Note: This document has been translated from a part of the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from the translation.
(Stock Exchange Code 6461)
June 10, 2020
To Shareholders with Voting Rights:
Akira Yamamoto
President
NIPPON PISTON RING CO., LTD.
Head Office: 5-12-10,
Honmachi-Higashi, Chuo-ku,
Saitama City, Saitama
NOTICE OF CONVOCATION OF
THE 126th ANNUAL GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 126th Annual General Meeting of Shareholders of NIPPON PISTON
RING CO., LTD. (the “Company”). The meeting will be held for the purposes as described below.
If you are unable to attend the meeting, you can exercise your voting rights by mail or via theInternet. Please review the attached Reference Documents for the General Meeting of Shareholders,
indicate your vote for or against the proposal on the enclosed Voting Rights Exercise Form and return
it so that it is received by 5:30 p.m. on Thursday, June 25, 2020, Japan time.

1. Date and Time:

Friday, June 26, 2020 at 10:00 a.m. Japan time

2. Place:

2F Hall, NPR Yono Building (the Company’s Head Office Building) located at
5-12-10, Honmachi-Higashi, Chuo-ku, Saitama City, Saitama, Japan

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
124th Fiscal Year (April 1, 2019 - March 31, 2020) and results of audits by
the Accounting Auditor and the Audit & Supervisory Board of theConsolidated Financial Statements
2. Non-consolidated Financial Statements for the Company’s 124th Fiscal Year
(April 1, 2019 - March 31, 2020)
Proposals to be resolved:
Appropriation of Surplus
Proposal 1:
Partial Amendments to the Articles of Incorporation
Proposal 2:
Election of 9 Directors
Proposal 3:
Election of 3 Audit & Supervisory Board Members
Proposal 4:
Determination of Remuneration for Granting Restricted Stock to Directors
Proposal 5:(Excluding Outside Directors)
Continuation of Countermeasures Related to the Action of Large-scale Purchase
Proposal 6:of Shares in NIPPON PISTON RING CO., LTD.

-1-






When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception
desk. In order to save resources, please bring this Notice with you to the meeting.
The Systems for Ensuring the Properness of Business Activities, Basic Policy on the Control over theCompany, Notes to Consolidated Financial Statements and Notes to Non-consolidated Financial
Statements are posted on the Company’s website (https://www.npr.co.jp/) in accordance with
provisions of laws and regulations as well as Article 15 of the Company’s Articles of Incorporationand therefore are not provided in the Notice. However, the Notes to Consolidated Financial Statements
and Notes to Non-consolidated Financial Statements, as well as the Appendix to the Reported Matters,
are subject to audit by the Accounting Auditor and the Audit & Supervisory Board.
Should the Reference Documents for the General Meeting of Shareholders, the Business Report, theNon-consolidated Financial Statements and Consolidated Financial Statements require revisions, therevised versions will be posted on the Company’s website (https://www.npr.co.jp/).

-2-

Reference Documents for the General Meeting of Shareholders

Proposal 1:
Appropriation of Surplus
It is proposed that the surplus be appropriated as indicated below.
1.

Matters Concerning Year-End Dividend
It is proposed that the year-end dividend for the 124th fiscal year be as follows, taking into
consideration matters such as business results for the fiscal year under review and future businessdevelopment.
(1) Type of dividend
Cash(2) Matters concerning allotment of property to be distributed and total amount55 yen per share of the Company’s common stock
Total amount of dividend: 444,947,360 yen
The annual dividend including the interim dividend will be 75 yen per share for the 124th
fiscal year.
(3) Effective date of dividend of surplus
June 29, 2020

2.

Matters Concerning Other Appropriation of Surplus
Not applicable.

-3-

Proposal 2:

Partial Amendments to the Articles of Incorporation

1.

Reasons for amendments to the Articles of Incorporation
In order to clarify Directors’ management responsibilities and establish a management system capableof swiftly responding to changes in the business environment, the Company will make necessary
amendments to Article 21 (Term of Office) in the current Articles of Incorporation to shorten the termof office of Directors from two years to one.

2.

Details of amendments to the Articles of Incorporation
The details of the amendments are as follows.
(Amended sections are underlined)

Current Articles of Incorporation
Article 1 - 20 (Provisions omitted)

Proposed Amendments
Article 1 - 20 (Unchanged)(Term of Office)
Article 21
The terms of office of Directors shall expire at theconclusion of the Annual General Meeting of
Shareholders held with respect to the latest businessyear that ends within two years after their appointment.

(Term of Office)
Article 21
The terms of office of Directors shall expire at theconclusion of the Annual General Meeting of
Shareholders held with respect to the latest businessyear that ends within one year after their appointment.

Article 22 - 38 (Provision omitted)

Article 22 - 38 (Unchanged)-4-

Proposal 3:

Election of 9 Directors

The terms of office of Messrs. Akira Yamamoto, Shigeru Oishi, Yuji Sakamoto, Teruo Takahashi,
Masaaki Fujita, Zhongliang Yang, Ryosuke Nagumo, and Kan Ishii will expire at the conclusion of this
General Meeting of Shareholders. Accordingly, the election of 9 Directors is proposed.
The candidates are as follows.
Candidate
No.

