Notice Regarding Issuance of Stock-Compensation-Type Stock Options (Stock Acquisition Rights)

Notice Regarding Issuance of Stock-Compensation-Type Stock Options (Stock
Acquisition Rights)

TOKYO, June 26, 2013 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc.
("IIJ") (Nasdaq:IIJI) (TSE1:3774) announced that IIJ's Board of Directors
today resolved that stock-compensation-type stock options (Stock Acquisition
Rights) be issued to Directors (excluding Part-time and Outside Directors) and
Executive Officers of IIJ, in accordance with the provisions of Articles 236
Paragraph 1, Article 238 Paragraph 1 and 2 and Article 240 Paragraph 1 of the
Company Law, as follows.


1. The reason for issuing the Stock Acquisition Rights as Stock Options

The purposes of issuing the Stock Acquisition Rights as Stock Options for
Directors (excluding Part-time and Outside Directors) and Executive Officers
of IIJ are to further promote their motivation and incentives to contribute to
the enhancement of the mid- to long-term continuous business performance and
corporate value.

2. Details of Issuance of Stock Acquisition Right

  (1)  Name of the stock acquisition rights

  Internet Initiative Japan Inc. Stock Acquisition Rights (3rd series)

  (2) Maximum number of stock acquisition rights: 135

  The maximum number as described above is the number of planned allotments.
  If the maximum number of the stock acquisition rights to be allotted is
  decreased due to no subscription for some of the rights, etc, then the
  maximum number of the stock acquisition rights to be issued shall be equal
  to the maximum number of the stock acquisition right to be allotted.

  (3) Class and number of shares to be issued upon exercise of stock
  acquisition rights

  The class of shares to be issued upon exercise of stock acquisition rights
  shall be common stock of IIJ. The number of shares to be issued upon
  exercise of each stock acquisition right (hereinafter referred as "Number of
  Shares Granted") shall be two hundred (200). However, in case the Company
  carries out a share split or share consolidation after the date of allotment
  of the stock acquisition rights (hereinafter referred to as the "Allotment
  Date") as defined in (13), the Number of Shares Granted shall be adjusted
  according to the following formula, with the resulting fractions of less
  than one share occurring upon such adjustment rounded down.

  Number of Shares   Number of Shares   Ratio of share split
  Granted after    = Granted before   × or share consolidation
  adjustment         adjustment

  In the case of a share split, the Number of Shares Granted after adjustment
  shall apply from the day after the record date of the said share split.
  Whereas, in the case of a share consolidation, the Number of Shares Granted
  after adjustment shall apply from the day the share consolidation becomes
  effective. Provided, however, that in cases where the Company conducts a
  share split conditional on approval at a General Meeting of Shareholders of
  the Company of a proposal to reduce surplus and increase capital stock and
  capital reserve, and the record date for the share split shall be the day
  prior to the day on which said shareholders' meeting closes, the Number of
  Shares Granted after adjustment shall retroactively apply from the day after
  the day the applicable shareholders' meeting closes and the day following
  the applicable record date.

  In case the Company carries out a merger, demerger or the like that makes it
  necessary to adjust the Number of Shares Granted, the Company may make
  appropriate adjustment to the Number of Shares Granted within a reasonable
  range.

  (4) Value of assets to be contributed upon exercise of stock acquisition
  rights

  The value of assets to be contributed upon exercise of stock acquisition
  rights shall be determined by multiplying the price to be paid per share
  upon exercise of each stock acquisition right (the "exercise price") by the
  Number of Shares Granted, and the exercise price shall be one (1) yen.

  (5) Exercise period of stock acquisition rights

  From July 12, 2013 to July 11, 2043

  (6) Matters concerning increase in capital stock and capital reserve by
  the issuance of shares upon exercise of stock acquisition rights

  1.Amount of increase in capital stock by issuing shares upon exercise of
      stock acquisition rights shall be half of the upper limit of capital
      increase as calculated pursuant to the provisions of Article 17,
      Paragraph 1 of the Ordinance for Corporate Accounting, with the
      resulting fractions of less than one (1) yen occurring upon such
      calculation shall be rounded up to the nearest yen.
  2.Amount of increase in capital reserve by issuing shares upon exercise of
      stock acquisition rights shall be the upper limit of capital increase as
      described in 1) above less the amount of increase in capital set out
      therein.

  (7)Restriction on acquisition of stock acquisition rights by transfer

  Any acquisition of stock acquisition rights by transfer shall be subject to
  the approval by resolution of the Board of Directors of the Company.

