[Translation]
February 7, 2008
Company Name: Coca-Cola West Holdings Co., Ltd.
Representative:
Norio Sueyoshi, Representative
Director & CEO(Code Number: 2579 Tokyo Stock Exchange First Section;
Osaka Securities Exchange First Section; Fukuoka Stock
Exchange)
Contact: Yasunori Koga
General Manager of General Affairs Dept.
Telephone: 092-283-5712

Introduction of Countermeasures to Large-Scale Acquisitions of
COCA-COLA WEST HOLDINGS Shares (Takeover Defense Measures)
Coca-Cola West Holdings Co., Ltd. (the “Company”) announces that at a meetingof its board of directors held on February 7, 2008, the Company’s board of directors
resolved to establish a basic policy regarding the persons who control decisions on the
Company group’s financial and business policies (“Basic Policy”) in order to ensure andenhance its corporate value and, in turn, the common interests of its shareholders, and to
introduce a plan for countermeasures to take against large-scale acquisitions of theshares of the Company (takeover defense measures) (the “Plan”) as a measure toprevent decisions on the Company group’s financial and business policies from being
controlled by persons viewed as inappropriate under the Basic Policy and the corporate
value of the Company group and, in turn, the common interests of its shareholders frombeing harmed. The introduction of the Plan is subject to shareholder approval at the50th Ordinary General Meeting of Shareholders of the Company scheduled for March
25, 2008 (the “Ordinary General Meeting of Shareholders”). Four of the Company’s
statutory auditors including three outside statutory auditors were in attendance at themeeting of the Company’s board of directors to resolve the details of the Plan, and theintroduction of the Plan was unanimously approved.
The Company has not received any notice or proposal of a large-scale acquisitionof the shares in the Company from specific third parties to date. Major shareholders of
the Company as of December 31, 2007 are shown in Exhibit entitled “Major
Shareholders of the Company”.

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I.

Details of Basic Policy

The Company believes that the persons who control decisions on the Company
group’s financial and business policies need to be persons who understand the source of
the Company group’s corporate value and who will make it possible to continually andpersistently ensure and enhance the Company group’s corporate value and, in turn, thecommon interests of its shareholders. The Company believes that ultimately its
shareholders as a whole must ultimately make a decision on any proposed acquisition
that would involve a change of corporate control of the Company group. Also, theCompany would not reject a large-scale acquisition of the shares in the Company if itwould contribute to the corporate value of the Company group and, in turn, the common
interests of its shareholders.
However, there are some forms of large-scale acquisition of the shares that benefit
neither the corporate value of the target company nor the common interests of its
shareholders: those with a purpose that would obviously harm the corporate value of thetarget company and, in turn, the common interests of its shareholders; those with thepotential to substantially coerce shareholders into selling their shares; those that do notprovide sufficient time or information for the target company’s board of directors andshareholders to consider the terms of the large-scale acquisition of the shares, or for thetarget company’s board of directors to make an alternative proposal; and those that
require the target company to discuss or negotiate with the acquirer in order to procure
more favorable terms for shareholders than those presented by the acquirer.
The Company believes that the persons who control decisions on the Company
group’s financial and business policies need to be persons who (A) fully understand (i)providing freshness and refreshment to people around the world and enroot the“Coca-Cola” brand, which is now a part of our life style, in local communities; (ii)passionately making efforts to ensure quality and safety in order to provide “quality andsafe products for anyone, anytime and anywhere”; (iii) appreciating employees who
have strong sense of responsibility to thoroughly pursuit customer satisfaction, andtreasuring each employee’s challenge and life; and (iv) contributing to local
communities and proactively engaging with environmental issues, (B) preserve
relationships of mutual trust with the customers, business partners, shareholders andemployees and perform up to their expectation, and (C) make it possible to continuallyand persistently ensure and enhance the Company group’s corporate value and, in turn,2

the common interests of its shareholders from the mid- to long-term perspective.
Therefore, the Company believes that a person who would make a large-scaleacquisition of the shares in the Company in a manner that does not contribute to thecorporate value of the Company group and, in turn, the common interests of its
shareholders would be inappropriate to become a person who would control decisions
on the Company group’s financial and business policies. The Company believes that itis necessary to ensure the corporate value of the Company group and, in turn, thecommon interests of its shareholders by taking the necessary and reasonablecountermeasures against a large-scale acquisition of the shares in the Company by sucha person.
II.

Special measures to realize the Basic Policy

1.
Approach to ensure and enhance the Company group’s corporate value and, inturn, the common interests of shareholders
1.1

Corporate mission and business of the Company group

On July 1, 2006, the Company was established as a joint holding company,
Coca-Cola West Holdings Co., Ltd., by integrating the management of Coca-Cola WestJapan Co., Ltd. and Kinki Coca-Cola Bottling Co., Ltd. As a result, Coca-Cola WestJapan Company, Limited, Kinki Coca-Cola Bottling Company, Limited and existing
subsidiary Mikasa Coca-Cola Bottling Company, Limited became Coca-Cola WestGroup (the Company and the Company’s affiliates including three aforementioned
companies, collectively, the “Company group”), combining each company’s businessknow-how, so the Company group could offer even better services to customers andbusiness partners and establish a competitive edge in the market.
The company’s new management team coined a new corporate mission to “Create
future of beverage business”, and the work together as a group to engage in various
activities to enhance the value for customer experiences, business partners andshareholders, as well as local communities, and contribute to sustainable developments
through the beverage business.
The Company group is supported by the unique Coca-Cola system in Japan.
Japan’s Coca-Cola system consists of Coca-Cola (Japan) Co., Ltd. (100% owned by the3Coca-Cola Company), twelve bottling companies (bottlers) that manufacture and sell
Coca-Cola Products in different regions within Japan and other affiliates. The
Coca-Cola business is growing through measures such as efficient productivity,
complete consumer-orientation, prompt action in the market, improved customer
services and strict quality control.
Among those companies, the Company group is doing business as the largest
bottler in Japan, with a business region of huge markets centering on North Kyushu,
Chugoku and Kinki regions. The Company breaks free of the framework of aconventional bottler as a strategic partner of the Coca-Cola Company and develops
various approaches, such as product development and test marketing, in cooperation
with Coca-Cola (Japan) Company, Limited, taking a lead role in Japan's Coca-ColaBusiness revolution.
1.2

Source of corporate value of the Company group

The source of corporate value of the Company group lies in (i) product brands
such as Coca-Cola, (ii) a quality and safety conscious system, (iii) employees with aconsumer focus and strong sense of responsibility to contribute to local communities,and (iv) a corporate culture embedded in local communities.
(a)

Product brands such as Coca-Cola

The Coca-Cola brand that provides freshness and refreshment to people aroundthe world has been developed, and become a part of our life style, as a global brandembedded in each local community. The Company has executed a manufacturing
licensing agreement on manufacture of Coca-Cola, etc. and use of trade mark with the
Coca-Cola Company and Coca-Cola (Japan) Co., Ltd, as well as a distribution licensing
agreement on sales of Coca-Cola etc., mainly in the North Kyushu region, Chugoku
region and Kinki region, which enable the Company to continually and dominantly
produce and sell Coca-Cola branded products in these regions.
The Company group engages in production and sales of beverages such as soda,
coffee, blended tea, fruit juice drinks, mineral water, sports drinks and energy drinks.
Among those, the Company considers Coca-Cola, Georgia, Aquarius and Sokenbicha ascore brands, and seeks to increase sales volume and market share by conducting
promotional activities and efficient sales of new lines in these brands.

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(b)

Quality and safety conscious system

Beverages are the product of the Company group. If the Company is not an
organization that is conscious of the quality and safety of beverages, in the unlikely
event of an accident, the brand image of the Company group would be materiallyharmed regardless of it being caused by the Company group.
The Company group obtained ISO9001 certification, the international quality
guarantee at an early stage and has engaged in production under strict quality
management. In addition, each employee of the Company acts with responsibility tocomply as a matter of course with applicable laws at each stage, such as at factories,
warehouses, branch offices, retail premises, and vending machines, setting out a strict
quality standard, and delivering only high quality products to customers. Moreover,
the Company group has a management system that incorporates customer feedback andstrives for quality improvement.
In this way, the Company group has a system to deliver “quality and safe products
for anyone, anytime and anywhere”.
(c)

Employees with a consumer focus and strong sense of responsibility to contributeto local communities

The Company group has a sales system that is dependant on the method ofpurchase by customers and the method of sales by business partners consisting of fourchannels, namely (i) vending (providing products to consumers through vending
machines.); (ii) chain stores (direct sales to supermarkets, discount stores, or home
centers); (iii) retail (direct sales to liquor stores, food retailers and the commuter
market); and (iv) food services (sales of syrup to fast food chains, cinemas, sports
facilities, and casual dining restaurants). The Company group believes that it is notpossible for the Company group to continually provide products and services thatsatisfy its customers and business partners, and to provide local communities withrefreshing relaxation without human resources, that is, employees with a strong sense of
responsibility to continually provide “fine flavor,” “convenience,” “enjoyment” and“safety” while thoroughly pursuing customer and business partner satisfaction. The
Company group also set out in the base of its philosophy to respect employees job
satisfaction and lifestyle they each deserve.

