, 2002 and authorization of the Board of Directors to increase the Companys share capital The Board of Directors proposes that the authorization to increase the Companys share capital given on April 8, 2002 be cancelled and the Board of Directors be authorized to increase the Companys share capital through an issue of new shares, stock options, option warrants and/or convertible bonds subject to the following terms: - The Board of Directors proposes to the Annual General Meeting that the Board of Directors be authorized to increase the Company's share capital in one or more issues by issuing new shares, stock options, option warrants and/or convertible bonds. Pursuant to this authorization, the aggregate maximum number of new shares to be issued or offered for subscription pursuant to stock options, option warrants and/or convertible bonds shall not exceed 17 265 911 shares with an account equivalent value of EUR 1.70 each, and the share capital of the Company may be increased by no more than EUR 29 352 050, which represents 10% of the currently registered share capital and of the votes that can be cast in the Annual General Meeting. The Board of Directors shall be authorized to decide the subscription price and the other terms and conditions of the issue of shares, stock options, option warrants and/or convertible bonds. - The Board of Directors proposes to the Annual General Meeting that the Board of Directors be authorized to decide who will be invited to subscribe for the new shares, stock options, option warrants and/or convertible bonds issued pursuant to this authorization. When issuing new shares, stock options, option warrants and/or convertible bonds, the Board of Directors may deviate from the shareholders' pre-emptive subscription rights, provided that such deviation is justified by an important financial reason for the Company, such as strengthening the Company's capital structure, financing corporate acquisitions and/or restructurings and/or providing incentives for the employees of the Company and its subsidiaries. The Board of Directors proposes to the Annual General Meeting that the Board of Directors be authorized to decide how the subscription price for the new shares, stock options, option warrants and/or convertible bonds is determined. The Board of Directors may not deviate from the shareholders' pre-emptive subscription rights in favor of persons that are closely connected to the Company in the meaning of Chapter 1, Section 4, subsection 1 of the Finnish Companies Act. The Board of Directors may decide that the subscription price for new shares can be paid by means of contribution in kind, set-off or otherwise subject to specific terms and conditions determined by the Board of Directors. It is proposed that this authorization shall be valid until the Annual General Meeting in 2004, however, no longer than 12 months from the decision of the Annual General Meeting. Issuing of stock options The Board of Directors of Outokumpu Oyj proposes to the Annual General Meeting of April 3, 2003 that stock options be issued on the terms and conditions defined below and attached hereto (APPENDIX 1): - The stock options shall be issued to Orijärvi Oy, a wholly owned subsidiary of Outokumpu Oyj. Stock options shall, by the resolution of the Board of Directors, be later distributed to the key persons of Outokumpu Group and its subsidiaries, from Orijärvi Oy on the terms and conditions attached hereto. - When preparing their proposal the Board of Directors has found it important that the Outokumpu Group moves toward share based incentives that are based on result requirements and relative performance. This way the key personnel are compensated for actual performance. The Board of Directors does not believe that a stock option plan, which is based on comparison to an index and which has earlier been in use in the company, as such fits Outokumpu Group any more. The Board of Directors proposes that the stock options shall be priced and distributed on an annual basis for a three (3) year period in order to take into account the result requirements and relative performance. - When deciding on the total and individual numbers of stock options to be annually distributed to key personnel the Board of Directors shall for example evaluate result development and success of the company by comparing the development of earnings per share (EPS) to other companies development of earnings per share (EPS). In addition, the numbers of stock options to be distributed to the senior management in 2004 shall be based on the development of the companys indebtedness level. - The stock options shall, with deviation from the shareholders pre-emptive right to subscription, be gratuitously offered to Orijärvi Oy, a wholly owned subsidiary of Outokumpu Oyj. Stock options shall, by the resolution of the Board of Directors, be later distributed to the key persons of the Outokumpu Group, from Orijärvi Oy. It is proposed that the shareholders pre-emptive right to subscription be deviated from since the stock options are intended to form a part of the incentive and commitment program for the