UPM-Kymmene Corporation applies for listing of all 1998 B stock options on the main list of the Helsinki Exchanges with the listing commencing on April 1, 2003.
The total number of B stock options is 2,000,000. Due to a bonus issue resolved by the Annual General Meeting of Shareholders held on March 19, 2003, the number of shares to be subscribed with the stock options and the share subscription price have been changed. Each B stock option entitles its holder to subscribe for two UPM-Kymmene Corporation shares. In the aggregate, the stock options entitle holders to subscribe for 4,000,000 shares. The present share subscription price with B stock options is EUR 14.13/ share. The dividends payable annually shall be deducted from the share subscription price.
The share subscription period with B stock options will commence on April 1, 2003 and will end on April 30, 2005.
Pirkko Harrela Vice President, Corporate Communications
DISTRIBUTIONHelsinki ExchangesNew York Stock ExchangeMain media
ENCLOSURES1. Terms and Conditions of the Stock Options 19982. Extract of the minutes from the March 19, 2003 Annual General Meeting of UPM-Kymmene Corporation
ENCLOSURE 1Terms and Conditions of the Stock Options 1998
UPM-KYMMENE CORPORATION SHARE OPTIONS
The Board of directors ("Board") of UPM-Kymmene Corporation "Company") at its meeting on 16th February 1998 has decided to propose to the Annual General Meeting to be held on 25th March 1998 that share options be granted to the management of UPM-Kymmene Corporation on the following terms and conditions:
I TERMS AND CONDITIONS OF THE SHARE OPTIONS
1. Number of share options
The share options shall be granted through the issue of 6,000,000 warrants, conferring entitlement to subscribe 6,000,000 UPM-Kymmene Corporation shares.
UPM-Kymmene Corporation shall issue a maximum of 6,000,000 warrants, of which 2,000,000 shall be marked with the letter "A", 2,000,000 with the letter "B", and 2,000,000 with the letter "C".
The Company shall inform the recipients in writing of the share options granted to them. The Company shall keep the warrants until the commencement of the relevant share subscription period, whereupon the recipients of the share options shall be entitled to take possession of them.
3. Allocation of the share options
The pre-emptive right to subscription of the Company's shareholders notwithstanding, the share options shall be granted to members of the Group's corporate management and to UPM-Kymmene Corporation's wholly-owned subsidiary Unicarta Oy. It is proposed that the shareholders' pre-emptive right to subscription be set aside because the share options are part of the management incentive scheme.
4. Distribution of share options
The Board of Directors shall decide on the distribution of share options. "A" and "B" warrants shall be distributed to members of management. The "C" warrants as well as those "A" and "B" warrants not distributed to members of UPM-Kymmene Corporation's management shall be granted to Unicarta Oy.
5. Transfer and obligation to relinquish warrants
The warrants may be freely transferred to a third party when the share subscription period pertaining to them has begun. However, the above statement notwithstanding, the Board of Directors may give permission for the warrants to be transferred at an earlier time.
Unicarta Oy may not exercise the warrants issued to it, nor transfer them to persons other than members of UPM-Kymmene Corporation's management in the manner prescribed by UPM-Kymmene Corporation's Board of Directors. The Board of Directors may decide on the transfer of the "C" series warrants in the possession of the subsidiary to management personnel of the UPM-Kymmene Group if the average price of the UPM-Kymmene Corporation share quoted on the Helsinki Stock Exchange in a one-week period exceeds two hundred (200) Finnish marks.
If a warrantholder ceases to be an employee of UPM-Kymmene Group before 1st April 2003 for any reason other than retirement or death, he or she must without delay or compensation offer to the company any warrants whose relevant share subscription time, as specified in section II. 2. herein, had not begun on the date when the employment relationship ended. If the reason for the termination of the warrantholder's employment is death or retirement on an early disability or old-age pension, the warrantholder must without compensation relinquish to the Company any warrants that will not become freely transferable within two years from the date of retirement.
II TERMS AND CONDITIONS OF SHARE SUBSCRIPTION
1. Right to subscribe new shares
Each warrant shall entitle its holder to subscribe one (1) UPM-Kymmene Corporation share with a nominal value of ten (10) Finnish marks. The share capital of UPM-Kymmene Corporation may rise as a consequence of the subscriptions by a maximum of 6,000,000 new shares, i.e. FIM 60,000,000.
2. Share subscription and payment
The share subscription periods shall begin as follows:
- "A" series warrants 1st April 2001- "B" and "C" series warrants 1st April 2003
The share subscription period for all warrants shall close on the 30th April 2005.
Share subscription shall take place at the Head Office of UPM-Kymmene Corporation and possibly at some other subsequently specified location. The subscriber must surrender the warrant in connection with share subscription, and the share subscription price must be paid at the same time.
3. Share subscription price
The share subscription prices are as follows:In the case of the "A" series warrant, the share's trading-weighted average price quoted on the Helsinki Stock Exchange during the period 18th – 24th March 1998 incremented by thirty (30) Finnish marks and rounded up to the nearest Finnish mark.
In the case of the "B" series warrant, the share's trading-weighted average price quoted on the Helsinki Stock Exchange during the period 18th–24th March 1998 incremented by sixty (60) Finnish marks and rounded up to the nearest Finnish mark
In the case of the "C" series warrant, the share's trading-weighted average price quoted on the Helsinki Stock Exchange during the period 18th-24th March 1998 incremented by a factor of two and rounded up to the nearest Finnish mark.
