APPENDICES:
 
APPENDIX 1. THE TERMS AND CONDITIONS OF THE CONVERTIBLE
BOND LOAN 2003A
 
 
BENEFON OYJ, THE TERMS AND CONDITIONS OF THE CONVERTIBLE
BOND LOAN ON EQUITY TERMS 2003A
 
Benefon Oyj, Business ID 0695082-4, (hereinafter “Companyö)
has resolved on the 26th of June 2003 to issue a
convertible bond loan (hereinafter öLoanö) on the following
terms and conditions.
 
I TERMS AND CONDITIONS OF THE LOAN
 
1. Loan amount
 
The total amount of the principal of the Loan shall be at
maximum EUR 4,000,000.00. The issue price of the Loan is
one hundred (100) percent. Transferable convertible bonds
with a principal value of at least one (1) euros shall be
given for the loan (hereinafter “Convertible Bondö). For
the debt subscribed each creditor has the right to receive
a maximum of three (3) Convertible Bonds of which aggregate
principal corresponds to the total amount of debt
subscribed by the creditor.
 
2. Loan period and repayment of the Loan
 
The loan period begins June 26th, 2003 and ends June 30th,
2011. The Loan and interest accrued fall due for repayment
in four equal parts during 2008-2011 on the annual due date
of June 30th excluding the Convertible Bonds converted into
the Company’s shares, assuming that the repayment is not
prohibited by law owing to the Loan’s equity terms.
 
The Company shall be entitled to repay the Loan before it’s
maturity either as a whole or in part. If the Company
announces to the bearer of the Convertible Bond that it
will repay the loan amount of Convertible Bond, the bearer
of the Convertible Bond shall have fourteen (14) days’ time
period, after receiving Company’s announcement, to demand
his Convertible Bond be converted into shares.
 
3. The subscription right of the Loan
 
The Loan is wholly offered for subscription to Company’s
creditors and to outside investors named by the Company
(“Investorsö).
 
The reason for deviating from the shareholders’ pre-emptive
subscription right is to strengthen the company’s
economical and financial situation and to secure the
operating environment of the company. Therefore, a
justified financial reason exists for deviating from the
shareholders’ first option from the company’s point of
view.
 
The subscription right may be used either as a whole or in
part.
 
The subscription right may not be transferred and no
secondary subscription shall take place.
 
4. Subscription and repayment of the Loan
 
The Company shall receive subscription commitments during
an offering period from June 9th 2003 until June 24th 2003
(“Offer Periodö).
 
The subscription period of the Loan begins on June 26h,
2003 and ends June 27th 2003. The subscription shall be
executed by signing a separate subscription list.
 
Creditors shall pay for the subscriptions by setting off
the matured balance of the debt. Investors shall pay for
the subscriptions in cash.
 
The Convertible Bonds will be given to the subscriber after
the Loan subscription is registered to the trade register.
 
5. Acceptance of the subscriptions
 
The Board of Directors of the Company shall decide upon the
acceptance of the subscriptions of the Loan and decide upon
the giving of the Convertible Bonds.
 
6. Issuance of the Loan
 
Convertible Bonds shall be given for the Loan. The Loan is
not issued in the book entry system.
 
7. Interest
 
A fixed annual interest of two (2) percent shall be paid to
the principal of the Loan. The interest falls due for
payment in four even amounts during the years 2008-2011 on
the annual interest payment date on June 30th, assuming
that the interest payment is not prohibited by law due to
the equity nature of the Loan. The entire principal amount
plus any accrued unpaid interest fall due at the maturity
date. The interest on the Loan principal accrues from June
26th, 2003, until the repayment date of the Loan, which
shall be the day when the Company has paid back the Loan
amount subscribed for by the subscriber. When calculating
the amount of the interest, a year shall be determined to
consist of 365 days.
 
8. Transferability of Convertible Bonds
 
Convertible Bonds are freely transferable after the Loan
subscription is registered to the trade register.
 