key personnel. The purpose of the stock options is to encourage the key personnel to work on a long-term basis to increase the shareholder value. The purpose of the stock options is also to commit the key personnel to the Company. - The total number of stock options to be issued shall be 5,100,000. The stock options shall be marked with symbols 2003A, 2003B and 2003C stock options, and be gratuitously distributed to the key personnel employed by or to be recruited by the Outokumpu Group, by the resolution of the Board of Directors in 2004, 2005 and 2006. Upon issue all stock options 2003A, 2003B and 2003C shall be granted to Orijärvi Oy, a wholly owned subsidiary of Outokumpu Oyj. - The share subscription price shall for stock option 2003A be the trade volume weighted average quotation of the Outokumpu Oyj share on the Helsinki Exchanges between December 1, 2003 and February 29, 2004, for stock option 2003B the trade volume weighted average quotation of the Outokumpu Oyj share on the Helsinki Exchanges between December 1, 2004 and February 28, 2005 and for stock option 2003C the trade volume weighted average quotation of the Outokumpu Oyj share on the Helsinki Exchanges between December 1, 2005 and February 28, 2006. The share subscription prices thus include a premium, consisting of the market expectation for the share price yield during the next 1-3 years. - Any amount of dividend decided after the end of the period for determination of the share subscription price but before share subscription, shall be deducted from the share subscription price of stock options, as per the dividend record date. Imputation credit, as referred to in Section 4 in the Imputation Credit Act (1232/1988), shall not be taken into account. - The share subscription period shall for stock option 2003A be from September 1, 2006 to March 1, 2009, for stock option 2003B from September 1, 2007 to March 1, 2010 and for stock option 2003C from September1, 2008 to March 1, 2011. As a result of the share subscriptions with the 2003 stock options, the share capital of Outokumpu Oyj may be increased by a maximum of EUR 8 670 000 and the number of shares by a maximum of 5 100 000 new shares. - A proportion of the persons entitled to share subscription by virtue of the stock options belong to the inner circle of the Company, as referred to in Chapter 1 Section 4 Subsection 1 of the Finnish Companies Act. The total share ownership of these persons does not exceed 0.1% of the Companys shares and the voting rights of the shares at the moment. - The stock options now issued can be exchanged for shares constituting a maximum of 2.9% of the Companys shares and voting rights after the potential share capital increase. A share ownership plan, in which the senior management is obliged to acquire the companys shares with a proportion of the income gained from the stock options, shall be incorporated to the stock option arrangement. The manner in which the share ownership plan will be executed, shall be decided by the Board of Directors in connection with the decision to distribute stock options. Dividend proposal by the Board of Directors The Board of Directors proposes to the Annual General Meeting a dividend of EUR 0.40 per share for 2002. The dividend will be paid to the shareholders who are registered in the shareholders register maintained by the Finnish Central Securities Depository Ltd. (Suomen Arvopaperikeskus Oy) at the dividend record date on April 8, 2003. The dividend is proposed to be paid on April 15, 2003. OUTOKUMPU OYJ Corporate Management Johanna Sintonen Manager - Investor and Media Relations tel. +358 9 421 2438, mobile +358 40 530 0778, fax +358 9 421 2429 e-mail: johanna.sintonen@outokumpu.com www.outokumpu.com APPENDIX 1 OUTOKUMPU OYJ 2003 STOCK OPTION TERMS AND CONDITIONS I STOCK OPTION TERMS AND CONDITIONS Number of stock options The number of stock options issued will be 5 100 000 which entitle to subscribe for a total of 5 100 000 shares in Outokumpu. Stock options Of the stock options 1 700 000 will be marked with the symbol 2003A, 1 700 000 will be marked with the symbol 2003B and 1 700 000 will be marked with the symbol 2003C. The Company will notify in writing the persons to whom stock options will be issued about the offer of stock options. Stock option certificates shall, upon request, be delivered to the stock option owner at the start of the relevant share subscription period unless the stock options have been transferred to the book-entry securities system. Right to stock options The stock options shall, with deviation from the shareholders pre-emptive right to subscription, be gratuitously granted to Orijärvi Oy (Orijärvi), a wholly owned subsidiary of Outokumpu). Stock options shall later be distributed to the key persons of the Outokumpu Group, from Orijärvi Oy, by the resolution of the Board of Directors. It is proposed that the shareholders pre-emptive right to subscription be deviated from since the stock options are intended to form part of the Outokumpu Groups incentive and commitment program for the key persons. Distribution of stock options The Board of Directors