AISIN - News Releases - Financial Report

Notice Concerning Stock Options (Stock Acquisition Rights)
(May 25, 2007)

The Board of Directors of Aisin Seiki Co., Ltd. (hereinafter referred to as the “Company”) resolved at a meeting on May 25, 2007 to submit a proposal at the 84th Ordinary General Meeting of Shareholders scheduled to be held on June 21, 2007 seeking approval of the issuance of stock acquisition rights without charge as stock options to the Company’s Directors, Managing Officers and the Directors of the Company’s subsidiaries, as well as to entrust the Company’s Board of Directors with the authority to determine the terms and conditions for the issue of the stock acquisition rights pursuant to Articles 236, 238 and 239 of the Corporate Law. Additionally, a proposal will be made seeking approval for the calculation method used in determining the stock acquisition rights to be issued to the Company’s Directors as compensation in place of cash compensation pursuant to the stipulations in Article 361 of the Corporate Law. Approval of the proposal concerning the matter of election of 15 directors at the Ordinary General Meeting of Shareholders will determine the 15 directors to be allotted stock acquisition rights, and upon consideration of prior granting of stock acquisition rights as stock options, as well as various other matters, 1,500 stock acquisition rights in total will be allotted to the Company’s Directors.

Reasons for Issuance of Stock Acquisition Rights without Charge

The Company shall issue stock acquisition rights without charge to the Directors of the Company, the Managing Officers of the Company and the Directors of the Company’s subsidiaries in order to provide incentive and raise morale, thereby contributing to improving performance and increasing the consolidated corporate value of the Company and its subsidiaries (Aisin Seiki Co., Ltd., Aisin Takaoka Co., Ltd., Aisin Chemical Co., Ltd., Aisin AW Co., Ltd., Aisin Living Planner Co., Ltd., Aisin Keikinzoku Co., Ltd., Aisin Development Co., Ltd., Aisin Kiko Co., Ltd., Aisin AI Co., Ltd., Aisin Sin’ei Co., Ltd., Aisin AW Industries Co., Ltd. and Hosei Brake Industry Co., Ltd.).

Summary of the Issuance of Stock Acquisition Rights

(1) Persons to whom stock acquisition rights will be granted
     Stock acquisition rights shall be granted to the Company’s Directors and Managing Officers and the Directors of the Company’s subsidiaries.

(2) Type and number of shares under stock acquisition rights
     The maximum number of shares shall be 800,000 ordinary shares of the Company.
     However, in the event that adjustments are made to the number of shares to be allotted by exercise of stock acquisition rights in accordance with Paragraph(3) below (including cases where the Company’s shares are transferred in lieu of issue, hereinafter the same), the maximum number shall be adjusted to the number of shares obtained by multiplying the number of shares after adjustment by the maximum number of stock acquisition rights.

(3) Total number of offered stock acquisition rights
     The maximum limit shall be 8,000.
     The number of shares per each stock acquisition right (hereinafter referred to as “number of allotted shares”) shall be 100 shares. However, in the event that the Company carries out a stock split (inclusive of the gratis allotment of the Company’s ordinary shares, the same hereinafter in relation to stock splits) after the date upon which the number of allotted shares to be acquired are granted upon exercise of stock acquisition rights, or reverse stock split, the number of allocated shares shall be adjusted by using the formula indicated below. However, this adjustment shall apply exclusively to the number of unexercised shares under stock acquisition rights at the point of time in question, and fractional amounts of less than one share arising from this adjustment shall be discarded.

[Number of shares after adjustment]

[Number of shares before adjustment]

[(Reverse) Stock split ratio]

(4) Issue price of stock acquisition rights
     The stock acquisition rights, whose terms and conditions for issuance can be determined by a resolution at the General Meeting of Shareholders, will be issued for no consideration.