9. Limitations concerning the Capital Loan
 
The principal of the Loan or a portion of it may be repaid
after the due date only if the Company’s latest audited
balance sheet, and if the Company is a parent company, the
groups’ latest audited consolidated balance sheet shows
full coverage of restricted share capital and other
undistributable funds after the repayment of the Loan’s
principal or a portion of it.
 
It is the duty of the Company’s auditors to ascertain in
the regular annual audit, whether the matured principal can
be repaid, considering the terms and conditions of the
Loan, based on the balance or consolidated balance
presented to the General Meeting of the Shareholders. The
Company must pay the matured principal or a portion of it
on the first day of the General Meeting of the Shareholders
after the due date, if it is possible according to the
terms and conditions of the Loan.
 
The principal of the Loan, or that portion of the principal
that cannot be repaid due to a restriction order on the day
of the general Meeting of the Shareholders held after the
due date, shall be paid on the next calendar year on a day
of the general Meeting of the Shareholders held after the
respective due date of that year abiding to what was said
in the previous chapter, until the whole principal has been
repaid.
 
The Company shall retain the accounting period
corresponding to the calendar year and shall hold the
General Meeting of the Shareholders annually no later than
June 30th, until the whole principal of the Loan has been
repaid for.
 
In case the debtor is dissolved or declared bankrupt, or
proceedings of involuntary liquidation commenced against
debtor, the principal of the Loan may be repaid only after
all regular loans and previous capital loans, and
shareholder loans have been paid for.
 
The repayment of the interest is possible only on the same
terms as the repayment of the Loans principal.
 
There shall be no collateral for the Loan. The Company
warrants that it or a consolidated entity has and will not
give collateral for the repayment of the Loan’s principal,
interest or other restitution.
 
 
II RIGHT TO CONVERT THE CONVERTIBLE BOND TO SHARES
 
1. Conversion period
 
The Convertible Bonds may be converted into the shares of
the Company during the time period between July 4th, 2003
and June 30th, 2003. However, the conversion period cannot
begin until the subscriptions of the Loan have been
registered to the trade register.
 
2. The right to convert the Convertible Bonds into shares
 
Each full EUR 0.34 of the Loan can be converted into one
(1) investment share of the Company. Thus, all Convertible
Bonds may be converted into a maximum of 11,764,705 new
investment shares of the Company and as a result of the
conversion of the Convertible Bonds the share capital of
the Company may increase by a maximum of EUR 3,957,362.71.
 
The bearer of the Convertible Bond may, by giving a written
notice to the Board of Directors of the Company and by
presenting the Convertible Bond and other necessary
documents, convert the amount of the Convertible Bond into
the shares of the Company during the conversion period
defined in section II.1. The whole amount of the
Convertible Bond must be converted into shares. The
conversion rate of the Convertible Bond corresponds to the
share subscription price of EUR 0.34 per share for each
share with the book counter value of EUR 0.34 (not the
exact value) so that each full EUR 0.34 of the Loan may be
converted into one (1) investment share. If the amount of
the shares converted with the Convertible Bond is a
fraction, the amount corresponding to the fractional part
of the Loan shall be paid back in money.
 
As a result of the conversion the lenders’ right to claim
against the Company based on the Convertible Bond ceases to
exist for the part of the Loan principal converted.
 
If the bearer of the Convertible Bond shall convert the
Convertible Bonds, the accrued interest shall not be
reimbursed.
 
The redemption clause and/or approval clause possibly
included in the articles of association of the Company
shall also be applicable to the shares to be given in the
conversion of the Loan.
 
3. Conversion place
 
The conversion takes place in the headquarters of the
Company and possibly in another place announced later.
 
4. Registration and public quotation of the new shares
 
The raise in the share capital as a result from conversion
of Convertible Bonds and the new investment shares will be
filed for registration to the trade register without delay.
Issuance of the new shares in the book entry system and
public quotation together with Company’s existing
investment shares will as well be applied without delay
after the raise in the share capital has been registered.
 
