EXHIBIT 4.2
AGREEMENT CONCERNING
ALLOCATION OF THE STOCK ACQUISITION RIGHTS
OF SONY CORPORATION
FOR THE FISCAL YEAR 2002
SONY CORPORATION (hereinafter referred to as the "Corporation") and
___________________ (hereinafter referred to as the "Qualified Person") enter
into this Agreement as follows in connection with the allocation of the stock
acquisition rights (hereinafter referred to as the "Options") to be issued by
the Corporation pursuant to the provisions of the terms and conditions of the
Options (hereinafter referred to as the "Terms and Conditions") set forth in the
Exhibit 1 attached hereto and pursuant to the special resolution adopted at the
85th Ordinary General Meeting of Shareholders held on June 20, 2002 and the
resolution adopted at the Meeting of the Board of Directors held on March 28,
2003:
Article 1 (Purpose and Administration)
The primary purpose of allocating the Options to the Qualified Person is
to enhance the willingness of the Qualified Person to contribute towards the
advancement of Sony Group's business performance and thereby advance such
business performance by making the economic interest, which the Qualified Person
will receive, correspond to the business performance of the Corporation. This
Agreement and the Terms and Conditions shall be administered by the Corporation,
and such representative directors or other persons as the Corporation may
designate from time to time to represent the Corporation in respect of this
Agreement, the Terms and Conditions and Options.
Article 2 (Restrictions under the Terms and Conditions and this Agreement)
The Options shall be subject to (1) the Terms and Conditions, which are
attached to this Agreement as Exhibit 1 and form an integral part of this
Agreement, and (2) the conditions and restrictions provided for in this
Agreement. The Qualified Person agrees to be bound by the conditions and
restrictions set forth in the Terms and Conditions and this Agreement.
Notwithstanding the provisions of the Terms and Conditions, the exercise of the
Options is further subject to such additional conditions as set forth herein. In
particular, the exercise is subject to the restrictions under Articles 5 and 7.
Article 3 (Allocation of the Options)
Pursuant to this Agreement, the Corporation allocates the following
Options to the Qualified Person in accordance with the following terms on the
execution date of this Agreement (hereinafter referred to as the "Issue Date").
(1) Number of Options allocated to the Qualified Person:
(________ shares may be issued or transferred upon the exercise
by the Qualified Person of all Options allocated to the Qualified
Person pursuant to this Agreement.)
(2) Class and number of shares to be issued or transferred upon
exercise of each Option:
100 shares of common stock of the Corporation
(3) Amount to be paid per share to be issued or transferred upon
exercise of each Option (hereinafter referred to as the "Exercise
Price") is initially:
US$36.57
(4) Period during which the Options may be exercised:
From and including April 1, 2003, to and including March 31, 2013
(the "Term"), however, exercise of the Options is subject to the
restrictions provided for in Article 5.
The number of shares to be issued or transferred upon exercise of each Option
and the Exercise Price payable upon the exercise of each Option may be adjusted
pursuant to the provisions of the Terms and Conditions.
Article 4 (Information on Corporation and its Shares)
Basic information on the Corporation and its shares is as set forth in
Exhibit 2 attached hereto.
Article 5 (Vesting, Conditions for Exercise of the Options and Prohibition
of Disposition)
(1) Exercise of the Options is further subject to the restrictions as
set forth in Exhibit 3 attached hereto.
(2) Except as provided in Article 7, the Options, whether vested or
unvested, are nontransferable by the Qualified Person.
Article 6 (Procedures for Exercising the Options)
Procedures for exercising the Options shall be provided for in the Terms
and Conditions, and in addition, detailed matters concerning such procedures
shall be provided for in a "Guide to the Sony Stock Option Program" separately
provided by the Corporation or one of its subsidiaries and delivered to the
Qualified Person by the Corporation or one of its subsidiaries no later than the
date on which the Options held by the Qualified Person first become exercisable.
Article 7 (Inheritance of the Options)
Upon the death of the Qualified Person, outstanding Options granted to
such Qualified Person may be exercised only by the executors or administrators
of the Qualified Person's estate or by any person or persons who shall have
acquired such right to exercise by will or by the laws of descent and
distribution, provided that no transfer by will or the laws of descent and
distribution of any Option, or the right to exercise any Option, shall be
effective to bind the Corporation unless the Corporation shall have been
furnished with (a) written notice thereof and with a copy of the will and/or
such evidence as the Corporation may deem necessary to establish the validity of
the transfer and (b) an agreement by the transferee to comply with all the terms
and conditions of the Option that are or would have been applicable to the
Qualified Person and to be bound by the acknowledgements made by the Qualified
Person in connection with the grant of the Option.
Article 8 (Issue of Certificate for the Options)
The Qualified Person shall not request the Corporation to issue
certificates for the Options.
