INVITATION TO THE ANNUAL GENERAL MEETING OF PAYNOVA AB (PUBL.)

Wed, May 07, 2008 09:29 CET

(NGM: PAY)

Shareholders of Paynova AB (publ.), org. no. 556584-5889, are hereby invited to attend the company’s Annual General Meeting on Wednesday 4 June 2008 at 18.00 at the Näringslivets Hus premises, Storgatan 19, Stockholm, Sweden. Registration starts at 17.00.

REGISTRATION, ETC.

Shareholders who wish to attend the meeting must:

be both included in the printout of the share register created by VPC AB on Thursday 29 May 2008, and register themselves and any assistants (maximum two) with the company no later than 16.00 on Thursday 29 May 2008. Registration must be made in writing to the address Paynova AB, Årsstämma, Box 23059, SE-104 35 Stockholm, Sweden, by fax +46 (0)8-517 100 29 (please state on the fax that the registration relates to the Annual General Meeting) or by e-mail: anm@paynova.com. Please state your name, personal ID or corporate ID number, number of shares and daytime telephone number in your registration.

AGENT-REGISTERED SHARES

Any shareholder whose shares are registered in the name of an authorised agent must request that he or she be entered temporarily in the share register maintained by VPC AB no later than Thursday 29 May 2008 in order to be entitled to attend the meeting. Shareholders must request registration with the agent in good time before this date.

REPRESENTATIVES ETC.

Shareholders can be represented at the meeting by a representative with written authorisation signed by the shareholder and dated. If the written authorisation is issued by a legal entity, a confirmed copy of the proof of registration for the legal entity must be attached. The written authorisation and proof of registration must not be issued earlier than one year before the date of the Annual General Meeting. The original of the written authorisation and any proof of registration should be submitted in good time before the meeting to Paynova AB, Årsstämma, Box 23059, SE-104 35 Stockholm, Sweden. An authorisation form is available on the company website, www.paynova.com.

OTHER

The company’s share capital on the date of this invitation amounts to SEK 3,983,039.90, divided between 39,830,399 shares. Each share is entitled to one (1) vote.

PROPOSED AGENDA

1. Opening of meeting

2. Election of a chairman for the meeting

3. Establishment and approval of voting list

4. Approval of the agenda

5. Election of one or two minutes-checkers

6. Checking whether the meeting has been duly convened

7. Submission of the annual accounts and auditors’ report, as well as the consolidated accounts and consolidated auditors’ report

8. CEO’s statement

9. Questions

10. Decisions on:

- approving the profit and loss statement and balance sheet as well as the consolidated income statement and balance sheet;

- allocations concerning the company’s profit and loss as per the adopted balance sheet;

- discharging the board members and CEO of liability

11. Agreement on the number of board members and deputies to be appointed by the Annual General Meeting

12. Confirmation of fees for the board and auditor

13. Election of board members and deputies

14. The board’s proposed guidelines for remunerating senior management figures

15. The board’s proposed changes to the articles of association

16. The board’s proposed new issue of shares with preferential rights for shareholders

17. The board’s proposed issue of subscription options (series 2011)

18. The board’s proposed issue of subscription options (series 2008:2)

19. The board’s proposed authorisation for guarantee compensation

20. The board’s proposed authorisation regarding a targeted issue of new shares

21. The board’s proposed authorisation regarding a targeted issue of new shares, etc.

22. The board’s proposed decision on implementing an incentive scheme

23. Conclusion of the meeting

THE BOARD’S PROPOSALS FOR DECISIONS

The board’s proposed guidelines for remunerating senior management figures as per point 14.

Paynova is currently aiming to offer its senior management market remuneration that makes it possible for the group to recruit and retain senior management. The board believes that it is extremely important that there be a clear link between this remuneration and the group’s values and economic goals, in both the short and long term.

The board’s proposed principles for remuneration and other terms of employment for the company management mean that the company will offer its senior management market remuneration, that the criteria will be based on the significance of the work tasks, skill requirements, experience and performance, and that the remuneration will consist of the following elements: (i) fixed basic salary, (ii) variable remuneration, (iii) pension benefits and (iv) other benefits and severance terms.