Name

1

Teruo Takahashi

Managing Director[Reappointment]

2

Yuji Sakamoto

Managing Director[Reappointment]

3

Masaaki Fujita

Director[Reappointment]

4

Zhongliang Yang

Director[Reappointment]

5

Nobuyasu Nara

Advisor[New appointment]

6

Makoto Kajiwara

Executive Officer[New appointment]

7

Ryosuke Nagumo

Independent Outside Director [Reappointment] [Outside] [Independent]

8

Kan Ishii

Independent Outside Director [Reappointment] [Outside] [Independent]

9

Hiromi Nakazawa

Current position at the Company[New appointment] [Outside] [Independent]

Reappointment: Candidate for Director to be reappointed
New appointment: Candidate for Director to be newly appointed
Outside: Candidate for Outside Director
Independent: Candidate for Independent Officer

-5-

No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions
April 1981
April 2005
June 2006

1

Joined the Company
General Manager, Product Engineering Department II
Executive Officer with Development Division,
General Manager, Product Engineering Department II,
Development Division
April 2009
Executive Officer and General Manager, Product Engineering
Department II, in charge of Technical Planning Department,
Product Engineering Department I, Product Engineering
Department II, and Research and Development Department
Director and General Manager, Product Engineering
June 2009
Department II, in charge of Technical Planning Department,
Product Engineering Department I, Product Engineering
Department II, and Research and Development Department
February 2014
Director, in charge of Technical Planning Department, ProductEngineering Department I, Product Engineering Department II,
Teruo Takahashi
and New Product Business Promotion Department(February 10, 1959)
April 2015
Director, in charge of Tochigi Plant, Technical Planning
Department,
Product Engineering Department I, Product[Reappointment]
Engineering Department II, Research and Development
Department, and New Product Business Promotion Department
June 2016
Managing Director, in charge of Technical Planning
Department, Product Engineering Department I, ProductEngineering Department II, Research and Development
Department, and New Product Business Promotion Department
April 2018
Managing Director, in charge of Technical Planning
Department, Product Engineering Department I, ProductEngineering Department II, Research and Development
Department, and New Product Business Development
Department (to present)[Significant concurrent positions]
・President, NPR FUKUSHIMA WORKS CO., LTD.
・Director, NPR of America, Inc.
・Director, NPR AUTO PARTS MANUFACTURING INDIA PRIVATE LIMITED

Number ofshares of theCompany held

-6-

5,100

No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions
July 1977
April 2001
April 2004

2

3

Joined the Company
General Manager, Tokyo East Sales Department
Executive Officer and General Manager, Tokyo Sales
Department, Sales Division
June 2006
Director, Deputy General Manager, Sales Division, and General
Manager, Business Planning Department, Sales Division
Managing Director (to present), in charge of Business Planning
June 2013
Yuji Sakamoto
Department, Tokyo Sales Department, Nagoya Sales(October 22, 1957)
Department, Osaka Sales Department, International Sales
Department, Marine Business Promotion Department andNippon Ring Service Co., Ltd.
[Reappointment]
In charge of Business Planning Department, Tokyo Sales
April 2018
Department, Nagoya Sales Department, Osaka Sales
Department, International Sales Department, METAMOLD
Business Promotion Department and Nippon Ring Service Co.,
Ltd. (to present)[Significant concurrent positions]・Director, NPR of Europe GmbH・Director, NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd.
Joined the Company
April 1984
General Manager, Corporate Planning Department
April 2005
President, NPR of America, Inc.
June 2006
Operating Officer, the Company
July 2012
President, NPR of America, Inc.
June 2013
Director, General Manager, Corporate Planning Department,
Masaaki Fujita
in charge of Corporate Planning Department and Overseas(May 30, 1961)
Operation Control Department
Director, General Manager, Corporate Planning Department,
April 2015
[Reappointment]in charge of Corporate Planning Department, Accounting and
Finance Department and Overseas Operation Control
Department
Director, in charge of Corporate Planning Department,
April 2018
Accounting and Finance Department, and Overseas Operation
Control Department (to present)[Significant concurrent positions]・Director, NPR IWATE CO., Ltd.

Number ofshares of theCompany held

-7-

9,700

5,684

No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions
April 1995
April 2007