Article 9 (Issuance of ADRs)
The Corporation currently maintains an American Depositary Receipt
program in the United States pursuant to which American Depositary Receipts or
"ADRs" represent shares of common stock of the Corporation. During the time the
Corporation maintains an American Depositary Receipt program in the United
States, the Qualified Persons who exercise Options will generally receive ADRs
in lieu of shares of common stock as follows. Upon exercise of an Option,
certificates for shares of common stock acquired upon the exercise of such
Option shall be issued in the name of the depositary under the Sony American
Depositary Receipt program in the name of, and for the benefit of, the Qualified
Person. Upon receipt of shares of common stock upon the exercise of an Option,
the depositary under the Sony American Depositary Receipt Program shall
immediately and automatically issue ADRs representing such shares of common
stock in the name of the applicable Qualified Person and shall deliver such ADRs
to such Qualified Person (or to an account held for the benefit of such
Qualified Person) as soon as practicable following the effective date on which
such issuance occurs. For simplicity, all references in this Agreement and the
Terms and Conditions to common stock will be deemed to also refer to ADRs.
Article 10 (Treatment in the Events of Merger and Consolidation)
1. In the event of (a) any consolidation or amalgamation of the Corporation
with, or merger of the Corporation into, any other corporation (other than a
consolidation, amalgamation or merger in which the Corporation is the continuing
corporation) or (b) any other corporate transaction (excluding any transaction
described in (a) above, a share exchange or share transfer) involving the
Corporation, including a dissolution or liquidation of the Corporation, a sale
of all or substantially all of the Corporation's assets, corporate separation,
or any other similar transaction, the Corporation may (x) cause the entity
resulting from such transaction to execute an agreement providing that a holder
of the Options shall have the right during the Term to exercise the Options and
upon exercise to receive the class and amount of shares, and other securities
and property receivable upon such transaction by a holder of the number of
shares in respect of which the Options could have been exercised immediately
prior to such transaction or (y) prevent from being exercised, effective
immediately upon the occurrence of such transaction, each Option outstanding
immediately prior to such transaction (whether or not then exercisable).
2. In the event that the Corporation enters into a definitive agreement or makes
a decision by board resolution or approval of shareholders' meeting to
effectuate one or more of the transactions or events described in (a) or (b) in
the immediately preceding paragraph (in this paragraph 2, including share
exchange and share transfer), the Corporation may provide not less than twenty
days advance notice to the Qualified Person of the consummation of such
transaction or event and give the Qualified Person the opportunity to exercise
their options (whether or not such options are then vested or exercisable),
immediately prior to, and subject to, the consummation of such transaction or
event.
Article 11 (Withholding by the Corporation)
In connection with Condition 13(2), the Corporation or its designee is
authorized to withhold from any payment relating to an Option or from any
payroll or other payment to a holder, amounts of withholding and other taxes or
fees due in connection with the Option, and to take any other action as the
Corporation may deem advisable to enable the Corporation and the holder to
satisfy obligations for the payment of withholding taxes, other tax obligations
and other costs and fees relating to the Options. This authority shall include,
in the Corporation's discretion, authority to withhold or receive shares of
common stock of the Corporation or other property and to make cash payments in
respect thereof in satisfaction of the holder's tax obligations and other costs
and fees relating to the Options, either on a mandatory or elective basis in the
discretion of the Corporation.
Article 12 (Compliance with the Applicable Securities Law, Etc.)
The Qualified Person shall, in selling the shares of common stock of the
Corporation acquired upon exercise of the Options, confirm in advance with the
Corporation that such proposed sale is permissible under any and all applicable
policies, programs, arrangements or other provisions relating to xxxxxxx xxxxxxx
maintained by the Corporation or any of its subsidiaries and shall comply with
any and all applicable laws and regulations, including but not limited to U.S.
and Japanese laws.
Article 13 (Amendment to This Agreement and Treatment of Matters Not
Provided for in This Agreement)
1. If it is found out that this Agreement is not in compliance with the
Commercial Code, the Securities and Exchange Law, the Income Tax Law, the
Corporation Tax Law or any other related laws or regulations of Japan or any
applicable laws of any other jurisdiction, or if this Agreement becomes not in
compliance therewith as a result of amendments thereto which become effective
after the conclusion of this Agreement, the Corporation may, with notice to the
Qualified Person, adequately establish, amend or eliminate the subject
provisions.
2. With respect to matters not provided for in this Agreement or the "Guide to
the Sony Stock Option Program", such matters shall be determined by consultation
in good faith between the Corporation and the Qualified Person. In the event
that the Qualified Person rejects such consultation, or in the event that such
consultation fails to bring an agreement, such matters shall be decided by the
Corporation and such representative director or other persons as the Corporation
may designate from time to time to represent the Corporation in respect of the
Terms and Conditions, Options and this Agreement. Decisions of the Corporation
or such representative directors or other persons as the Corporation may
designate from time to time to represent the Corporation in respect of the Terms
and Conditions, the Options and this Agreement shall be final and binding on all
parties. None of the Corporation or such representative directors or other
persons as the Corporation may designate from time to time to represent the
Corporation in respect of the Terms and Conditions, the Options or this
Agreement shall be liable to any Qualified Person for any action, omission or
determination relating to the Terms and Conditions, the Options or this
Agreement.