The board’s proposed principles are mainly in agreement with previous years’ remuneration principles and are based on agreements already signed by the company and senior management. The division between basic salary and variable remuneration will be in proportion to the responsibilities and individual authority of senior management figures. The variable remuneration for the CEO and other senior management is based on both the group results and individual qualitative parameters.

The board is authorised to disregard these guidelines if there are specific reasons for doing so.

PROPOSED CHANGE TO THE ARTICLES OF ASSOCIATION AS PER POINT 15

The board proposes that § 4 of the articles of association be changed so that the minimum limit for the share capital is increased from SEK 1,500,000 to SEK 2,000,000 and the maximum limit for share capital is increased from SEK 6,000,000 to SEK 8,000,000, and that § 5 be changed so that the minimum number of shares is increased from 15,000,000 to 20,000,000 shares and that the maximum number of shares is increased from 60,000,000 till 80,000,000 shares.

PROPOSED DECISIONS AS PER POINTS 16-19

During 2007, Paynova completed a successful restructuring that gave the company increased competitiveness and cost-efficiency. Paynova is facing a period of growth, where the company will grow with existing customers and the pace of implementing new partnerships will be increased, and in particular the partnership with China’s Beijing Cyber Recreation Development Corp (CRD). Paynova’s board has decided to propose that the Annual General Meeting guarantee the company’s financing plan and significantly strengthen the balance sheet through a preferential share issue. There are four reasons for this:

1. The company’s previous financing plan was based on the issues implemented during 2007 and the remaining option scheme providing the company with the required capital over and above the capital from operations until the point at which cash flow positivity is achieved. The company’s subscription options designated TO10, which expire on 31 May 2008 at a subscription rate of SEK 12.48, offer entitlement to subscribe to 760,000 new shares corresponding to a capital sum of around SEK 10 million. Paynova’s share price trend recently has meant that capital from the option scheme could not be obtained as planned. The board of Paynova thus believes that the existing capital and business-generating operating capital is insufficient to cover the company’s capital requirements.

2. A strengthening of Paynova’s balance sheet and equity ratio is required to ensure the pace of the implementation and development work involved in the partnership with CRD. During the first quarter of 2008, Paynova worked intensively to guarantee cooperation with CRD in the short term and to gain a long-term and significantly expanded cooperation for its operation with both CRD and other players in the Chinese market. A strengthening of the balance sheet would further speed up this work and also contribute to the company being able to function more proactively on the market.

3. Paynova’s underlying market, e-commerce, is continuing to show very strong growth, and the company believes, as before, that there is potential for significantly increased transaction volumes. One of the most important segments for the company, online gaming, is showing even stronger growth, although based on significantly lower volumes. In this segment, Paynova has created a strong position for itself, and the company will focus on investing in guaranteeing this, as well as increasing transaction volumes. In this segment, it is taking longer than the company had predicted to generate large volumes, which means that the company’s business-generated working capital has not flown in at the pace the company had predicted. A stable balance sheet is also a requirement for implementing larger and medium-sized customers.

4. Paynova’s aim is to continue active participation in the industry’s consolidation and to be prepared to participate in potential future structural deals. Cooperation with CRD has indicated and created the conditions for a potentially expansive cooperation on the Asian market, which Paynova intends to actively develop further.

In order to significantly strengthen Paynova’s balance sheet, equity ratio and liquidity, the issue of new shares with preferential rights for current shareholders currently proposed will be completed in accordance with point 16. The issue on the proposed terms will provide the company with around SEK 23 million in the event of full subscription. The proceeds of the issue are intended to be used to finance ongoing activities and the development and establishment of the partnership with CRD and the other necessary partnerships required to establish activities in Asia, particularly China. The proceeds of the issue are also required for a stronger balance sheet thus being able to lay the basis for a more proactive investment in the marketing of Paynova’s services within prioritised market segments.