4

5

6

Joined the Company
Overseas Operation Control Division, the Company
Plant Manager, NPR Auto Parts Manufacturing (Yizheng) Co.,Ltd.
May 2011
Chairman and President, NPR Auto Parts Manufacturing(Yizheng) Co., Ltd.
December 2012 Chairman and President, NPR Powdered Metals Manufacturing(Yizheng) Co., Ltd.
Zhongliang Yang
July 2013
Executive Officer, the Company(July 20, 1962)
Chairman and President, NPR ASIMCO Powdered Metals
Manufacturing (Yizheng) Co., Ltd.
[Reappointment]
June 2016
Director, the Company, in charge of Quality Assurance
Department, Production Control Department, Tochigi Plant,
Production Engineering Department I, Production Engineering
Department II and Production Engineering Department III (topresent)[Significant concurrent positions]・Director, NPR FUKUSHIMA WORKS CO., LTD.
・Director, NPR Auto Parts Manufacturing (Yizheng) Co., Ltd.
・President, NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd.
April 1986
Joined The Long-Term Credit Bank of Japan, Limited (present
Shinsei Bank, Limited)
Nobuyasu Nara
April 2014
Executive Officer, Executive Officer in charge of Institutional(September 21, 1963)
Business and General Manager of Osaka Branch, Shinsei Bank,
Limited[New appointment] November 2016 Executive Officer, General Manager, Institutional Credit
Management Division, Shinsei Bank, Limited
December 2019 Retired from Shinsei Bank, Limited
January 2020
Joined the Company, Advisor, the Company (to present)
April 1997
Joined the Company
Makoto Kajiwara
April 2015
General Manager, Product Engineering Department I(July 11, 1971)
July 2016
Executive Officer, General Manager, Product Engineering
Department I (to present)[New appointment][Significant concurrent positions]・Director, NPR IWATE CO., Ltd.

Number ofshares of theCompany held

-8-

1,983

0

703

No.

Name
(Date of birth)

Past experience, positions, responsibilities,
and significant concurrent positions
April 1975
April 1997

7

8

9

Joined RHYTHM WATCH CO., LTD.
General Manager, FV Sales, Domestic Sales Division,
RHYTHM WATCH CO., LTD.
January 2003
General Manager, Tokyo Branch, Domestic Sales Division,
Ryosuke Nagumo
RHYTHM WATCH CO., LTD.
(November 13, 1953)
June 2005
Director, General Manager, Tokyo Branch, Domestic Sales
Division, RHYTHM WATCH CO., LTD.
[Reappointment]
January 2006
Director, General Manager, Sales Headquarters, Domestic Sales[Outside]
Division, RHYTHM WATCH CO., LTD.
[Independent]
June 2007
President and Representative Director, RHYTHM KAIHATSU
CO., LTD.
June 2014
Part-time Advisor, RHYTHM WATCH CO., LTD.
June 2015
Director, the Company (to present)
April 1977
Joined Japan Development Bank (present Development Bank ofJapan, Inc.)
March 2001
Head of Treasury Department, Development Bank of Japan, Inc.
June 2003
Head of Project Finance Department, Development Bank ofJapan, Inc.
June 2005
Head of Credit Analysis Department, Development Bank of
Kan Ishii
Japan, Inc.
(February 11, 1954) June 2006
Branch Manager, Kyushu Branch, Development Bank of Japan,
Inc.
[Reappointment]
June 2008
Executive Director, Development Bank of Japan, Inc.
[Outside]
October 2008
Managing Executive Officer, Development Bank of Japan, Inc.
[Independent]
January 2010
Deputy Trustee, Japan Airlines Co., Ltd.
August 2011
President and C.E.O., Fukuoka Jisho Co., Ltd.
August 2015
Vice Chairman/Director, Fukuoka Jisho Co., Ltd.
June 2017
Director, the Company (to present)
June 2018
Director, The Nishinippon Shimbun Co., Ltd. (to present)[Significant concurrent positions]・Director, The Nishinippon Shimbun Co., Ltd.
April 1988
Joined The Mitsui Bank Limited (present Sumitomo Mitsui
Banking Corporation)
October 1995
Joined Taiyo Audit Corporation (present Grant Thornton Taiyo
LLC)
Hiromi Nakazawa
January 1998
Joined Ota Showa Audit Corporation (present Ernst & Young(September 10, 1964)
ShinNihon LLC)
April 1999
Registered as Certified Public Accountant[New appointment] September 2012 Joined Nidec Corporation[Outside]
Audit & Supervisory Board Member, C’BON Co.,Ltd
June 2013[Independent]
Executive Officer, C’BON Co.,Ltd.
June 2015
Audit & Supervisory Board Member, C’BON Co.,Ltd (toJune 2017present)[Significant concurrent positions]・Audit & Supervisory Board Member, C’BON Co.,Ltd

Number ofshares of theCompany held

-9-

1,600

0

0

(Notes)
1.
2.

3.

4.

There are no special interests between the candidates for Directors and the Company.
Messrs. Ryosuke Nagumo and Kan Ishii and Ms. Hiromi Nakazawa are candidates for Outside Directors. The
Company reported Messrs. Nagumo and Ishii as independent directors as stipulated by Tokyo Stock Exchange, Inc. If
the reappointment of Messrs. Nagumo and Ishii is approved as proposed, they will continue to be reported as
independent directors. If the election of Ms. Nakazawa is approved as proposed, she is scheduled to be reported toTokyo Stock Exchange, Inc. as an independent director.
Number of years since appointment in the case where candidates for Directors are incumbent Outside Audit &Supervisory Board Members
Messrs. Ryosuke Nagumo and Kan Ishii are currently part-time Directors of the Company and their terms of office as
Outside Directors at the conclusion of this Annual General Meeting of Shareholders are as follows.
Mr. Ryosuke Nagumo: five years
Mr. Kan Ishii: three years
Limited liability agreement with the candidates for Directors
The Company has entered into an agreement with Messrs. Ryosuke Nagumo and Kan Ishii in accordance with Article
427, Paragraph 1 of the Companies Act to limit his liability pursuant to Article 423, Paragraph 1 of the Companies Act.
If Messrs. Nagumo and Ishii are elected, the Company intends to continue the limited liability agreement with them.
The maximum amount of liability pursuant to the agreement is the amount stipulated by laws and regulations.
If Ms. Hiromi Nakazawa is elected, the Company intends to enter into a similar agreement with her.