  (8)Conditions for acquisition of stock acquisition rights

  In case that a resolution for the approval of any of the proposals 1) or 2)
  below is adopted at the General Meeting of Shareholders of the Company (or
  at a meeting of the Board of Directors of the Company if resolution at a
  General Meeting of Shareholders is not required), the Company may acquire
  the stock acquisition rights as at the date specifically determined by the
  Board of Directors of the Company without contribution.

  1.Proposal for approval of a merger agreement under which the Company
      shall be merged
  2.Proposal for approval of a share exchange agreement or share transfer
      plan under which the Company shall be a wholly-owned subsidiary

  (9)Matters concerning the details of the issuance of stock acquisition
  rights undergoing Organizational Restructuring

  In the event the Company merges (limited to cases wherein the Company
  becomes a dissolving company), performs an absorption-type demerger or an
  incorporation-type demerger (only if the Company becomes the split company),
  or conducts a share exchange or a share transfer (only if the Company
  becomes a wholly-owned subsidiary) (hereinafter collectively referred to as
  "Organizational Restructuring"), stock acquisition rights of a corporation
  described in Article 236, Paragraph 1, Items 8.1 through 8.5 of the
  Corporation Law of Japan (hereinafter "Restructured Company") shall be
  granted to each Stock Acquisition Right Holder remaining unexercised
  (hereinafter "Remaining Stock Acquisition Rights") immediately before the
  date when Organizational Restructuring takes effect (refers to the date when
  absorption-type merger takes effect, the date on which the company
  incorporated through the incorporation-type merger, the date when
  absorption-type demerger takes effect, the date on which the company
  incorporated through the incorporation-type demerger, the date when share
  exchange takes effect, or the date when the wholly-owning parent company is
  established by share transfer). However, the foregoing shall apply only to
  cases in which the delivery of stock acquisition rights of the Restructured
  Company according to the following conditions is stipulated in the
  absorption-type merger agreement, the incorporation-type merger agreement,
  the absorption-type demerger agreement, the incorporation-type demerger
  plan, the share exchange agreement or the share transfer plan.

  1.Number of stock acquisition rights of the Restructured Company to be
      delivered
      The Company shall deliver stock acquisition rights, the number of which
      shall equal the number of stock acquisition rights held by the holder of
      the Remaining Stock Acquisition Rights.
  2.Class of shares of the Restructured Company to be issued upon exercise
      of stock acquisition rights
      Common stock of the Restructured Company.
  3.Number of shares of the Restructured Company to be issued upon exercise
      of stock acquisition rights
      To be decided according to (3) above after taking into consideration the
      conditions etc. of the Organizational Restructuring.
  4.Value of the assets to be contributed upon exercise of stock acquisition
      rights
      The value of the assets to be contributed upon exercise of each stock
      acquisition rights shall be the amount obtained by multiplying the
      amount to be paid after restructuring as stipulated below, and the
      number of shares of the Reorganized Company to be issued upon exercise
      of the stock acquisition rights as determined in accordance with 3)
      above. The amount to be paid after restructuring shall be one (1) yen
      per share of the Restructured Company that can be granted due to the
      exercise of each stock acquisition right that is to be granted.
  5.Exercise period of stock acquisition rights
      Starting from the later of either the commencement date of the exercise
      period of stock acquisition rights as stipulated in (5) above, or the
      date on which the Organizational Restructuring becomes effective and
      ending on the expiration date for the exercise of stock acquisition
      rights as stipulated in (5) above.
  6.Matters concerning increase in capital stock and capital reserve to be
      increased by the issuance of shares upon exercise of stock acquisition
      rights
      To be determined in accordance with (6) above.
  7.Restriction on acquisition of stock acquisition rights by transfer
      Any acquisition of stock acquisition rights by transfer shall be subject
      to the approval by resolution of the Board of Directors of the
      Restructured Company.
  8.Conditions for acquisition of stock acquisition rights
      To be determined in accordance with (8) above.
  9.Other terms and conditions of exercising stock acquisition rights
      To be determined in accordance with (11) below.

  (10)Rules pertaining to fractions of less than one share arising from the
  exercise of stock acquisition rights

  Fractions of less than one share in the number of shares to be granted to
  Stock Acquisition Right Holders who exercised stock acquisition rights shall
  be rounded down.

