2 Instruks for styret og administrerende direktør
Government of Nammo AS and the Nammo Group
A. Introduction
This document covers the general allocation of work and responsibility between the Board of Directors and the Chief Executive Officer of Nammo AS («the Company») and Nammo Group («the Group») according to the Norwegian law and the Shareholders Agreement of August 17, 1998.
The instructions shall be valid until revised, and confirmed by the Board each year.
B. The Board of Directors
1. Duties and responsibilities
The Board of Directors is responsible for adequate organization and government of the company.
The Board of Directors has the authorities and tasks according to the Norwegian law and the Shareholders Agreement.
The Board of Directors carries the overall responsibility for the management and the operation of the Company. The Board is responsible for the appointment of the Chief Executive Officer and the alteration and termination of his employment contract.
The Board of Directors shall primarily attend and decide in general and long-term matters in addition to matters of specific importance.
The Board of Directors is also responsible to follow and evaluate the Chief Executive Officer daily running of the Company.
2. Board members
The shareholders and the employees shall be represented and elected to the Board of Directors according to the Shareholders Agreement for Nammo.
3. Chairman of the Board
The Chairman shall:
Through contact with the Chief Executive Officer follow the development of the Company.
Ensure that the Board of Directors receives proper information from the Chief Executive Officer in order to follow the economical position and planning for the Company.
Discuss strategic issues with the Chief Executive Officer.
Be responsible for the agenda and chair the meetings of the Board of Directors.
Observe that the procedures and decisions are in line with the Norwegian law and the Shareholders Agreement for Nammo.
Confirm the nomination and remuneration of the Corporate Executive Committee/Group Management reporting to the Chief Executive Officer. If the Chairman cannot accept the proposal of the Chief Executive Officer in this matter, the Board will decide the matter.
4. Board meetings
4.1 Meeting plan
A meeting plan shall be agreed at the beginning of the year. The board will normally meet 8 times (minimum 4 times) a year, but any Board member as well as the Chief Executive Officer, may call an extraordinary meeting at any time.
4.2 Call for meetings
According to the instructions by the Chairman, the Chief Executive Officer shall send the Board Members a call for the meeting together with an agenda and proper documentation for the items to be handled. The Board Members must receive the above mentioned material at least five days before the meeting.
4.3 Agenda
The Agenda shall have the following permanent items:
Protocol from last meeting
Report from the Administration
Confirmation of date and place for the next meeting
Any other business
In addition, the Agenda shall have separate items for each matter, which requires board decisions. On the first board meeting after a Shareholders Meeting the agenda shall start with a item regarding necessary actions required according to the protocol from the Shareholders Meeting.
4.4 Protocol
The Board Secretary shall issue a protocol after each meeting (even after telephone, video or per capsule meetings).
Each protocol shall be given a unique reference number and each decision or action an item number. All necessary documentation presented to the Board during or before the meeting will be included in the protocol as Exhibits.
The protocol shall be forwarded for comments first to the Chairman and the Chief Executive Officer and thereafter to all Board Members within one week after the meeting. The protocol shall be signed by the Chairman and at least one other Board Member and the Chief Executive Officer, if present in the meeting. All other Board Members have the obligation to express their comments, if any, to the protocol not later than during the next Board Meeting.
The Chief Executive Officer is responsible for safekeeping of the original protocols.
4.5 Confidentiality
All documentation, discussions and the protocol are regarded as confidential unless the Board of Directors explicitly decides otherwise.
C. Instructions for the Chief Executive Officer
1. General
The Chief Executive Officer is responsible for the daily operations of the Company in accordance with the Norwegian law and the Shareholders Agreement. He shall supervise the activity within the Company and take appropriate actions in order to improve the financial results both short and long term.
He shall keep the Chairman of the Board informed regarding important operational or strategic matters. He shall issue a report to the Board of Directors before each board meeting showing the financial development compared to budgets, market trends, ongoing strategic projects and development within the Product Divisions.
2. Restrictions
2.1 General
The Chief Executive Officer shall not make any commitments on behalf of the Company, which are incompatible with the valid strategy, or due to its content is of special importance without consulting the Board.
In addition he shall obtain prior approval from the Board for the following matters:
Investment exceeding NOK 5 millions;
Loans exceeding NOK 10 millions equivalent in foreign currency;
Annual budgets and strategic plans;
Purchase, sale and long term leasing or similar renting of real estate;
Purchase and sale of businesses;
Entering into strategic co-operation with other companies;
Agreements between Company and any of the Parties or parties affiliated with any of the Parties;
Lain of assets;
Alteration in the operations of Company, which implies substantial, changes to the employees;
Any other matter requested by either Party to be resolved by the Board of Directors as well as a possible future revision of the value limits concerning investments, loans, guarantees and fixed assets.
3. Authorization to sign on behalf of the Company
The Chief Executive Officer shall establish the necessary instructions regarding the authorization to sign within the Company.
4. Chief Executive Officers authorization to sign
The Chief Executive Officer is, with the restrictions stated above, authorized to sign on behalf of the Company in all matters relating to the daily operations.
The Chief Executive Officer may not however deal with matters regarding himself directly or indirectly, and the Company.
5. Accountancy and reporting
The Chief Executive Officer is responsible for that the accounting within the Company is conducted in accordance with applicable law and that the use of the funds within the Company is conducted in a secure way.
The Chief Executive Officer shall establish and supervise a accountancy and reporting system, which in all aspects, in a continuous way, shall be able to present the financial status within the Company.
The Chief Executive Officer shall comply with special directives, issued from time to time by the Board, what regards the accountancy and reporting within the Company.
The Chief Executive Officer shall issue every fiscal month, Management report, which shall include among other things profit and loss statement, a balance sheet financial situation as well as market and operation review of the Group. The report will be distributed to the Board Members and to the Management of the Group.
The Chief Executive Officer is also responsible for the risk management and the internal control.
6. Loyalty
In performing his activities, the Chief Executive Officer shall always act in the best interests of the Company.
He shall assume the full loyalty expressed in his employment agreement, which among other things contains an obligation of confidentiality regarding all matters relating to the Company, which could be harmful to disclose. Furthermore, he has a full responsibility of information regarding matters, which are of importance for the Company.
7. Approval of the expenses
The expenses created by the Chairman and other Board Members will be accepted by the Chief Executive Officer and Chief Financial Officer of the Group. The Group compensates the Board Members' travel expenses either directly to the Board Members according to the company general principles or according to the invoice of the shareholder, which the Board Members represent. If the Chief Executive Officer or the Chief Financial Officer is at all uncertain about the compensation principles they are obliged to report the situation to the Chairman for approval.
Otherwise the General Meeting of the Company decides the remuneration to the Board Members.
8. Auditors
The General Meeting of the Company elects the auditor or auditors. The Company auditors are responsible for the auditing of the Group. The auditor in charge of the Audit Company is also responsible for instruction and co-ordination of the audit in all Group companies.
Each year the auditor in charge and the Company's management prepare jointly an auditing program for the Group. The auditors issue audit report to the shareholders on annual financial statements of the Group as required by the law. In addition they report their findings to the Chief Executive Officer and Corporate Executive Committee and the Board of directors at least twice a year.
17 August 1999
Jorma Eloranta
Chairman of the Board