Share-based payment

The Company has different fixed option plans which reserve shares of common stock and AIXTRON American Depository Shares (ADS) for issuance to members of the Executive Board, management and employees of the Company. Each AIXTRON ADS represents the beneficial ownership in one AIXTRON common share. The following is a description of these plans:

AIXTRON stock option plan 1999

In May 1999, options were authorized to purchase 3,000,000 shares of common stock (after giving effect to capital increases, stock splits, and the EURO conversion). The options are exercisable in equal instalments of 25% per year after the second anniversary of the date of grant, subject to certain conditions. Vested options are only permitted to be exercised when the performance of the AIXTRON stock exceeds the performance of the Technology AS Price Index (formerly the New Market Index) by at least 5% in the reference period or when the turnover reported by AIXTRON rises by at least 25% per year and the profit/revenue ratio is at least 12%. Regardless of fulfilment of these conditions, the stock options can be exercised when 15 years have elapsed. Under the terms of the 1999 plan, options are granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date. All options are settled by physical delivery of shares. Upon exercise of options new shares are issued. Under this plan 1,245,151 options for the purchase of 1,926,005 commons shares were outstanding as of December 31, 2006.

In 2002, options were granted with the exercise price slightly less than fair market value. Fair mar- ket value is determined based upon the closing trading price on grant date.

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AIXTRON stock option plan 2002

In May 2002, options were authorized to purchase 3,511,495 shares of common stock. The options are exercisable in equal instalments of 25% per year after the second anniversary of the date of grant, subject to certain conditions. Options expire ten years from date of grant. Under the terms of the 2002 plan, options are granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date, plus a premium of 20% over the aver- age closing price. No grants were issued with a strike price less than fair market value. All options are settled by physical delivery of shares. Upon exercise of options new shares are issued. A total of 3,134,560 options to purchase the same number of common stock were outstanding under this plan as of December 31, 2006.

Genus stock option plan 2000

With the acquisition of Genus, Inc. the company adopted the Genus Incentive Stock Option Plan 2000. Under this plan at the date of acquisition options were authorized to purchase 3,948,014 shares of common stock. At the date of acquisition these were converted into options to purchase 2,013,487 AIXTRON ADS. Options granted before October 3, 2003 vest over a three-year-period and expire five years from the date of grant. Options granted after October 3, 2003 vest over a four-year-period and expire in ten years from the date of grant.

A total of 994,469 options to purchase AIXTRON ADS were outstanding under this plan as of December 31, 2006. Upon exercise of options new shares are issued from the trust (see note 22).

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Summary of stock option transactions

AIXTRON share options

Number Average Number Average

of shares exercise of shares exercise

price (EUR) price (EUR)

2006 2005

Balance at January 1 3,932,501 16.46 4,254,331 16.12

Granted during the year 1,616,100 3.83 0 0.00

Exercised during the year 0 0.00 0 0.00

Expired during the year 0 0.00 0 0.00

Forfeited during the year 488,036 11.23 321,830 11.99

Outstanding at December 31 5,060,565 12.93 3,932,501 16.46

Exercisable at December 31 1,073,466 15.80 716,480 21.85

Genus share options

Number Average Number Average

of shares exercise of shares exercise

price (USD) price (USD)

2006 2005

Balance at January 1 1,365,076 5.47 0 0.00

Addition Genus options 0 0.00 2,013,487 6.19

Granted during the year 0 0.00 0 0.00

Exercised during the year 39,540 2.61 41,226 2.53

Expired during the year 179,669 5.51 178,413 13.11

Forfeited during the year 151,398 5.98 428,772 5.95

Outstanding at December 31 994,469 5.47 1,365,076 5.47

Exercisable at December 31 766,051 5.54 938,036 5.37

The weighted-average share price of the options exercised was US$ 4.54. The intrinsic value of options exercised amounted to kUSD 76.

The employees of Genus Inc. held 1,949,939 stock options representing the right to receive 994,469 ADS of AIXTRON AG as of December 31, 2006. As part of the Genus, Inc. transaction, a trust for the employee stock options of Genus Inc. was set up, into which ADS of AIXTRON AG were deposited after the capital increase on March 14, 2005.

1 1 3 AIXTRON stock options as of December 31, 2006

Exercise price Outstanding Exercisable Average option

(EUR) life (in years)

3.10 681,330 340,665 6.5 3.83 1,559,900 0 9.5 6.17 893,330 223,333 7.5 7.48 684,005 0 10.5 18.70 406,824 406,824 7.5 26.93 424,600 0 9.5 67.39 410,576 102,644 8.5 5,060,565 1,073,466

Genus stock options at December 31, 2006

Range of exercise Average Outstanding Exercisable Average option

prices (USD) exercise life (in years)

price (USD) 2.10 to 2.53 2.52 106,662 106,662 0.8 3.45 to 4.84 3.63 298,565 162,140 7.5 5.00 to 6.90 5.14 233,262 220,477 1.7 7.20 to 9.41 8.01 346,290 269,451 6.9 11.53 to 12.73 11.99 9,690 7,321 6.9 994,469 766,051

Assumptions used to calculate fair values and share-based payment expenses

The fair value of services received in return for stock options granted is measured by reference to the fair value of the stock options granted. The fair value of the stock options is determined on the basis of a binomial lattice model. In accordance with IFRS 2 the measurement includes only options which were granted after November 7, 2002. In 2006, the personnel expenses from share-based payments were kEUR 1,450 (2005: kEUR 1,801; 2004: kEUR 1,041). As at December 31, 2006 an amount of kEUR 3,126 relating to stock options granted prior to that date has not yet been recognised as a personnel expense. This amount will be charged over the period to 2011. The expected allocation of the expense is as follows: 2007: kEUR 1,404, 2008: kEUR 937, 2009: kEUR 487 and after 2009: kEUR 298.

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AIXTRON share options granted

in 2006 in 2004 in 2003

Fair value on grant date 1.53 5 3.08 5 1.78 5

Price per share 2.71 1 4.84 1 2.79 1

Exercise price 3.83 1 6.17 1 3.10 1

Expected volatility 65.59% 73.54% 73.76%

Option life 10.5 years 10.5 years 10.5 years

Expected dividend payments 0.00 1 0.00 1 0.00 1

Risk-free interest rate 3.90% 4.38% 4.40%

Genus share options granted

in 2005 in 2004 before 2004

Average fair value on grant date 1.30 $ 1.65 $ 2.68 $

Average price per share 2.04 $ 2.51 $ 3.97 $

Average exercise price 2.04 $ 2.51 $ 3.97 $

Average expected volatility 91.76% 95.38% 104.20%

Average option life 10 years 10 years 9.53 years

Average expected dividend payments 0.00 $ 0.00 $ 0.00 $

Average risk-free interest rate 4.11% 4.27% 4.18%

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