The share subscription price shall be reduced by the amount of dividends distributed after 1st May 1998 and before the date of share subscription, excluding avoir fiscal tax credits on each record date of divided distribution. In any event the share subscription price shall be at least the nominal value of the share.
4. Registration of shares
Subscribed and fully paid up shares shall be recorded on the book-entry account of the subscriber.
5. Shareholder rights
The shares shall be entitled to dividend for the financial period during which they are subscribed. Other shareholder rights shall begin from the date on which the increase in share capital is recorded on the Trade Register of Finland.
6. Issues of the shares, convertible bonds and share options before share subscription
If the subscription of shares is preceded by an increase in the Company's share capital as a consequence of a new issue of shares, convertible bonds or share options, a warrantholder shall have the same or equal rights as a shareholder. This equality shall be realised in the manner decided by the Company's Board of Directors so that the numbers of shares available for subscription or the subscription prices or both are adjusted.
If the subscription of shares is preceded by an increase in the Company's share capital as a consequence of a bonus issue, the subscription ratio shall be adjusted so that the shares subscribed by exercising the warrants account for the same proportion of share capital. If the new number of shares subscribed by exercising one warrant should not be a whole number, the fraction shall be taken into consideration by reducing the subscription price.
7. Rights in certain special cases
If the subscription of shares is preceded by a decrease in the Company's share capital, the warrantholder's subscription right shall be changed accordingly in the manner detailed in the decision to lower the share capital.
If the subscription of shares is preceded by the Company being placed in liquidation, the warrantholders shall be given an opportunity to exercise their subscription rights during a specific period of time decided by the Board of Directors before the commencement of the liquidation procedure.
If the Company decided to merge, as a merging company, into another company, or into the company formed in a combination merger, or decides to break up, the warrantholders shall be given the right to subscribe shares during a specific period of time decided by the Board of Directors before the merger or break-up. Thereafter the warrantholders shall not longer have any subscription rights.
If, after the share subscription period has begun, the Company decides to purchase its own shares by making an offer to all shareholders, the warrantholders must be made an equal offer. In other circumstances the procurement of own shares shall not require the Company to take any action with regard to the warrantholders. If a situation should arise whereby a shareholder is entitled in accordance with the provisions of the Companies Act to redeem the shares of other shareholders, the warrantholders shall be given the same opportunity as the shareholders to sell their own warrants to the redeemer.
If the nominal value of the UPM-Kymmene Corporation share is changed so that the share capital remains unchanged, the terms and conditions of subscription shall be amended so that the combined nominal value of the shares to be subscribed and the combined subscription price remain unchanged.
If the Company changes from a public limited company to a private limited company, this shall not cause any amendment to the terms and conditions of the share options.
8. Settlement of disputes
Any disputes concerning the share options shall be settled in arbitration proceedings according to the Arbitration Rules of the Central Chamber of Commerce.
9. Other issues
The Board of Directors of the Company may decide on the subsequent transfer of the warrants to the computerised book entry system for securities and on technical amendments to the terms of conditions as a consequence of this transfer. The Board of Directors of the company shall decide on other matters concerning the share options. Documents concerning the share options shall be available for inspection at the Head Office of UPM-Kymmene Corporation in Helsinki.
ENCLOSURE 2 Extract of the minutes from the March 19, 2003 Annual General Meeting of UPM-Kymmene Corporation
EXTRACTUPM-Kymmene CorporationMinutes of the Annual General Meeting
Time: 19 March, 2003 at 01.30 p.m.Place: The Helsinki Fair Centre, HelsinkiPresent: It was noted in the Minutes that the shareholders, their representatives and assistants are listed in the list of votes appended to item 5 of the Minutes
1 Opening of the Meeting and presence of a Quorum
The meeting was opened by Mr. Vesa Vainio, Chairman.Mr. Pekka Merilampi was elected Chairman of the Annual General Meeting.
2 Appointment of the Secretary by the Chairman
The Chairman appointed Mr. Reko Aalto-Setälä as Secretary to the Annual General Meeting.
3 Election of officers to scrutinize the Minutes and count the votes
Mr. Veikko Lahtinen was elected as an officer to scrutinize the Minutes. Mr. Magnus Savander and Mr. Asko Matula were elected as officers to count the votes.17 Proposal for a Bonus Issue
The Board had made a proposal for an increase of the share capital which proposal is in item 5 of the Summons.
The Annual General Meeting resolved to increase the share capital by a bonus issue of the amount of EUR 445,042,090.50 from EUR 445,042,090.50 to EUR 890,084,181 whereby the number of new shares to be issued is a total of 261,789,465, and, amend the terms and conditions of the company's year 1998 A and B and 2002 D and E option rights in a way that the shares to be subscribed with option rights will double and the subscription price will halve to the effect that with the option rights of the year 1998 the share capital may increase by 13,600,000 EUR and with the option rights of the year 2002 the share capital may increase by 25,840,000 EUR.
Pekka Merilampi Reko Aalto-SetäläPekka Merilampi Reko Aalto-SetäläChairman Secretary
The Minutes scrutinized
Veikko LahtinenVeikko Lahtinen