- 10 -

Proposal 4:

Election of 3 Audit & Supervisory Board Members

The terms of office of Audit & Supervisory Board Members Messrs. Yoshihiro Sato, Hiroshi Ishibashi
and Hiroki Kimura will expire at the conclusion of this General Meeting of Shareholders. Accordingly, theelection of 3 Audit & Supervisory Board Members is proposed.
The Audit & Supervisory Board has previously given its approval to this proposal.
The candidates are as follows.
No.

Name
(Date of birth)
Hiroto Koeba(April 4, 1965)

1

2

3

Past experience, positions,and significant concurrent positions
April 1988
April 2012
July 2016

Joined the Company
General Manager, Accounting and Finance Department
Executive Officer, General Manager, Accounting and Finance[New appointment]
Department
July 2018
Executive Officer, Assistant to Officer Responsible for
Accounting and Finance Department (to present)
April 1984
Joined Asahi Mutual Life Insurance Company
April 2012
Executive Officer, Head of Finance and Real Estate Division,
Asset Management Administration Division, Asahi Mutual Life
Insurance Company
July 2013
Director, Executive Officer and Head of Asset Management
Administration Division, Asahi Mutual Life Insurance Company
April 2015
Director, Managing Executive Officer in charge of AssetManagement Planning Department and Securities Management
Hiroki Kimura
Department, Asahi Mutual Life Insurance Company(January 19, 1962) April 2016
Director, Managing Executive Officer in charge of Corporate
Planning Department and Finance Department, Asahi Mutual[Reappointment]Life Insurance Company[Outside]
June 2016
Audit & Supervisory Board Member (Outside), the Company (to[Independent]
present)
April 2017
President and Representative Director, Asahi Mutual Life
Insurance Company (to present)
March 2019
Audit & Supervisory Board Member (Outside), The Yokohama
Rubber Co., Ltd. (to present)[Significant concurrent positions]
・President and Representative Director, Asahi Mutual Life Insurance Company
・Outside Auditor, Kanto Denka Kogyo Co., Ltd.
・Audit & Supervisory Board Member (Outside) , The Yokohama Rubber Co., Ltd.
April 1990
Registered as Attorney-at-Law
Joined Sakano Seo Hashimoto Law Office
April 2000
Partner, Tokyo Hachobori Law Office (to present)
October 2013
Part-time Judge, Tokyo District Court (Civil Conciliation Act)
March 2015
Substitute Auditor, LOOK HOLDINGS INCORPORATED (toYoshihide Hino
present)(August 2, 1962)
April 2016
Conciliation Commissioner, Tokyo Summary Court (to present)
April 2017
Chairperson of the Administration Committee, Investigatory[New appointment]
Commission for Housing Disputes, Daini Tokyo Bar[Outside]
Association[Independent]
April 2018
Housing Dispute Resolution Body Examination Committee
Member, Japan Federation of Bar Associations (to present)
January 2020
Human Rights Volunteer, Ministry of Justice (to present)[Significant concurrent positions]
・Partner, Tokyo Hatchobori Law Office- 11 -

Number ofshares of theCompany held

1,182

0

0

(Notes)
1.
2.
3.

4.

5.

6.

There are no special interests between Mr. Hiroto Koeba and the Company.
There are no special interests between Mr. Yoshihide Hino and the Company.
Mr. Hiroki Kimura is President and Representative Director of Asahi Mutual Life Insurance Company. Although said
company holds 259,200 shares of the Company, there are no special interests between Mr. Hiroki Kimura and theCompany.
Messrs. Hiroki Kimura and Yoshihide Hino are candidates for Outside Audit & Supervisory Board Members. The
Company has reported Mr. Kimura as an independent auditor as stipulated by Tokyo Stock Exchange, Inc. If thereappointment of Mr. Kimura is approved as proposed, he will continue to be reported as an independent auditor. If theelection of Mr. Hino is approved as proposed, he is scheduled to be reported to Tokyo Stock Exchange, Inc. as anindependent auditor.
Current position and responsibility held by the candidates for Audit & Supervisory Board Member if the candidates
are incumbent Audit & Supervisory Board Members, and the number of years since appointment if the candidates
serve as Outside Audit & Supervisory Board Members
Mr. Hiroki Kimura is currently a part-time Audit & Supervisory Board Member of the Company, and his term ofoffice as an Outside Audit & Supervisory Board Member will be four years at the conclusion of this Annual General
Meeting of Shareholders.
Limited liability agreement with the candidates for Audit & Supervisory Board Members
The Company has entered into an agreement with Mr. Hiroki Kimura in accordance with Article 427, Paragraph 1 of
the Companies Act to limit his liability pursuant to Article 423, Paragraph 1 of the Companies Act. The maximum
amount of liability pursuant to the agreement is the amount stipulated by laws and regulations. If the reappointment of
Mr. Kimura under this proposal is approved as proposed, the said agreement shall continue in effect.
If the election of Mr. Hino is approved as proposed, the Company intends to enter into a similar limited liability
agreement with him.