Article 14 (Manner of Notice)
Notices by the Corporation to the Qualified Person under the Terms and
Conditions and this Agreement shall be made in any of the following manners:
(1) delivering (including mailing) a written notice to the address of
the Qualified Person set forth in the register of Options;
(2) sending documents to the Qualified Person at his/her department
in the Corporation (including any Sony Group Company) or sending
electronic data to the e-mail address of the Qualified Person at
the Corporation (including any Sony Group Company); or
(3) giving notice on the web site of the Corporation (including any
Sony Group Company).
Article 15 (Governing Law and Jurisdiction)
This Agreement shall be governed by and construed in accordance with the
laws of Japan. The Tokyo District Court shall have the exclusive jurisdiction
for settling any and all disputes that arises under or in connection with this
Agreement.
IN WITNESS WHEREOF, this Agreement and the grant of Options provided for herein
shall be effective as of the date that two (2) originals of this Agreement have
been prepared and executed by seal impressions or signatures by the Corporation
and the Qualified Person, each party retaining one (1) original.
SONY CORPORATION
0-00, Xxxxxxxxxxxxx 0-xxxxx, Xxxxxxxxx-xx, Xxxxx
By: /s/ Xxxxxxxx Xxxx
-----------------
Xxxxxxxx Xxxx
Representative Director
Date: March 31, 2003
QUALIFIED PERSON
By: ______________________________
Name:
Address:
Date: March 31, 2003
Exhibit 1
TERMS AND CONDITIONS OF THE THIRD SERIES OF
STOCK ACQUISITION RIGHTS
FOR SHARES OF COMMON STOCK OF SONY CORPORATION
These terms and conditions of the stock acquisition rights shall apply to
the Third Series of Stock Acquisition Rights for Shares of Common Stock
(hereinafter referred to as the "Options") of Sony Corporation (hereinafter
referred to as the "Corporation") issued on March 31, 2003 by the Corporation in
accordance with the special resolution adopted at the 85th Ordinary General
Meeting of Shareholders held on June 20, 2002 and the resolution adopted at the
Meeting of the Board of Directors held on March 28, 2003:
1. Aggregate Number of Options
o 14,475
2. Class and Number of Shares to be Issued or Transferred upon Exercise of
Each Option
100 shares of common stock of the Corporation (hereinafter referred to
as "Common Stock")
3. Adjustment of Number of Shares to be Issued or Transferred upon Exercise of
Each Option
(1) In the case that the Corporation splits or consolidates its Common
Stock, the number of shares to be issued or transferred upon exercise
of each Option (hereinafter referred to as the "Number of Granted
Shares per Option") shall be adjusted in accordance with the following
formula:
Number of Granted Shares = Number of Granted Shares X Ratio of split
per Option after per Option before or
adjustment adjustment consolidation
(2) An adjustment to the Number of Granted Shares per Option under the
immediately preceding item shall be made only with respect to the
Options that have not been exercised prior to or at the time of the
adjustment. Any fraction less than one (1) share resulting from the
adjustment shall be disregarded.
(3) The effective date of the Number of Granted Shares per Option after
adjustment shall be the same day as the date provided for in item (2)
of Condition 7 when the Exercise Price after adjustment becomes
effective with regard to the adjustment of the Exercise Price for the
same reason as the adjustment of the Number of Granted Shares per
Option.
(4) When the Number of Granted Shares per Option is adjusted, the
Corporation shall give notice of necessary matters to each holder of
the Options registered in the register of Options, no later than the
day immediately preceding the effective date of the Number of Granted
Shares per Option after adjustment; provided, however, that if the
Corporation is unable to give such notice no later than the day
immediately preceding such effective date, the Corporation shall
promptly give such notice on or after such effective date.
4. Issue Price of Options
The Options are issued without the payment to the Corporation of any
consideration.
5. Issue Date of Options
March 31, 2003
6. Exercise Price of Options
The amount to be paid in per share to be issued or transferred upon
exercise of the Options (the "Exercise Price") is initially US$36.57.
7. Adjustment of Exercise Price
(1) In the case that the Corporation splits or consolidates shares of
Common Stock after the issue date of the Options, the Exercise Price
shall be adjusted in accordance with the following formula and any
fraction less than one (1) cent resulting from this adjustment shall
be rounded up to the nearest one (1) cent:
Exercise Price after = Exercise Price before X 1
adjustment adjustment --------
Ratio of split or
consolidation
(2) In case that the Exercise Price is adjusted pursuant to the
immediately preceding item, the effective date of the Exercise Price
after adjustment shall be as set forth below:
The Exercise Price after adjustment shall become effective, in case of
a stock split, on and after the day following the allocation date, and
in case of a stock consolidation, on and after the day following the
expiration date of the period provided for in paragraph 1 of Article
215 of the Commercial Code of Japan; provided, however, that in the
case that the Corporation splits shares of Common Stock on condition
that the agenda on transferring profits available for dividends to
stated capital is approved by the Ordinary General Meeting of
Shareholders of the Corporation and the allocation date for such stock
split falls on any day prior to the conclusion date of such General
Meeting of Shareholders, the Exercise Price after adjustment shall, on
the date immediately after the conclusion date of such General Meeting
of Shareholders, become effective retroactively from the date
immediately after the allocation date.
