Announcement Regarding Stock Option Plan
Apr 30, 2004
The meeting of the Board of Directors of Tokyo Electron Limited (the "Company") held today voted in favor of a proposal for the issue of share subscription rights (shinkabu-yoyaku-ken; options to subscribe to shares or acquire shares held by the Company, the "Option" or "Options") to eligible non-shareholders in order to implement a stock option plan at the Fiscal Year 2004 (the 41th FY) Annual Shareholders' Meeting planned to be held on June 22, 2004.
In 1997 the Company introduced an incentive plan for Directors and executive employees of the Company and its subsidiaries aimed to motivate generating a culture of participation in realizing profitability and maximizing corporate value. In 2000 and 2001, the Company also implemented a stock option plan by using the Company's own stocks and a quasi stock option plan by using bonds with warrants based on the Special Measures for Industrial Revitalization Law. Since 2002, the Company has been implementing a stock option plan based on the newly issued stock Options in accordance with amendments to the Japanese Commercial Code instead of the two aforementioned kinds of stock option plans. Considering the aim of the stock option plan, this year the Company plans to continue the stock option plan based on the newly issued stock Options.
For actual implementation, this stock option is subject to approval at the Fiscal Year 2004 (the 41th FY) Annual Shareholders' Meeting to be held on June 22, 2004.
An outline of the stock option plan to be implemented is as follows:
| 1. | Reason for the issue of Options for eligible non-shareholders under preferable conditions | ||
| The Company issues Options as newly issued stock options under the purpose to maximize corporate value by providing an additional incentive to Directors and employees of the Company and its subsidiaries, and employing and maintaining a high caliber of staff. The Company will grant the Options to eligible persons without charge. | |||
| 2. | Eligible persons | ||
| Directors and employees of the Company and its subsidiaries | |||
| 3. | Matters related to the issue of Options | ||
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(1) |
Total number and type of shares to be issued pursuant to exercising Options: | ||
| Not more than 800,000 shares of common stock of the Company | |||
| In the event of the share splitting or consolidation, the number of shares will be adjusted pursuant to the formula below; provided, however, that this adjustment will be made only with respect to shares not yet exercised at the time of splitting or consolidation. In this calculation, any fraction of a share smaller than one share will be disregarded. | |||
| Adjusted number of shares = Number of shares before adjustment x Ratio applicable to the splitting or consolidation of shares | |||
| In the event of a merger, an absorption and a corporate split relating to the Company, the Company will adjust the number of shares as the Company considers appropriate. | |||
| The Company will make additional adjustments to the number of shares to the extent the Company considers appropriate based on a resolution of a meeting of the Board of Directors of the Company. | |||
| (2) | Number of Options: | ||
| Not more than 8,000 | |||
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(100 shares will be equivalent to one Option. The Company will otherwise adjust the number of shares as described in paragraph (1) above.)
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| (3) | Issue price of the Options: | ||
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The Company will grant the Options to eligible persons without charge.
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| (4) | Payment required for the exercise of Options: | ||
| The payment required to exercise one Option shall be equivalent to the amount of the payment price per share determined as described below, multiplied by the number of shares to be transferred for each Option as described in paragraph (2) above. | |||
| Amount of payment price per share = A x B (Any fraction smaller than 1 yen will be rounded up to 1 yen.) A: Final (closing) price per share under an ordinary trade of shares on the Tokyo Stock Exchange on the day preceding the issue of the Options B: 1.05 | |||
| However, the result will not be lower than the average of the final (closing) prices of one share during 30 trading days beginning the 45th trading day proceeding the day of issue of the Options under an ordinary trade of shares on the Tokyo Stock Exchange. Any fraction smaller than 1 yen as a result of the calculation of an average price will be rounded up to 1 yen. | |||
| In the event of the share splitting or consolidation, the payment amount (set forth in the preceding paragraph) will be adjusted pursuant to the formula below, and any fraction smaller than 1 yen as a result of the adjustment will be rounded up to 1 yen. | |||
| Adjusted payment amount = Payment amount before adjustment x (1 / (Ratio applicable to the splitting or consolidation of shares)) | |||
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The Company will make additional adjustment to the payment amount to the extent the Company considers appropriate based on a resolution of a meeting of the Board of Directors of the Company.
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| (5) | Exercise period of the Options: | ||
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Not longer than eight years after the day of issue of the Options and to be determined at a meeting of the Board of Directors of the Company.
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| (6) | Conditions for exercising Options: | ||
| a) | The eligible persons for the Options may not exercise a part of an Option by separating the Options he/she has. | ||
| b) |
Other conditions related to the exercise of the Options not specified herein shall be set out based on a resolution adopted at a meeting of the Board of Directors of the Company or in a respective agreement concerning the grant of the Options entered into between each eligible person and the Company in accordance with the respective board resolution (the "Stock Option Agreement").
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| (7) | The Company extinguishes the Options without redemption when: | ||
| a) | The Company agrees to become the subject of a merger by absorption, or the Meeting of Shareholders approves a draft agreement of exchange or transfer of shares in order that the other company will own the total number of the issued shares of the Company. | ||
| b) |
An eligible person holding the Options subsequently fails to meet the pre-requisite conditions for eligibility set out based on the resolution of the board meeting or in the Stock Option Agreement, or waives all or a part of the Options.
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| (8) | Restriction of transfer: | ||
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Transfer of the Options requires the approval at a meeting of the Board of Directors of the Company.
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| (9) | Succession of Options to a wholly parent company in case of an exchange or a transfer of shares of the Company: | ||
| a) | Succession of Options to a wholly parent company may occur if the Company becomes a wholly owned subsidiary through an exchange or a transfer of shares. | ||
| b) | Type of share to be allotted for the Option shall be the common share of the wholly parent company, and the number of shares shall be calculated by multiplying the number described in paragraph (2) above (upper limit) by share allotment ratio number of the shares of the wholly parent company applicable to one share of the Company. In this calculation, any fraction of a share smaller than one share will be disregarded. | ||
| c) | Payment required for the exercise of Options: | ||
| The payment required to exercise one Option after succession will be adjusted pursuant to the formula below, and any fraction smaller than 1 yen as a result of the adjustment will be rounded up to 1 yen. | |||
| Payment amount after succession= Payment amount before succession x (1 /Share allotment ratio number of the shares of the wholly parent company applicable to one share of the Company) | |||
| d) | Exercise period of the Options after succession: | ||
| As set forth in paragraph (5) above; provided, however, if the Options are already within the exercisable period when the succession occurs, they may be exercisable only from the effective date of the exchange or the transfer of shares to the end of the period set forth in paragraph (5). | |||
| e) | Conditions for exercising Options after succession and extinguishment of the Options after succession: | ||
| As set forth in the paragraphs (6) and (7) above. | |||
| f) | Transfer restriction of the Options after succession: | ||
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Regarding the transfer restriction of the Options after succession, the approval of the Board of Directors of the wholly parent company shall be required.
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| (10) | Other items: | ||
| Further matters including any details of the Options shall be determined at a meeting of the Board of Directors of the Company scheduled after the Fiscal Year 2004 (the 41st FY) Annual Shareholders' Meeting or in the Stock Option Agreement. | |||
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