- 12 -

Proposal 5:

Determination of Remuneration for Granting Restricted Stock to Directors (Excluding
Outside Directors)

The amount of remuneration, etc. for Directors of the Company was resolved not to exceed 300 million
yen per annum (however, this amount does not include employee salaries for Directors concurrently serving
as employees) at the 112th Annual General Meeting of Shareholders held on June 29, 2006. Apart from this,the maximum amount of remuneration for Directors in the form of share options as stock options was
resolved to be within 70 million yen per annum at the 114th Annual General Meeting of Shareholders heldon June 27, 2008.
As part of revisions to the officer remuneration plan, the Company proposes to pay new remuneration for
granting restricted stock to Directors of the Company (excluding Outside Directors; hereinafter, referred toas “Eligible Directors”) in place of the current stock compensation-type stock options, so that they further
share value with shareholders and have an incentive to enhance the mid- and long-term corporate
performance as they acquire and hold a certain amount of stock while they are in office.
Under this Proposal, the remuneration paid in order to grant restricted stock to Eligible Directors shall bemonetary claims (hereinafter “monetary remuneration claims”), and the total amount thereof shall be within
70 million yen per annum, the same amount as the amount of remuneration in the form of the current stockcompensation-type stock options (however, this amount does not include employee salaries for Directors
concurrently serving as employees). In addition, the specific timing of payment and allocation to each
Eligible Director shall be determined by the Board of Directors. However, the Company shall not pay
remuneration for the granting of restricted stock to Outside Directors.
If this proposal is approved, the compensation framework for the stock compensation-type stock options
for Eligible Directors will be abolished with the exception of stock options already granted, and future shareoptions as the current stock compensation-type stock options will not be allocated to Eligible Directors.
At present, there are eight (8) Directors (including two (2) Outside Directors), but if Proposal 3 “Electionof 9 Directors” is approved and passed as originally proposed, there will be nine (9) Directors (including
three (3) Outside Directors).
In addition, Eligible Directors shall pay all monetary remuneration claims paid to them under this
Proposal as property contributed in kind, and shall receive common stock of the Company through issuanceor disposal, pursuant to a resolution of the Board of Directors of the Company, and the total number ofshares of common stock of the Company to be issued or disposed of in this way shall not exceed 25,000
shares per annum (however, if, on or after the date this Proposal is approved and passed, a share split(including a gratis allotment of common stock of the Company) or consolidation of shares is conducted inregard to the Company’s common stock, or if other circumstances arise that necessitate an adjustment to thetotal number of shares of common stock of the Company to be issued or disposed of as restricted stock, theCompany shall adjust the total number of shares within a reasonable range).
Furthermore, the amount to be paid in per share shall be an amount determined by the Board of Directors
within a reasonable range that will not be a particularly advantageous amount for the Eligible Director who
will receive the common stock, based on the closing price of the Company’s common stock on the Tokyo
Stock Exchange on the business day before the date of each resolution by the Board of Directors (if there areno trades on that day, the closing price on the most recent preceding trading day). Furthermore, when issuingor disposing of common shares of the Company in this way, the Company shall enter into a restricted stock
allotment agreement (hereinafter the “Allotment Agreement”) containing the following content with Eligible
Directors.
(1) Transfer restriction period
Eligible Directors shall not be able to transfer, create security interests on, or otherwise dispose of(hereinafter the “transfer restrictions”) common stock of the Company received by allotment under the
Allotment Agreement (hereinafter the “Allotted Shares”), for a period determined by the Board of Directorsof the Company between three (3) and thirty (30) years under the Allotment Agreement (hereinafter the“transfer restriction period”).
(2) Treatment upon retirement
If an Eligible Director retires from the position of Director at the Company prior to the end of the transfer
restriction period, the Company shall automatically acquire the Allotted Shares without consideration,
excluding cases when the retirement is due to the end of the term, other justifiable reason, or death.
(3) Removal of transfer restrictions- 13 -