In the case provided for in the proviso above, the number of shares of
Common Stock calculated in accordance with the following formula shall
be issued or transferred to holders of the Options that exercise the
Options from the day following the allocation date for the stock split
to the conclusion date of the relevant General Meeting of
Shareholders. (The number of shares to be issued or transferred upon
such exercise of the Options shall be hereinafter referred to as the
"Number of Initial Shares before Approval"). In this case, any
fraction less than one (1) share resulting from such adjustment shall
be disregarded.
Number of
shares to be
additionally Number of
issued or = (Exercise Price -- Exercise Price after x Initial Shares
transferred (before adjustment adjustment before Approval
---------------------------------------------------------------
Exercise Price after adjustment
(3) In addition to the cases in item (1) of this Condition where the
Exercise Price is required to be adjusted, the Exercise Price shall be
adjusted in the manner deemed to be appropriate by the Corporation in
the following cases.
(i) When the Exercise Price is required to be adjusted in case of
merger, capital reduction, or company split (split by new
incorporation or by absorption) of the Corporation.
(ii) In addition to item (i) above, when the Exercise Price is
required to be adjusted for the reason of occurrence of events
that shall cause or may cause a change to the total number of
shares of issued Common Stock.
(4) When the Exercise Price is adjusted, the Corporation shall give notice
of necessary matters to each holder of the Options registered in the
register of Options, no later than the day immediately preceding the
effective date of the Exercise Price after adjustment; provided,
however, that if the Corporation is unable to give such notice no
later than the day immediately preceding such effective date, the
Corporation shall promptly give such notice on or after such effective
date.
8. Period during which Options May be Exercised
From and including April 1, 2003, to and including March 31, 2013. If the
last day of such period falls on a holiday of the Corporation, the
immediately preceding business day shall be the last day of such period.
9. Conditions for Exercise of Options
(1) Each Option may not be exercised in part.
(2) If share exchange or share transfer by which the Corporation becomes a
wholly-owned subsidiary of another company is approved at the General
Meeting of Shareholders of the Corporation, holders of the Options may
not exercise the Options on and after the date of such share exchange
or share transfer.
10. Restrictions under the U.S. Securities Act and Other Matters
The Corporation shall not be obligated to effect the registration pursuant
to the U.S. Securities Act of 1933, as amended, of any Common Stock to be
issued or transferred upon exercise of the Options or to effect similar
compliance under any state laws. Notwithstanding anything herein to the
contrary, the Corporation shall not be obligated to issue or cause to be
issued or delivered any certificates evidencing Common Stock pursuant to
these Terms and Conditions unless and until the Corporation is advised by
its legal counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental
authorities and the requirements of any securities exchange on which Common
Stock are traded. The Corporation may require, as a condition to the
issuance and transfer of Common Stock pursuant to the Terms and Conditions,
that the recipient of such Common Stock make such covenants, agreements and
representations, and that such certificates bear such legends, as the
Corporation deems necessary or desirable.
The exercise of any Option granted hereunder shall only be effective at
such time as counsel to the Corporation shall have determined that the
issuance and transfer of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange on which Common Stock is
traded. The Corporation may, in its sole discretion, defer the
effectiveness of the exercise of a Option granted hereunder to allow the
issuance and transfer of Common Stock pursuant thereto to be made pursuant
to registration or an exemption from registration or other methods for
compliance available under federal or state securities laws. The
Corporation shall inform the holder of a Option in writing of a decision to
defer the effectiveness of the exercise of an Option granted hereunder.
During the period that the effectiveness of the exercise of a Option has
been deferred, the holder may, by written notice, withdraw such exercise
and obtain the refund of any amounts paid in connection with the proposed
exercise.
11. Cancellation of Options
The Corporation may acquire the Options from a holder of the Options
without any payment therefor when the holder agrees to return the Options
to the Corporation and the Corporation may cancel them.
12. Restrictions on Transfer of Options
The Options are nontransferable (other than any transfer upon the death of
the Qualified Person to such Qualified Person's estate or beneficiaries),
unless such transfer is expressly approved by the Board of Directors of the
Corporation.
13. Application for Exercise of Options and Manner of Payment
(1) In case of exercise of the Options, the holder of the Options shall
fill in necessary matters on the "Application Form for Exercise of the
Options" in the form designated by the Corporation, and shall submit
such application form (including application for exercise of the
Options in an electromagnetic manner) to the place where applications
for exercise of the Options are made as provided for in Condition 14,
after affixing his or her name and seal or signature (including
electronic signature) thereon. If certificates for the Options to be
exercised are issued, the certificates shall be submitted together
with the Application Form for Exercise of the Options. The Application
Form for Exercise of the Options shall be accepted at the place where
applications for exercise of the Options are made only on a business
day of such place.
