Stock Exchange Release
THE PROPOSAL BY THE BOARD OF DIRECTORS OF STONESOFT CORP. TO THE GENERAL MEETING OF SHAREHOLDERS ON THE GRANTING OF OPTION RIGHTS
The Board of Directors of Stonesoft Corp. is calling an Extraordinary General Meeting of Shareholders on 24.11.2004.
The Board of Directors of Stonesoft Corp proposes to the Extraordinary General Meeting of Shareholders to be held on 24.11.2004 that the Extraordinary General Meeting grant option rights to the members of the Board of Directors, other management and to the personnel of Stonesoft Corporation as part of the Company's incentive program. The number of the stock options issued shall be the maximum of 1,500,000 which entitle to subscribe for a maximum of 1,500,000 Stonesoft Corp. shares with an accounting value of 0.02 euros.The share subscription price for all stock options shall be the trade volume weighted average price of the share during the last ten trading days on the Helsinki Exchanges before theExtraordinary General Meeting of Shareholders resolving on this plan. The subscription price shall be rounded off to the nearest cent.
The share subscription period with stock options commences on January 1 2006 and the share subscription period with all the stock option will end on December 31 2010. The share subscription periods are specified in more detail in the terms and conditions of the stock option program.
Appendix: The proposal by the Board of Directors on the granting of option rights
For further information, please contact:
President and CEO Ilkka Hiidenheimo, Stonesoft Corp. Tel. +358 9 47 67 11
ilkka.hiidenheimo@stonesoft.com
Distribution:
The Helsinki Stock Exchange
Major Media
Stonesoft Corp.
Ilkka Hiidenheimo
President and CEO
THE PROPOSAL BY THE BOARD OF DIRECTORS TO THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF 24 NOVEMBER 2004 TO DECIDE ON THE GRANTING OF OPTION RIGHTS
The Board of Directors proposes to the Extraordinary General Meeting of Stonesoft Corp. to be held on 24 November 2004 that the Extraordinary General Meeting grant option rights to the members of the Board of Directors, other management and to the personnel of Stonesoft Corp. pursuant to the Terms and Conditions as attached hereto (Appendix 1.1.). Part of the option rights shall be granted to a wholly (directly or indirectly) owned subsidiary of the Company.
The number of the stock options issued shall be the maximum of 1,500,000 which entitle to subscribe for a maximum of 1,500,000 Stonesoft Corp. shares with an accounting value of 0.02 euros.
The option rights shall be granted to the above-mentioned parties in deviation from the shareholders' pre-emptive subscription right for the purpose of ensuring that the key resources in view of the company's future development will have a long-term commitment to the company. The proposal for deviation from the shareholders' pre-emptive subscription right is made because the option rights are intended to be as part of the Company's incentive program, and therefore, it shall be deemed to constitute a weighty financial reason for the Company.
The subscription price of a share with stock options shall be the trade volume weighted average price of the share during the last ten trading days on the Helsinki Exchanges before the Extraordinary General Meeting of Shareholders resolving on this plan. The subscription price shall be rounded off to the nearest cent. The share subscription price shall always nevertheless be at least the accounting equivalent value in accordance with the Companies Act.
The share subscription period with stock options commences as follows:
- on January 1, 2006 for the stock options "2004A",
- on January 1, 2007 for the stock options "2004B",
- on January 1, 2008 for the stock options "2004C", and
- on January 1, 2009 for the stock options "2004D".
The share subscription period shall end on December 31, 2010 for all stock options.
The Company's share capital may be increased by the share subscriptions based on the stock option by the maximum of 30,000 euros. The payment of the subscription price shall take place simultaneously with the share subscription.
A number of those entitled to subscribe belong to the inner circle of the Company. The ownership of these individuals constitute 18,73 % of the whole stock of the Company and the total of the votes the shares entitle to.Since the Board of Directors will according to the proposal be entitled to determine the persons to whom option rights will be offered, the shares of the Company owned by such persons cannot be determined at this stage. The number of the shares available for subscription on the basis of the options to be now issued in Stock Option Plan 2004 shall constitute 2,62 % of the total of the votes the total of the Company's shares entitle to.
APPENDICES
Terms and Conditions of the Stock-Option Plan 2004
Appendix. 1.1
Copy of the latest income statements and the resolution by the Annual General Meeting concerning
profit/loss
Appendix 1.2
Copy of the interim report 1 January 2004 - 30 September 2004
Appendix 1.3
Account by the Board of Directors on events occurred after the interim with significant effect
on the Company's standing
Appendix 1.4
STONESOFT CORP'S STOCK OPTION PLAN 2004
I TERMS AND CONDITIONS OF STOCK OPTIONS
1.Amount of stock options
The number of stock options issued shall be a maximum of 1,500,000. The issued stock options entitle to subscribe for a total maximum of 1,500,000 Stonesoft Corp. ("the Company") shares with an accounting equivalent value of EUR 0.02 each.