shall later on decide upon the further distribution of the stock options granted to Orijärvi, to the key persons employed by or to be recruited by the Outokumpu Group. Upon issue all stock options 2003A, 2003B and 2003C shall be granted to Orijärvi. Orijärvi may distribute stock options 2003A, 2003B and 2003C to the key persons employed by or to be recruited by the Outokumpu Group by the resolution of the Board of Directors. Transfer of stock options and obligation to offer stock options The stock options are freely transferable, when the relevant share subscription period has begun. The Company shall hold the stock options on behalf of the stock option owner until the beginning of the share subscription period. The stock option owner has the right to acquire the possession of the stock options when the relevant share subscription period begins. Should the stock option owner transfer his/her stock options, such person is obliged to inform the Company about the transfer in writing without delay. The Board of Directors may, as an exception to the above, permit the transfer of a stock option also before such date. Should a stock option owner cease to be employed by or in the service of the Outokumpu Group, for any other reason than the death of the employee, or the statutory retirement of the employee in compliance with the employment contract, or the retirement of the employee otherwise determined by the Company, before September 1, 2008, such person shall without delay offer to the Company or its order, free of charge, the stock options for which the share subscription period in accordance with Section II.2 had not begun at the last day of such persons employment or service. Regardless of whether the stock option owner has offered his/her stock options to the Company or not, the Company is entitled to inform the stock option owner in writing that the stock option owner has lost his/her stock options on the basis of the above-mentioned reasons. Should the stock options be transferred to the book-entry securities system, the Company has the right, whether or not the stock options have been offered to the Company, to request and get transferred all the stock options, for which the share subscription period had not begun, from the stock option owners book-entry account to the book-entry account appointed by the Company without the consent of the stock option owner. In addition, the Company is entitled to register transfer restrictions and other respective restrictions concerning the stock options to the stock option owners book-entry account without the consent of the stock option owner. II SHARE SUBSCRIPTION TERMS AND CONDITIONS Right to subscribe new shares Each stock option entitles its owner to subscribe for one (1) share in Outokumpu Oyj. The account equivalent value of each share is EUR 1.70. As a result of the subscriptions the share capital of Outokumpu Oyj may be increased by a maximum of EUR 8 670 000 and the number of shares by a maximum of 5 100 000 new shares. Orijärvi, as a subsidiary of Outokumpu, shall not be entitled to subscribe shares in Outokumpu on the basis of the stock options. Share subscription and payment The share subscription period shall be: - For stock option 2003A from September 1, 2006 to March 1, 2009, - For stock option 2003B from September 1, 2007 to March 1, 2010 and; - For stock option 2003C form September 1, 2008 to March 1, 2011. The share subscription shall take place at the head office of Outokumpu or possibly at another location to be determined later. The subscriber shall transfer the respective stock option certificates with which he/she subscribes shares to the Company, or in case the stock options have been transferred to the book-entry securities system, the stock options with which shares have been subscribed shall be deleted from the subscribers book-entry account. Payment for shares subscribed shall be effected upon subscription to the bank account appointed by the Company. The Company shall decide on all measures concerning the share subscription. Share subscription price The share subscription price shall be: - For stock option 2003A the trading volume weighted average share price of Outokumpu Oyj on the Helsinki Exchanges between December 1, 2003 and February 29, 2004, - For stock option 2003B the trading volume weighted average share price of Outokumpu Oyj on the Helsinki Exchanges between December 1, 2004 and February 28, 2005 and; - For stock option 2003C the trading volume weighted average share price of Outokumpu Oyj on the Helsinki Exchanges between December 1, 2005 and February 28, 2006. Any dividend decided after the end of the period for determination of the share subscription price but before share subscription, shall be deducted from the share subscription price of stock options, as per the dividend record date. Imputation credit, as referred to in Section 4 in the Imputation Credit Act (1232/1988), shall not be taken into account. The share subscription price shall nevertheless always amount to at least the account equivalent value of the share. Registration of shares Shares subscribed for and fully