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Press Release

May 26, 2005
DISCO to Issue Stock Options (Share Acquisition Rights)
(Issuance of Share Acquisition Rights pursuant to the provisions of Article 280-20 and 280-21 of the Commercial Code)

DISCO Corporation (hereafter the "Company") announces that its board approved on May 26, 2005, to propose an agenda asking for authorization to issue share acquisition rights for the purpose of granting stock options to directors and employees of the Company and its subsidiaries, pursuant to the provisions of Articles 280-2 and 280-21 of the Commercial Code of Japan. The proposal will be made at the Company's ordinary general meeting of shareholders to be held on June 24, 2005.

1. Reason for Issue of Share Acquisition Rights on Specially Favorable Terms to Persons Other than Shareholders:
The Company issues share acquisition rights without receipt of consideration, for the purpose of linking the interests of the directors and employees of the Company and its subsidiaries with the Company's business performance, so as to raise their motivation, and also to match the interests of the directors and employees of the Company and its subsidiaries with those of shareholders' to the utmost in order to improve the Company's business performance.
2.Terms of Issue of Share Acquisition Rights:
(1) Persons to whom share acquisition rights shall be allocated:
  Directors and employees of the Company and its subsidiaries
(2) Class and number of shares to be issued upon exercise of share acquisition rights:
  Shares of common stock of the Company not exceeding 120,000.
In case of any adjustment to the Exercise Price (defined in (5)), the number of shares to be issued upon exercise of each share acquisition right shall be adjusted according to the following formula, provided, however, this adjustment shall be applied only to the number of shares to be issued upon exercise of the share acquisition right which are not exercised at the time of split or consolidation, and any fraction less than (1) share resulting from this adjustment shall be rounded down.
 
Number of shares after adjustment   Exercise Price before adjustment x Number of shares before adjustment
=
  Exercise Price after adjustment
(3) Aggregate number of share acquisition rights:
  Not exceeding 1,200.
The number of shares to be issued upon exercise of each share acquisition right shall be 100; provided, however, in case the number is adjusted according to the formula in (2), the number shall be adjusted accordingly.
(4) Issue price of share acquisition rights:
  No consideration shall be paid.
(5) Amount to be paid in for exercise of share acquisition rights:
a. The amount to be paid in for each share acquisition right shall be the amount to be paid in per share (hereafter the "Exercise Price") multiplied by the number of shares to be issued upon exercise of each share acquisition right. The initial Exercise Price shall be the price which is equal to the product of 1.05 multiplied by the average of the daily closing prices of common stock of the Company in the regular transactions at the Tokyo Stock Exchange during the calendar month immediately prior to the month including the issue date of the share acquisition rights, except for the day on which transaction is not completed. Any fraction less than (1) yen shall be rounded down. In the event that the amount resulting from the calculation above is less than the closing price of common share of the Company at the Tokyo Stock Exchange as of the issue date, the closing price as of the issue date shall be the Exercise Price; provided, however, in case the transaction is not completed, the closing price of the day immediately prior to the day shall be the Exercise Price.
b. In case the Company splits or consolidates its shares after the issue date, the Exercise Price shall be adjusted according to the following formula and any fraction less than (1) yen resulting from this adjustment shall be rounded up.
 
Exercise Price after adjustment Exercise Price before adjustment 1
=
x
    Ratio of split or consolidation
c. In case the Company issues new shares after the issue date, except for exercise of the share acquisition right, or sells treasury stocks, at a price to be paid below the market price, or issues share acquisition right or security with share acquisition right by which common stock of the Company is issued at a price to be paid below the market price, the Exercise Price shall be adjusted according to the following formula and any fraction less than (1) yen shall be rounded up.
 
Number of previously issued shares Number of newly issued shares x Paid-in value per share
+
Exercise Price after adjustment
 
Exercise Price before adjustment
Market price
=
×
Number of previously issued shares + Number of newly issued shares
  In the formula above, "number of previously issued shares" shall be the total number of issued shares of the Company less the number of the treasury stock; provided, however, in case of sales of treasury stock, "number of newly issued shares" shall be "number of shares sold" and "paid-in value per share" shall be "sales price per share".
(6) Period during which the share acquisition rights may be exercised:
  The period shall be within 10 years after the issue date and decided at the meeting of board of directors of the Company. However, exercise of the right during the period may be limited by the agreement concerning allocation of share acquisition rights entered into between persons to whom share acquisition rights are allocated and the Company (hereafter "Agreement Concerning Allocation of Share Acquisition Rights").
(7) Conditions for exercise of share acquisition rights:
a. Persons to whom share acquisition rights are allocated need to be directors or employees of the Company or its subsidiaries at the time of exercise of the rights except for resignation due to expiration of term of office, mandatory retirement age or any other reasonable event.
b. No assignment, creation of a pledge or any other disposition of the share acquisition rights shall be essentially admitted.
c. In case person to whom share acquisition rights is allocated passes away, the heirs may exercise the rights; provided so do pursuant to the conditions prescribed in the Agreement Concerning Allocation of Share Acquisition Rights.
d. Other conditions of exercise of share acquisition rights shall be based on resolution of the Company's meeting of its board of directors concerning issue of share acquisition rights and so do pursuant to the conditions prescribed in the Agreement Concerning Allocation of Share Acquisition Rights.
(8) Events and conditions for cancellation of share acquisition right:
a. When contract of merger on extinction of the Company are approved, or agenda concerning approval of agreement for exchange and transfer of shares in which the Company becomes fully owned subsidiaries are approved at general meeting of shareholders, share acquisition rights may be cancelled without consideration.
b. In case the person to whom share acquisition rights are allocated does not fulfill the conditions of exercise of the rights or abandons the rights, his/her right may be canceled without consideration.
(9) Restriction on transfer of share acquisition rights:
  Transfer of share acquisition rights shall require an approval of the board of directors of the Company.

[N.B.]
The issuance of Share Acquisition Rights shall depend upon approval of the agenda concerning Issuance of share acquisition rights for the Company's shares for the purpose of granting stock options at the Company's 66th general meeting of shareholders to be held on June 24, 2005.

Contact:
Director, General Manager, Investor Relations Office
Tsutomu Nakayama
Phone: 81-3-4590-1099
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