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(d)

Corporate culture embedded in local communities

In its commitment to being a good corporate citizen, the Company group always
acts from a social standpoint, and is involved in a range of activities that contribute to
local communities and the environment. In order to strengthen the bond between
society and the environment, and to grow with local people, the Company group has
been supporting the sound upbringing of youth and promoting closer communication
with local communities, featuring social welfare services” sports activities, cultural andeducational activities, and regional events. As a company dedicated to creating thefuture of the beverage business, the Company group recognizes the preservation of the
Earth’s environment as an issue of the greatest importance and endeavors to contributeto the realization of a sustainable society.
1.3 Measures to ensure and enhance the corporate value and the common interests ofshareholders
The maturing soft drink market is not expected to experience significant growth.
Thus, the Company group expects its operating environment to become increasingly
tough as soft drink producers increase the pace of the restructuring on which theirsurvival depends.
With these circumstances in mind, the Company group has formulated the
medium-term management plan, “W’ing” (for the FY2007 through FY2009 period),
under which the Company group has transferred all the value standards to the consumer
focused “Consumer View” and by continually providing values exceeding those
provided by competitors, aims to grow and progress over the next ten, twenty and thirty
years.
The Company group sets the group vision to be achieved under this medium-term
management plan within three years, aiming to (i) thoroughly transfer to the Consumer
View under the strong confidential relationship between employees and the company,(ii) realize significant growth faster than the competitors and establish a solid revenue
base, and (iii) become the world’s leading bottler that leads the innovation of the
Coca-Cola system in deed as well as in name.
The group strategies to realize the medium-term management plan W’ing are as

6

follows.
(a)Evolution to a new bottler by strengthening strategic partnerships with the
Coca-Cola Company and Coca-Cola (Japan) Co., Ltd.

The Company group will establish a consistent process from marketing strategy
framework to product distribution and operations based on the Consumer View byformulating a new strategic partnership with the Coca-Cola Company and Coca-Cola(Japan) Co., Ltd., and make efforts to develop new products and sales methods in a newmarket for the purpose of obtaining new growth opportunities in the future.
(b)

Expansion of sales and profits through Consumer View activities that surpass
competitors

Firstly, the Company group will establish a structure to incorporate customer
feedback into our management cycle in order to conduct thorough business activities
based on the Consumer View, which is the foundation of the business.
Then, the Company group will endeavor to reformulate the vending business andimprove quality of customer management, aiming for profitable new growth byproviding the best products and services to consumers.
(c)Functional strengthening, increase in efficiency which harnesses management
integration

Firstly, the Company will improve and enrich decision-making, reporting andsupervisory operations in order to speed up management and maintain a solidmanagement cycle.
Then, the Company group will endeavor to integrate and improve themanagement system, and strengthen and increase efficiency of the business system toachieve both a quick and flexible response to the changing market and absolute low
costs.
(d)Strengthening the capabilities of talented associates and organizations
From the view point that associates are the foundation of a company, the7Company group will improve the personnel system to draw out employees motivationand promote development of human resources.
The Company group will, under this medium-term management plan, further
strengthen its strategic partnership with the Coca-Cola Company and Coca-Cola (Japan)
Co., Ltd., realize significant growth faster than competitors and establish a solid
revenue base, endeavor to integrate and improve the management system to become theworld’s leading bottler and pursue expansion and efficiency, striving for a continuous
increase to the corporate value of the Company group.
2.
Basic plan to enhance the corporate value and common interests of theshareholders: maintenance of corporate governance
The Company is working to strengthen previous corporate governance through asignificant plan that is essential to enhance the corporate value of the Company group
and, in turn, the common interests of the shareholders. The basic principle regarding
corporate governance of the Company is to strive to enhance the effectiveness andtransparency of management and increase the corporate value.
Specifically, the board of directors was restructured and an executive system
introduced in March 1999, and in addition to improving the separation of decision
making from business management and execution, a measure limiting the directors’
term of office to one year was introduced to establish a flexible management system thatcan swiftly respond to the changing business environment and to clarify directors’
management responsibilities.
A characteristic of the Company is the management advisory committee
established in July 2006 to obtain suitable advice from knowledgeable and experienced
people for the purpose of enhancing the efficiency and transparency of management andto increase the corporate value. The committee advises on matters related to director
and auditor candidates, remuneration for officers and key strategic matters for groupmanagement as a whole. Further, the Company currently has eight directors, of whom
two are outside directors, and four statutory auditors, of whom three are outside
statutory auditors. Through this arrangement, the board of directors is an establishedsystem that can sufficiently observe the performance of duties by the directors while,from time to time, obtaining appropriate advice from the third-party perspective ofoutside directors, who have external knowledge and experience. In addition to being a8system where the directors and statutory auditors can participate in material meetings,
such as management meetings that are comprised of executive officers, and sufficiently
observe the performance of duties by executive officers, this system allows for suitableadvice to be obtained from legal counsel and accounting auditors if any doubt arises inthe execution of business.
The Company will continue to promote and execute the above policy, aiming tostrengthen corporate governance, and further ensure and enhance corporate value and,in turn, the common interests of its shareholders.
III. Measures to prevent decisions on the Company group’s financial andbusiness policies from being controlled by persons viewed as inappropriate
under the Basic Policy
1.

Purpose of introducing the Plan

The Plan is introduced for the purpose of ensuring and enhancing the corporate
value of the Company group and the common interests of its shareholders, incompliance with the Basic Policy described in I. ‘Details of Basic Policy’ above.
The Company’s board of directors has decided that, when a large-scaleacquisition of the shares is launched against the shares of the Company, it is necessary
to introduce a framework that ensures the necessary time and information is madeavailable for the shareholders to decide whether or not to accept such proposal or for theCompany’s board of directors to present alternative proposals to the shareholders, andthat enables the board of directors to discuss or negotiate with the acquirer for the
benefit of the shareholders, and thus deters acquisitions that are detrimental to thecorporate value of the Company group and, in turn, the common interests of its
shareholders.
Therefore, the Company’s board of directors resolved to introduce the Plan,
subject to the approval of the shareholders at the Ordinary General Meeting of
Shareholders, as part of the measures to prevent decisions on the Company group’s
financial and business policies from being controlled by persons viewed as
inappropriate under the Basic Policy.
2.

Plan Details

9

2.1

Outline of the Plan(a)

Procedures for the Plan

The Plan sets out procedures that enable the Company, in the case there is alarge-scale acquisition of the shares in the Company or any similar action or proposal
for such action (excluding those deemed amicable by the Company’s board of directors,“Acquisition”), to request in advance that the party effecting the Acquisition(“Acquirer”) provides information relating to the Acquisition, and to secure time tocollect information and consider the Acquisition, and then present information such as
management plans and any alternative proposals of the Company’s board of directors to
the shareholders and conduct discussions or negotiations with the Acquirer (for details
see below at III.2.2, ‘Procedures for the Plan’). The Acquirer must comply with theprocedures for the Plan, and may not conduct the Acquisition after the procedures for
the Plan have commenced until (i) the Committee for the Assessment of Corporate
Value makes a recommendation for implementation or non-implementation of the gratis
allotment of Stock Acquisition Rights, or (ii) a resolution is made for implementation or
non-implementation of a gratis allotment of Stock Acquisition Rights at the general
meeting of shareholders held in accordance with the recommendation of the Committee
for the Assessment of Corporate Value.

(b)

Use of a gratis allotment of Stock Acquisition Rights

If an Acquirer effects an Acquisition without following the procedures set out in
the Plan or the Company group’s corporate value or the common interests of its
shareholders are otherwise deemed to be likely to be harmed (for details of theserequirements, see below at III.2.3, ‘Requirements for the gratis allotment of Stock
Acquisition Rights’), the Company will allot stock acquisition rights with (i) an exercise
condition that does not allow the Acquirer to exercise them, and (ii) an acquisition
provision to the effect that the Company may acquire the stock acquisition rights frompersons other than the Acquirer in exchange for shares in the Company (the details ofsuch stock acquisition rights are set out below at III.2.4, ‘Outline of the gratis allotmentof Stock Acquisition Rights’; “Stock Acquisition Rights”) by means of a gratis
allotment of stock acquisition rights (shinkabu yoyakuken mushou wariate) (prescribedby Article 277 onwards of the Corporation Law of Japan) to all shareholders at that10

time.
(c)

Use of the Committee for the Assessment of Corporate Value in order to eliminate
arbitrary decisions of the directors

In order to eliminate arbitrary decisions by the directors, decisions relating tomatters such as implementation or non-implementation of the gratis allotment of Stock
Acquisition Rights or the acquisition of the Stock Acquisition Rights will be madethrough the judgment of a committee for the assessment of corporate value(“Committee for the Assessment of Corporate Value”). The Committee for theAssessment of Corporate Value will be composed only of members who are highly
independent from the management of the Company and have expertise knowledge on
corporate management. It will make its decisions in accordance with the Rules of theCommittee for the Assessment of Corporate Value (see Attachment 1 for an outline) andtransparency will be ensured by timely disclosure to the Company’s shareholders andinvestors.
The Committee for the Assessment of Corporate Value is intended to initially becomposed of four outside, experts highly independent. The names and careersummary of the intended initial members are described in Attachment 2. (Please see
Attachment 1 for the standards for appointing members, requirements for resolution,and resolution matters.)(d)Exercise of Stock Acquisition Rights and the Company’s acquisition of Stock
Acquisition Rights

If a gratis allotment of Stock Acquisition Rights were to take place in accordancewith the Plan and either the shareholders other than the Acquirer exercise the Stock
Acquisition Rights or the shareholders other than the Acquirer receive shares in the
Company in exchange for the Company acquiring the Stock Acquisition Rights, then it
would be possible for the ratio of voting rights in the Company held by the Acquirer tobe diluted by up to 50%.
2.2

Procedures for the Plan(a)Targeted acquisitions

11

The Plan will apply in cases where there is an Acquisition that falls under (i) or(ii) below. The Acquirer shall follow the procedures set out in the Plan.

