Why an In-Kind Dividend

We recognize that the proposal, which is structured as an in-kind dividend of shares in Tokyo Electron (TEL), is unusual.  A more conventional approach would have been a straight cash dividend.  We considered but decided against proposing a straight cash dividend because, under the applicable provisions of the Japanese Company Law, a shareholder proposal in this form would not allow us to specify the sources from which the cash dividend should be paid.  We thought that it was important to structure the proposal in a way that specifically and concretely addressed the issue that TBS management and shareholders should be most concerned about, namely TBS’ excessive “strategic holdings”, of which TEL is the most prominent but by no means only example.

We hope that TBS shareholders, by supporting the proposal, will send a message to TBS management that they expect a continuing, consistent reduction of “strategic holdings” in the years to come.

TBS shareholders should be aware that under the proposal they have the option to receive the dividend in the form of cash instead of TEL shares.  We expect that most shareholders will choose to receive the dividend in the form of cash.