The stock option terms and conditions have been updated according to the share issue without payment (split) on February 28, 2008.
The Extraordinary Shareholders’ Meeting approved on November 21, 2005 the Board proposal to issue new option rights to key personnel of the KONE group as well as to a wholly-owned subsidiary of KONE Corporation.
The option program will include a maximum of 300 key employees and subsidiary directors globally. The purpose of the stock options is to encourage long-term efforts by key personnel to grow shareholder value and increase their commitment to the company by offering them an internationally competitive incentive program. The company’s CEO, President and members of the executive board are not included in the program. Some of the personnel included in the program belong to the inner circle of the company. These persons currently own a maximum of 0.1 percent of the shares and 0.04 percent of the voting rights in the company. The stock options have been marked with the symbol 2005C, and a maximum total of 2,000,000 class B shares have been offered for subscription. The maximum number of option rights per person has been limited to 8,000 shares. All 2,000,000 KONE 2005C option rights have been subscribed, and the Board of Directors of KONE Corporation approved the subscriptions on December 19, 2005. Each stock option entitles its owner to subscribe for one (1) class B KONE share. The class B shares for which these stock options can be exchanged constitute no more than 1.54% of the company’s total number of shares. The share subscription price for 2005C option rights is the trade volume weighted average price of the KONE Corporation B share on the NASDAQ OMX Helsinki Ltd between October 24, 2005 and November 18, 2005, which was EUR 28.40. The amount of KONE Corporation’s dividend paid after the determination of the subscription price shall be deducted from the subscription price up until the time of share subscription, as per the dividend record date. New subscription price after the record date [and the registration of the share issue without payment (split 1:2) on February 26, 2008] on February 26, 2009 is EUR 11.9.
The Annual General Meeting on February 25, 2008 confrimed that the share subscription period for the 2005C option rights will begin on April 1, 2008.The share subscription period for 2005C option rights shall be April 1, 2008–April 30, 2010However, the share subscription period will begin only if the following criteria have been attained: the average net sales growth of the KONE Group for financial years 2006 and 2007 exceeds market growth and the Earnings before Interest and Taxes (EBIT) of the KONE Group for the financial year 2006 exceeds the EBIT for the financial year 2005 and the EBIT for the financial year 2007 exceeds the EBIT for the financial year 2006. If the above-mentioned criteria have not been attained, stock options 2005C expire in the manner decided by the Board of Directors.
The stock option terms and conditions have been updated according to the share issue without payment (split) on February 28, 2008.I STOCK OPTION TERMS AND CONDITIONS 1. Number of Stock Options The maximum total number of stock options issued shall be 2,000,000, and they entitle their owners to subscribe for a maximum total of 4,000,000 class B shares in KONE. 2. Stock Options The stock options shall be marked with the symbol 2005C. The people to whom stock options are issued shall be notified in writing by the Board of Directors about the offer of stock options. The subscription period of stock options shall end on January 31, 2007 or on any earlier date determined by the Board of Directors. The Board of Directors shall decide on the approval of the subscriptions of stock options. Stock option certificates shall, upon request, be delivered to a 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. 3. Right to Stock Options The stock options shall, in deviation from the shareholders’ pre-emptive subscription rights, be gratuitously issued to the key personnel of the KONE Group and to KONE Capital Oy (Subsidiary), a wholly owned subsidiary of KONE. The shareholders’ pre-emptive subscription rights are proposed to be deviated from since the stock options are intended to form part of the Group’s incentive and commitment program for the key personnel. 4. Distribution of Stock Options The Board of Directors shall decide upon the distribution of the stock options. The Subsidiary shall be granted stock options to the extent that the stock options are not distributed to the key personnel of the KONE Group. The Board of Directors of KONE shall later decide upon the further distribution of the stock options subscribed by the Subsidiary, to the key personnel employed by or to be recruited by the KONE Group. 5. 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 Board of Directors may, however, permit the transfer of a stock option also before such date. 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 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. Should a stock option owner cease to be employed by or in the service of the KONE Group, for any reason than the death of a stock option owner, or the statutory retirement of a stock option owner, such person shall, without delay, offer to the Company or its order, free of charge, the stock options for which the share subscription period specified in Section II.2 has not begun, on the last day of such person’s employment or service. The Board of Directors can, however, in the above-mentioned cases, decide that the stock option owner is entitled to keep such stock options, or a part of them, which are under the offering obligation. 