Stock Option Plan 2003
On May 28, 2003 the Annual General Meeting approved a new stock option plan.
Subject to the consent of the Supervisory Board, the Managing Board is hereby authorized to issue once or recurrently up to 27 May 2008 convertible bonds entitling to a total sub-scription of up to 900,000 bearer ordinary shares and up to 900,000 non-voting bearer preference shares with a total par value of Euro 4,608,000.00 to members of the Managing Board of the Corporation, to managerial staff members of affiliates of the Corporation, to employees of the Corporation and to employees of affiliates of the Corporation. The Supervisory Board is hereby authorized accordingly insofar as members of the Managing Board of the Corporation are concerned.
Each convertible bond has a par value of Euro 2.56 and is interest-bearing at the rate of 5.5% per annum, payable in arrears. The term of the convertible bonds is 10 years as of grant. A convertible bond provides an entitlement for a term of up to 10 years after grant of such convertible bond, in consideration of the requirements established under this resolution for the subscription of a bearer ordinary share and a non-voting bearer preference share in the Corporation.
Beneficiaries and Allocation of the Convertible Bonds
The entitlement to, the quantity and the nature of convertible bonds (with or without a success target) will be determined for the relevant group of employees by the Managing Board, and for Managing Board members by the Supervisory Board. Convertible bonds of voting bearer ordinary share and convertible bonds of a non-voting bearer preference share will always be issued in the same amount. The group of employees will include managerial staff members - except for Managing Board members of the Corporation -, executive staff members and other employees of Fresenius AG and of those companies affiliated with the Corporation. However, managerial staff members and employees of Fresenius Medical Care AG and of companies affiliated with the Corporation solely through Fresenius Medical Care AG will be excluded. The competent corporate body granting the convertible bonds may, exercising it due discretion, grant convertible bonds also to persons who would not be eligible for obtaining convertible bonds with respect to the applicable time period, but who are eligible with respect to another time period within the business year concerned.
Should convertible bonds which are subject to a success target be offered to the beneficiaries, the beneficiary may instead acquire convertible bonds without a success target, in which case the quantity of convertible bonds he or she may acquire will be reduced by 15%.
The group of Managing Board members shall be entitled to 400,000 convertible bonds with an entitlement to subscribe to 200,000 bearer ordinary shares and non-voting bearer preference shares each. The employees shall be entitled to 1,400,000 convertible bonds with an entitlement to subscribe to 700,000 bearer ordinary shares and non-voting bearer preference shares each.
The statutory subscription right for shareholders is excluded.
Vesting Period and Conversion Periods
The beneficiaries may exercise the corresponding conversion right for one third of the convertible bonds 2 years after the relevant grant. The corresponding conversion right for a further third of the convertible bonds may be exercised three years after the grant of such convertible bonds and for the remaining third of the convertible bonds 4 years after the grant of the relevant convertible bonds. Convertible bonds of bearer ordinary shares and convertible bonds of a non-voting bearer preference shares can only be converted in the same amount.
Exercise of the conversion right is permitted within 15 working days after the ordinary general meeting of the Corporation and 15 working days after publication of the business figures of the Corporation for the past calendar quarter if and when at this point in time the ordinary general meeting of the Corporation for the past business year has already taken place.
General Prerequisites for Exercise
The conversion right may be exercised only as long as the holder of the convertible bonds is in the employment or service of the Corporation or an affiliate, including Fresenius AG or one of its affiliates, for which notice of termination or dismissal has not been given. The transfer of employees of the Company to Fresenius Medical Care AG or its affiliated entities shall not exclude the employees’ conversion right. In case of death, occupational disability or incapacity for employment, retirement or dismissal on operational grounds and in similar exceptional cases, special regulations may be adopted.
Success Target as Prerequisite of Exercise
The convertible bonds may be issued either as convertible bonds which are subject to a success target or as convertible bonds without a success target.
In the case of convertible bonds which are subject to a success target, exercise of the conversion right will be conditional on achievement of that target. The success target shall be deemed to have been met if the increase of the joint average stock exchange rate of the bearer ordinary shares and the non-voting bearer preference shares in the Corporation exceeds the stock exchange rate on the date of grant of the respective convertible bond (Initial Value) by 25% or more for at least one day, prior to exercise of the relevant conversion right. The Initial Value shall be the joint average stock exchange rate of the bearer ordinary share and the non-voting bearer preference share in the Corporation dur-ing the last 30 trading days of the stock exchange before the grant of the convertible bond.
The stock exchange price of the individual shares in the Corporation shall be deemed to be the closing price of the shares (ordinary share / preference share) in the Corporation in electronic "Xetra" trading of the Deutsche Börse AG.
Conversion Price
Upon the exercise of the conversion right the beneficiary shall pay to the Corporation a conversion price per bearer ordinary share as well as per non-voting bearer preference share to which he or she subscribes. The conversion price for convertible bonds without a success target shall correspond to the average stock exchange price of the bearer ordinary share as well as the non-voting bearer preference share of the Corporation during the last 30 trading days at the stock exchange prior to the grant of the relevant convertible bonds, less the par value of the converted convertible bond. The conversion price for convertible bonds which are subject to a success target shall correspond to the stock exchange rate of the bearer ordinary share as well as the non-voting bearer preference share in the Corporation at the time the target is achieved for the first time, less the par value of the converted convertible bond.