Notice of Grant of Stock Options (Subscription Rights to Shares)

Transcription

1 October 31, 2017 Name of Company: NEXON Co., Ltd. Representative: Owen Mahoney, Chief Executive Officer and President (Stock Code: 3659, TSE First Section) Contact: Koji Abe, Administration Division Manager Telephone: Notice of Grant of Stock Options (Subscription Rights to Shares) NEXON Co., Ltd. (the Company ), a global leader in online games for PC and mobile, announced that, pursuant to the provisions of Articles 236, 238 and 239 of the Companies Act and the resolution of the Company s 15 th Annual General Meeting of Shareholders convened on March 28, 2017, the following matters were decided by resolution of the Company s Board of Directors regarding the granting of stock options, or subscription rights to shares, to be issued under preferential terms to persons other than the Company s shareholders. 1. Persons to whom subscription rights to shares will be granted Number of Individuals Number of Options Company Employees Directors of Wholly-Owned Subsidiaries Employees of Wholly-Owned Subsidiaries 357 4,584 Directors of Other Company Subsidiaries 1 50 Employees of Other Company Subsidiaries TOTAL 447 5, Guidelines for issuance of subscription rights to shares (1) Class and number of shares to be issued upon exercise of subscription rights to shares 5,909,000 shares of common stock of the Company In the event that the Company splits its common stock (including allotment of its common stock without compensation) or consolidates its common stock, the number of shares to be issued upon exercise of each unit of subscription rights to shares shall be adjusted according to the formula outlined below; provided however, that such adjustment shall be made only to those subscription rights that remain unexercised at the time of such adjustment, and any fraction less than one share resulting from such

2 adjustment shall be rounded down. Number of shares after adjustment = (number of shares before adjustment) x (ratio of split or consolidation) In the event that Nexon conducts a merger, a company split, a share exchange or share transfer, or when there is any other inevitable reason necessitating an adjustment of the number of shares, the number of shares shall be adjusted within a reasonable scope upon consideration of the conditions and other matters pertaining to the merger, company split, share exchange or share transfer. (2) Number of subscription rights to shares to be issued 5,909 units The number of shares to be issued upon exercise of each subscription right to shares ( Number of Granted Shares ) shall be 1,000 shares of common stock of the Company. In the case the number of shares is adjusted as provided in (1) above, the Number of Granted Shares shall also be adjusted. (3) Cash payment in consideration of subscription rights to shares No cash payment is required in consideration of subscription rights to shares. (4) Value of the assets to be contributed upon exercise of subscription rights to shares The amount of the assets to be contributed upon exercise of subscription rights to shares shall be the amount obtained by multiplying the amount to be paid in for each share to be issued upon exercise of such subscription rights to shares ( Exercise Price ) by the number of shares to be issued upon exercise of such subscription rights to shares. The Exercise Price shall be the closing price of the common stock of the Company in regular trading on the Tokyo Stock Exchange on the date of allotment of subscription rights to shares ( Allotment Date ). In the event that the Company carries out a stock split (including allotment of its common stock without compensation) or a consolidation of its common stock after the Allotment Date, the Exercise Price shall be adjusted according to the following formula. Any fraction of less than one yen shall be rounded up. Exercise Price after adjustment = Exercise Price before adjustment x 1 ratio of split or consolidation In the event that Nexon conducts a merger, a company split, a share exchange or share transfer, or when there is any other inevitable reason necessitating an adjustment of Exercise Price, Exercise Price shall be adjusted within a reasonable scope upon consideration of the conditions and other matters pertaining to the merger, company split, share exchange or share transfer. (5) Exercise period of subscription rights to shares The exercise period shall commence on the Allotment Date and terminate after ten years therefrom. In the event that the last date of the exercise period is a non-business day of the Company, the last date of the exercise period shall be the

3 business day immediately preceding such date. (6) Conditions for exercise of subscription rights to shares A person must be a director or an employee of the Company or its subsidiaries at the time of the exercise to be eligible, except when a director or an employee of the Company or its subsidiaries loses his or her position as a director or employee due to resignation or retirement, dismissal or discharge (excluding punitive dismissal or any other similar event), or death or disability, or when there is any other due reason specifically provided by the Board of Directors. (7) Treatment of subscription rights upon a restructuring or other activities When approval is granted for proposals i), ii), iii), iv) or v) below by a resolution of the General Meeting of Shareholders (or, if a resolution of the General Meeting of Shareholders is not required, then when approval is granted by a resolution of the Board of Directors of the Company), the Company may acquire subscription rights to shares without charge on the date specifically stipulated by the Board of Directors: i) Proposal for the approval of a merger agreement in which the Company will not be the surviving entity; ii) Proposal for the approval of a corporate demerger agreement or a corporate demerger plan for the Company; iii) Proposal for the approval of a share-for-share exchange agreement or a share transfer plan in which the Company will become a wholly-owned subsidiary of another company; iv) Proposal for the approval of an amendment to the Articles of Incorporation to make provisions concerning all shares issued by the Company requiring the Company s approval for the acquisition of such shares through transfer ; or v) Proposal for the approval of an amendment to the Articles of Incorporation to make provisions concerning underlying shares of subscription rights to shares (a) requiring the Company s approval for the acquisition of such shares through transfer, or (b) allowing the Company to acquire all shares of the relevant class upon resolution of the General Meeting of Shareholders. (8) Restriction on the acquisition of subscription rights to shares by transfer Any acquisition of subscription rights to shares by transfer shall require approval of the Board of Directors of the Company by resolution. (9) Matters concerning the amount of capital and capital reserve increased by the issuance of shares upon exercise of subscription rights to shares: i) The amount of capital increased by the issuance of shares upon exercise of subscription rights to shares shall be one-half of the amount of the maximum limit on the increase in capital as calculated pursuant to Article 17, Paragraph 1 of the Company Accounting Ordinance. Any fraction of less than one yen shall be rounded up. ii) The amount of capital reserve increased by the issuance of shares upon exercise of subscription rights to shares shall be the amount of the maximum limit on the increase in capital provided in i) above, reduced by the amount of increased capital stipulated in i) above. (10) Allotment Date November 9, 2017