The proposed new issue of around SEK 23.2 million and the subscription options 2008:2 and 2011 proposed below for around SEK 11.6 million and SEK 30 million respectively will provide the company with around SEK 64 million before deductions for emission costs in the event of full utilisation, representing an addition to the previous SEK 26 million decided on in the event of full utilisation of subscription options TO6.

The board believes that this is sufficient for the company’s current capital needs including a significantly stronger balance sheet. Outstanding subscription options designated TO7 and proposed subscription options 2011 are mainly intended to meet the company’s future requirements for more proactive investments in marketing and market development, but are not judged to be of significant financial importance to the company’s liquidity or equity.

Against this background, the board proposes that the company implement a preferential rights share issue, issues of subscription options which will be assigned to those who subscribe to shares in the preferential issue and remuneration as per the guarantee agreement below.

PROPOSED DECISION ON ISSUE OF NEW SHARES WITH PREFERENTIAL RIGHTS FOR SHAREHOLDERS AS PER POINT 16

The board proposes that the General Meeting makes a decision that the board’s share capital, currently totalling SEK 3,983,039.90 be increased by a sum of no more than SEK 341,675.50 that may be actualised on full utilisation of the company’s option rights designated “TO5” and “TO10”, whereby a new subscription to a maximum of 1,170,661 shares may be arranged. Thus, a maximum of 3,416,755 new shares may be subscribed to within the scope of the new issue, with a maximum of 97,555 shares being subscribed to with the support of shares obtained after the utilisation of existing subscription options, which may be used in connection with the issue. The last day for subscription utilising the company’s “TO5” and “TO10” option rights in order for the shares acquired through such a subscription to carry entitlement to participation in the issue will be Friday 23 May 2008. The quota value of the share is SEK 0.10.

Anyone registered as a Paynova shareholder on the record date has preferential rights to subscribe to one (1) new share for each whole number of twelve (12) shares owned. The new shares must be subscribed to during the period from Monday 16 June 2008 to Monday 30 June 2008 inclusive. The record date for obtaining subscription rights is Wednesday 11 June 2008. The new shares will be issued at a price of SEK 7 (seven) per share.

The new shares carry a dividend entitlement, if a dividend is agreed, for the financial year 2008 onwards, provided the new shares have been registered and entered in the share register maintained by VPC AB before the record date for dividends.

In the event of full subscription to the proposed preferential share issue, the dilution effect will correspond to around 8 per cent of the share capital and votes.

PROPOSED ISSUE OF SUBSCRIPTION OPTIONS FOR NEW SUBSCRIPTION TO SHARES (SERIES 2011) AS PER POINT 17

The board proposes that the Annual General Meeting, with deviation from shareholders’ preferential rights, make a decision on a targeted issue of a maximum of 3,319,199 subscription options, or the higher sum of a maximum of 3,416,755 that can be actualised in the event of full utilisation of the company’s option rights designated “TO5” and “TO10”. Through “TO5” and “TO10”, a new subscription for a maximum total of 1,170,661 shares will be made, of which a maximum of 97,555 subscription options 2011 may be subscribed to using shares obtained after utilisation of “TO5” and “TO10”.

It is proposed that the subscription options (series 2011), with deviation from shareholders’ preferential rights, be subscribed to free of charge by Mangold Fondkommission AB with entitlement and obligation to transfer one (1) subscription option for each assigned share to share subscribers to the preferential rights issue as per point 16 above, free of charge. The reason for the deviation from shareholders’ preferential rights is to allow an allocation of subscription options (series 2011) to those assigned shares in the preferential share issue.

Subscription to subscription options (series 2011) must be made by 30 June 2008 at the latest.

Each subscription option (series 2011) entitles the owner to subscribe to one (1) new share in the company at a subscription price of SEK 9 (nine). By utilising the subscription rights, the share capital will be increased by a maximum of SEK 341,675.50.

The subscription period for the new share subscription, with support from subscription options (series 2011), runs from 1 February 2011 to 31 May 2011 inclusive.

