The holders of Swedish Depository Receipts of shares in Vostok Nafta Investment Ltd. (“New Vostok Nafta” or the “Company”) are hereby invited to an Extraordinary General Meeting of shareholders to be held on Wednesday 29 August 2007 at 3:00 p.m. at Grand Hotel, conference room New York, Södra Blasieholmshamnen 8 in Stockholm.
Notice of participation etc.
Holders of Swedish Depositary Receipts who wish to attend the meeting shall have entered their names in the register of owners of depositary receipts maintained by VPC AB no later than Thursday 23 August 2007, and notify the Company of their intention to participate no later than on Friday 24 August 2007 at 1:00 p.m.
Notice of participation in the meeting shall be made in writing to Vostok Nafta Investment, Hovslagargatan 5, SE-111 48 Stockholm, Sweden, by phone on: (46-8) 545 015 50, by fax on (46-8) 545 015 54, or by e-mail to stamma2007@vostoknafta.com.
When giving notice of participation, the shareholder should state name, personal identity number or company registration number, address and telephone number. If holder of Swedish Depositary Receipts shall be represented by power of attorney, the name of the authorised person shall be stated.
Holders of Swedish Depository Receipts having their Swedish Depository Receipts registered through a nominee must, in order to participate in the General Meeting temporarily register the Swedish Depository Receipts in their own name for voting purposes. A holder of Swedish Depository Receipts who wish to register its Swedish Depository Receipts in its own name must notify its nominee regarding such registration in due time before 23 August 2007.
Proposed Agenda
1. Election of chairman of the meeting
2. Preparation and approval of the voting list
3. Approval of the agenda
4. Election of one or two persons to verify the minutes
5. Determination of whether the meeting has been duly convened
6. Resolution on approval of incentive scheme
7. Resolution on approval of transfer of call options at market value in connection with investments in portfolio companies
8. Closing of the meeting
Proposals
Resolution on approval of incentive scheme (item 6)
The Board of Directors proposes that the General Meeting resolves to approve the adoption of an incentive programme in New Vostok Nafta which entitles present and future employees to be allocated call options, which entitles the holder to acquire shares represented by Swedish Depositary Receipts in New Vostok Nafta. The exercise price for the options shall correspond to 120 percent of the market value of the Swedish Depositary Receipts at the time of the granting of the options. The options may be exercised not earlier than two years and not later than three years from the time of the granting.
For employees resident outside of Sweden the following conditions shall apply. No premium shall be paid for the options and the options may only be exercised if the option holder at the time of exercise is still employed within the group.
For employees resident in Sweden the following conditions shall apply. The options are offered to a purchase price corresponding to the market value of the options at the time of the offer. The options shall be fully transferable and will hereby be considered as securities. Among other things this entail that the options are not contingent upon employment and will not lapse should the employee leave his or her position within the group. In order to stimulate the participation in the scheme, the company has the intention to arrange for a subsidy in the form of a bonus payment which after tax corresponds to the option premium. Half of the bonus is intended to be paid in connection with the purchase of the options and the remaining half in connection with the exercise of the options. The latter bonus payment is subject to the requirement that the holder is still an employee of the group at the time of exercise of the options. If the options are not exercised, the latter bonus payment will not be paid. For employees in Sweden, the participation in the scheme will thus include a risk-taking element.
Options may be issued by New Vostok Nafta or by other group companies. The Board of Directors, or a designated committee appointed by the Board of Directors, shall be authorised to determine the detailed terms and conditions for the incentive scheme in accordance with the approved principal conditions and guidelines. The Board of Directors may in connection thereto make necessary adjustments to satisfy certain regulations or market conditions abroad. The Board of Directors shall also be authorised to resolve on other adjustments in conjunction with material changes effecting the group or its business environment, which would mean that the authorised conditions for the incentive scheme would no longer be appropriate.
The incentive scheme is proposed to include granting of not more than 1 million options. Allocation of options to the Managing Director shall not exceed 500,000 options and allocation to each members of the executive management or to other key employees shall not exceed 200,000 options.
The allocation of options shall be decided by the Board of Directors, or by the Compensation Committee, whereby inter alia the performance of the employee and his or her importance to the group will be considered. Directors who are not employed by the group shall not be able to participate in the scheme.
In the event all 1 million options are fully exercised, the holders will acquire shares represented by Swedish Depositary Receipts corresponding to approximately 2.1 percent of the share capital.
The purpose of the proposed incentive scheme is to create conditions to retain and recruit competent employees to the group as well as promote long-term interests of the company by offering its employees the opportunity to participate in any favourable developments in the value of the Company. The Board of Directors is of the opinion that the adoption of an incentive scheme is particularly justified as a consequence of employees of the Company not being subject to any variable bonus scheme.
Approval of the incentive scheme requires support by shareholders representing at least two thirds of the shares represented at the meeting.
Resolution on approval of transfer of call options at market value in connection with investments in portfolio companies (item 7)
The Board of Directors proposes that the General Meeting resolves to approve the transfer of call options, during the period up to the next Annual General Meeting in New Vostok Nafta, by group companies to members of the executive management and other employees related to investments in non-listed portfolio companies to create opportunities for employees to take part in future rise in value. Directors of the Company who are not employed by the group shall not be entitled to participate in the scheme.
The following guidelines shall apply in connection with transfer of call options. The options shall entitle the holder to acquire shares in the portfolio company at a certain exercise price corresponding to 110-150 percent of the market value of the shares in the portfolio company at the time of the transfer of the options. The term of the options shall be not longer than five years. The options shall be sold at market value. The price for the options shall be determined by an independent valuation institute or auditing firm in accordance with the Black & Scholes valuation model. Investment in the options thus imply a risk-taking element for the employee. The number of options shall not exceed five percent of the underlying shares in a portfolio company corresponding owned by any group company. The Company shall be entitled to repurchase the options at market value if the holder cease to be an employee of the group. In case of special circumstances, the Board of Directors shall be entitled to deviate from the guidelines above.
By offering employees to acquire options in respect of shares in portfolio companies, employees will be given the opportunity to participate in a future increase in value similar to the opportunities open for persons acting for private equity entities. The Board of Directors is of the opinion that this proposal significantly improves the possibility to retain and recruit competent personnel to the group.
Approval of the above proposal by the Board of Directors requires support by shareholders representing at least half of the shares represented at the meeting.
Miscellaneous
The Board of Directors’ complete proposals according to items 6 and 7 above will be made available at the Company office at Hovslagargatan 5 in Stockholm and at the Company website www.vostoknafta.com no later than 15 August 2007.
Stockholm, July 2007
E. ÖHMAN J:OR FONDKOMMISSION AB
The Board of Directors of
VOSTOK NAFTA INVESTMENT LTD.
