The shareholders of UPM-Kymmene Corporation are hereby summoned to the company's Annual General Meeting to be held on Tuesday, 19 March 2002 beginning at 1.30 pm in the Helsinki Fair Centre, Congress Wing Entrance, address Messuaukio 1, 00520 Helsinki. The names of participants will be checked and voting slips issued beginning at 12.30 pm.
The following matters will be dealt with at the meeting:
1. Matters pertaining to the Annual General Meeting as stated in § 11 of the company's Articles of Association.
2. The Board of Directors' proposal to reduce the share capital.
The contents of the proposal are as follows:
The purpose of reducing the share capital is to invalidate own shares held by the company.
The company's share capital will be reduced by no more than 1,998,176.60 euros.
The share capital will be reduced by invalidating, without payment, no more than 1,175,398 own shares held by the company.
The invalidation concerns only own shares held by the company.
The purchase price of the shares will be deducted from distributable shareholders' equity. Restricted shareholders' equity will not be reduced as the book value (equivalent value) of the shares invalidated will be transferred from the share capital to the share premium reserve.
The reduction in share capital will not affect the distribution of share ownership and voting rights within the company, as the shares to be invalidated are in the possession of the company.
3. The Board of Directors' proposal that the Annual General Meeting decide on the buying back of the company's own shares using distributable funds on the following terms:
Own shares will be bought back for use as payment when the company acquires assets relating to its business operations, as payment in any company acquisitions in the manner and to the extent decided by the Board of Directors, or otherwise for relinquishment or invalidation.
The number of shares to be bought back will be no fewer than 100 and no more than 12,300,000.
The shares will be purchased through public trading on the Helsinki Exchanges.
The shares will be purchased at the market price quoted in public trading at the time of purchase. The purchase price will be paid to the sellers within the payment time specified in the rules of the Helsinki Exchanges and Finnish Central Securities Depository Ltd. Purchase of the shares will reduce the company's distributable shareholders' equity.
As the maximum number of shares to be bought back represents less than 5% of the total number of the company's shares and less than 5% of the number of votes carried by the shares, the purchase will have no major impact on the distribution of share ownership and voting rights within the company.
Under the terms of the Companies Act, at 25 January 2002, insiders owned a total of 58,962,574 of the company's 258,717,825 shares, which represents 22.79% of the company's share capital. Insiders control 22.79% of the voting rights carried by the shares before the proposed buy-back of own shares. As the company intends to buy back its own shares through public trading on the Helsinki Exchanges without knowing the sellers of the shares, the proportion of the company's share capital and voting rights controlled by insiders after the share buy-back cannot be determined.
4. The Board of Directors' proposal that the Annual General Meeting authorise the Board to decide on the disposal of own shares bought back in accordance with the above decision on the following conditions:
The authorisation concerns a maximum of 12,300,000 own shares bought back by the company.
The Board of Directors will be authorised to decide to whom and in what order it will dispose of the said shares. The Board of Directors may decide to dispose of the shares otherwise than in proportion to the existing pre-emptive rights of shareholders to purchase the company's shares.
The shares will be used as payment when the company acquires assets relating to its business operations and as payment in any company acquisitions in the manner and to the extent decided by the Board of Directors.
The shares will be sold for at least the market price quoted for them in public trading on the Helsinki Exchanges at the moment of sale.
This authorisation will remain valid for one year from the date of the decision of the Annual General Meeting.
5. The Board of Directors' proposal that the Annual General Meeting decide to issue stock options to the key personnel of the UPM-Kymmene Group as well as to a wholly owned subsidiary of UPM-Kymmene Corporation on the following terms:
It is proposed that the shareholders' pre-emptive right to share subscription be deviated from, since the stock options form a part of the incentive and commitment programme for the key personnel. The number of stock options issued will be 7,600,000. Of the stock options, 3,800,000 will be marked with the symbol 2002D and 3,800,000 with the symbol 2002E. In total, the stock options will entitle to the subscription of a maximum of 7,600,000 shares in UPM-Kymmene Corporation.
The share subscription price for stock option 2002D shall be the trade volume weighted average quotation of UPM-Kymmene Corporation's share on the Helsinki Exchanges between 15 April and 15 May 2002 with an addition of ten (10) per cent, and for stock option 2002E, the trade volume weighted average quotation of UPM-Kymmene Corporation's share on the Helsinki Exchanges between 15 April and 15 May 2003 with an addition of ten (10) per cent.
The share subscription price of stock options 2002D and 2002E shall, as per the dividend record date, be reduced by the amount of the dividend decided after the end of the period for determination of the subscription price but before share subscription.