Notwithstanding the provisions of the above item (1), the Company shall remove transfer restrictions on
all Allotted Shares when the transfer restriction period ends, subject to the Eligible Director serving
continuously as Director of the Company during the transfer restriction period. However, if the Eligible
Director retires from the position of Director at the Company before the end of the transfer restriction period
owing to the end of the term of office, other justiciable reason, or death, the Company shall reasonably adjust
the number of Allotted Shares from which to remove transfer restrictions and the timing of the removal oftransfer restrictions, as necessary. In addition, the Company shall automatically acquire all Allotted Shares
whose transfer restrictions have not been removed without consideration, immediately after the removal oftransfer restrictions in accordance with the above provisions.
(4) Treatment in organizational restructuring, etc.
Notwithstanding the provisions of the above item (1), if, during the transfer restriction period, a merger
agreement where the Company will be the disappearing company, share exchange agreement or sharetransfer plan where the Company will become a wholly owned subsidiary, or other item related toorganizational restructuring, etc. is approved at a General Meeting of Shareholders of the Company(however, this shall be the Board of Directors of the Company if the organizational restructuring, etc. does
not require approval by the General Meeting of Shareholders of the Company), the Company shall remove
transfer restrictions ahead of the effective date of the organizational restructuring, etc. on a reasonably
determined number of Allotted Shares, taking into consideration the period from the start date of the transfer
restriction period to the approval date of the organizational restructuring, etc., by resolution of the Board of
Directors of the Company. In addition, in cases provided for above, the Company shall automatically acquire
any Allotted Shares whose transfer restrictions have not been removed without consideration, immediately
after the removal of transfer restrictions.
(5) Other matters
Other matters related to the Allotment Agreement shall be determined by the Board of Directors of theCompany.

- 14 -

Proposal 6:

Continuation of Countermeasures Related to the Action of Large-scale Purchase of
Shares in NIPPON PISTON RING CO., LTD.

NIPPON PISTON RING CO., LTD. (the “Company”) continued “the Countermeasures against the
Action of Large-scale Purchase of the Company’s Shares (Anti-takeover Measures)” (hereinafter, the“Current Plan”) with the approval of the stockholders at the 123rd Annual General meeting of stockholders
held on June 29, 2017.
The effective term of the Current Plan will expire at the close of the 126th Annual General meeting ofstockholders to be held in June 2020 (hereinafter, “this Annual General meeting of stockholders”), andtherefore we have continued to investigate matters including whether to continue the Current Plan from theperspective of ensuring and enhancing the corporate value of the Company and the common interests of ourstockholders.
As a result of such investigations, a resolution was passed at the Board of Directors’ meeting held on
May 28, 2020, to continue the Current Plan following a partial revision (hereinafter the revisedcountermeasures shall be referred to as “the Plan”) provided that it receives the approval of stockholders at
this Annual General meeting of stockholders.
All five (5) Audit & Supervisory Board Members of the Company have expressed views in agreementwith the continuation of the Plan, subject to the specific implementation of the Plan being conducted in an
appropriate manner.
In addition, the status of the Company’s shares as of March 31, 2020 is shown in Appendix 2, but as ofthe date of this notice, the Company has not received any notification or proposal concerning a large-scalepurchase from any specific third-party.
Furthermore, the main changes from the Current Plan to the Plan are not limited to formal amendments
such as streamlining of words and phrases, and cover mainly the following points, taking into consideration
demands from capital markets, etc.
<Main changes from the Current Plan>(1) Certain types of large-scale purchase have been removed from those considered to be large-scalepurchases that will cause damage to the Company from which it is difficult to recover andlarge-scale purchases that will bring about a significant loss of the corporate value of the Company
and the common interests of our stockholders, and these have been limited to the so-called fourtypes of takeover specified by the Tokyo High Court and coercive two-tiered purchases.
(2) In order to eliminate the arbitrary implementation of the Plan by management, provisions statingthat the Board of Directors shall respect the recommendation of the Independent Committee to the
maximum extent possible when making decisions have been changed to stating that the Board of
Directors shall comply with the recommendation when making decisions.
(3) The content of countermeasures has been limited to a gratis allotment of share options.
(4) It has been clearly stated that there will be no delivery of cash or other economic benefits when
acquiring the Share Options from nonqualified persons.
1. Basic Policy Regarding Persons Who Control the Company’s Decisions on Financial and Business
Policies
The Company believes that it is desirable that persons who control the Company’s decisions on financial
and business matters have full understanding of the Company’s financial and business matters and of thesource of its corporate value, and are capable of ensuring and enhancing the corporate value of the Company
and the common interests of our stockholders in a continuous and sustainable manner.
Nevertheless, as a corporate entity listed on a financial instruments exchange, the Company respects thefree trading of the Company’s shares in the market and will not absolutely deny any action of large-scalepurchase by a specific party as long as it contributes to the corporate value of the Company and the common
interests of our stockholders. Additionally, we believe that a decision over whether to respond to a proposal
for the large-scale purchase of shares should ultimately be made based on the will of our stockholders.
However, recently in Japan’s capital market, there are some cases in which an action of large-scalepurchase of shares is undertaken “hostilely” without going through a sufficient discussion and agreement
process with the management team of the target company, and many such actions of large-scale purchases do
not contribute to the corporate value of the target company or the common interests of its stockholders.
These include: 1) those that may clearly harm the corporate value and common interests of stockholders inlight of the objectives of the takeover and/or management policies after the takeover; 2) those that may
effectively force stockholders to sell their shares; 3) those that do not provide sufficient time or information
for the Board of Directors or stockholders to consider the terms, etc. of the takeover or for the Board of- 15 -

