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Invitation to Extraordinary General Meeting of Shareholders

2003-11-10

Notice of Extraordinary General Meeting of the Shareholders of Active Biotech AB (publ)
The shareholders of Active Biotech AB (publ) are hereby invited to attend an Extraordinary General Meeting to be held at 3.00 p.m. (CET) on December 8, 2003 at Active Biotech AB, Scheelevägen 22, Lund, Sweden.
NOTIFICATION
A shareholder who wishes to participate in the Extraordinary General Meeting must:
  • be registered in its own name (not trustee registered ) in the Company's share register maintained by VPC AB (Swedish Securities Register Centre) not later than Friday, November 28, 2003, and
  • notify the Company of its intention to participate in the Meeting not later than 4.00 p.m. (CET), Tuesday, December 2, 2003.
  • A notification regarding its participation in the Meeting can be submitted in writing to to Active Biotech AB (publ), Att. Susanne Jönsson, PO Box 724, SE-220 07 Lund; by telephone to +46-46-19 20 00; by fax to +46-46-19 20 50; or by e-mail to susanne.jonsson@activebiotech.com. The notification must include the shareholder's name, personal identification number (corporate registration number), address, telephone number, the number of shares and the class of shares and any advisers (maximum two).
    The shareholders whose shares are held in the name of a trustee, via the trust department of a bank or firm of stockbrokers, must temporarily register the shares in their own name at VPC in order to be entitled to participate in the Meeting. Such re-registration must be completed not later than Friday, November 28, 2003.
    AGENDA
    The following matters will be addressed at the Meeting:
    1. Opening of the Meeting
    2. Election of Chairman of the Meeting
    3. Preparation and approval of the voting register
    4. Approval of the agenda
    5. Election of two officers to verify the minutes
    6. Determination of whether the Meeting has been duly convened
    7. Presentation of (i) a transcript of the annual report and auditor's report for 2002, including notes on decisions on account of the Company's loss, (ii) the Board of Directors' statement in accordance with Chapter 4, Section 4 of the Swedish Companies Act, and (iii) the auditors' statement on the aforementioned
    8. The Board of Directors' proposal regarding a stock option program
    9. The Board of Directors' proposal regarding an amendment of the Articles of Association
    10. Closing of the Meeting
    RESOLUTIONS TO BE ADOPTED WITH REGARD TO THE FOLLOWING POINTS
    THE BOARD OF DIRECTORS' PROPOSAL REGARDING A STOCK OPTION PROGRAM (Point 8)
    Allocation of stock options
    The program involves the allocation, without payment, of a maximum of 1,000,000 stock options to all the employees of the Active Biotech Group during 2003- 2006, of which a maximum of 330,000 options shall be allocated in December 2003, a maximum of 330,000 options shall be allocated in June 2005 and a maximum of 340,000 options shall be allocated in June 2006.
    The options which are allocated in December 2003 shall carry a right to acquire one share in Active Biotech AB at an exercise price that shall be fixed at an amount corresponding to approximately 150 per cent of the average price quoted on the stock exchange for Series B shares in Active Biotech AB during the period from December 10 until December 16, 2003. The options which are allocated in June 2005 and June 2006 respectively shall carry a right to acquire one share in Active Biotech AB at an exercise price which shall be fixed at an amount corresponding to approximately 120 per cent of the average price quoted on the stock exchange for shares in Active Biotech AB during a period comprising five (5) trading days immediately preceding the allocation date. If the Articles of Association, at the time of future allocation and the exercise of options, permit the issue of shares of different classes, the exercise price of the options and the shares acquired on the basis of the options shall comprise Series B shares.
    In the event of a stock split, consolidation of shares, share issue, or similar share transaction, the exercise price and the number of shares to which each option carries a right to acquire shall be adjusted in accordance with customary terms and conditions.