The share subscription period for stock options 2002D shall be 1 April 2004 – 30 April 2007, and for stock options 2002E it shall be 1 April 2005 - 30 April 2008.
As a result of the share subscriptions with the 2002 stock options, the share capital of UPM-Kymmene Corporation may be increased by a maximum of EUR 12,920,000.
The Board of Directors further proposes that the 2,000,000 stock options of the 1998C issue held by Unicarta Oy, a wholly owned subsidiary of UPM-Kymmene Corporation, shall be cancelled.
6. The Board of Directors' proposal that the company donate to the State of Finland approx. 560 hectares of forestry land for a national park to be established in the Natura 2000 nature conservation area of Repovesi in the Valkeala municipality. The Board of Directors further proposes that the company should file an application in accordance with the Nature Conservation Act of Finland for the non-compensable conservation of approx. 1400 hectares of the company's forestry land located within the Natura 2000 conservation area in Repovesi, Valkeala.
7. The Board of Directors' proposal that the Annual General Meeting approve the merger plan signed on 22 January 2002, whereby Finnpap Oy, a wholly owned subsidiary of the company, will be merged into the parent company UPM-Kymmene Corporation without compensation. The merger will be implemented to simplify the corporate structure. The merger will not entail any amendments to the Articles of Association of UPM-Kymmene Corporation. The implementation of the merger will be registered no later than by 31 August 2002.
The merger plan will be available for inspection by the shareholders as of Thursday, 14 February 2002, and the financial statements of the company as well as the other proposals of the Board of Directors, as of Tuesday, 12 March 2002, at UPM-Kymmene Corporation's Head Office (address below). Copies of these documents will be sent to shareholders on request.
Right to attend the meeting
Shareholders wishing to attend the meeting must be registered in the list of the company's shareholders maintained by Finnish Central Securities Depository Ltd on Friday, 8 March 2002.
* Natura 2000 is nature conservation programme of the European Union
Shareholders whose shares have not been transferred to the book-entry securities system may also attend the meeting, provided that they were registered in Kymmene Corporation's list of shareholders before 21 August 1992, or in Repola Ltd's list of shareholders before 28 February
1994, or that they have notified the company of their share ownership and established their valid title and right to attend the meeting. In such cases the shareholders must present to the meeting their share certificates or proof of their whereabouts, or other evidence that the title to the shares has not been transferred to a book-entry account.
Shareholders wishing to attend the meeting must inform the company thereof no later than by 4 pm on Thursday, 14 March 2002, by writing to UPM-Kymmene Corporation, Share Register, Eteläesplanadi 2, P.O.Box 380, FIN-00101 Helsinki, Finland, by telephoning to numbers +358 (0)2041 50108 or +358 (0)2041 50109, by telefax to number +358 (0)2041 50333, or via the Internet at www.upm-kymmene.com. Written notifications must arrive before the deadline stated above. Possible proxies should be submitted in connection with the notifications of attendance.
Shareholders registered under nominees
Custodians of nominee accounts accept notifications of attendance from shareholders taken from the nominee register as well as information about the parties representing such shareholders at meetings. The custodians will forward the information regarding the nominee-registered shareholders to Finnish Central Securities Depository Ltd for inclusion in the list of the company's shareholders drawn up for the meeting.
Composition of the Board
The Nomination Committee proposes to the Annual General Meeting that the number of the members of the Board be increased from 9 members to 11 members and the Board members: Martti Ahtisaari, Carl H. Amon III, Michael Bottenheim, Donna Soble Kaufman, Anton Lenstra, Juha Niemelä, Jorma Ollila, Gustaf Serlachius and Vesa Vainio be re-elected for the new term which will continue until the next Annual General Meeting. Additionally the Nomination Committee proposes that Mr. Berndt Brunow and Mr. Fritz Holzhey be elected as new Board members for the same term. Mr. Brunow is President & CEO of Sanitec Corporation and Mr. Holzhey has been Director of Haindl GmbH & Co KG.
Payment of dividend
The Board of Directors has decided to propose to the Annual General Meeting that a dividend of EUR 1.50 per share be paid for the financial year 2001. The dividend will be paid to shareholders who are registered in the list of shareholders maintained by Finnish Central Securities Depository Ltd. at 22 March 2002 which is the record date for the dividend payment. The Board of Directors proposes to the Annual General Meeting that the dividend be paid on Wednesday, 3 April 2002.
In the case of shareholders permanently resident outside Finland, tax at source will be deducted from the dividend payment.
Helsinki, 5 February, 2002
BOARD OF DIRECTORS
5 February, 2002