Directors to present an alternative proposal; and 4) those that require the target company to negotiate withthe purchaser in order to procure conditions more favorable than those originally proposed by the purchaser.
Furthermore, as outlined below in 2. (1) The Company’s Corporate Philosophy and Source of Corporate
Value, the Company’s business is based on the collaboration of various stakeholders, including our customer
companies, employees, and local communities. Creating a sound system that enables these stakeholders to
involve themselves in our business with confidence, and providing the stable supply of cutting-edge andhigh-quality services required globally are essential factors in raising the Company’s corporate value. Unlessthe person(s) undertaking the action of large-scale purchase of the Company’s shares can ensure and enhancethese corporate values in the medium- and long-term based on an understanding of the source of theCompany’s corporate value, it is possible that the corporate value of the Company and the common interestsof our stockholders will be damaged.
The Company believes that those who conduct such inappropriate large-scale purchases are notappropriate as persons who control the Company’s decisions on financial and business policies, and further
believes that it is necessary to ensure the corporate value of the Company and the common interests of ourstockholders by taking necessary and appropriate measures against large-scale purchases of shares by such
person(s)2. Initiatives to Contribute to the Source of the Corporate Value of the Company and the Realizationof our Basic Policy(1) The Company’s Corporate Philosophy and Source of Corporate Value
The Company was founded in 1934 and, as a manufacturer of functional engine parts. We havepromoted technological development in materials, processing, and surface treatment technology. As theresult of product development in cylinder liners, camshafts and valve seat inserts, with a focus onpiston rings, and by establishing a global supply system, we have responded to the needs of ourdomestic and overseas customers, including automakers, in our aim to expand our business.
In our efforts to respond promptly and accurately to our customers’ needs, we have formulated our
corporate philosophy and specified our action guidelines as follows: “Let us build the prosperity of theCompany and of our lives by combining the ingenuity and efforts of each individual by strengthening
the collaboration between manufacturing, sales and technology.”<Corporate Philosophy>
1. Always act under the principle of “customer first.”
2. Respond flexibly to changes in the environment, secure appropriate profits, and give back tostockholders and other stakeholders.
3. Seek harmony with the society and maintain the position as a global comprehensive manufacturerof parts, to contribute to the human development.
4. Always strive for innovation and the better business performance, to build the prosperity of theCompany and improve the lives of the employees.
Fully recognizing our role as a global comprehensive manufacturer of parts while valuing
relationships with our customers, employees, and local communities, we attribute the growth of theCompany thus far to our stockholders’ support as well as the results of our efforts to establish a supply
system, improve quality, and make technological innovations, etc. based on the corporate philosophy
stated above. We believe this is the major source of the Company’s corporate value.
In addition, in order to enable many investors to invest in the Company on a long-term and ongoingbasis based on a good understanding of such source of the corporate value, we are working to enhance
the corporate value of the Company and the common interests of our stockholders from theperspectives of both promoting our mid-term management plan as outlined in (2) below andstrengthening our corporate governance as outlined in (3) below.
(2) Initiatives to Enhance Corporate Value
The Company is actively contributing to issues of environmental load reduction through productdevelopment in response to the demands to lower fuel consumption and comply with emission
regulations on the back of the global trend on environmental measures. In addition, we are continuing
to promote cost reduction activities, focusing on innovative manufacturing of our mainstay products,
and under the basic policy, Improve corporate value through “manufacturing that adapts well tochange” ~Establish the foundation for Nippon Piston Ring to prosper for 100 years, through marketing- 16 -

and innovation~, we are working on the following main initiatives: (1) Increase sales that is oriented tomaking and using technical proposals, both domestically and abroad, (2) Strive for innovative
manufacturing, (3) Strengthen new product development, (4) Strive for the world’s highest quality, bystrengthening human resources development, (5) Continue to promote Corporate Social Responsibility
activities.
Specifically, we are expanding sales to European and American automobile manufacturers as well
as Chinese local ones by strengthening sales activities through expanding innovative production lines tosome of our overseas manufacturing bases and also localizing some R&D functions at our major
overseas bases. Moreover, we are proactively promoting business in the non-automotive engine realm
for the future. We are developing the new business through using industry-government-academia
partnership in addition to our proprietary technologies such as expanding sales of metal injection
molding products and developing medical-related products using metal materials having superiority inbiocompatibility.
(3) Strengthening Corporate Governance
As a company with a responsibility to support society, the Company’s basic policy is to take all
stakeholders into consideration in corporate management, while also endeavoring to strengthen
corporate governance on an ongoing basis, in order to ensure sustainable growth and enhance corporate
value over the medium- to long-term.
Under this policy, the Company has focused on enhancing the soundness and transparency of theoperation of the Board of Directors, strengthening management monitoring functions by inviting
outside officers, and other initiatives, but henceforth the Company will endeavor to further enhance
corporate value as we implement the following corporate governance reforms.
<Main initiatives>
1. Increase number of female Independent Outside Directors by one (1)In order to further strengthen the management structure as we look to promote medium-term
management strategies, the Company will increase the number of Directors by one (1) while at thesame time increasing the number of female Independent Outside Directors by one (1) in order tostrengthen the monitoring function of the Board of Directors and enhance corporate governance.
As a result, the proportion of Independent Outside Directors in the Board of Directors will be
one-third or more, and the Company will endeavor to further strengthen monitoring functions
from the perspective of enhancing the quality of the Board of Directors and strengthening its
functions, as required by Japan’s Corporate Governance Code.
2. Shorten Directors’ term of office to one (1) year
The term of office of Directors will be shortened from two (2) years to one (1) year, in order tofurther clarify the management responsibilities of Directors and create a management structure
capable of quickly responding to changes in the management environment.
3. Establishment of a “Nomination and Remuneration Advisory Committee”
A “Nomination and Remuneration Advisory Committee” will be established as a voluntary
advisory committee under the Board of Directors, in order to enhance the transparency andobjectivity of procedures related to the nomination of Directors and remuneration, etc., andenhance corporate governance. This committee will consist of three (3) or more members, whowill be Directors, a majority of whom will be Independent Outside Directors. Additionally, thechairperson of the committee is planned to be the President.
4. Introduction of restricted stock remuneration plan
A remuneration plan will be introduced in which restricted stock is allotted to eligible Directors inplace of the stock-remuneration-type stock options in place up to this time, in order to share thebenefits and risk of share price fluctuations with stockholders and enhance Directors’ motivation
to contribute to increasing the share price and enhancing corporate value.
3. Initiatives to Prevent Decisions on the Company’s Financial and Business Policies being Controlled
by Inappropriate Persons in Light of our Basic Policy(1) Objectives of the Plan

