News Release


May 16, 2001
Tokai Rika Grants Stock Options for Directors
The company carries out a stock buyback to fund the options

Aichi, Japan, May 16 - Tokai Rika Co., Ltd., announced today that its Board of Directors meeting that convened on May 16, 2001, has approved the introduction of a stock option system as well as the repurchase of up to 205,000 shares of its common stock. The stock buyback will be used to fund the stock options to be offered to 21 directors, under the provisions of Paragraph 2, Article 210 of the Commercial Code in Japan.

In a company-wide effort to further improve shareholders' value and increase profitability, Tokai Rika believes that a stock option plan would help raise morale among management members, and that it would directly link their contributions with the company's overall performance. Stock options of up to 205,000 shares of common stock will be offered to 21 directors who are present as of the close of the company's 54th annual general shareholders' meeting, which is scheduled for June 26, 2001. Eligible directors will be given between 5,000 and 15,000 shares, based on qualifications and responsibilities, and each has the right to exercise the options from July 1, 2003, through June 30, 2007. Pending final approval at the general shareholders' meeting, a stock buyback of up to Yen330 million will be made in the open market in July.

Details of the stock options
 The share transfer price shall be set by multiplying by 1.05 the average daily closing prices of the company's common stock (excluding non-trading days) on the Tokyo Stock Exchange on normal trading days during the month prior to the month in which options are offered. The price will be rounded up to the nearest whole yen. If the calculated share transfer price is lower than the closing price on the day of the grant of the options, then the transfer price shall be set at the closing price. If the company carries out a stock split or merger on or after the options are granted, the price shall be adjusted according to the per-share split or merger ratios. Adjusted amounts of less han Yen1 shall be rounded up.

In the event that, on or after the options are granted, the company issues new shares below market price (excluding convertible bond conversion, and exercise of warrant securities), the price shall be calculated by the following formula. Amounts of less than Yen1 are rounded up.



In the event that an eligible director loses his or her position in the company, options are exercisable. In the event of death, an eligible director's survivors can exercise rights. These and other details of the stock options and the holder's rights are individually prescribed in the contract between the company and each eligible director and are based on the decisions of the general shareholders' meeting and those of future meetings of the Board of Directors.


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