(2) The entire amount of the Exercise Price of Common Stock to be issued
or transferred upon exercise of the Options, including any applicable
taxes and all other costs or fees associated with the exercise
(hereinafter referred to as the "Amount of Payment") shall be paid in
cash to an account designated by the Corporation (hereinafter referred
to as the "Designated Account") at the payment handling place provided
for in Condition 15 by the date and time designated by the
Corporation. The entitlement of a holder to the receipt of Common
Stock upon the exercise of a Option is subject to the payment in full
of any federal, state, local and foreign taxes of any kind required to
be withheld with respect to the exercise of any Option, as well as the
payment of any costs or fees (such as brokerage fees) associated with
the exercise of such Option.
(3) Except as provided for in Condition 10, any holder of the Options who
has submitted the documents required for exercise of the Options to
the place where applications for exercise of the Options are made, may
not cancel such exercise thereafter.
14. Place Where Applications for Exercise of Options are Made
Sony Corporation of America Human Resources, or its duly authorized
designee.
15. Payment Handling Place on Exercise of Options
Sumitomo Mitsui Banking Corporation, Head Office (or any successor bank of
such bank from time to time and/or any successor office of such office)
16. Effective Date and Time of Exercise of Options
(1) Except as provided for in Condition 10, exercise of the Options shall
come into effect when the Application Form for Exercise of the
Options, that is accepted at the place where applications for exercise
of the Options are made, is delivered to the payment handling place
and the Amount of Payment provided for in Condition 13 is duly paid to
the Designated Account.
(2) The Corporation shall deliver the share certificates without delay
after the procedure for exercise of the Options is completed;
provided, however, that the Corporation shall not deliver share
certificates for shares constituting less than one (1) full unit of
shares.
17. Calculation of Dividend on Shares Issued upon Exercise of Options
With respect to any annual dividend or interim dividend (being a cash
distribution pursuant to Article 293-5 of the Commercial Code of Japan) on
Common Stock issued upon exercise of the Options, such shares shall be
deemed to have been issued, in case that the Options are exercised during
the period from April 1 to September 30 every year, on April 1 of the
relevant year, and in case that the Options are exercised during the period
from October 1 to March 31 of the following year, on October 1 of the
relevant year.
18. Portion of Issue Price of Shares which Will not be Accounted for as Stated
Capital in Case Shares are Issued upon Exercise of Options
The portion of the issue price of shares which will not be accounted for as
stated capital shall be the amount obtained by reducing the amount which
will be accounted for as stated capital from the Exercise Price (if the
Exercise Price is adjusted under Condition 7, the Exercise Price after
adjustment). The amount to be accounted for as stated capital shall be the
amount obtained by multiplying the Exercise Price (if the Exercise Price is
adjusted, the Exercise Price after adjustment) by 0.5 and any fraction less
than one (1) cent resulting from such calculation shall be rounded up to
the nearest cent.
19. Issue of Certificates for Options
Certificates for Options shall be issued only when a holder of the Options
requests the Corporation to issue such certificates of Options
20. Loss or Other Cases of Certificates for Options
(1) In case that any holder of the Options that has lost the certificate
for any Options notifies the Corporation its certificate number and
the reason for loss and other matters and requests the issue and
delivery of a replacement certificate for such Options together with a
certified copy of the judgment of nullification of the subject lost
certificate, the Corporation may issue and deliver a replacement
certificate for such Options.
(2) In case of destruction or defacement of the certificate for any
Options, the holder of such destroyed or defaced certificate for such
Options shall request the issue and delivery of a replacement
certificate for such Options by submitting such destroyed or defaced
certificate. In such case, the Corporation shall issue and deliver a
replacement certificate for such Options in exchange for such
destroyed or defaced certificate for such Options; provided, however,
that the provision above for loss of the certificate for such Options
shall apply mutatis mutandis when it is difficult to determine whether
such destroyed or defaced certificate for such Options is genuine or
not.
21. Expenses of Delivery of Replacement Certificates for Share Acquisition
Certificates
In case of issue and delivery of a replacement certificate for Options, the
Corporation shall collect the actual expenses required therefor from the
person who so requested, unless such expenses are paid for by another
entity, which may include the Corporation or its subsidiary or affiliate.
22. Handling of Matters Relating to Abolition of the Unit Share System
In case that the Corporation abolishes the unit share system after the
issue date of the Options, the Corporation may take necessary measures for
handling the related matters thereto in the manner deemed as appropriate by
the Corporation in accordance with the provisions of the Commercial Code of
Japan and in consistent to these terms and conditions.
