| PRESS RELEASE: No.05 May 11, 2006 |
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| Notice Regarding Granting Stock Options (Stock Subscription Rights) to Executives |
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| At its Board of Directors' meeting on May 11, 2006, Sumitomo Wiring Systems determined to propose as an agenda item at the SWS 145th regular shareholders' meeting, to be held on June 27, 2006, obtaining approval to grant stock subscription rights to executives at Sumitomo Wiring Systems, as stock options within 20 million yen per year, as compensation, based on Article 361 of the Corporate Law. The contents of the agenda is as follows: | ||||||||||||||
| 1. | Reasons for granting stock subscription rights to compensate executives | |
| Stock subscription rights are granted as stock options to compensate executives at Sumitomo Wiring Systems for their service contributions, for the purpose of heightening their commitment and determination to improve business results so that SWS will produce better corporate results and values for its shareholders. | ||
| 2. | Description of stock subscription rights | |
| (1) | Total number of stock subscription rights and kinds and number of stocks subject to stock subscription rights Total number of stock subscription rights: The upper limit of stock subscription rights issued within one year of the date of the regular shareholders' meeting is 17. Kinds and number of stocks subject to stock subscription rights: The upper limit of the number of stocks that can be granted by exercising stock subscription rights issued within one year of the date of the regular shareholders' meeting is 17,000 common stocks. The number of stocks subject to each stock subscription right (hereafter called "the number of granted stocks") is 1,000. When an adjustment by the company in the number of stocks is appropriate by exercising a stock split (including free-of-charge stock allocations; this applies to the description of a stock split hereunder) or reverse-split of the company's common stocks, or decreasing its capital, SWS will conduct the necessary adjustments. |
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| (2) | Amount to be paid in per stock subscription right The amount to be paid in is the fair value of the stock subscription right that is calculated, based on the Black-Scholes Formula, on the day when stock subscription rights are allocated (hereafter called "allocation date"). |
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| (3) | Asset value invested to exercise the stock subscription rights The value of assets invested to exercise stock subscription rights is the amount that is gained by multiplying the amount to be paid in per stock that can be granted by exercising stock subscription rights (hereafter called "exercise value") by the number of granted stocks. The exercise value will be the amount gained by multiplying 1.05 by the mean value of the closing price with regular transactions of the company's common stocks (hereafter called "closing price") on the day (excluding the day when transactions were not concluded) of the month previous to the month of the allocation date of the stock subscription rights on the Nagoya Stock Exchange, with fractions less than one yen being raised to one yen. However, when the amount gained in this way is less than the closing price on the allocation date (or the closing price on the closest day preceding the allocation date when transactions were not concluded), the amount should be the closing price on the allocation date. In the case where an adjustment in exercise values is appropriate, including when SWS splits or reverse-splits its common stocks after the allocation date, when SWS issues new stocks or disposes of treasury stocks at a value less than the market price (excluding cases through the sale of treasury stocks based on Article 194 of the Corporate Law (requests for sale of odd stocks by stockholders of odd stocks), and through the conversion or exercise of securities that are or can be converted to the company's common stocks or the stock subscription rights (including those attached to corporate bonds with stock subscription rights) that allow requests for granting of the company's common stocks, or when SWS decreases its capital, SWS will conduct the necessary adjustments. |
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| (4) | Exercisable period of the stock subscription rights Within three years after the day after two years have elapsed from the next day of the stock subscription right allocation. |
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| (5) | Conditions for exercising the stock subscription rights 1) When a person who has received an allocation of the stock subscription rights passes away, his or her heir has no right to exercise the person's stock subscription rights. 2) Other conditions are to be stipulated by SWS Board of Directors. |
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| (6) | Limits on assigning the stock subscription rights The Board of Directors of the company must approve any assignment of the stock subscription rights. |
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| (Note) | The contents described above are based on the premise that the agenda item "Determining stock-option compensation for executives and its contents" will be approved at the 145th regular shareholders' meeting to be held on June 27, 2006. |