  (11)Other terms and conditions of exercising stock acquisition rights

  1.Partial execution of each stock acquisition rights is not allowed.
  2.A person granted the stock acquisition rights may exercise its rights
      only within ten (10) days from the day following the day the person
      loses his or her position as a Director or Executive Officer of the
      Company, except for losing his or her position by passing away. However,
      this does not apply if his or her legal heir who inherit the stock
      acquisition rights as described in the following paragraph 3) exercise
      the rights.
  3.If a person granted the stock acquisition rights passes away, only one
      of his or her legal heir is permitted to inherit the granted stock
      acquisition rights (hereinafter referred as "Grantee"), The Grantee can
      exercise only within six (6) months after inheriting the new shares
      acquisition rights. If the Grantee passes away, the stock acquisition
      rights cannot be passed on to the legal heir of the Grantee.
  4.The Share Purchase Warrants shall not be transferred to third-party,
      offered for pledge or disposed of in any other way.
  5.Matters concerning other conditions for the exercise of stock
      acquisition rights, other than the items prescribed above, shall be
      determined at the meeting of the Board of Directors when the terms and
      conditions of offering of stock acquisition rights are determined.

  (12)Method for calculating the amount to be paid upon allocation of stock
  acquisition rights

  The amount to be paid upon allocation of each stock acquisition rights shall
  be the option price per share calculated based on the following figures from
  2) to 7) according to the formula of the Black-Scholes model, multiplied by
  the Number of Shares Granted, with fractions of less than one yen being
  rounded up to the nearest yen.

  To access the Black-Scholes model, please click here:
  https://media.globenewswire.com/cache/9792/file/20539.pdf

  1.Option price per share (C)
  2.Share price (S): the closing price (base price for the next trading day
      when there is no closing price) of the common stock of the Company in
      regular trading on the Tokyo Stock Exchange on July 11, 2013
  3.Exercise price (X): one (1) yen
  4.Expected remaining period (T): 15 years
  5.Volatility (σ): volatility of share price computed based on the closing
      price of the common stock of the Company in regular trading for the last
      trading date of each week between December 2, 2005 to July 11, 2013.
  6.Risk-free interest rate (r): The interest rate on super-long-term
      Japanese government bonds with remaining years corresponding to the
      expected remaining period.
  7.Dividend yield (q): Dividend per share (amount of dividend per share
      paid for the fiscal year ended March, 2013) divided by the share price
      as set forth in 2) above. * IIJ conducted a 1:200 stock split on common
      stock with an effective date of October 1, 2012. Dividend yield above is
      calculated based on the paid dividends per share for the fiscal year
      retroactively adjusted to reflect the stock split.
  8.Cumulative distribution function of the standard normal distribution
      (N(・))

  The option price to be calculated as described above is a fair value of the
  stock acquisition rights. Accordingly, the issuance of the stock acquisition
  rights is not an issuance of shares with favorable terms. The monetary
  remuneration claims of the person who will be allotted the stock acquisition
  rights against the Company and their obligations to pay for the allotment of
  the stock acquisition rights will be offset.

  (13) Date of allotment of the stock acquisition rights

  July 11, 2013

  (14) Date of payment of consideration in exchange of the stock acquisition
  rights

  July 11, 2013

  (15) Persons to be allotted stock acquisition rights, number of persons,
  and number of stock acquisition rights to be allotted
  

  Directors (excluding Part-time and Outside   7 Directors           95 rights
  Directors) of IIJ
  Executive Officers of IIJ                    10 Executive Officers 40 rights

  (16) Details in case of issuance of stock acquisition rights certificates

  There will be no issuance of stock acquisition rights certificates.

About IIJ

Founded in 1992, Internet Initiative Japan Inc. is one of Japan's leading
Internet-access and comprehensive network solutions providers. IIJ and its
group companies provide total network solutions that mainly cater to high-end
corporate customers. The company's services include high-quality systems
integration and security services, Internet access, and cloud computing.
Moreover, the company has built one of the largest Internet backbone networks
in Japan that is connected to the United States and the United Kingdom. IIJ
listed on NASDAQ in 1999 and on the First Section of the Tokyo Stock Exchange
in 2006. For more information about IIJ, visit the IIJ Web site at
http://www.iij.ad.jp/en/.

The statements within this release contain forward-looking statements about
our future plans that involve risk and uncertainty. These statements may
differ materially from actual future events or results. Readers are referred
to the documents furnished by Internet Initiative Japan Inc. with the SEC,
specifically the most recent reports on Forms 20-F and 6-K, which identify
important risk factors that could cause actual results to differ from those
contained in the forward-looking statements.

CONTACT: For inquiries, contact:
         IIJ Investor Relations
         Tel: +81-3-5259-6500
         E-mail: ir@iij.ad.jp
         URL: http://www.iij.ad.jp/en/ir

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