In the event of full subscription to the proposed issue, the dilution effect will correspond to around 7 per cent of the share capital and votes.

PROPOSED ISSUE OF SUBSCRIPTION OPTIONS FOR NEW SUBSCRIPTION TO SHARES (SERIES 2008:2) AS PER POINT 18

The board proposes that the Annual General Meeting, with deviation from shareholders’ preferential rights, make a decision on a targeted issue of a maximum of 1,659,599 subscription options, or the higher sum of a maximum of 1,708,377 that can be actualised in the event of full utilisation of the company’s subscription options designated “TO5” and “TO10”. Through “TO5” and “TO10”, a new subscription for a maximum total of 1,170,661 shares will be made, of which a maximum of 48,777 subscription options 2008:2 may be subscribed to using shares received or utilisation obtained after “TO5” and “TO10”.

It is proposed that the subscription options (series 2008:2), with deviation from shareholders’ preferential rights, be subscribed to free of charge by Mangold Fondkommission AB with entitlement and obligation to transfer one (1) subscription option (series 2008:2) to share subscribers to the preferential rights issue as per point 16 above, free of charge for each complete number of two (2) assigned shares. The reason for the deviation from shareholders’ preferential rights is to allow an allocation of subscription options (series 2008:2) to those assigned shares in the preferential share issue.

Subscription to subscription options (series 2008:2) must be made by 30 June 2008 at the latest.

Each subscription option (series 2008:2) entitles the owner to subscribe to one (1) new share in the company at a subscription price of SEK 7 (seven). By utilising the subscription rights (series 2008:2), the share capital will be increased by a maximum of SEK 170,837.70.

The subscription period for new subscription with support from the subscription options runs from 1 September 2008 to 31 October 2008 inclusive.

In the event of full subscription to the proposed issue, the dilution effect will correspond to around 3.5 per cent of the share capital and votes.

PROPOSED AUTHORISATION AS PER POINT 19

The board proposes that the meeting authorise the board to decide, before the next Annual General Meeting, on payment of cash remuneration and/or make a decision on increasing the share capital, with deviation from shareholders’ preferential rights, through a targeted issue of new shares, within the framework of the relevant articles of association, to the people and/or companies that are signatories to the guarantee agreement with the company concerning participation in the preferential issue as per point 16. The board will be authorised to determine the other terms for the issue.

The reason for the deviation from the preferential rights is that the company must pay the agreed guarantee compensation for the above-mentioned issue guarantees. The guarantee remuneration must be paid as cash compensation corresponding to ten (10) per cent of the maximum subscription commitment as per the guarantee agreement or in the form of shares in the company to a value corresponding to fifteen (15) per cent of the maximum subscription commitment as per the guarantee agreement, or a combination of the two. The total guarantee commitments will be announced on the company’s website in connection with this invitation.

If guarantee compensation is paid in the form of newly-issued shares, the issue price in accordance with the guarantee agreement will amount to the quota value of the share, i.e. SEK 0.10. The maximum number of shares that the board can decide to issue as a result of the authorisation must be determined based on the company share’s average final payment price over a period of two (2) weeks immediately preceding the meeting’s decision on the preferential rights issue as per point 16 above, calculated as follows: the value of the subscription commitment, divided by the average final payment price for the Paynova share over a period of two (2) weeks immediately preceding the decision of the meeting regarding preferential issue, multiplied by 0.15.

PROPOSED AUTHORISATION AS PER POINT 20

The board proposes that the meeting authorise the board to decide to increase the share capital, on one or more occasions, through a targeted issue of new shares to Beijing Cyber Recreation Development Corp (CRD) prior to the next Annual General Meeting, with deviation from shareholders’ preferential rights, within the framework of the relevant articles of association.

The decision on the issue of new shares may contain terms stating that newly-issued shares may be paid through offset, in addition to a cash payment. The board will also be authorised to determine the other terms for the issue. However, the issue price will be determined based on the market value of the company’s shares on each respective occasion when utilising the authorisation.