2.Allocations of stock options
The stock options shall, in deviation from the shareholders' pre- emptive right to subscription, be is-sued to the members of the Board of Directors, other management and personnel ("the option holders") of Stonesoft Corp. and its subsidiaries (forming together "the Group"), as nominated by the Board of Directors of the Company ("the Board") for the purpose of ensuring that the key resources in view of the company's future development will have a long-term commitment to the company. A number of stock options will be given to a directly or indirectly wholly owned subsidiary of Stonesoft Corp. as nominated by the Board ("the Subsidiary").
The Subsidiary is entitled to subscribe for the stock options when these stock options are not given to the option holders. This is to enable these stock options to be given later to option holders within the incentive-plan of the Group.
The shareholders' pre-emptive right to subscription is being deviated from due to the stock options being intended to be part of the Group's incentive-plan and accordingly, there is, from the point of view of the Company, a weighty financial reason.
3.Subscription of stock options
The Company shall by December 31, 2004 notify each option holder in writing or in another verifiable manner of the grant of the stock options. The subscription for the stock options must take place by January 31, 2005. The subscription venue is the Company. The options will be given free of charge. The Board may decide upon all procedures relating to the approval of the subscriptions in the case of prospective over- or under subscription and all other issues and actions relating to the granting of the stock options.
The stock options granted to the Subsidiary are intended to be given at a later date to option holders of the Group, as nominated by the Board. The Subsidiary is not permitted to use the stock options for share subscription.
4.The stock options and the book entry-system
The stock options issued by the Company are divided into four option classes 375,000 of which will be marked as "2004A", 375,000 as "2004B", 375,000 as "2004C" and 375,000 as "2004D".
The stock options shall be issued in the book-entry system. The Board will decide on the relevant procedure and schedule. The stock options will be entered into the book-entry account of the option holder before the commencement of the option class- specific share subscription periods under Section II.2. The stock options concerned are under the restriction in Section I.5 below, which will be registered in the book-entry system as a restriction concerning all the stock options. The transfer and other restrictions relating to the stock options referred to in Section I.5 below can be registered by the Company in the book- entry account of the option holder without the consent of the option holder. The Company also has the right to transfer the stock options of the option holder to a book-entry account designated by the Company without the consent of the option holder to implement the restrictions mentioned under Section I.5 below.
5.Restriction to transfer and obligation to offer stock options
Stock options must not be transferred to a third party, pledged or be used for share subscription before the share subscription period mentioned in Section II.2 below has commenced. After the commencement of the option class-specific share subscription periods the said stock options may be freely transferred. The Board may, however, permit the transfer of the stock options in writing at an earlier date.
It is not permissible to enter into any derivative agreement or other similar hedging arrangement relating to the stock options or the shares to be subscribed for prior to the share subscription period. The Company shall provide more detailed provisions on the contents of the terms of the transfer restriction.
Should the option holder cease to be employed by a company belonging to the Group or cease to be a member of the Board of Directors of a company belonging to the Group for any reason other than retirement or death then such person shall without delay offer to the Company or to its assignee free of charge those stock options for which the share subscription period referred to in Section II.2 has not yet commenced as at the last day of such person's employment or membership. The Board may for special reasons make an exception to this rule.
The Company also has the right to redeem such stock options free of charge from the option holder after the end of the employment with the Group or the membership of the Board of Directors without any consent from the option holder and to enforce the redemption by transferring the stock options from the book-entry account of the option holder to a book-entry account designated by the Company, irrespective of whether or not the option holder has offered the stock options to the Company.
The Company may resolve that in cases of voluntary and/or statutory leave of absence of the option holder and in other corresponding circumstances the Company has the right to extend the transfer restriction period of stock options and/or redeem stock options free of charge from the option holder without any consent from the option holder and to enforce the redemption by transferring the stock options from the book-entry account of the option holder to a book-entry account designated by the Company.
II TERMS AND CONDITIONS OF SHARE SUBSCRIPTION
1.Right to subscribe for new shares
Each stock option entitles its holder to subscribe for one (1) share of Stonesoft Corp. with the accounting equivalent value of EUR 0.02. Pursuant to the share subscription, the share capital of Stonesoft Corp. may increase by a maximum of EUR 30,000 and the amount of shares may increase by a maximum of 1,500,000 new shares.