4 (11) Bank handling payments for the exercise of subscription rights to shares and its location Sumitomo Mitsui Banking Corporation, Tokyo Chuo Branch (Address: Nihombashi, Chuo-ku, Tokyo) 3. Agreement for the allotment of subscription rights to shares The Company will enter into an agreement for the allotment of subscription rights to shares with each person to whom subscription rights to shares will be granted, which will set forth the following matters with regards to the exercise period of subscription rights to shares, terms and conditions of the exercise of subscription rights to shares, and the reason and conditions for the acquisition of subscription rights to shares, in addition to the provisions under 2. Guidelines for issuance of subscription rights to shares. (1) Exercise period of subscription rights to shares The exercise period of subscription rights to shares shall be from the day on which two full years have elapsed since the date of resolution of the Board of Directors (except in the event that non-qualified stock options have been selected, in which case this date shall be November 9, 2017) (the Exercise Start Date ) through November 8, 2023 (except in the event that this is a non-business day of the Company, in which case this date shall be the business day immediately preceding such date; Final Exercise Date ). (2) Terms and conditions of the exercise of subscription rights to shares i) Up to one third (1/3) of the total number of subscription rights to shares granted will vest at the end of one full year following the Allotment Date (except in the event that such date is a non-business day of the Company, in which case it shall be the business day immediately following such date). Up to an additional one twelfth (1/12) of the total number of subscription rights to shares granted will vest at the end of each successive three-month period following the Allotment Date, until three full years have elapsed from the Allotment Date (except in the event that any of such dates are non-business days of the Company, in which case they shall be the respective business days immediately following such dates). However, if for any reason a person to whom subscription rights to shares will be granted takes a leave of absence from work at the Company or any of its subsidiaries, the vesting process of unvested subscription rights to shares shall be suspended for the duration of said leave and the vesting date shall be delayed for an equivalent number of days. In addition, the subscription rights to shares would not be exercisable for the duration of said leave. Vested subscription rights to shares (any fractional amount resulting from the calculations in the first and second sentences in i) of this paragraph shall be rounded off) may be exercised from the Exercise Start Date to no later than the Final Exercise Date as set forth in the foregoing paragraph and then only if the guidelines for issuance of subscription rights to shares and any other conditions for exercise as set forth in the agreement for the allotment of subscription rights to shares have been satisfied. ii) Except as otherwise provided in iii), iv) and v) below, the subscription rights to shares may not be exercised unless the person to whom subscription rights to shares will be granted, at the time he or she exercises an option, is, and has been at all times since the Allotment Date, a director or employee of the Company or any of its subsidiaries. iii) If the person to whom subscription rights to shares will be granted ceases to be eligible for any reason, then, except as provided in iv) and v) below, the subscription rights to shares that are vested as of the date of such cessation shall be exercisable for a period of no more than 30 days after the date of such cessation (or a period of

5 no more than 1 year from the day following the date of such cessation if the person to whom subscription rights to shares will be granted is a director of the Company, and in either case, it s only granted in the period stated in (1)). Notwithstanding the foregoing, if the person to whom subscription rights to shares will be granted violates the non-competition or confidentiality provisions of any employment or management service contract, confidentiality and nondisclosure agreement, non-competition agreement or any other agreement between that person and the Company or any of its subsidiaries, the subscription rights to shares shall become unexercisable immediately upon such violation. iv) If the person to whom subscription rights to shares will be granted ceases to be eligible due to death or a disability prior to the Final Exercise Date, that person or his/her qualified heir shall be able to exercise the subscription rights to shares that are vested as of the date of such cessation for a period of no more than six months after such cessation (it s only granted in the period stated in (1)). v) If the person to whom subscription rights to shares will be granted loses his/her eligibility before the Final Exercise Date due to punitive dismissal or any similar reason, all granted options, including those already vested at the time, shall become unexercisable immediately upon the date of such loss of eligibility. The loss of eligibility due to punitive dismissal or any similar reason shall mean the termination of employment agreement or delegation agreement between the Company or its subsidiary and the person to whom subscription rights to shares will be granted, as determined by the company party to such employment agreement or delegation agreement with such person (i.e., the Company or its subsidiary), with the person s willful misconduct or willful failure to perform his/her duties (including, without limitation, breach by the person of any provision of any employment, management service, nondisclosure, non-competition or any similar agreement (including Rules of Employment) with the Company or its subsidiary) as grounds for such termination. In the event the Company or its subsidiary has found a situation to have arisen, prior to or simultaneously with the voluntary resignation or retirement of a person to whom subscription rights to shares will be granted, that gives cause to the person s loss of eligibility due to punitive dismissal or a similar reason, such person shall be deemed to have lost his/her eligibility due to punitive dismissal or a similar reason. vi) Each subscription right to shares shall be exercised in whole and cannot be partially exercised by dividing its rights. (3) Causes and conditions for the acquisition of subscription rights to shares On condition that either of the provisions of (2) ii), iii), iv) and v) above, the non-exercisability of subscription rights to shares by a person to whom subscription rights to shares will be granted, or a waiver of all or part of the subscription rights to shares by the person applies; upon which, such person shall transfer his/her subscription rights to shares to the Company without consideration and the Company shall acquire said subscription rights to shares for free.