(b)

(i)

An acquisition that would result in the holding ratio of share certificates, etc.
(kabuken tou hoyuu wariai) 1 of a holder (hoyuusha) 2 amounting to 20% ormore of the share certificates, etc. (kabuken tou) 3 issued by the Company; or(ii)

A tender offer (koukai kaitsuke) 4 that would result in the owning ratio of sharecertificates, etc. (kabuken tou shoyuu wariai) 5 of share certificates, etc.
(kabuken tou) 6 relating to the tender offer and the owning ratio of sharecertificates, etc. of a person having a special relationship (tokubetsu
kankei-sha) 7 totaling at least 20% of the share certificates, etc. issued by theCompany.

Request to the Acquirer for the provision of information

Unless the Company’s board of directors deems it an amicable Acquisition, theCompany will require any Acquirer conducting an Acquisition described above at
III.2.2(a) to submit to the Company’s board of directors in a form prescribed by theCompany before effecting the Acquisition, a document which includes information
described in item (i) through (viii) below (“Essential Information”) and a written
undertaking that the Acquirer will, upon the Acquisition, comply with the procedures set
out in the Plan (“Acquisition Statement”).

1

Defined in Article 27-23(4) of the Financial Instruments and Exchange Law of Japan. Thisdefinition is applied throughout this document.
2
Including persons described as a holder under Article 27-23(3) of the Financial Instruments andExchange Law of Japan (including persons who are deemed to fall under the above by theCompany’s board of directors). The same is applied throughout this document.
3
Defined in Article 27-23(1) of the Financial Instruments and Exchange Law of Japan. Unlessotherwise provided for in this document, the same is applied throughout this document.
4
Defined in Article 27-2(6) of the Financial Instruments and Exchange Law of Japan. The same isapplied throughout this document.
5
Defined in Article 27-2(8) of the Financial Instruments and Exchange Law of Japan. The same isapplied throughout this document.
6
Defined in Article 27-2(1) of the Financial Instruments and Exchange Law of Japan. The same isapplied in III.2.2 (a)(ii).
7
Defined in Article 27-2(7) of the Financial Instruments and Exchange Law of Japan (including
persons who are deemed to fall under the above by the board of directors of the Company); provided,
however, that persons provided for in Article 3(2) of the Cabinet Office Regulations concerning
Disclosure of a Tender Offer by an Acquirer other than the Issuing Company are excluded from thepersons described in Article 27-2(7)(i) of the Financial Instruments and Exchange Law of Japan.
The same is applied throughout this document.
12

The Company will promptly disclose the commencement of procedures set out in
the Plan.
On receiving the Acquisition Statement, the Company’s board of directors willpromptly provide it to the Committee for the Assessment of Corporate Value. If theCommittee for the Assessment of Corporate Value determines that the information
included in the Acquisition Statement is insufficient as Essential Information, it may fix
a deadline for response and request directly, or indirectly through the Company’s boardof directors, that the Acquirer additionally provide Essential Information. In such case,
the Acquirer should additionally provide such Essential Information within the fixed
time limit.
(i)

Details (including the specific name, capital structure, financial position,
experience and result of transactions similar to the Acquisition, and the impactof past transactions on the corporate value of the target company) of theAcquirer and its group (including joint holders 8 , persons having a special
relationship and, in the case of funds, each partner and other constituent
members).

(ii)

The purpose, method and terms of the Acquisition (including information on
the amount and type of consideration for the Acquisition, the timeframe of theAcquisition, the scheme of any related transactions, the legality of theAcquisition method, and the probability of the Acquisition being effected).

(iii) The basis for the calculation of the purchase price of the Acquisition(including the underlying facts and premises of the calculation, the calculation
method, the numerical data used in the calculation, the details of any expectedsynergies from any series of transactions relating to the Acquisition, and thedetails of such synergies to be shared with minority shareholders).
(iv) Financial support for the Acquisition (including the specific name of the funds
providers (including all indirect funds providers), financing methods and theterms of any related transactions).
(v)

Post-Acquisition management policy, business plan, capital and dividend

8

Including persons described as “joint holders” under Article 27-23(5) of the Financial Instruments
and Exchange Law of Japan, including persons regarded as a joint holder under Article 27-23(6) of
the Financial Instruments and Exchange Law of Japan (including persons who are deemed to fallunder the above by the Company’s board of directors.). The same is applied throughout thisdocument.
13

policies for the Company group.
(vi) Post-Acquisition policies dealing with the Company group’s employees,
business partners, customers, and any other stakeholders in the Company
group.
(vii) Specific measures to avoid any conflict of interest with other shareholders of
the Company.
(viii) Any other information that the Committee for the Assessment of Corporate
Value reasonably considers necessary.

If the Committee for the Assessment of Corporate Value recognizes that theAcquirer has initiated the Acquisition without complying with the procedures set out in
the Plan, as a general rule, it will recommend the Company’s board of directors to
implement a gratis allotment of Stock Acquisition Rights in accordance with
III.2.2(d)(i) below, except in particular circumstances where it should continue with its
requests for the submission of an Acquisition Statement and Essential Information, andits discussion and negotiation with the Acquirer.
(c)Consideration of terms of the Acquisition, negotiation with the Acquirer, andconsideration of an alternative proposal(i)Request to the Company’s board of directors for the provision of information

If the Acquirer submits the Acquisition Statement and Essential Information that theCommittee for the Assessment of Corporate Value additionally requests (if any), theCommittee for the Assessment of Corporate Value may request that the Company’sboard of directors present an opinion (including an opinion to reserve giving such an
opinion; hereinafter the same) on the terms of the Acquirer’s Acquisition and supporting
materials, an alternative proposal (if any), and any other information or materials that
the Committee for the Assessment of Corporate Value considers necessary from time totime upon fixing a reasonable deadline for response in consideration of the timerequired to collect information and consider the corporate value evaluation by theCompany’s board of directors as well as any necessary examination by outside experts(up to sixty days as a general rule; although this period is fixed as a period necessary for
the Company’s board of directors to provide an opinion, supporting materials, and anyother information or materials that the Committee for the Assessment of Corporate
Value may consider necessary from time to time in light of results of consideration by
14

outside experts, the Company’s board of directors will consider these matters as soon as
possible) in order to compare the information contained in the Acquisition Statementand Essential Information, and business plan and corporate evaluation by theCompany’s board of directors and the like in light of ensuring and enhancing theCompany group’s corporate value and, in turn, common interests of its shareholders.
(ii)

Committee for the Assessment of Corporate Value consideration

If the Committee for the Assessment of Corporate Value determines that
information and materials (including those additionally requested) have been
sufficiently provided by the Acquirer and the Company’s board of directors (if theCompany’s board of directors is so required as set out in (i) above), it may set a
consideration period (up to sixty days as a general rule; in this regard, however, theCommittee for the Assessment of Corporate Value may extend or re-extend theperiod by its resolution up to 30 days in the event of 2.2(d)(iii) below; hereinafter
the “Committee for the Assessment of Corporate Value Consideration Period”).
During the Committee for the Assessment of Corporate Value Consideration Period,
the Committee for the Assessment of Corporate Value should consider the terms of
the Acquirer’s Acquisition and collect and compare information on the businessplans and other information of the Acquirer with that of the Company’s board of
directors, and consider any alternative proposal presented by the Company’s boardof directors. If necessary, the Committee for the Assessment of Corporate Value
should discuss and negotiate with the Acquirer directly or indirectly through theCompany’s board of directors during the Committee for the Assessment ofCorporate Value Consideration Period, in order to improve the terms of theAcquirer’s Acquisition with a view to ensure and enhance the corporate value of theCompany group and common interests of its shareholders and present the alternative
proposal made by the Company’s board of directors to the shareholders.
In order to ensure that the Committee for the Assessment of Corporate Value’s
decision contributes to the Company group’s corporate value and the common
interests of its shareholders, the Committee for the Assessment of Corporate Value
may, at the expense of the Company, obtain advice from independent third parties(including financial advisers, certified public accountants, legal counsel, consultants
or any other experts).
If the Committee for the Assessment of Corporate Value directly, or indirectly15through the Company’s board of directors, requests the Acquirer provide materials
for consideration or any other information, or discuss and negotiate with theCommittee for the Assessment of Corporate Value, the Acquirer must promptly
respond to such request.