paid shall be registered in the book-entry account of the subscriber. Shareholder rights Dividend rights of the shares and other shareholder rights shall commence when the increase of the share capital has been entered into the Finnish Trade Register. Share issues, convertible bonds and stock options before share subscription Should the Company, before the share subscription, increase its share capital through an issue of new shares, or issue of new convertible bonds or stock options, so that the shareholders have pre-emptive right to subscription, a stock option owner shall have the same right as or an equal right to that of a shareholder. Equality is reached in the manner determined by the Board of Directors by adjusting the number of shares available for subscription, the share subscription price or both of these. Should the Company, before the share subscription, increase its share capital by way of a bonus issue, the subscription ratio shall be amended so that the ratio to the share capital of shares to be subscribed by virtue of stock options remains unchanged. If the number of shares that can be subscribed for by virtue of one stock option should be a fraction, the fractional part shall be taken into account by reducing the subscription price. Rights in certain cases If the Company reduces its share capital before the share subscription, the subscription right accorded by the terms and conditions of the stock options shall be adjusted accordingly as specified in the resolution to reduce the share capital. If the Company is placed in liquidation before the share subscription, the stock option owner shall be given an opportunity to exercise his subscription right before the liquidation begins within a period of time determined by the Board of Directors. If the Company resolves to merge in another company as the company being acquired or in a company to be formed in a combination merger or if the Company resolves to be divided, the stock option owner shall, before the merger or division, be given the right to subscribe for the shares with his stock options within a period of time determined by the Board of Directors. After such date no subscription right shall exist. In the above situations the stock option owner has no right to require that the Company redeems the stock options from him/her for market value. If the Company, after the beginning of the share subscription period, resolves to acquire its own shares by an offer made to all shareholders, the stock option owners shall be made an equivalent offer. In other cases acquisition of the Companys own shares does not require the Company to take any action in relation to the stock options. In case, before the end of the subscription period, a situation, as referred to in Chapter 14 Section 19 of the Finnish Companies Act, in which a shareholder possesses over 90% of the shares of the Company and therefore has the right and obligation to redeem the shares of the remaining Shareholders, or a situation, as referred to in Chapter 6 Section 6 of the Finnish Securities Market Act, or a situation, as referred to in Section 16 in the Articles of Association, arise, the stock option owners shall be entitled to use their right of subscription by virtue of the stock option within a period of time determined by the Board of Directors. If the number of the Companys shares is changed while the share capital remains unchanged, the share subscription terms and conditions of the stock options shall be amended so that the relative proportion of shares available for subscription with the stock options to the total number of the Companys shares, as well as the share subscription price total, remain the same. Converting the Company from a public company into a private company shall not affect the terms and conditions of the stock options. III OTHER MATTERS The laws of Finland shall be applied to these terms and conditions. Disputes arising in relation to the stock options shall be settled by arbitration in accordance with the Arbitration Rules of the Central Chamber of Commerce. The Board of Directors may decide on the transfer of the stock options to the book-entry securities system at a later date and on the resulting technical amendments to these terms and conditions, including those amendments and specifications to the terms and conditions, which are not considered essential. The Board of Directors shall decide on other matters related to the stock options. The stock option documentation is kept available for inspection at the head office of Outokumpu. The Company is entitled to withdraw the stock options, which have not been transferred, or with which shares have not been subscribed, free of charge, if the stock option owner acts against these terms and conditions, or against regulations given by the Company on the basis of these terms and conditions, or against applicable law, or against regulations by authorities. These terms and conditions have been prepared in Finnish and English. In case of any discrepancy between the Finnish and English language terms and conditions, the Finnish terms and conditions are decisive.