The reason for the deviation from preferential rights is the company’s partnership agreement with CRD and its formulation, as well as the company’s desire to make CRD both an industrial partner and part-owner of Paynova in order to strengthen the partnership between the parties.

The number of shares that the board can decide to issue using the authorisation amounts to a maximum of ten (10) per cent of the share capital on the date of this invitation.

It will also be proposed at the meeting to authorise the board and the CEO, or the board will decree, that any small adjustments be made to the above decision that may prove necessary in connection with the decision being registered with Swedish Companies Registration Office.

PROPOSED AUTHORISATION AS PER POINT 21

The board proposes that the Annual General Meeting authorise it to make a decision, before the next meeting, on increasing the share capital through an issue of new shares, an issue of subscription options or an issue of convertibles on one or more occasions, with or without preferential rights, within the framework of the relevant articles of association, corresponding, on full utilisation, to a total of ten (10) per cent of the share capital on the date of this invitation.

The decision on a new issue may contain terms stating that newly-issued shares, subscription options or convertibles may be paid for assets contributed in kind, through offset or otherwise subscribed to as per chap. 13 § 5 first paragraph 6 of the Swedish Companies’ Act, chap. 14 § 5 first paragraph 6 or chap. 15 § 5 first paragraph 4 of the Swedish Companies’ Act. The board will also be authorised to determine the other terms for the issue.

The aim of the authorisation is to allow the company to issue the above instruments as purchase sum payment in connection with the acquisition of other companies, parts of companies, or assets that the board regards as being of value to the company’s activities and as remuneration funds for strategic partnerships for the company.

PROPOSED INCENTIVE SCHEME FOR THE COMPANY’S EMPLOYEES AS PER POINT 22

For a period, the board has been looking at the issue of whether the company will introduce a new incentive scheme for its employees. The reason is that the board believes it would be in the company’s interest for key persons and employees in the company group to be given personal incentives directly linked to the development of the company, through partial ownership of the company.

Assuming that the proposal below is adopted by the Annual General Meeting, the board intends to return with similar proposals at the Annual General Meetings in 2009 and 2010. The board’s aim is for the company to implement an incentive scheme that in total would include a maximum of around ten (10) per cent of the company’s share capital and would take over place over a three-year period.

Against this background, the board proposes that the Annual General Meeting decide on implementation of the first phase of this incentive scheme as per the terms below, including a decision on issue of subscription options to a subsidiary, point 22 a), and a decision on approval of the transfer of the said subscription options to employees, point 22 b), (the “Scheme”).

Point 22 a)

1. Under the Scheme, a maximum of 1,666,000 new subscription options will be issued, each subscription entitling the owner to a new subscription of one (1) share in the company, meaning that the share capital can be increased by a maximum of SEK 166,600 in the event of full utilisation of the subscription options (the “Subscription Options”).

2. The Subscription Options, with deviation from shareholders’ preferential rights, may be subscribed to by the company’s wholly-owned subsidiary Paynova TOI AB, corp. ID no. 556702-2958, (the “Subsidiary”). The Subscription Options will be issued free of charge. Subscription must be made no later than four (4) weeks from the date of the decision of the Annual General Meeting.

3. In the event of the Subscription Option being utilised, the owner of each share acquired will pay a sum equivalent to 150 per cent of the average final payment rate for the company’s shares for each stock market day during the period from thirty (30) stock market days before this Annual General Meeting until the day of this Annual General Meeting.

4. The Subscription Options may be utilised for subscription to shares from 1 May 2011 until 31 May 2011. Shares acquired through the utilisation of the Subscription Option carry an entitlement to a share dividend agreed after the shares have been subscribed to.

5. The redemption price and the number of shares that each Subscription Option entitles the holder to may be recalculated for issues, etc. in accordance with the normal recalculation terms.