2.Share subscription and payment
The period for the subscription of the shares commences
- on January 1, 2006 for the stock options "2004A",
- on January 1, 2007 for the stock options "2004B",
- on January 1, 2008 for the stock options "2004C", and
- on January 1, 2009 for the stock options "2004D".
The share subscription period shall end on December 31, 2010 for all stock options.
The subscription shall take place at the head office of Stonesoft Corp. and possibly in another venue as later specified by the Company. The payment for the subscription shall take place upon subscription. The Board will decide on the acceptance of the subscriptions. The stock options used for share subscription will be removed from the subscriber's book-entry account.
3.Subscription price
The share subscription price for all stock options shall be the trade volume weighted average price of the share during the last ten trading days on the Helsinki Exchanges before the General Meeting of Shareholders resolving on this plan. The subscription price shall be rounded off to the nearest cent. The share subscription price shall nevertheless always be at least the accounting equivalent value in accordance with the Companies Act.
4.Registration of the shares
Shares subscribed for and fully paid for shall be entered in the subscriber's book-entry account.
The Board shall accept subscriptions at least once in every calendar quarter and shall have the increases in the share capital based on the accepted subscriptions registered without delay and submit the new shares to public trade with the existing shares of the Company. The Board does not have any obligation to accept subscriptions made after the end of the financial year before the Annual General Meeting of the Shareholders.
5.Shareholder rights
The shares shall entitle to a dividend for the financial year during which the shares have been sub-scribed for. Other shareholder rights shall commence when the increase of the share capital has been entered into the trade register.
6.Share issues, convertible bonds, warrants and stock options before share subscription
6.1 Bonus issue
Should the Company, before the end of the share subscription period, raise its share capital by a bonus issue the subscription price and the number of shares to be subscribed for by each stock option shall be adjusted in accordance with the following formulas:
New subscription price =
subscription price before the bonus issue * number of shares before the bonus issue / the number of shares after the bonus issue.
New number of shares to be subscribed for by a stock option =
the number of shares to be subscribed for by a stock option before the bonus issue * the number of shares after the bonus issue / the number of shares before the bonus issue.
Should the Company, before the end of the subscription period, amend its share capital without chang-ing the number of shares the subscription right by virtue of the stock option will not be affected.
6.2 Changing the number of shares without changing the share capital
Should the Company, before the end of the subscription period, amend the number of shares while the share capital shall remain unchanged the models in 6.1 shall be applied to adjusting the subscription price and the number of shares to be subscribed for by the stock options.
6.3 New issue, issue of convertible bonds, warrants and stock options
Should the Company, before the subscription of shares, raise its share capital through an issue of new shares or an issue of new convertible bonds or bonds with warrants or stock options where a shareholder has a pre-emptive right, the option holder in such case shall have the same or equal rights to a shareholder. Equality shall be achieved in the manner determined by the Board by adjusting the number of shares available for subscription, the subscription price or both.
Should the new number of shares to be subscribed for by a stock option be a fraction according to paragraphs 6.1-6.3, that fraction shall be taken into account by reducing the subscription price.
7.Rights of option holder in certain situations
a) Should the Company, before the subscription for the shares, reduce its share capital the subscription right of the options holders shall be adjusted accordingly as specified in the resolution to re-duce the share capital.
b) Should the Company, before the subscription period commences, be set into liquidation the option holders shall be reserved an opportunity to use their subscription right before the commencement of the liquidation within a time stipulated by the Board. After this no subscription right shall exist.
c) Should the Company, before the end of the share subscription period, make a resolution to acquire its own shares with an offer to all the shareholders, the Company will be obliged to make an equal offer to the option holders for those stock options of which the share subscription period has com-menced. If the Company acquires its own shares in any other manner, it shall not affect the position of the option holders.
d) Should the Company resolve to merge into 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 Company or the company acquiring or the company to be formed in the combination merger (conditionally) and its Board of Directors may decide to offer an exchange of the stock options of the Company to new issued stock options to be exchanged on equivalent terms following the relevant terms and conditions on the shares of the Company at the merger or division. If the exchange of stock options to new, equivalent stock options is being offered the option holder has no right to request redemption of the stock options as allowed under the Companies Act. The Board also has the right to decide at a merger or division that the option holder shall be given a right to subscribe for the shares during a time stipulated by the Board before the actual merger or division. After such time no subscription right shall exist.