(iii) Disclosure of information to shareholders
The Committee for the Assessment of Corporate Value will appropriately
disclose to the shareholders and investors the fact that the Acquirer has surfaced, it
has received an Acquisition Statement from the Acquirer, the Committee for theAssessment of Corporate Value requests the Acquirer to provide information to theCompany’s board of directors, the Committee for the Assessment of Corporate
Value Consideration Period has commenced, the Committee for the Assessment ofCorporate Value requests the Acquirer to hold discussions or negotiations, theCompany’s board of directors has presented alternative proposals to the Committee
for the Assessment of Corporate Value, and an outline of the Essential Information
and any other matters the Committee for the Assessment of Corporate Valueconsiders appropriate.
(d)

Recommendations by the Committee for the Assessment of Corporate Value

If an Acquirer emerges, the Committee for the Assessment of Corporate Value
will make a recommendation to the Company’s board of directors as follows. If theCommittee for the Assessment of Corporate Value makes any recommendation or
resolution as listed in III.2.2(d)(i) through III.2.2(d)(iii) below, or otherwise believes it
to be appropriate, the Company will disclose the fact that the Committee for theAssessment of Corporate Value has made the recommendation or resolution, an outlineof it, and any other matters that the Committee for the Assessment of Corporate Valueconsiders appropriate (in the case of extension or re-extension of the Committee for theAssessment of Corporate Value Consideration Period, including the details of theextended period and an outline of the reason for such extension or re-extension),
promptly after the recommendation or resolution.
(i) Recommendations for the implementation of gratis allotment of Stock
Acquisition Rights

16

If the Acquirer fails to comply with the procedures set out in the Plan, or if as aresult of considering the terms of the Acquirer’s Acquisition or discussing andnegotiating the terms with the Acquirer the Committee for the Assessment ofCorporate Value determines that the Acquisition by the Acquirer meets any of therequirements set out below at III.2.3, ‘Requirements for the gratis allotment of Stock
Acquisition Rights,’ and the implementation of the gratis allotment of stockacquisition rights explained below is reasonable, the Committee for the Assessmentof Corporate Value will recommend the implementation of the gratis allotment ofStock Acquisition Rights to the Company’s board of directors, regardless of whether
the Committee for the Assessment of Corporate Value Consideration Period hascommenced or ended.
However, even after the Committee for the Assessment of Corporate Value has
made a recommendation for the implementation of the gratis allotment of Stock
Acquisition Rights, if the Committee for the Assessment of Corporate Value
determines that either of the events listed (A) and (B) below apply, the Company onor before the date immediately prior to the Exercise Period Commencement Date of
Stock Acquisition Rights (defined at (f) of 2.4 ‘Outline of the gratis allotment ofStock Acquisition Rights’) may make a new recommendation (before the gratis
allotment has taken effect) to cancel the gratis allotment of Stock Acquisition Rightsor (after the gratis allotment has taken effect) to acquire the Stock Acquisition
Rights without consideration.
(A) The Acquirer withdraws the Acquisition or the Acquisition otherwise ceases toexist after the recommendation.
(B) There is a change in the facts or otherwise upon which the recommendation
decision was made, and the Acquisition by the Acquirer does not meet any of
the requirements set out below in III.2.3, ‘Requirements for the gratis
allotment of Stock Acquisition Rights’, or it is not reasonable to implement thegratis allotment or allow the shareholders to exercise the Stock Acquisition
Rights even if the Acquisition by the Acquirer does meet one of therequirements.

Even if the Committee for the Assessment of Corporate Value determines thatthe implementation of the gratis allotment of the Stock Acquisition Rights isreasonable, the Committee for the Assessment of Corporate Value will recommend17

to the Company’s board of directors convocation of a general meeting ofshareholders and submission of a proposal to implement the gratis allotment ofStock Acquisition Rights, if it deems it necessary to pass a resolution at the general
meeting of shareholders to implement the gratis allotment of Stock Acquisition
Rights.
(ii) Recommendations for the non-implementation of gratis allotment of Stock
Acquisition Rights
If, as a result of its consideration of the terms of the Acquirer’s Acquisition anddiscussions and negotiations with the Acquirer, the Committee for the Assessment ofCorporate Value determines that the Acquisition by the Acquirer does not meet anyof the requirements set out below at III.2.3, ‘Requirements for the gratis allotmentof Stock Acquisition Rights,’ or it is not reasonable to implement the gratis
allotment of Stock Acquisition Rights even if the Acquisition by the Acquirer does
meet one of the requirements, the Committee for the Assessment of Corporate Value
will recommend the non-implementation of the gratis allotment of Stock Acquisition
Rights to the Company’s board of directors, regardless of whether the Committee
for the Assessment of Corporate Value Consideration Period has ended.
However, even after the Committee for the Assessment of Corporate Value has
already made a recommendation for the non-implementation of the gratis allotmentof Stock Acquisition Rights, if the Committee for the Assessment of Corporate
Value determines that there is a change in the facts or otherwise upon which therecommendation decision was made and the Acquirer’s Acquisition meets any of therequirements set out below at III.2.3, ‘Requirements for the gratis allotment of Stock
Acquisition Rights,’ and the Committee for the Assessment of Corporate Value
subsequently decides that implementation of the gratis allotment of Stock
Acquisition Rights is appropriate, it may make a new judgment including a newrecommendation on the implementation of the gratis allotment of Stock Acquisition
Rights, and recommend that judgment to the Company’s board of directors.
(iii) Extension of the Committee for the Assessment of Corporate Value
Consideration Period
If the Committee for the Assessment of Corporate Value does not reach a
recommendation for either the implementation or non-implementation of the gratis

18

allotment of Stock Acquisition Rights by the expiry of the initial Committee for theAssessment of Corporate Value Consideration Period, the Committee for theAssessment of Corporate Value will, to the reasonable extent necessary for actions
such as consideration of the terms of the Acquirer’s Acquisition, discussions andnegotiations with the Acquirer and the consideration of alternative proposals, pass a
resolution to extend the Committee for the Assessment of Corporate Value
Consideration Period (and any extension of the new period after a period has been
extended will follow the same procedure).
If the Committee for the Assessment of Corporate Value Consideration Period
is extended as a result of the resolution described above, the Committee for theAssessment of Corporate Value will continue with its information collection andconsideration process and like activities for the purpose the period was extended,and use best efforts to make a recommendation for the implementation or
non-implementation of the gratis allotment of Stock Acquisition Rights within theextended period.
(e)Resolutions of the board of directors and convocation of a general meeting ofshareholders

The Company’s board of directors, in exercising their role under the Corporation
Law, will promptly pass a resolution relating to the implementation or
non-implementation of a gratis allotment of Stock Acquisition Rights (including
suspension of the gratis allotment of Stock Acquisition Rights) respecting thatrecommendation from the Committee for the Assessment of Corporate Value describedabove to the maximum extent.
If the Company’s board of directors obtains a recommendation from theCommittee for the Assessment of Corporate Value for convocation of a general meetingof shareholders to resolve the gratis allotment of Stock Acquisition Rights, theCompany’s board of directors will promptly convene a general meeting of shareholders
in order to hold the meeting as soon as practicably possible, and submit a proposal on
the implementation of the gratis allotment of Stock Acquisition Rights. The
Company’s board of directors will, when the resolution on the gratis allotment of Stock
Acquisition Rights (the resolution in accordance with the amended Article 18.3 of theCompany’s Articles of Incorporation) is passed at the general meeting of shareholders,
take the procedures necessary for the gratis allotment of Stock Acquisition Rights in19

accordance with the resolution of the general meeting of shareholders. The Acquirer
must not effect the Acquisition during the period from the commencement of the Planprocedures until (i) the Company’s board of directors passes a resolution for the
implementation or non-implementation of the gratis allotment of Stock Acquisition
Rights, or (ii) shareholders at the general meeting approve or disapprove the gratis
allotment of Stock Acquisition Rights (if it is held).
After the Company’s board of directors passes a resolution on the implementation
or non-implementation of Stock Acquisition Rights or convocation of the general
meeting of shareholders, or shareholders at the general meeting approve or disapprove
the gratis allotment of Stock Acquisition Rights, the Company’s board of directors willpromptly disclose an outline of its resolution, and any other matters that the board of
directors considers appropriate.
2.3

Requirements for the gratis allotment of Stock Acquisition Rights

The Company intends to implement the gratis allotment of Stock Acquisition
Rights by a resolution of the Company’s board of directors or the general meeting ofshareholders as described above at (e) of III.2.2, ‘Procedures for the Plan’ if it isconsidered that an Acquisition by an Acquirer falls under any of the items (a) through(e) below and the implementation of the gratis allotment of Stock Acquisition Rights isreasonable. However, the Company’s board of directors will, without fail, make its
determination as to whether an Acquisition by an Acquirer falls under a requirement
below and whether it is reasonable to implement the gratis allotment of the Stock
Acquisition Rights through the recommendation of the Committee for the Assessmentof Corporate Value in accordance with (d) of III.2.2 above, ‘Procedures for the Plan.’(a)Acquisitions not in compliance with the procedures set out in the Plan such asprovision of information or ensuring the Committee for the Assessment ofCorporate Value Consideration Period set out above at (b) of III.2.2, ‘Proceduresfor triggering the Plan’. For example:(i) Acquisition that does not provide the Company’s board of directors withthe period of time reasonably necessary to submit alternative proposals to
the Acquisition.
(ii) Acquisition that does not provide the Committee for the Assessment ofCorporate Value with the Committee for the Assessment of Corporate Value
Consideration Period set out in the Plan.
20

(iii) Acquisition that comes into effect without the resolution of the general
meeting of shareholders regardless of the recommendation of theCommittee for the Assessment of Corporate Value to obtain shareholders’decision at the general meeting of shareholders.
(iv) Acquisition in which the provision of Essential Information or any otherinformation considered reasonably necessary to assess the Acquisition
terms is inadequate.