Exhibit 2
Information on the Corporation and its Shares
1. Trade name of the Corporation:
SONY CORPORATION
2. Classes of shares issued by the Corporation:
Shares of Common Stock
Shares of Subsidiary Tracking Stock (details as set forth below)
3. Number of shares issued by the Corporation:
Shares of Common Stock 3,500,000,000 shares
Shares of Subsidiary Tracking Stock 100,000,000 shares
4. Number of shares constituting one unit of shares: 100 shares
Details of the Shares of Subsidiary Tracking Stock are as follows:
(1) In the event that the Board of Directors of Sony Communication Network
Corporation (hereinafter referred to as "SCN") resolves to submit to its
ordinary general meeting of shareholders a proposed appropriation of
retained earnings including the payment of dividends for the accounting
period of SCN ending on or immediately prior to the last day of an
accounting period of the Corporation, the Corporation, for such accounting
period of the Corporation, shall pay to the holders and/or the registered
pledgees of the shares of Subsidiary Tracking Stock (hereinafter referred
to as the "Shares of Subsidiary Tracking Stock") whose names appear on the
register of shareholders as of the close of the last day of each accounting
period, the smaller amount of the following (i) or (ii) as dividends per
share of Subsidiary Tracking Stock (hereinafter referred to as the
"Dividends for Subsidiary Tracking Stock") with priority to the payment of
dividends to the holders and/or the registered pledgees of shares of Common
Stock of the Corporation whose names appear on the register of shareholders
as of the close of the last day of each accounting period:
(i) The amount obtained by multiplying the amount of dividends per share
of Common Stock of SCN (hereinafter referred to as the "Shares of
Common Stock of SCN") under the relevant proposed appropriation of
retained earnings by the Standard Ratio (initially 0.01, which Ratio
shall be subject to adjustment pursuant to (13) below) as of the end
of the relevant accounting period; provided, however, that if the
amount of the Interim Dividends for Subsidiary Tracking Stock (as
defined below) paid for the relevant accounting period is less than
the amount provided for in the principal provision of (2) below, the
amount of such shortfall shall be added thereto.
(ii) The amount obtained by multiplying one hundred thousand yen (100,000
yen) by the Standard Ratio mentioned above; provided, however, that if
the Interim Dividends for Subsidiary Tracking Stock are paid for the
relevant accounting period, the amount of such payment shall be
deducted therefrom (hereinafter referred to as the "Maximum Dividend
Amount of Subsidiary Tracking Stock").
(2) In the event that SCN's Board of Directors resolves to pay interim
dividends with respect to the most recent record date for payment of SCN's
interim dividends on or before September 30 every year (hereinafter
referred to as the "Record Date for Interim Dividends"), the Corporation
shall pay to the holders and/or the registered pledgees of the Shares of
Subsidiary Tracking Stock, whose names appear on the register of
shareholders as of the close of such Record Date for Interim Dividends, a
cash distribution (referred to as the "Interim Dividends for Subsidiary
Tracking Stock") per share of Subsidiary Tracking Stock in an amount
obtained by multiplying the amount of the interim dividends per share of
the Common Stock of SCN resolved by SCN's Board of Directors by the
Standard Ratio as of such Record Date for Interim Dividends, with priority
to the holders and/or the registered pledgees of Common Stock of the
Corporation whose names appear on the register of shareholders as of the
close of such Record Date for Interim Dividends; provided, however, that
the amount of such Interim Dividends for Subsidiary Tracking Stock to be
paid shall not exceed the amount obtained by multiplying one hundred
thousand yen (100,000 yen) by the Standard Ratio as of the relevant Record
Date for Interim Dividends.
(3) Although the Dividends for Subsidiary Tracking Stock are not paid for a
certain accounting period because SCN's Board of Directors has not resolved
to submit a proposed appropriation of retained earnings including the
payment of dividends to its ordinary general meeting of shareholders, the
Corporation may pay dividends to the holders and/or the registered pledgees
of the Common Stock of the Corporation.
(4) If the amount of the Dividends for Subsidiary Tracking Stock paid with
respect to a certain accounting period is less than the amount determined
pursuant to (i) of (1) above, such shortfall shall be cumulated as
dividends for subsequent periods (hereinafter referred to as the
"Cumulative Unpaid Dividends") and the Corporation shall pay to the holders
and/or the registered pledgees of Subsidiary Tracking Stock the Cumulative
Unpaid Dividends subject to the Maximum Dividend Amount of Subsidiary
Tracking Stock as its maximum amount, with priority to the payment of the
Dividends for Subsidiary Tracking Stock and dividends to the holders and/or
the registered pledgees of Common Stock for each subsequent accounting
period. Any unpaid amount of the Cumulative Unpaid Dividends shall be
cumulated as the Cumulative Unpaid Dividends for subsequent periods. In
case of the new issuance of the Shares of Subsidiary Tracking Stock, the
amount equivalent to the Cumulative Unpaid Dividends shall be regarded as
the Cumulative Unpaid Dividends to such newly issued Shares of Subsidiary
Tracking Stock. If any Cumulative Unpaid Dividends are paid for a certain
accounting period, the Dividends for Subsidiary Tracking Stock shall be
determined subject to the amount obtained by deducting such paid Cumulative
Unpaid Dividends from the Maximum Dividend Amount of Subsidiary Tracking
Stock as the Maximum Dividend Amount of Subsidiary Tracking Stock as
provided for in (ii) of (1) above.