    The options shall not constitute securities and shall not be transferable to a third party. The options shall only be exercisable on condition that the option holder concerned is still an employee of the Active Biotech Group at the time of exercise of the options. However, the options shall be exercisable after the death of an employee or following a special resolution passed by the Board of Directors.
    The options which are allocated in December 2003 shall be exercisable during the period from June 1, 2006 until May 31, 2009.
    The options which are allocated in June 2005 shall be exercisable during the period from June 1, 2007 until May 31, 2010.
    The options which are allocated in June 2006 shall be exercisable during the period from June 1, 2008 until May 31, 2011.
    The allocation of the options to all the employees of the Group, of which the Managing Director shall be allocated a maximum of 33,600 options, shall be carried out in accordance with the Board of Directors' instructions. Other employees (about 180 persons) shall be allocated the remaining options, with a lower number per person.
    Securing the obligations in accordance with the stock option program
    In addition, the Board of Directors proposes that the Meeting, in order to secure the obligations according to the stock option program set forth above, shall adopt a resolution in respect of issuing debentures together with warrants for subscription of new shares in accordance with the following principal terms and conditions:
    Debentures with a nominal amount of a maximum of SEK 1,330 together with a maximum of 438,900 Series 1 warrants, 438,900 Series 2 warrants and 452,200 Series 3 warranst carrying a right to subscription for new shares shall, with deviations from the shareholders' preferential rights, be subscribed for by a wholly owned subsidiary of Active Biotech AB. The debentures shall be issued at a price corresponding to the nominal amount and shall not bear any interest and shall be due for payment on March 31, 2004.
    Each Series 1 option shall carry a right to the subscription of one new share during the period from June 1, 2006 until May 31, 2009 at a subscription price corresponding to approximately 150 per cent of the average price quoted on the stock exchange for Series B shares in Active Biotech AB during the period from December 10 until December 16, 2003.
    Each Series 2 option shall carry a right to the subscription of one new share during the period from June 1, 2007 until May 31, 2010 at a subscription price corresponding to approximately 120 per cent of the average price quoted on the stock exchange for shares in Active Biotech AB during a period comprising the five last (5) trading days in May 2005.
    Each Series 3 option shall carry a right to the subscription of one new share during the period from June 1, 2008 until May 31, 2011 at a subscription price corresponding to approximately 120 per cent of the average price quoted on the stock exchange for shares in Active Biotech AB during a period comprising the five last (5) trading days in May 2006.
    If the Articles of Association, in connection with the fixing of the subscription price and the exercise of warrants, permit the issue of shares of different classes, the subscription price and the shares acquired on the basis of the options shall comprise Series B shares.
    The subsidiary shall, following the subscription of debentures with warrants, detach the warrants and utilise them in order to fulfil the obligations set forth in the stock option program described above. In this context, the subsidiary shall be entitled to sell a maximum of 330,000 warrants in order to finance any social security fees, etc. in connection with the implementation of the stock option program.
    Dilution effects and the costs relating to the program
    The share capital shall increase by a maximum of SEK 13,300,000 upon full exercise of the proposed options, subject to a reservation for the increase that may be caused as a result of any adjustment of the number of shares to which each option carries a right to acquire, which may take place following new share issues, etc. The dilution effect, upon full exercise of the warrants, corresponds to 3,8 per cent (of which 2,9 per cent as a consequence of the allocation to the employees) of the share capital and 2,9 per cent (of which, 2,2 per cent as a consequence of the allocation to the employees) of the votes. If there are no shares of different classes at the time of the exercise of the options, the dilution of the number of votes will amount to 3,8 per cent (of which 2,9 per cent as a consequence of the allocation to the employees). The proposed options do not, with an application of Swedish Financial Accounting Standards Council's Recommendation RR 18, result in any dilution of the earnings per share reported for 2002.