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 under the offering obligation from the stock option owner’s 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 owner’s book-entry account, without the consent of the stock option owner. II SHARE SUBSCRIPTION TERMS AND CONDITIONS 1. Right to Subscribe for New Shares Each stock option entitles its owner to subscribe for two (2) class B share in KONE. The book equivalent value of each share is EUR 0.25. As a result of the share subscriptions, the share capital of KONE may be increased by a maximum total of EUR 1,000,000 and the number of class B shares by a maximum total of 4,000,000 new class B shares. The Subsidiary shall not be entitled to subscribe for shares in KONE on the basis of the stock options. 2. Share Subscription and Payment The share subscription period for stock option 2005C shall be April 1, 2008 – April 30, 2010. However, the share subscription period begins only if following criteria have been attained: the average turnover growth of the KONE Group for financial years 2006 and 2007 exceeds market growth and the Earnings before Interest and Taxes (EBIT) of the KONE Group for the financial year 2006 exceeds the EBIT for the financial year 2005 and the EBIT for the financial year 2007 exceeds the EBIT for the financial year 2006. If the above mentioned criteria have not been attained, stock options 2005C expire in the manner decided by the Board of Directors. Share subscriptions shall take place at the head office of KONE or possibly at another location to be determined later. The subscriber shall transfer the respective stock option certificates with which he/she subscribes for shares, or, in the case of the stock options having been transferred to the book-entry securities system, the stock options with which shares have been subscribed for, shall be deleted from the subscriber’s book-entry account. Upon subscription, payment for the shares subscribed for shall be made to the bank account appointed by the Company. The Board of Directors shall decide on all measures concerning the share subscription. 3. Share Subscription Price The share subscription price for stock option 2005C shall be the trade volume weighted average quotation of the KONE class B share on the Helsinki Stock Exchange between October 24, 2005 and November 18, 2005. From the share subscription price of the stock options shall, as per the dividend record date, be deducted the amount of the dividend decided after the end of the period for determination of the share subscription price but before share subscription. The share subscription price shall, nevertheless, always amount to at least the book equivalent value of the share. 4. Registration of Shares Shares subscribed for and fully paid shall be registered in the book-entry account of the subscriber. 5. Shareholder Rights The dividend rights of the shares and other shareholder rights shall commence when the increase of the share capital has been entered into the Trade Register. 6. 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 an issue of new convertible bonds or stock options, 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 for by virtue of the stock options remains unchanged. If the number of shares that can be subscribed for by virtue of one stock option is a fraction, the fractional part shall be taken into account by reducing the share subscription price. 7. 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/her 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/her 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 Company’s own shares shall not require the Company to take any action in relation to the stock options. If, 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 and the votes 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, 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, or they shall be entitled to have an equal right to that of a shareholder to sell their stock options to the redeemer. A shareholder who possesses over 90% of the shares and the votes of the shares of the Company has the right to buy the stock option owner’s stock options for market value. If the number of the Company’s shares is changed, while the share capital remains unchanged, the share subscription terms and conditions shall be amended so that the relative proportion of shares available for subscription with the stock options to the total number of the Company’s 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. Other matters related to the stock options shall be decided on by the Board of Directors. The stock option documentation shall be kept available for inspection at the head office of KONE. The Company shall be entitled to withdraw the stock options which have not been transferred, or with which shares have not been subscribed for, free of charge, if the stock option owner acts against these terms and conditions, or against the regulations given by the Company on the basis of these terms and conditions, or against applicable law, or against the regulations of the authorities. These terms and conditions have been made in Finnish and in English. In the case of any discrepancy between the Finnish and English terms and conditions, the Finnish terms and conditions shall decide.
KONE 2005C option rights were listed on the main list of the Helsinki Stock Exchange (NASDAQ OMX Helsinki Ltd) on April 1, 2008 respectively. Each 2005C option right entitles to the subscription of two (2) class B shares at a price of EUR 12.55 per share.
The Board will not handle share subscriptions between the end of the 2009 accounting period and the following Annual General Meeting.