(b)

Acquisitions that threaten to cause obvious harm to the corporate value of theCompany group and, in turn, the common interests of its shareholders throughactions described below or any similar action:(i) Buyout of shares to require such shares to be compulsorily purchased by
the Company group at an inflated price.
(ii) Management that achieves an advantage for the Acquirer to the detrimentof the Company group, such as temporary control of the Company group’s
management for the low-cost acquisition of the Company group’s material
assets.
(iii) Diversion of the Company group’s assets to secure or repay debts of theAcquirer or its group company.
(iv) Temporary control of the Company group’s management to bring about adisposal of high-value assets that have no current relevance to the Company
group’s business and declaring temporarily high dividends from the profits
of the disposal, or selling the shares at a high price taking advantage of theopportunity afforded by the sudden rise in share prices created by the
temporarily high dividends.
(v) Acquisition made with no intention of truly participating in corporate
management and solely for the purpose of increasing the stock price of theCompany and having the Company’s affiliates purchase shares in the
Company at a higher price.

(c)

Acquisition that threatens to have the effect of coercing the shareholders into
selling shares, such as coercive two-tiered tender offers (meaning acquisitions ofshares including tender offers that do not offer to acquire all shares in the initialacquisition, and set acquisition terms for the second stage that are unfavorable

21

for the shareholders for the second stage or do not set clear terms for the second
stage).
(d)Acquisition of which the terms (including amount and type of consideration
for the Acquisition, the timeframe of the Acquisition, the scheme of any relatedtransactions, the legality of the Acquisition method, the probability of theAcquisition being effected, post-Acquisition management policies and businessplans, and post-Acquisition policies dealing with the Company’s othershareholders, the Company group’s employees, business partners, customers andany other stakeholders in the Company group) are materially inadequate or
inappropriate in light of the Company group’s intrinsic value.

(e)Acquisition that materially threatens to be against the corporate value of theCompany group and, in turn, the common interests of its shareholders, bydestroying the relationship with the Company group’s employees, customers,
business partners and the like or the source of the corporate value, brand value
or corporate culture of the Company group, which is indispensable to thegeneration of the Company group’s corporate value.

2.4

Outline of the gratis allotment of Stock Acquisition Rights

An outline of the gratis allotment of Stock Acquisition Rights under the Plan is
described below.
(a)Number of Stock Acquisition Rights

The number of the Stock Acquisition Rights will be the same number as the final
and total number of issued and outstanding shares in the Company (excluding thenumber of shares in the Company held by the Company at that time) on a certain datethat is separately determined by the Company’s board of directors or the general
meeting of shareholders in the resolution relating to the gratis allotment of Stock
Acquisition Rights (that date, the “Allotment Date”; that resolution, the “Gratis
Allotment Resolution”).
(b)

Entitled Shareholders
The Company will allot the Stock Acquisition Rights without consideration to22

those shareholders, other than the Company, who are entered or recorded in the
Company’s final register of shareholders or register of beneficial shareholders as of the
Allotment Date, at a ratio of one Stock Acquisition Right for every one share of theCompany held.
(c)Effective date of the gratis allotment of Stock Acquisition Rights

The effective date of the gratis allotment of Stock Acquisition Rights in the Gratis
Allotment Resolution is to be separately determined.
(d)Number of shares to be acquired upon exercise of the Stock Acquisition Rights
The number of shares to be acquired upon exercise of each Stock Acquisition
9

Right (the “Applicable Number of Shares”) shall be one share except as separately
adjusted.
(e)

The amount of properties to be contributed upon exercise of the Stock
Acquisition Rights

Contributions upon exercise of the Stock Acquisition Rights are to be in cash, andthe amount per share of properties to be contributed upon exercise of the Stock
Acquisition Rights will be an amount separately determined in the Gratis Allotment
Resolution within the range between a minimum of one yen and a maximum of any
amount equivalent to one-half of the fair market value of one share of the Company.
“Fair market value” means an amount equivalent to the average closing price (including
quotations) for regular transactions of the common stock of the Company on the Tokyo
Stock Exchange on each day during the 30 to 180 day period prior to the Gratis
Allotment Resolution separately determined by the board of directors (excluding thedays on which trades are not made), with any fraction of a yen resulting from suchcalculation to be rounded up to the nearest whole yen.
(f)

Exercise period of the Stock Acquisition Rights

9

Even if the Company becomes a Corporation with Class Shares (defined in Article 2(13) of the
Corporation Law), both (i) the shares in the Company to be issued upon exercise of the Stock
Acquisition Rights and (ii) the shares to be delivered in exchange for acquiring the Stock Acquisition
Rights means the same type of shares that are currently outstanding (common stock) at the time of
the Ordinary General Meeting of Shareholders.
23The commencement date will be a date separately determined in the Gratis
Allotment Resolution (this commencement date of the exercise period shall be referred
to as the “Exercise Period Commencement Date”), and the period will be a period fromone month to three months long as separately determined in the Gratis Allotment
Resolution; provided, however, that if the Company acquires the Stock Acquisition
Rights pursuant to the provisions of paragraph (i) (ii) below, the exercise period of theStock Acquisition Rights with respect to that acquisition will be up to and including thebusiness day immediately prior to the relevant acquisition date. Further, if the final
day of the exercise period falls on a holiday for the payment place for the cash payable
upon exercise, the final day will be the preceding business day.
(g)

Conditions for the exercise of the Stock Acquisition Rights

As a general rule, the following parties may not exercise the Stock Acquisition
Rights (the parties falling under (i) through (vi) below shall collectively be referred toas the “Non-Qualified Parties”):(i)Specified Large Holders 10 ;(ii)

Joint Holders of Specified Large Holders;(iii)

Specified Large Purchasers 11 ;10“Specified Large Holder” means a person who is a holder of share certificates, etc. issued by theCompany and whose holding ratio of share certificates, etc. in respect of such share certificates, etc.
is at least 20% (including those deemed so by the Company’s board of directors). Provided,
however, that a party that the Company’s board of directors recognizes as a party whose acquisitionor holding of share certificates, etc., of the Company is not contrary to the Company group’s
corporate value and, in turn, the common interests of its shareholders or certain other party that theCompany’s board of directors determines in the Gratis Allotment Resolution is not a Specified Large
Holder. The same is applied throughout this document.
11“Specified Large Purchaser” means a person who makes a public announcement of purchase, etc.,(as defined in Article 27-2(1) of the Financial Instruments and Exchange Law; the same is applied
throughout this Note 11) of share certificates, etc., (as defined in Article 27-2(1) of the Financial
Instruments and Exchange Law; the same is applied throughout this Note 11) issued by the Company
through a tender offer and whose ratio of ownership of share certificates, etc., in respect of suchshare certificates, etc., owned by such person after such purchase, etc., (including similar ownershipas prescribed in Article 7(1) of the Order of the Enforcement of the Financial Instruments andExchange Law) is at least 20% when combined with the ratio of ownership of share certificates, etc.,
of a person having a special relationship (including those deemed so by the Company’s board of
directors). Provided, however, that a party that the Company’s board of directors recognizes as aparty whose acquisition or holding of share certificates, etc., of the Company is not contrary to theCompany group’s corporate value and, in turn, the common interests of its shareholders or certain
other party that the Company’s board of directors determines in the Gratis Allotment Resolution is
not a Specified Large Purchaser. The same is applied throughout this document.
24

(iv)

Persons having a Special Relationship with Specified Large Purchasers;(v)

Any transferee of or successor to the Stock Acquisition Rights of any
person falling under (i) through (iv) without the approval of theCompany’s board of directors; or(vi)

Any Affiliated Party 12 of any person falling under (i) through (v).

Further, nonresidents of Japan who are required to follow certain procedures
under foreign laws and ordinances to exercise the Stock Acquisition Rights may not as a
general rule exercise the Stock Acquisition Rights (except, however, that certain
nonresidents, such as those who may use any exemption provision under applicablelaws and ordinances in such foreign country, will be able to exercise the Stock
Acquisition Rights, and the Stock Acquisition Rights held by nonresidents will be
subject to acquisition by the Company in exchange for shares in the Company as set outin (i), ‘Acquisition of the Stock Acquisition Rights by the Company’ below). In
addition, anyone who fails to submit a written undertaking, in a form prescribed by theCompany and containing representations and warranties regarding matters such as thefact that he or she satisfies the exercise conditions of the Stock Acquisition Rights,
indemnity clauses and other covenants, may not exercise the Stock Acquisition Rights.
(h)Restriction on assignment of the Stock Acquisition Rights

Any acquisition of the Stock Acquisition Rights by assignment requires theapproval of the Company’s board of directors.
(i)Acquisition of the Stock Acquisition Rights by the Company(i)

At any time on or before the date immediately prior to the Exercise Period
Commencement Date, if the Company’s board of directors recognizes that
it is appropriate for the Company to acquire the Stock Acquisition Rights,
the Company may, on a date separately determined by the Company’sboard of directors, acquire all of the Stock Acquisition Rights without

12

An “Affiliated Party” of a given party means a person who substantially controls, is controlled by,or is under common control with such given party (including thosed deemed so by the Company’sboard of directors that ), or a party deemed by the Company’s board of directors to act in concert
with such given party. “Control” means to “control decisionson the financial and business policies”(as defined in Article 3(3) of the Enforcment Regulations of the Corporation Law) of othercorporations or entities.
25

consideration.