    The proposed options could give rise to costs in the form of both social security fees in connection with their exercise as well as accounting-related costs during the term of the options in accordance with the rules proposed by IASB, which are expected to become effective on January 1, 2005. The costs for social security fees are estimated, upon full exercise of all the 1,000,000 options after the expiry of the term of the program, to be approximately SEK 7,8 million, based on an assumed original share price of SEK 60 and an annual rise of 10 per cent in the price of Active Biotech shares. This cost shall be financed by selling the warrants in the market.
    Valuation of the options
    The Board of Directors has commissioned Handelsbanken Capital Markets to conduct a valuation of the options. The value of the options which are allocated in December 2003 is estimated, applying the customary valuation model (Black & Scholes) and not taking into account restrictions on the right of disposal, to be SEK 21,10 per option, which results in a total value of SEK 7,0 million for all of these options.
    The value of the options to be allocated in 2005 and 2006, calculated in the same manner and assuming a share price at the respective allocation dates of SEK 69 and SEK 76 respectively, will be SEK 27,30 and SEK 30,10 per option respectively, resulting in a total value of approximately SEK 19,2 million. Accordingly, it is estimated that the total value of all options allocated under the program will be approximately SEK 26,2 million.
    Reasons for the proposal
    The Board of Directors's reasons for proposing an option program that entails a deviation from the preferential rights of the existing shareholders are as follows: a share-related incentive program will contribute to ensuring that the employees continue to focus on generating value growth within the Company's projects and will also create the conditions for allowing all employees to benefit from the Company's future value growth that is a result of the employees' efforts. There are currently no option programs for Company employees outstanding. Against this background, the Board has concluded that the proposed incentive program- considering the terms and conditions, the size of allocations and other circumstances- is reasonable and beneficial from the viewpoint of the Company and its shareholders.
    Majority requirement
    Resolutions in accordance with the above require the support of shareholders representing at least 9/10 of the votes cast and of the shares represented at the Meeting.
    THE BOARD OF DIRECTORS' PROPOSAL WITH REGARD TO AN AMENDMENT OF THE ARTICLES OF ASSOCIATION (Point 9)
    The Board of Directors proposes that Section 5 of the Company's Articles of Association be amended and have the following wording:
    The wording of Section 5 shall be:
    "The nominal value per share is ten Swedish kronor (SEK 10)."
    The implication of the amendment of Section 5 of the Articles of Association is that all of the shares in the Company will be of the same class and accordingly, all of the shares will have the same voting power and that the Articles of Association will no longer permit the issue of Series A or Series B shares. The Board of Directors has decided, provided that the Meeting approves its proposal regarding an amendment of the Articles of Association, that the Board's proposal shall be effected in VPC's (Swedish Securities Register Center) system with an order day on December 23, 2003. The final day for trading in Series A and Series B shares in Active Biotech AB on the Stockholm Stock Exchange will be December 18, 2003 and the first day for trading in the new single class of shares will be December 19, 2003.
    Majority requirement
    The Board of Directors' proposal regarding an amendment of the Company's Articles of Association requires the support of both the shareholders representing 2/3 of the votes cast and of the shares represented at the Extraordinary General Meeting as well 1/2 of all the shareholders of Series A shares and 9/10 of the Series A shares represented at the Extraordinary General Meeting consent to the amendment.
    DOCUMENTS
    The Board of Directors' complete proposals for resolutions pursuant to the above will be available at the Company's Head Office and on its website as of November 24, 2003, and will be sent to the shareholders of Series A shares whose address are known to the Company, to all the shareholders who have notified their intention to attend the Extraordinary General Meeting and to all other shareholders who make such a request and who state their postal addresses.
    The Board of Directors' account of events of significance to the Company's status and which occurred after the annual report was presented, the auditors' statement on the aforementioned and all other documents required in accordance with Chapter 4, Section 4 of the Swedish Companies Act will be available at the Company's Head Office as of December 1, 2003 and will be sent to all the shareholders who have notified their intention to attend the Extraordinary General Meeting and to all other shareholders who make such a request and who state their postal address.
    Lund, November 2003
    BOARD OF DIRECTORS

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