(5) No additional dividends other than the Dividends for Subsidiary Tracking
Stock shall be paid with respect to the Shares of Subsidiary Tracking
Stock.
(6) In distributing the residual assets, as long as they include the Shares of
Common Stock of SCN, the Corporation shall distribute to the holders and/or
the registered pledgees of Subsidiary Tracking Stock, per share of the
Subsidiary Tracking Stock, the number of Shares of Common Stock of SCN
obtained by multiplying one (1) by the Standard Ratio as of the
distribution date of the residual assets, or the amount obtained by way of
disposition of such Shares of Common Stock of SCN (the costs required for
the disposition shall be deducted therefrom), with priority to the
distribution of any residual assets to the holders and/or the registered
pledgees of Common Stock of the Corporation. No additional distribution of
residual assets other than those prescribed above shall be made with
respect to the Shares of Subsidiary Tracking Stock.
(7) The Corporation may, at any time, purchase the Shares of Subsidiary
Tracking Stock and retire them at the purchase price of such shares with
the profit distributable as dividends to shareholders.
(8) The Corporation may compulsorily retire all the Shares of Subsidiary
Tracking Stock on any date following the third anniversary of June 20, 2001
and determined by the Board of Directors of the Corporation by paying per
share of the Subsidiary Tracking Stock, the amount equivalent to the
Standard Market Price (as defined below) of the Shares of Subsidiary
Tracking Stock to the holders and/or the registered pledgees of the
Subsidiary Tracking Stock, with its profit distributable as dividends to
shareholders or in accordance with provisions concerning capital reduction.
(9) The Corporation may compulsorily convert, on any date following the third
anniversary of June 20, 2001 and determined by the Board of Directors of
the Corporation, each Share of Subsidiary Tracking Stock into the shares of
Common Stock of the Corporation in the number obtained by dividing the
number obtained by multiplying the Standard Market Price (as defined below)
of the Shares of Subsidiary Tracking Stock by 1.1 by the Standard Market
Price (as defined below) of the shares of Common Stock of the Corporation;
provided, however, that such conversion shall be implemented only in cases
where the Common Stock of the Corporation is listed on or registered at the
stock exchange or over-the-counter market as prescribed in the Articles of
Incorporation of the Corporation (hereinafter referred to as the "Stock
Exchange").
(10) The "Standard Market Price" shall mean the average of the closing prices of
the relevant shares on the Stock Exchange determined in the method
prescribed in the Articles of Incorporation.
(11) The Corporation shall, without delay, compulsorily retire all the Shares of
Subsidiary Tracking Stock or compulsorily convert them into the shares of
Common Stock of the Corporation pursuant to (8) and (9) above if any of the
following events occur; provided, however, that such compulsory retirement
or compulsory conversion shall be made without delay on any day after the
occurrence of any of the following events and determined by the Board of
Directors to resolve such compulsory retirement or compulsory conversion
notwithstanding (8) and (9) above:
(i) SCN disposes of, by way of transfer or otherwise, those assets with
value not less than eighty percent (80%) of the consolidated total
assets on SCN's consolidated balance sheet (or the total assets on
SCN's balance sheet if SCN does not prepare a consolidated balance
sheet) for the most recent accounting period or those businesses where
the consolidated net sales on SCN's consolidated income statement (or
the net sales on SCN's income statement if SCN does not prepare a
consolidated income statement) for the most recent accounting period
is anticipated to decrease not less than eighty percent (80%);
provided, however, that the disposition of such assets or businesses
to a company whose issued shares are all, directly or indirectly,
owned by SCN are excluded;
(ii) SCN ceases to be a subsidiary of the Corporation;
(iii) a situation continues for at least three (3) months where the total
number of the Shares of Common Stock of SCN directly owned by the
Corporation are less than the number obtained by multiplying the total
number of the Shares of Subsidiary Tracking Stock by the Standard
Ratio;
(iv) SCN makes a resolution to dissolve;
(v) SCN files a petition in bankruptcy or other similar procedure, or a
declaration of bankruptcy or other similar court decision is made with
respect to SCN; or
(vi) an event that falls within the requirements for the delisting or the
cancellation of registration of the Shares of Subsidiary Tracking
Stock occurs at all the Stock Exchanges where the Shares of Subsidiary
Tracking Stock are listed or registered.
(12) The Corporation shall, without delay, compulsorily retire all the Shares of
Subsidiary Tracking Stock or compulsorily convert them into the Shares of
Common Stock of the Corporation pursuant to (8) and (9) above if the
listing or registration of the shares of Common Stock of SCN on a Stock
Exchange is approved; provided, however, that such compulsory retirement or
compulsory conversion shall be made on the day immediately preceding the
day of such listing or registration or on any prior day determined by the
Board of Directors of the Corporation notwithstanding (8) and (9) above.
The Corporation may compulsorily retire all the Shares of the Subsidiary
Tracking Stock on the day of such listing or registration or on any prior
day determined by the Board of Directors of the Corporation by delivering
per share of the Subsidiary Tracking Stock, the Shares of Common Stock of
SCN in the number obtained by multiplying one (1) by the Standard Ratio as
of such day or determined day, with its profit distributable as dividends
to the shareholders or in accordance with the provisions concerning capital
reduction.