Point 22 b)

6. The subsidiary, by agreement with the company, is entitled and obliged to transfer all Subscription Options within the framework of the Scheme to those people to the extent and in accordance with the terms specified as follows.

a) Subscription Options may be transferred to the employees specified in point 6b) in return for simultaneous payment of the market price as per point 6c) on one or more occasions and no later than 28 February 2009.

b) The Subscription Options may be distributed to the employees in five different personnel categories in accordance with the following principles: (i) The CEO can be offered a maximum of 220,000 Subscription Options, (ii) the four people holding the posts of Sales Director, Product & Marketing, CFO and Director Emerging Markets can be offered a maximum of 150,000 Subscription Options each, (iii) the four people holding the posts of VP Sales, CTO, Risk and CS/Operations can be offered a maximum of 90,000 Subscription Options each, (iv) other key personnel such as chief accountant, developers, sales staff, market and sales support can be offered a maximum of 40,000 Subscription Options each and (v) other employees can be offered a maximum of 6,000 Subscription Options each.

c) The market price to be paid on acquisition of Subscription Options from the Subsidiary must be calculated by an external assessor as per the Black & Scholes model.

7. Subscription Options in this proposed Scheme will be freely transferable and have no connection to employment terms, etc. for the employee (from the day the Subscription Options are acquired from the Subsidiary).

The reason for the deviation from the shareholders’ preferential rights is to allow the implementation of the Scheme in accordance with the above terms and in accordance with the aim specified in the introduction to point 22.

In the event of full subscription to the proposed issue, the dilution effect will correspond to around 3 per cent of the share capital and votes.

Other terms, etc. for the proposed issues and authorisations as per points 15-22

The issues proposed as per points 16-18 and the authorisation as per point 19 are proposed crosswise, conditional on the general meeting making a decision in accordance with all of the board’s proposals as per these points.

As shareholders declared themselves willing to pay in parts of the proceeds of the issue in advance by providing the company with a loan, it is proposed that payment for newly-issued shares, in addition to cash payment, should also be paid by offsetting any claim that shareholders will have on the company when the board’s complete proposal is presented for decision as below.

A decision of the Annual General Meeting in accordance with the board’s proposal as per points 15-21 needs to receive the support of shareholders with at least two thirds of both the votes casts and the shares represented at the meeting.

A decision of the Annual General Meeting in accordance with the board’s proposal as per point 22 needs to receive the support of shareholders with at least 9/10 of both the votes cast and the shares represented at the meeting.

DOCUMENTS, ETC.

The annual accounts and audit report will be available from Paynova AB, Gävlegatan 12A, SE-104 35 Stockholm, Sweden, tel. +46 (0)8-517 100 00, by Wednesday 21 May 2008 at the latest.

The board’s complete proposed appropriation of funds as per point 10, guidelines for remuneration for senior management as per point 14, articles of association as per point 15, issues as per points 16-18 and authorisations as per points 19-21 and incentive scheme as per point 22, and associated documents as per the Swedish Companies’ Act, plus the nominations committee’s proposals regarding the composition of the board, etc. as per points 11-13, will be made available at the company’s specified address from Wednesday 21 May 2008.

All documents will also be made available on the company’s website, www.paynova.com, from Wednesday 21 May 2008.

All documents will be sent free of charge to those shareholders who request them and provide their postal address. These documents will also be available at the Annual General Meeting.

Stockholm, May 2008

PAYNOVA AB (publ.)

The board

ABOUT PAYNOVA

Paynova offers an international, account-based complete service for payments via the Internet. With Paynova as the only counterpart, e-retailers can get a payment guarantee for 21 payment options with credit cards, debit cards and Internet banks, in 12 languages with 12 currencies in a security-certified interface (PCI). Consumers can also open a Paynova account to make purchases simple and secure, as well as look after transfers between family members, friends and acquaintances. Paynova has agreements with around 1 800 e-retailers. Most are found in the following prioritised segments: travel, retail and media/network games. The company has been listed on NGM Equity since February 2004.

For further information, visit: www.paynova.com.

INVITATION TO THE ANNUAL GENERAL MEETING OF PAYNOVA AB (PUBL.)

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