(5) Amount payable upon exercise of the stock acquisition rights
     The amount payable upon exercise of each stock acquisition right shall be obtained by multiplying the price paid per share granted (the “exercise price”) by the number of allotted shares, as prescribed below:
     The exercise price shall be 1.05 times the average closing price for the Company’s ordinary shares on the Tokyo Stock Exchange on each day (excluding days on which no trading is conducted) of the month immediately preceding the date on which the stock acquisition rights are issued, with any fractional yen amounts of less than one yen to be rounded up to the nearest yen. However if this amount is less than the closing price of the Company’s common stock on the date that stock acquisition rights are issued, the closing price for that day will be the exercise price.
     Adjustments to the exercise price shall be made as follows:

In the event, the Company implements a stock split or reverse split after the date on which stock acquisition rights are issued, the exercise price will be adjusted according to the following formula, with fractional amounts of less than one yen resulting from such adjustments to be rounded up to the nearest yen.

[Exercise price
after adjustment]
= [Exercise price before
adjustment] X 1

[(Reverse) Stock split ratio]

In the event that the Company issues common stock or divests its treasury stock (excluding any exercise of stock acquisition rights) at a price below the market price after the date on which stock acquisition rights are issued, the exercise price shall be adjusted according to the following formula, with fractional amounts of less than one yen resulting from such adjustments to be rounded up to the nearest yen.

[Exercise price after adjustment]	=	[Exercise price before adjustment]	X	(Number of outstanding shares)	+	(Number of new shares to be issued)	X	(Amount to be paid per share)

						Market price

				(Number of outstanding shares) + (Number of new shares to be issued)

In the above price adjustment formula, the “number of outstanding shares” shall exclude treasury stock held by the Company. In the event that the Company decides to divest its treasury stock, the “number of new shares to be issued” shall be replaced by the “number of treasury stock to be divested.”

(6) Period in which stock acquisition rights may be exercised
From August 1, 2009 to July 31, 2013

(7) Conditions to the exercise of stock acquisition rights

Partial exercise of stock acquisition rights shall be permitted only to the extent of obtaining integral multiple units of the number of shares under the objectives of the stock acquisition rights.
Other conditions for the exercise of stock acquisition rights shall be provided for in a Stock Acquisition Rights Allotment Agreement to be entered into between the Company and each recipient of the stock acquisition rights, subject to approval of the issuance of stock acquisition rights at the Ordinary General Meeting of Shareholders and a resolution at a meeting of the Board of Directors held thereafter.

(8) Events and conditions for cancellation of stock acquisition rights
In cases where a proposal is approved at the Ordinary General Meeting of Shareholders for a merger agreement, under which the Company shall be dissolved; or a share exchange agreement, under which the Company will become a wholly owned subsidiary; or an share transfer agreement, under which the Company will become a wholly owned subsidiary, the Company may acquire, free of charge, stock acquisition rights, at a date separately stipulated by the Board of Directors.

(9) Restrictions on the transfer of stock acquisition rights
Approval by the Board of Directors of the Company shall be required for the transfer of stock acquisition rights.

(10) Matters concerning the increase of capital and capital reserves accompanying the issue of shares as a result of the exercise of stock acquisition rights

In the event of the issue of shares as a result of the exercise of stock acquisition rights, the amount of capital increase shall be one-half of the maximum limit for increases in capital, etc., stipulated in Article 40, Paragraph 1 of the Corporate Accounting Rules, with fractional amounts of less than one yen resulting from such calculation to be rounded up to the nearest yen.
In the event of the issue of shares as a result of the exercise of stock acquisition rights, the amount of capital reserves to be added shall be determined by subtracting the increase in capital, as stipulated in 1) above, from the maximum limit for increases in capital, etc., as per 1) above.

(11) Handling of fractional shares
In the event that there are fractional amounts of less than one share in the number of allotted shares to those who exercise stock acquisition rights, such amounts shall be discarded.

(12) Method for calculating fair value of stock acquisition rights
The fair value of stock acquisition rights shall be calculated using the Black-Scholes model based on the conditions prevailing at the date of allotment of said stock acquisition rights.
*(Reference) The basic computed amount based on the Black-Scholes model was 754 yen per share as at the end of March 2007.

(Note) Subject to approval of the resolution concerning the above issuance of stock acquisition rights at the Company’s 84th Ordinary General Meeting of Shareholders to be held on June 21, 2007, the details of issuance and allotment of stock acquisition rights shall be determined by a resolution of the Board of Directors of the Company to be held after such meeting of shareholders.