(13) The Standard Ratio shall be adjusted in accordance with the method
prescribed in the Articles of Incorporation of the Corporation in cases
where the Shares of the Subsidiary Tracking Stock are to be issued at a
price less than the market price, the Shares of the Common Stock of SCN are
to be issued at a price less than the market price, or otherwise prescribed
in the Articles of Incorporation.
(14) The Corporation may consolidate or split the shares of Common Stock of the
Corporation and/or the Shares of Subsidiary Tracking Stock. The Corporation
may grant the shareholders of Common Stock the right to subscribe for
shares of Common Stock and/or the shareholders of Subsidiary Tracking Stock
the right to subscribe for Shares of Subsidiary Tracking Stock. The
Corporation may make stock splits with respect to the shares of Common
Stock and the Shares of Subsidiary Tracking Stock at the same time in
different split ratios. In addition, the Corporation may grant the
shareholders of Common Stock the right to subscribe for shares of Common
Stock and the shareholders of Subsidiary Tracking Stock the right to
subscribe for Shares of Subsidiary Tracking Stock at the same time on
different terms.
(15) Details with respect to the Shares of Subsidiary Tracking Stock shall be
subject to the details prescribed in the Articles of Incorporation of the
Corporation.
Exhibit 3
[Intentionally Omitted]
Exhibit 4
[Applicable to optionees in certain jurisdictions]
The Qualified Person confirms the following matters pursuant to Article 13 of
the Allocation Agreement.
1. (Employment Contract)
I understand that allotment of Options is discretionary and is not part of
my employment contract, unless my employment contract expressly states
otherwise.
I understand that there is no guarantee that I will be granted a stock
acquisition right or any other Option in the future. The Sony Corporation
Stock Acquisition Rights Plan (the "Plan") may cease to be operated in the
future although any existing Options granted under such Plan that I may
have will continue in accordance with the Allocation Agreement and all
Exhibits thereto, including but not limited to the Terms and Conditions.
I know that I will have no right to claim compensation for any loss
suffered in respect of any existing or future benefits I may receive under
the Plan, except as set out in the relevant plan documentation.
2. (Data Protection)
This statement relates to information I have given on this form and to any
other information which I provide to the Corporation, companies in the Sony
group (including my employer) or which they hold about me, in relation to
the Plan. Subject to legislative requirements, the information may be
retained after my Option is exercised or cancelled. I understand that I can
contact Secretariat of Stock Option Plan, Employee Relations, Corporate
Human Resources, Sony Corporation or the Human Resources Department of Sony
Corporation of America (in accordance with the contact information provided
to me under separate cover), if I have any queries in respect of this
statement.
I understand that the information provided to the Corporation, the
companies in the Sony group (including my employer), and/or to their duly
authorized third party designee(s) retained for the purpose of assisting
the Corporation or the Sony group companies with administration of the
Options and provided in relation to the Plan will be used in relation to
the administration of my Option under the Plan.
The Corporation and/or any of the companies in the Sony group (including my
employer) may give essential information to others (including people acting
as your agents) where this is necessary for the administration of the Plan
on the understanding that they will keep the information confidential.
In order to process the information the Corporation and/or companies in the
Sony group (including my employer) may transfer the information to other
countries, including the United States, provided that I am assured the same
level of protection which I would enjoy in my home country.
I understand that I have a right to access certain information that you
hold about me and in order to exercise this right, I can contact
Secretariat of Stock Option Plan, Employee Relations, Corporate Human
Resources, Sony Corporation or the Human Resources Department of Sony
Corporation of America (in accordance with the contact information provided
to me under separate cover).
3. (Payment of Tax, Social Security or Other Amounts)
I authorize the Corporation and companies in the Sony group (including my
employer) to withhold any amounts or make such arrangements, including the
sale of any shares, on my behalf as are necessary to meet any liability to
taxation, social security or other amounts in respect of my participation
in the stock incentive plan.
4. (Tax Filings)
By signing the Allocation Agreement I agree to:
(1) make all neccessary personal tax filings in the territory where I am
tax resident in relation to this plan;
(2) make any required foreign exchange filings or notifications in relation
to my holding of rights under the plan in the territory where I am foreign
exchange resident; and
(3) comply with any requirements to notify my employing company of my
interests in rights relating to shares of the Corporation (whether these
requirements are based on the internal rules of the relevant employing
company or on the general law).
5. (Pensions)
I understand and agree that this grant of Options to me will not affect my
pension rights in any way. No additional contributions will be made by the
Corporation or by any other member of the Sony group (including my
employer) as a result of my participation in this Plan. Any pension I may
receive will not be increased by my participation in this Plan.
6. (Tax Treatment)
I understand and agree that neither the Corporation nor any member of the
Sony group (including my employer) has arranged for any special tax
treatment to apply to these Options. The Options are not tax qualified in
any particular jurisdiction.