(ii)

On a date separately determined by the Company’s board of directors, theCompany may acquire all of the Stock Acquisition Rights that have notbeen exercised on or before the business day immediately prior to suchdate determined by the Company’s board of directors, that are held byparties other than the Non-Qualified Parties and, in exchange, deliver
shares in the Company in the number of the Applicable Number of Sharesfor every one Stock Acquisition Right. If any third party other than the
Non-Qualified Parties obtains the Stock Acquisition Rights held by the
Non-Qualified Parties by transfer on or after the acquisition by theCompany, the Company may acquire those Stock Acquisition Rights
originally held by the Non-Qualified Parties.

In addition to the above, the Company may determine the matters relating to theacquisition of the Stock Acquisition Rights other than (i) and (ii) above (such as mattersrelating to the acquisition of the Stock Acquisition Rights from the Non-Qualified
Parties) upon the specific Gratis Allotment Resolution, if it deems appropriate from theappropriateness viewpoint based on the recommendation of the Committee for theAssessment of Corporate Value or the resolution of the general meeting of shareholders.
(j)Delivery of the Stock Acquisition Rights in the Case of Merger, Absorption-type
Demerger (kyushu bunkatsu), Incorporation-type Demerger (shinsetsu bunkatsu),
Share Exchange (kabushiki koukan), and Share Transfer (kabushiki iten)
These matters are to be separately determined in the Gratis Allotment Resolution.

(k)Issuance of certificates representing the Stock Acquisition Rights
Certificates representing the Stock Acquisition Rights will not be issued.

2.5

Procedures for the introduction of the Plan

The introduction of the Plan will be, as described below, subject to the approvalof the shareholders at the Ordinary General Meeting of Shareholders:

26

(a)

Proposed amendments to the Company’s Articles of Incorporation, including theincorporation of the provision stated below in Articles 18 and 19 therein, arescheduled to be submitted to the Ordinary General Meeting of Shareholders for
its resolution. (For details of the proposal for partial amendments to the
Articles of Incorporation to introduce the Plan, see ‘Notice of Partial
Amendments to the Articles of Incorporation’ separately disclosed on the date ofthis document.)
Article 18 Method of Resolutions
18.1 (Same as the current version)
18.2 (Same as the current version)
18.3 The Company shall determine matters relating to the gratis
allotment of Stock Acquisition Rights by a resolution of theboard of directors, as well as by a resolution of the general
meeting of shareholders, or by a resolution of the board of
directors upon the assignment by the general meeting ofshareholders.
Article 19 Countermeasures against large-scale acquisitions of theshares in the Company
19.1 In the course of taking countermeasures against large-scaleacquisitions of the shares in the Company(“Countermeasures”) set out for the purpose of ensuring
and enhancing the corporate value of the Company and, inturn, the common interests of its shareholders, theCompany may determine the details of the Stock
Acquisition Rights as follows upon determination of thegratis allotment of the Stock Acquisition Rights.
(1)
A certain person set out in the Countermeasures (the“Non-Qualified Parties”) cannot exercise the Stock
Acquisition Rights.
(2) The Company may acquire the Stock Acquisition Rights
solely from persons other than the Non-Qualified Parties
and, in exchange, deliver shares in the Company.
(3) The Company may acquire the Stock Acquisition Rightsfrom the Non-Qualified Parties and, in exchange, deliver
shares, stock acquisition rights, bonds, monies and other27

consideration in the Company.
19.2 The Countermeasures are measures established to make it
difficult to acquire the Company by issuing new shares or stockacquisition rights. The countermeasure means any arrangementthat makes an acquisition of the Company difficult, including anissuance of shares or stock acquisition rights although theCompany’s primary purpose of doing so is not a businesspurpose such as financing, which would be implemented before
a person who would harm the corporate value of the Company
and, in turn, the common interests of its shareholders proposes alarge-scale acquisition of the shares in the Company. The
general meeting of shareholders of the Company may determine
the Countermeasures by its resolution.
(b)

Under the provision of Article 19.2 of the Company’s Articles of Incorporation
after the amendment in accordance with (a) above, a proposal to request theshareholders to introduce the Plan is scheduled to be submitted to the Ordinary
General Meeting of Shareholders, which is also a resolution to approve theamendments to Article 18.3 of the Company’s Articles of Incorporation that setsout assignment to the Company’s board of directors of the authority to determine
matters relating to the gratis allotment of the Stock Acquisition Rights inaccordance with the terms and conditions set out in the Plan.

2.6

Effective period, abolition and amendment of the Plan

The effective period of the Plan (also the period for assignment of the authority to
decide matters relating to the gratis allotment of Stock Acquisition Rights) as resolved
by resolution of the Ordinary General Meeting of Shareholders set out in 2.5‘Procedures for the introduction of the Plan’ (the “Effective Period”) shall be the period
commencing after the resolution at the Ordinary General Meeting of Shareholders anduntil the conclusion of the ordinary general meeting of shareholders relating to the final
fiscal year ending within two years after the conclusion of the Ordinary General
Meeting of Shareholders.
However, if, even before the expiration of the Effective Period, (a) a general
meeting of shareholders of the Company passes a resolution to abolish the Plan, or (b)the Company’s board of directors passes a resolution to abolish the Plan, the Plan and28authorization under the Plan shall be abolished or withdrawn at that time.
Further, the Company’s board of directors may revise or amend the Plan evenduring the Effective Period of the Plan, if such revision or amendment is not against the
purpose of the resolution of the Ordinary General Meeting of Shareholders set out in (b)of 2.5 ‘Procedures for the introduction of the Plan’ (including cases where any law,regulation, financial product exchange rules or the like concerning the Plan is
introduced, amended or abolished and it is appropriate to reflect such introduction,
amendment or abolition, cases where it is appropriate to revise the wording for reasons
such as typographical errors and omissions, and cases where such revision oramendment does not detriment the Company’s shareholders, and the like), and subject
to the approval of the Committee for the Assessment of Corporate Value.
If the Plan is abolished or amended, the Company will promptly disclose
information, including the fact that such abolition or amendment has taken place, and(in the event of an amendment) the details of the amendment and any other matters asnecessary.
2.7

Revision due to amendment to laws and ordinances
The provisions of laws and ordinances referred to in the Plan are subject to theprevailing provisions as of February 7, 2008. If it becomes necessary to amend theterms and conditions or definitions of terms set out above after such date due to theintroduction, amendment or abolishment of laws and ordinances, the terms andconditions or definitions of terms set out in the paragraphs above shall be readaccordingly as required to a reasonable extent, upon consideration on the purposes ofsuch introduction, amendment or abolishment.
3.

Impact on shareholders, etc.

3.1

Impact on shareholders and investors at the time of introduction of the PlanAt the time of its introduction, the Plan will have no direct material impact on theshareholders and investors because no actual gratis allotment of Stock Acquisition
Rights will be implemented.
3.2

Impact on the shareholders and investors of the gratis allotment of Stock
Acquisition Rights29

If the Company’s board of directors or the general meeting of shareholders passes
the Gratis Allotment Resolution, the Company will allot the Stock Acquisition Rights
without consideration to those shareholders who are entered or recorded in the
Company’s final register of shareholders or register of beneficial shareholders as of the
Allotment Date that is separately determined by the Gratis Allotment Resolution, at aratio of one Stock Acquisition Right for every one share of the Company held. If theCompany’s shareholders do not pay the amount equivalent to the exercise price or takeprocedures for exercising the Stock Acquisition Rights described in detail at (b) of 3.3‘Procedures that shareholders will be required upon the gratis allotment of Stock
Acquisition Rights’ below within the exercise period, the shares they hold in the
Company will be diluted by the exercise of the Stock Acquisition Rights by othershareholders. However, it is also possible for the Company to acquire the Stock
Acquisition Rights of all shareholders other than the Non-Qualified Parties and, in
exchange, deliver shares in the Company, in accordance with the procedures set out in(c) of 3.3 ‘Procedures that the shareholders will be required upon the gratis allotment ofStock Acquisition Rights’ below. If the Company carries out such acquisition
procedures, all shareholders other than the Non-Qualified Parties will come to receive
the shares in the Company without exercising their Stock Acquisition Rights or paying
an amount equivalent to the exercise price, and, as a general rule, no dilution of theshares in the Company they hold will result.
In addition, even after the Allotment Date or the gratis allotment of the Stock
Acquisition Rights has taken effect, the Company may, if the Acquirer withdraws the
Acquisition, on or before the date immediately prior to the Exercise Period
Commencement Date of Stock Acquisition Rights, cancel the gratis allotment of Stock
Acquisition Rights or acquire the Stock Acquisition Rights without consideration
without delivering shares in the Company to the Stock Acquisition Rights holders. In
such cases, no dilution of the value per share will result, and it is likely that any
investors who have sold or bought the shares expecting to see such a dilution will becommensurately affected as a result of a fluctuation in the share price.
3.3

Procedures required of the shareholders upon the gratis allotment of Stock
Acquisition Rights(a)Procedures for entry of name change30

