Information contained in the news releases are current as of the date of the press announcement, but may be subject to change without prior notice.
May 10, 2006
TDK Corporation's (the "Company") Board of Directors today passed a resolution to authorize it to issue to individuals other than stockholders stock acquisition rights with specially favorable terms and conditions. The purpose of the issue is to offer a stock option scheme, pursuant to the regulations of Articles 236, 238 and 239 of the Company Law of Japan. This resolution is subject to approval at the 110th Ordinary Annual General Meeting of Stockholders scheduled for June 29, 2006.
1. Reason for issuance of stock acquisition rights with specially favorable terms and conditions to individuals other than stockholders
The Company will issue stock acquisition rights free of charge in accordance with the matters pertaining to issuance explained beginning with item 2. below to high-ranking TDK managers, and directors and high-ranking managers of group companies as a further incentive for contributing to the improvement of the Company's consolidated operating results.s
2. Matters pertaining to the issuance of stock acquisition rights
| (1) |
Maximum number of stock acquisition rights
Up to 1,200 stock acquisition rights as detailed in (3) below.
Furthermore, up to 120,000 shares of the Company's common stock can be distributed due to the exercise of stock acquisition rights. In the event that the "number of shares granted" is adjusted in accordance with (3)1. below, the maximum number of shares shall be calculated by multiplying the "number of shares granted" after adjustment by the maximum number of stock acquisition rights as detailed above. |
| (2) |
Amount to be paid for stock acquisition rights
No payment shall be required for the stock acquisition rights. |
| (3) |
Details of stock acquisition rights
| 1. |
Class and number of shares to be issued upon the exercise of the stock acquisition rights
The class of share to be issued upon the exercise of stock acquisition rights shall be the Company's common stock, and the number of shares for each stock acquisition right (hereinafter the "number of shares granted") shall be 100.
However, in the event that the Company conducts a stock split, distributes shares free of charge, or consolidates its common stock after the determination date of this proposal (hereinafter "determination date"), the "number of shares granted" shall be adjusted according to the following method of calculation. This adjustment will apply to the "number of shares granted" for those stock acquisition rights that have not already been exercised prior to the relevant date. Moreover, fractions of less than one share arising out of the above adjustments shall be discarded.
Post-adjustment "Number of shares granted" = Pre-adjustment "number of shares granted" × stock split or stock consolidation ratio
Moreover, in other cases where circumstances arise requiring the "number of shares granted" to be adjusted after the determination date, the "number of shares granted" shall be adjusted appropriately.
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| 2. |
Method for calculating the amount to be invested when exercising each stock acquisition right
The amount to be invested when exercising each stock acquisition right shall be the amount to be paid for each share that can be granted due to the exercise of stock acquisition rights (hereinafter the "exercise price") multiplied by the "number of shares granted."
The exercise price shall be an amount which is the average of the closing price (regular way) of the Company's common stock on the Tokyo Stock Exchange on each day (other than any day on which no sale is reported) of the month immediately preceding the date of allotment (hereinafter "allotment date") of stock acquisition rights, multiplied by 1.05. Any amount less than one yen arising from this calculation shall be rounded up to the nearest yen.
However, if the resulting exercise price is less than the closing price as of the day before the allotment date (or the closing price on the nearest preceding day if there is no closing price on that date), then the closing price on the day before the allotment date shall be used instead.
In the event that the Company conducts a stock split, distributes shares free of charge, or consolidates its common stock after the allotment date, the exercise price shall be adjusted in accordance with the following method of calculation and any amount less than one yen arising out of such adjustment shall be rounded up to the nearest yen:
Exercise price after adjustment = Exercise price before adjustment × 1 / Stock split or stock consolidation ratio
In case the Company issues new shares or disposes of its own shares at a price less than the current market price (except in the case of the conversion of convertible stock or stock with mandatory conversion terms, or in the case of a request by a stockholder for the sale of shares constituting less than one unit or the exercise of stock acquisition rights), the exercise price shall be adjusted in accordance with the following formula and any amount less than one yen arising out of such adjustment shall be rounded up to the nearest yen:
In the above formula, the "number of shares issued" shall be defined as the aggregate number of shares of common stock issued and outstanding less the number of treasury stock. In the event that the Company disposes of treasury stock, the "number of new shares issued" shall be read as "number of treasury stock disposed of."
Moreover, in other cases where circumstances arise requiring the exercise price to be adjusted after the allotment date, the exercise price shall be adjusted appropriately.
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| 3. |
Exercise period for stock acquisition rights
The exercise period shall be the period beginning August 1, 2008 and ending on July 31, 2012.
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| 4. |
Other conditions for exercising stock acquisition rights
Partial exercise of a stock acquisition right is not permitted.
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| 5. |
Items concerning increases in common stock and additional paid-in capital if shares are issued due to the exercise of stock acquisition rights
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(a) In the event that shares are issued due to the exercise of stock acquisition rights, common stock shall increase by half the limit for increase in common stock calculated in accordance with Article 40-1 of the Japanese generally accepted accounting principles. Any amount less than one yen arising shall be rounded up to the nearest yen. |
| (b) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital shall increase by the amount remaining after deducting the increase in common stock prescribed in (a). |
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| 6. |
Restrictions on the acquisition of stock acquisition rights due to transfers
Regarding the acquisition of stock acquisition rights due to transfers, approval is required by resolution of the Company's Board of Directors.
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| 7. |
Provisions for the acquisition of stock acquisition rights
If a meeting of stockholders of the Company approves a proposal of a merger agreement under which the Company is to be dissolved; a proposal for a corporate division agreement or plan under which the Company undergoes a split; or a proposal of a share transfer agreement or plan that makes the Company a wholly owned subsidiary (or approval by a resolution of the Company's Board of Directors where approval of the stockholders is not required), the Company can acquire the stock acquisition rights without compensation on a date separately specified by the Board of Directors.
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| (4) |
Others
| 1. |
The Company shall execute an "Agreement of Allotment of Stock Acquisition Rights" with each eligible person when granting stock acquisition rights. This agreement sets forth conditions that the Company's Board of Directors has deemed reasonable based on the objectives of issuing the stock acquisition rights.
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| 2. |
Authority to determine other matters concerning stock acquisition rights
Matters concerning the distribution and details of stock acquisition rights, other than the items prescribed above, shall be determined at the meeting of the Board of Directors to be held after this Ordinary General Meeting of Stockholders. |
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For further information, contact the Corporate Communications Dept.
Tel.: 81-3-6778-1055
E-mail: TDK.PR@tdk.com
