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Decisions of KONE Corporation’s Extraordinary Shareholders’ Meeting

Stock Exchange Release Published 21/11/2005

KONE Corporation’s Extraordinary Shareholders’ Meeting was held in Helsinki on 21 November, 2005. The Shareholders’ Meeting decided upon the following items:

1. Share split

The Shareholders’ Meeting approved the Board proposal that the number of the company’s shares be increased in proportion to the holdings of the shareholders by doubling the number of shares from 63,867,465 to 127,734,930 shares without increasing the share capital. The number of class A shares will increase to 19,052,178 and the number of class B shares to 108,682,752. As a result, each share with the current accounting par value of EUR 1.00 will be split into two shares with accounting par values of EUR 0.50.
The increase in the number of shares is expected to be entered into the Trade Register on Monday 28 November, 2005. Trading of the split shares will start on Tuesday 29 November, 2005.

2. Amending the terms of the KONE 2005 Option Plan

The Board proposal that the number of shares that can be subscribed for with KONE 2005A and 2005B option rights be increased in proportion to the split was approved. The total accounting par value of shares to be subscribed and the total subscription price remain unchanged. As a result, one option right will entitle to subscription for six (6) class B shares to a price of EUR 8.04 per share.

3. Issuing new option rights to key personnel of the KONE Group as well as to a wholly-owned subsidiary of KONE Corporation

The Shareholders’ Meeting approved 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. 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 company’s CEO, President and members of the executive board are not included in the program.
The shareholders’ pre-emptive subscription rights will be deviated from since the option rights are to form a part of the incentive and commitment program for key personnel. The maximum number of option rights issued will be 2,000,000. One option right will entitle the holder to subscription of one KONE Corporation class B share and, in total, to subscription of a maximum of 2,000,000 shares. The option rights will be marked with the symbol 2005C.
The share subscription price for 2005C option rights is the trade volume weighted average price of the KONE Corporation B share on the Helsinki Stock Exchange between 24 October 2005 and 18 November 2005, which was EUR 28.40 (split adjusted). 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.
The share subscription period for 2005C option rights shall be 1 April 2008–30 April 2010. However, 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.
As a result of subscriptions with 2005C option rights, the share capital of KONE Corporation can increase by a maximum of EUR 1,000,000 and the number of B shares by a maximum of 2,000,000 new class B shares.
The complete terms and conditions of the option program are available in the Investors section of KONE’s Corporate website www. kone.com.
Sender:
KONE Corporation
Tapio Hakakari
Director, Secretary to the Board
Minna Mars
Senior Vice President, Corporate Communications & IR
For further information, please contact:
Tapio Hakakari, Director, Secretary to the Board, tel. +358 (0)204 75 4226
KONE is the world’s fourth largest elevator company and provides complete and innovative solutions for the installation, maintenance and modernization of elevators and escalators and the maintenance of automatic building doors. KONE provides safe and easy access to hundreds of millions of people daily in all parts of the world. KONE has annual net sales of approximately EUR 2.9 billion and about 25,500 employees. Its class B shares are listed on the Helsinki Exchanges.
www.kone.com