If the Company’s board of directors or the general meeting of shareholders passes
the Gratis Allotment Resolution, the Company will decide the Allotment Date for thegratis allotment for Stock Acquisition Rights by the same resolution and give public
notice of the Allotment Date. In this case, the Company will make a gratis allotmentof Stock Acquisition Rights to the shareholders who are entered or recorded in the
Company’s final register of shareholders and register of beneficial shareholders as of
the Allotment Date . Therefore, it will be necessary for the shareholders to promptly
arrange for the procedures for entry of name change. No procedures for entry of namechange are required for those share certificates deposited with the Japan Securities
Depository Center, Inc. All the shareholders who are entered or recorded in the
Company’s final register of shareholders and register of beneficial shareholders as of
the Allotment Date will become Stock Acquisition Right holders as a matter of courseon the effective date of the gratis allotment of Stock Acquisition Rights.
(b)

Procedures for exercising Stock Acquisition Rights

The Company will deliver, as a general rule, an exercise request form for the
Stock Acquisition Rights (in a form prescribed by the Company and containing
necessary matters such as the terms and number of the Stock Acquisition Rights forexercise and the exercise date for the Stock Acquisition Rights, as well as
representations and warranties regarding the matters such as that the shareholders are
not the Non-Qualified Parties, indemnity clauses and other covenants) and otherdocuments necessary for the exercise of the Stock Acquisition Rights to theshareholders who are entered or recorded in the Company’s final register ofshareholders and register of beneficial shareholders as of the Allotment Date. Afterthe gratis allotment of Stock Acquisition Rights, the shareholders will be issued one
share in the Company per Stock Acquisition Right upon submitting these necessary
documents during the exercise period but by the acquisition of the Stock Acquisition
Rights becomes effective, and by paying to the place handling such payments theamount determined by the Company’s board of directors or the general meeting ofshareholders in the Gratis Allotment Resolution, which will be an amount within therange of one yen and one-half of the fair market value of the Company’s stock per the
Stock Acquisition Right.
(c)

Procedures for the acquisition of the Stock Acquisition Rights by the Company

31

If the Company’s board of directors determines to acquire the Stock Acquisition
Rights, the Company will acquire the Stock Acquisition Rights in accordance with thestatutory procedures from the shareholders other than the Non-Qualified Parties, on thedate that falls on the date separately determined by the Company’s board of directors,
and will promptly deliver shares in the Company to its shareholders in exchange for the
Stock Acquisition Rights. In such case, the shareholders concerned may be separately
requested to submit, in a form prescribed by the Company, a written undertaking
including representations and warranties regarding matters such as the fact that they are
not Non-Qualified Parties, indemnity clauses and other covenants.
If the matters on the acquisition of the Stock Acquisition Rights from the
Non-Qualified Parties or other acquisition are set out in the Gratis Allotment Resolution
by the Company’s board of directors or the general meeting of shareholders subject tothe recommendation by the Committee for the Assessment of Corporate Value, theCompany may take measures complying with the provision of such matters.
In addition to the above, the Company will disclose to or notify all of its
shareholders and investors with respect to the particulars of the allotment methods,
methods for entry of name change, exercise methods and methods for the acquisition by
the Company of the Stock Acquisition Rights after the Gratis Allotment Resolution by
the Company’s board of directors or the general meeting of shareholders, so we requestthat the shareholders check these details at that time.
IV. Decisions and reasoning of the Company’s board of directors regarding
applicability of the above measures to the following requirements
1.

Measures satisfy the basic policy

The Plan is a framework to ensure the Company group’s corporate value and, inturn, the common interests of its shareholders by ensuring the necessary time andinformation is made available for the shareholders to decide whether or not to accept theAcquisition of share certificates, etc. of the Company or for its board of directors topresent alternative proposals to the shareholders, and by enabling the board of directors
to discuss or negotiate with the Acquirer for the benefit of the shareholders when the
Acquisition is to be effected. The Plan is in compliance with the basic policy.
2.

Measures are not detrimental to the common interests of the shareholders and do32not aim to maintain the positions of directors and statutory corporate auditors of
the Company
For the following reasons, the Company believes that the measures to prevent
control by persons viewed as inappropriate under the basic policy would not be
detrimental to the common interests of the Company’s shareholders, and that they havenot been implemented for the purpose of maintaining the positions of the directors andstatutory corporate auditors of the Company.
(i)

Fully satisfying the requirements of the Guidelines for Takeover Defense
Measures

The Plan fully satisfies the three principles set out in the “Guidelines Regarding
Takeover Defense Measures for the Purposes of Ensuring and Enhancing Corporate
Value and Shareholders’ Common Interests” released by the Ministry of Economy,
Trade and Industry and the Ministry of Justice on May 27, 2005.
(ii)

Placing high value on the intent of the shareholders (resolution of general
meeting of shareholders and sunset clause)

The Company intends to introduce the Plan subject to the approval at theOrdinary General Meeting of Shareholders. Specifically, as set out above in section
III.2.5, ‘Procedures for the introduction of the Plan,’ the Plan will be introduced subject
to the amendments to the Articles of Incorporation of the Company and a resolution of
the Ordinary General Meeting of Shareholders being obtained to introduce the Plan inaccordance with the amended provisions of the Articles of Incorporation.
Further, as set out above in section III.2.6, ‘Effective period, abolition andamendment of the Plan,’ if, even before the expiration of the Effective Period of thePlan, the general meeting of shareholders of the Company passes a resolution to abolishthe Plan, or the board of directors composed of directors appointed by the general
meeting of shareholders passes a resolution to abolish the Plan, the Plan will beabolished at that time. In this regard, the life of the Plan depends on the intent of theCompany’s shareholders.
(iii)

Disclosure of information and emphasis on the decisions of highly independent
outside parties

33

In introducing the Plan, the Company will establish the Committee for theAssessment of Corporate Value as an organization that will eliminate arbitrary decisions
by its directors and objectively carry out the substantive decisions on behalf of theshareholders for the operation of the Plan, including its triggering or abolition.
If an Acquisition of the shares in the Company actually occurs, the Committee for
the Assessment of Corporate Value would, as set out above in III.2.2, ‘Procedures fortriggering the Plan,’ and in accordance with the Rules of the Committee for theAssessment of Corporate Value, make substantive determinations, as to whether or not
the Acquisition would harm the Company group’s corporate value and, in turn, thecommon interests of its shareholders. Then, the Company’s board of directors would,
in exercising their role under the Corporation Law, pass a resolution respecting thosedeterminations to the maximum extent.
In this way, the Committee for the Assessment of Corporate Value will strictly
monitor any arbitrary acts by the Company’s board of directors, and it will disclose
outlines of its decisions to the shareholders and investors, and ensure the structure of thePlan is such that the Plan can only be operated in a transparent way that serves thecorporate value of the Company group and, in turn, the common interests of its
shareholders.
The Committee for the Assessment of Corporate Value is intended to initially becomposed of four people who are outside experts. (Please see Attachment 1 forcriteria for appointing members, requirements for resolution, resolution matters, andother matters concerning the Committee for the Assessment of Corporate Value, andAttachment 2 for details of initial members of the Committee for the Assessment ofCorporate Value).
(iv)

Establishment of reasonably objective requirements

As set out above at section (d) of III.2.2, ‘Recommendation by the Committee for
the Assessment of Corporate Value’, and III.2.3, ‘Requirements for the gratis allotmentof Stock Acquisition Rights,’ the Plan is introduced so that it will not be triggered unlessreasonable and detailed objective requirements have been satisfied, and ensures a
structure to prevent arbitrary triggering by the Company’s board of directors.

34

(v)

Obtaining the advice of outside experts

If an Acquirer emerges, the Committee for the Assessment of Corporate Value
may obtain the advice of independent third parties (financial advisors, certified public
accountants, lawyers, consultants and other experts) at the expense of the Company.
This is a mechanism to even more securely enhance the objectivity and fairness of thedecisions made by the Committee for the Assessment of Corporate Value.
(vi)

No dead-hand or slow-hand takeover defense measures

As stated above in section III.2.6, ‘Effective period, abolition and amendment of
the Plan,’ the Plan is introduced so that it may be abolished by the Company’s board of
directors, which is composed of directors appointed by a person acquiring a large
number of shares in the Company and approved at the Company’s general meeting ofshareholders. Therefore, the Plan is not a dead-hand takeover defense measure (atakeover defense measure in which even if a majority of the members of the Company’sboard of directors are replaced, the triggering of the measure cannot be stopped). Also,
as the Company has not adopted a system of staggered terms of office, the Plan is not aslow-hand takeover defense measure either (a takeover defense measure in which
triggering takes more time to stop due to the fact that the members of the Company’sboard of directors cannot be replaced all at once).

