Announcement Regarding Stock Option Plan

May 10, 2002

Announcement Regarding Stock Option Plan

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, "Options") to eligible non-shareholders in order to implement a stock option plan at the Fiscal Year 2002 (the 39th FY) Annual Meeting of Shareholders planned to be held on June 21, 2002.

The Company introduced an incentive plan for Directors and executive employees of the Company and its subsidiaries aimed to motivate the achievement of mid-term goals and generate a culture of participation in realising profitability. The Company also has been annually implementing a stock option plan by using the Company's own stocks and a quasi stock option plan by using bonds with warrants based on Special Measures for Industrial Revitalization since 2000.

The Company is now contemplating the implementation of a new stock option plan based on the issue of Options in accordance with amendments to the Japanese Commercial Code in April instead of the two aforementioned kinds of stock option plans that have been implemented up to last year. This new stock option plan is subject to approval at the Fiscal Year 2002 (the 39th FY) Annual Meeting of Shareholders to be held on June 21, 2002 for actual implementation of the new plan.

An outline of the stock option plan to be implemented is as follows:

Reason for the issue of Options for eligible non-shareholders under preferable conditions

The Company issues Options as a stock option to provide an additional incentive to Directors and executive employees of the Company and its subsidiaries and to employ and maintain a high caliber of staff. The Company will issue the Options without charge.

Eligible persons

Directors and executive employees of the Company and its subsidiaries

Matters related to the issue of Options

(1)

Total number and type of shares to be issued pursuant to exercising Options:

Not more than 5,000,000 shares of common stock

In the event that the shares are split or are consolidated, the number of shares will be adjusted pursuant to the formula below. However, this adjustment will be made only with respect to shares not yet exercised at the time of a split 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 split or consolidation of shares

In the event that the Company is acquired by another company or companies, or the Company is merged into a new company, the Company will adjust the number of shares as the Company considers appropriate.

The Company will make additional adjustment 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 5,000

(100 shares will be equivalent to one subscription right. The Company will otherwise adjust the number of shares as described in paragraph (1) above.)

(3)

Issue price of the Options:

The Company will issue the Options without charge.

(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 during 30 trading days of one share under an ordinary trade of shares on the Tokyo Stock Exchange beginning the 45th trading day proceeding the day of issue of the Options. 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 that shares are split or consolidated, 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 split or consolidation of shares))

In the event of the issue of shares at a subscription price less than the market value, 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.

C x D

Adjusted payment amount = A x B+ E___

B + C

A: Payment amount before adjustment

B: Number of shares already issued

C: Number of shares newly issued

D: Payment amount per share

E: Price of shares before being newly issued

(5)

Exercise period of the Options:

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.

(6)

Conditions for exercising Options:

The eligible persons for the Options may not exercise a part of an Option by a separation of the Options.

Other conditions related to the exercise of Options not specified herein shall be set out in the respective agreements concerning issue of the Options between the eligible persons and the Company.

(7)

Forfeiture of the Options will occur when:

The Company is acquired by another company or companies and becomes a wholly owned subsidiary, or the Company agrees to become the subject of a merger by absorption.

An eligible person issued the Options subsequently fails to meet the pre-requisite conditions for eligibility or waives all or a part of the Options.

(8)

Restriction of transfer:

Transfer of the Options requires the approval at a meeting of the Board of Directors of the Company.

(9)

Details:

Details shall be determined at a meeting of the Board of Directors of the Company scheduled after the Fiscal Year 2002 (the 39th FY) Annual Meeting of Shareholders.