5. Origination of the shareholder’s rights
 
The new shares shall entitle for full dividend from the
beginning of the accounting period following the previous
accounting period of which books have been consolidated.
Other rights originate, when the increase of the share
capital has been registered to the trade register.
 
6. The rights of the holders of a Convertible Bond in
special cases
 
The holder of a Convertible Bond has prior to the
conversion of the Convertible Bond into the shares of the
Company the equal rights with the shareholders of the
Company when the Company increases it’s share capital with
a new share issue, convertible loan or option rights or
when the Company decreases it’s share capital. This is
implemented in a manner decided by the Board of Directors
of the  Company such that the amounts of the shares
available for conversion, the conversion rate or both shall
be changed or the holders of the Convertible Bonds are
given the same rights with the shareholders.
 
If the Company prior to the share subscription increases
it’s share capital with a bonus issue, the conversion rate
shall be changed such that the proportional portion of the
shares to be subscribed for with the Convertible Bond of
the share capital remains unchanged. If the new amount of
the shares available for subscription with the Convertible
Bond is a fraction, the fractional part shall be taken into
account by lowering the subscription price.
 
If the Company prior to the conversion of the Convertible
Bond into shares decreases its share capital, the
conversion rate shall be correspondingly changed with the
terms detailed in the resolution concerning the decrease.
 
If the Company during the Loan period is declared bankrupt,
placed in liquidation or is dissolved, the Loan falls due
for repayment considering the limitations in Section I.9
immediately after the commencement of bankruptcy,
liquidation or dissolution has been registered to the trade
register.
 
If the Company resolves to acquire it’s own shares by an
offer made to all the shareholders, the holder of the
Convertible Bond shall be made an equivalent offer. In
other situations the acquisition of the own shares does not
require from the Company any measures with respect to the
holders of the Convertible Bonds.
 
If a shareholder prior to the conversion of the Convertible
Bond is entitled and obliged, according to the Companies
Act, Chapter 14 Paragraph 19, to redeem the shares of other
shareholders, the holder of a Convertible Bond shall have
the right equal to that of a shareholder to demand
redemption of the Convertible Bond from the redeeming
shareholder.
 
If the Company resolves to merge into another company or
into a company to be established in a combination merger or
resolves to divide, the holder of a Convertible Bond shall
prior to the merger or division and during a period to be
determined by the Board of Directors be entitled to convert
the Convertible Bond into the shares of the Company. After
this the conversion right no longer exists.
 
If the nominal value or the book counter value of the share
registered to the trade register changes such that the
share capital remains the same, the terms and conditions of
the conversion of the Convertible Bond change
correspondingly so that the sum of the nominal values or
par values of the shares to be subscribed for and the sum
of the subscription prices remain the same.
 
The transformation of the Company from a public limited
company into a private limited company or vice versa does
not cause any changes into these terms and conditions.
 
7. Settlement of disputes and applicable law
 
All disputes arising from this Loan or it’s subscription
shall be solved according to Finnish law, excluding its
provisions concerning the choice of law, that might lead to
applying a law of a different country. All disputes arising
from this Loan or it’s terms and conditions shall primarily
be solved through negotiations between the Parties. If such
negotiations do not lead to a settlement, the dispute shall
be settled bindingly according to the rules of the
arbitration procedure of the Board of Arbitration of the
Central Chamber of Commerce of  Finland by one (1)
arbitrator appointed by the Central Chamber of Commerce.
The arbitration shall take place in Helsinki and the
language used shall be either Finnish or English, as
decided by the subscriber. The arbitrator shall give the
final ruling within thirty (30) days of the appointment.
 
8. Other matters
 
The Board of Directors of the Company shall be entitled on
decide on any other matters relating to this Loan, the
Convertible Bonds and the increase of the share capital and
practical measures resulting from them. Announcements to
the holders of the Convertible Bonds shall be delivered to
the postal addresses given by them to the Company. The
documents concerning the Convertible Bonds are on view in
the headquarters of Benefon Oyj, address Meriniitynkatu 11,
24100 Salo.