---End---35

Attachment 1
Outline of the Rules of the Committee for the Assessment of Corporate Value・ The Committee for the Assessment of Corporate Value shall be established byresolution of the Company’s board of directors.
・ There shall be no less than three members of the Committee for theAssessment of Corporate Value, and the Company’s board of directors shallelect the members from (i) outside directors of the Company, (ii) outside
statutory corporate auditors of the Company, and (iii) other outside experts
who are independent from the management that executes the business of theCompany. However, such outside experts must be experienced corporate
managers, parties with experience as government officials, parties withknowledge of the investment banking industry or the Company’s businessfield, lawyers, certified public accountants, researchers whose research
focuses on the Corporation Law of Japan or the like, or parties of similar
qualifications, and must have executed with the Company an agreement
separately specified by the Company’s board of directors that contains aprovision obligating them to exercise the duty of care of a good manager orsimilar provision.
・ Unless otherwise determined by a resolution of the Company’s board of
directors, the term of office of members of the Committee for the Assessmentof Corporate Value shall be until the conclusion of the ordinary general
meeting of shareholders relating to the final fiscal year ending within two
years after the conclusion of the Ordinary General Meeting Of Shareholders.
However, the term of office of any member of the Committee for theAssessment of Corporate Value who is an outside director or outside statutory
corporate auditor of the Company shall end simultaneously in the event thatthey cease to be a director or statutory corporate auditor (except in the case of
their re-election).
・ The Committee for the Assessment of Corporate Value shall make decisions
on the matters listed in (a) through (c) below and make recommendations to
the Company’s board of directors containing the details of and reasons for therecommendation. Respecting such recommendations of the Committee for
the Assessment of Corporate Value to the maximum extent, the Company’sboard of directors shall, in exercising their role under the Corporation Law,pass resolutions concerning the implementation or non-implementation of thegratis allotments of Stock Acquisition Rights. Each member of theCommittee for the Assessment of Corporate Value and each director of theCompany must make such decisions with a view to whether the decision willserve the Company group’s corporate value and the common interests of its
shareholders, and they must not solely serve the purpose of their own interestsor those of the management of the Company.
(a) The implementation or non-implementation of the gratis allotment ofStock Acquisition Rights (including submission of proposals on thesematters to the general meeting of shareholders).
(b) The cancellation of the gratis allotment of Stock Acquisition Rights or
the acquisition of the Stock Acquisition Rights without consideration.
(c) Any other matters that are for determination by the Company’s boardof directors in respect to which it has consulted the Committee for theAssessment of Corporate Value.
・ In addition to the matters prescribed above, the Committee for the Assessmentof Corporate Value shall conduct the matters listed in (a) though (j) below.
(a) Determining whether the Acquisitions should be subject to thetriggering of the Plan.
(b) Determining information that the Acquirer and the Company’s boardof directors should provide to the Committee for the Assessment ofCorporate Value, and the deadline for the provision of that
information.
(c) Examination and consideration of the terms of the Acquirer’s
Acquisitions.
(d) Discussion and negotiation with the Acquirer.
(e) Request to the Company’s board of directors for an alternative
proposal and consideration of the alternative proposal.
(f)Extension of the Committee for the Assessment of Corporate Value
Consideration Period.
(g) Approval of revision or amendment of the Plan.
(h) Abolition of the Plan.
(i)
Any other matters that the Plan prescribes that the Committee for theAssessment of Corporate Value may conduct.
(j)
Any matters that the Company’s board of directors separately
determines that the Committee for the Assessment of Corporate Value
may conduct.
・ If the Committee for the Assessment of Corporate Value determines that

information provided by the Company’s board of directors is insufficient as
Essential Information, it shall request that the Acquirer provide additional
Essential Information. Further, if the Committee for the Assessment ofCorporate Value receives from the Acquirer the Acquisition Statement andany additional Essential Information that it requests, it may request that theCompany’s board of directors provide within a certain period an opinion
regarding the terms of the Acquirer’s Acquisition and materials supportingthat opinion, an alternative proposal (if any), and any other information andmaterials that the Committee for the Assessment of Corporate Value may
consider necessary from time to time.
・ If it is necessary, the Committee for the Assessment of Corporate Value shalldirectly, or indirectly through the Company’s board of directors, discuss andnegotiate with the Acquirer, or present to the shareholders the alternative plan
provided by the Company’s board of directors, etc., or conduct any similaraction in order to improve the terms of Acquirer’s Acquisition from theperspective of ensuring and enhancing the corporate value of the Company
group and, in turn, the common interests of its shareholders.
・ In order to collect necessary information, the Committee for the Assessmentof Corporate Value may request the attendance of a director, statutory
corporate auditor or employee of the Company, or any other party that theCommittee for the Assessment of Corporate Value considers necessary, andmay require explanation of any matter it requests.
・ The Committee for the Assessment of Corporate Value may, at the Company’s
expense, obtain the advice of an independent third party (including financial
advisers, certified public accountants, lawyers, consultants and other experts)
and conduct similar actions.
・ Any member of the Committee for the Assessment of Corporate Value may
convene a meeting of the Committee for the Assessment of Corporate Valuewhen an Acquisition arises, or at any other time.
・ Resolutions of a meeting of the Committee for the Assessment of Corporate
Value shall, in principle, pass with at least a majority of the votes cast when
all the members of the Committee for the Assessment of Corporate Value are
in attendance. However, when members are unable to act or faced withunavoidable circumstances, a resolution may pass with a majority of voting
rights when a majority of the members of the Committee for the Assessmentof Corporate Value are in attendance.

---End---Attachment 2
Career Summary of Committee for the Assessment of Corporate Value
Members
The following four people are scheduled to be the initial members of the Committee for
the Assessment of Corporate Value upon introduction of the Plan.
Shingo Matsuo
Born May 19, 1938
[Business Background]
Apr. 1963
July 1994
June 1997
June 1998
June 2003
Mar. 2005
July 2006

Joined Kyushu Electric Power Company Inc.
Appointed General Manager of Kyushu Electric Power Company Inc.
Appointed Director of Kyushu Electric Power Company Inc.
Appointed Managing Director of Kyushu Electric Power Company Inc.
Appointed President of Kyushu Electric Power Company Inc.
Appointed Director of the Company (Outside Director)
Appointed Member of Management Advisory Committee of the Company(current position)
June 2007 Appointed Chairperson of Kyushu Electric Power Company Inc. (current
position)

Kazuhiko Enomoto
Born September 25, 1943
[Business Background]
Apr. 1966 Joined The Nippon Fudosan Bank, Ltd (now Aozora Bank, Ltd.)
Apr. 1972 Joined The Fukuoka Sogo Bank, Ltd. (now The Nishi-Nippon City Bank,
Ltd.)
Apr. 1983 Joined Fukuoka Jisho Co., Ltd.
June 1984 Appointed Senior Managing Director of Fukuoka Jisho Co., Ltd.
Mar. 1977 Appointed Director of Royal Co., Ltd. (now Royal Holdings Co., Ltd.)
Aug. 1979 Appointed Representative Director/President of Fukuoka Jisho Co., Ltd.

Mar. 1991 Appointed Representative Director/Vice Chairman of Royal Co., Ltd. (nowRoyal Holdings Co., Ltd.)Mar. 1997 Appointed Representative Director/Chairman of Royal Co., Ltd. (current
position)Aug. 2003 Appointed Representative Director/Chairman of Fukuoka Jisho Co., Ltd.
(current position)
Mar. 2005 Appointed Director of the Company (Outside Director)
July 2006 Appointed Member of Management Advisory Committee of the Company(current position)

Susumu Ishihara
Born April 30, 1945
[Business Background]
July 1969 Joined Japanese National Railways
Apr. 1987 Appointed Manager of Management Planning Division, General PlanningGroup of Kyushu Railway Company
June 1993 Appointed Director of Kyushu Railway Company
June 1997 Appointed Managing Director of Kyushu Railway Company
June 2001 Appointed Senior Managing Director of Kyushu Railway Company
June 2002 Appointed President of Kyushu Railway Company (current position)
Mar. 2005 Appointed Director of the Company (Outside Director)
July 2006 Appointed Member of Management Advisory Committee of the Company(current position)
Takashi Matsuzaki
Born March 4, 1946
[Business Background]
Apr. 1974 Registered as lawyer. Joined Wachi Law Office.
Aug. 1988 Established Tokunaga Matstuzaki Law Office (now Tokunaga, Matsuzaki
and Saito Law Office). Appointed Partner.
Apr. 2004 Appointed President of Fukuoka Bar Association
Mar. 2005 Appointed Statutory Auditor of the Company (Outside Statutory Auditor)

Apr. 2005 Appointed Vice President of the Japan Federation of Bar Associations
July 2006 Appointed Member of Management Advisory Committee of the Company(current position)
The Company has entered into a legal advisor agreement with Mr. Takashi Matsuzaki.
---End---Exhibit
Major Shareholders of the Company
Major shareholders of the Company as of December 31, 2007 are as follows:
Name of Shareholders
Number ofPercentage
Shares heldof Shares
Owned to(shares)the Total
Number of
Outstanding Shares(%)
Ricoh Co., Ltd.
16,792,838
15.11
Kirin Holdings Co., Ltd.
11,626,715
10.46
The New Technology Development Foundation
5,294,718
4.76
Coca-Cola Holdings West Japan, Inc.
4,074,945
3.67
Mitsubishi Heavy Industries Food & Packaging
3,912,151
3.52
Machinery Co., Ltd.
Mellon Bank N.A. Treaty Clients Omnibus
3,759,494
3.38
The Nishi-Nippon City Bank, Ltd.
3,703,003
3.33
Japan Trustee Services Bank, Ltd. (Trust Account)
3,162,200
2.85
Morgan Stanley and Co. Inc.
2,944,564
2.65
CBNY-UMB Fund
1,693,000
1.52(Note)
1.
In addition to the shares above, the Company holds 4,947,870 shares of treasury.
---End---