e) Should a redemption right or obligation for the shares of the Company under Chapter 14, Section 19 of the Companies Act, or a duty to make a redemption offer for the shares of the Company or others' securities entitling to the shares of the Company under Chapter 6, Section 6 of the Securities Markets Act be created for a shareholder ("the Acquirer") before share subscription with the stock options, the option holder must offer the stock options to the Acquirer to be redeemed on equal terms to those terms applying to the shares of the Company (taking into consideration among others the share subscription price relating to those stock options) or to be exchanged to options issued by the Acquirer. If the Acquirer, in connection with the offer to the shareholders under Chapter 14, Section 19 of the Companies Act, or with the duty to redeem others' shares under Chapter 6, Section 6 of the Securities Markets Act, resolves to primarily offer its own stock options to the option holders on financially reasonable terms and conditions when compared to these terms and conditions, the stock options shall be considered to have lapsed one month after the Acquirer has announced to offer its own stock options. This is provided that such offering commences within two months of the announcement on that a right to redeem has arisen. Until the lapse of the stock options the option holder may subscribe for shares by those stock options the share subscription period of which has commenced. However, the stock options will lapse only if an investment bank, nominated by the Board and independent of the Acquirer, has made a statement on the financial reasonableness of the terms to the option holders. Should the Acquirer fail to make an offer to re-deem the stock options on such equal terms with the shareholder as stated above or to make a financially reasonable offer of exchange within three months after the duty to redeem under Chapter 6, Section 6 of the Securities Market Act has arisen or after the redemption right or obligation has been registered into the trade register (depending which of the obligations or registrations has occurred earlier), a right to subscribe for the Company's shares by all one's stock options arises immediately after such failure. This is irrespective of whether the subscription time with stock options has begun. After this no right to subscribe shall exist.
f) Should the share of the Company, before the end of the share subscription period, cease to be publicly traded on the Helsinki Exchanges, an opportunity to use subscription rights within a time stipulated by the Board shall be reserved to the holders of the stock options before the trading of the Company's shares ends. After this no subscription right shall exist.
g) Should the Company, before the end of the share subscription period, resolve to be converted from a public limited company to a private limited company, an opportunity to use subscription rights within a time stipulated by the Board shall be reserved to the option holders. After this no subscription right shall exist.
8.Governing law and dispute resolution
These terms and conditions shall be governed by the laws of Finland. 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 with a single arbitrator.
9.Other matters
The Board shall decide on other matters related to the stock options including but not limited to listing of the stock options and the shares subscribed for by them and can confer binding rules on the option holders. The Board may make amendments to these terms provided that they do not substantially alter the terms. The Board may authorize in all authoritarial matters the Managing Director to act on its behalf as allowed under the Companies Act.
The option holder shall not be entitled to compensation on any grounds in respect of the stock option grant from any company belonging to the Group during or after the employment with any company of the Group or the membership with the Board of Directors of the Company or the Subsidiary. Any benefit derived from the stock options under this stock option plan will not be pension able.
Should an option holder breach these terms, the stipulations given by the Company and/or applicable laws and regulations the Company has the right to redeem free of charge all stock options of the option holder, which have not at the time of the breach been transferred or used for share subscription without any consent from the option holder and to enforce the redemption by transferring the stock options from the book-entry account of the option holder to a book-entry account designated by the Company.
In the event of conflict between the Finnish and English terms and conditions of the stock option plan the Finnish terms and conditions of the stock option plan shall prevail. The Company shall determine the meaning of the Group and termination of related employment or the membership of the Board for the purposes of these terms. The Company shall determine on the interpretation of all terms.
Any notices relating to this stock option plan may be sent by the Company to the option holder by post or e-mail, or if the stock options have been listed on the stock exchange, by means of a press release. The documentation for the stock options may be viewed at the Company's head office in Helsinki.
By accepting the stock options the option holder undertakes to comply with the terms and conditions of this stock option plan and other terms and conditions stipulated by the Company and all applicable laws and regulation
STONESOFT CORP APPENDIX 1.4
ACCOUNT OF THE BOARD OF DIRECTORS ON EVENTS OCCURRED AFTER THE INTERIM REPORT FOR THE PERIOD 1 JANUARY 2004 - 30 MARCH 2004 WITH SIGNIFICANT EFFECT ON THE COMPANY'S STANDING
The interim report of Stonesoft Corp. for the period 1 January 2004 - 30 September 2004 was published on 22 October 2004 in a stock exchange release. The section "Significant events after the report period" in the interim report includes an account of the most important activities of Stonesoft Corp. between the end of the reporting period and the date of the stock exchange release.
The activities of Stonesoft Corp. have been conducted in compliance with the earlier principles and within the customary scope of activities. In addition to the events included in the interim report no such event has occurred after the interim report that has a material effect on the Company's standing.
In Helsinki, 26 October 2004
Stonesoft Corp.
Board of Directors
Thursday, October 28, 2004