- 17 -

The Plan will be introduced in accordance with the basic policy outlined in the aforementioned 1.
Basic Policy Regarding Persons Who Control the Company’s Decisions on Financial and Business
Policies, with the objectives of ensuring and enhancing the corporate value of the Company and thecommon interests of our stockholders.
The Board of Directors believes that persons who conduct large-scale purchases that do notcontribute to the corporate value of the Company and the common interests of our stockholders areinappropriate as persons who control the Company’s decisions on financial and business policies, as
stipulated in the Basic Policy. In order to prevent decisions on the Company’s financial and business
policies being controlled by inappropriate persons, and to deter large-scale purchases that are contrary
to the corporate value of the Company and the common interests of our stockholders, the Company has
deemed it necessary to have a framework in place that enables the Board of Directors to present analternative proposal to our stockholders when a large-scale purchase of the Company’s shares is carriedout; secure the necessary information and time so that our stockholders can determine whether to
respond to a large-scale purchase; and conduct negotiations on behalf of our stockholders.
The overall flow, from the emergence of a large-scale purchaser to the invoking or non-invoking ofcountermeasures, is outlined in the flow chart in Appendix 1. However, as stated in the
below-mentioned 3. (2) 1) Details of Large-scale Purchase Rules, the Company may request a party(hereinafter, “Large-scale Purchaser”) who intends to execute the action of large-scale purchase, etc. of
the Company’s shares (defined in the below-mentioned 3. (2) 1) (a) Action of Large-scale Purchase, etc.
Subject to the Plan”) to comply with prescribed procedures (hereinafter, “Large-scale Purchase Rules),and may invoke certain countermeasures in order to prevent damage in the event that the action oflarge-scale purchase, etc. is not in accordance with said procedures or in the event that the details, terms
and methods of the Action of Large-scale Purchase, etc. are deemed to damage the corporate value of
the Company and the common interests of our stockholders. Additionally, in order to eliminate
arbitrary judgments by the Board of Directors, the invoking of countermeasures, etc. shall be based on
the objective judgment of an independent committee comprising only the Company’s Outside Directors,
Outside Audit & Supervisory Board Members or external experts who are independent from the
management team that executes the Company’s business operations (hereinafter, “Independent
Committee”).
Furthermore, the status of the Company’s stockholders as of March 31, 2020 is shown in Appendix
2.
(2) Details of the Plan
1) Details of Large-scale Purchase Rules
The Large-scale Purchase Rules set out by the Board of Directors refer to the following: i) The
Large-scale Purchaser presents the necessary and sufficient information concerning the Action of
Large-scale Purchase to the Board of Directors in advance; ii) The Board of Directors sets a
certain evaluation period then consults the Independent Committee, to carefully formulate andannounce their opinion as the Board of Directors, including the invoking of countermeasures; andiii) The Large-scale Purchaser commences said action of purchase after the procedures of i) andii).
Details are as described in (a) to (f) below.
(a) Action of Large-scale Purchase, etc. Subject to the Plan
The Plan shall be applied in the event of actions that fall under (i) or (ii) below or similaractions or when these proposals1 are made. (However, this excludes the actions separately
approved by the Board of Directors. The relevant action is hereinafter referred to as “Action of
Large-scale Purchase, etc.).
The Large-scale Purchaser who intends to conduct Action of Large-scale Purchase, etc. mustcomply with the Large-scale Purchase Rules stipulated in the Plan in advance.
(i) A purchase of the shares, etc. issued by the Company2 resulting in the holder3 or joint
holders4 having a holding ratio of shares, etc.5 of 20% or more. (The holders and joint
holders are hereinafter collectively referred to as “Specific Large-volume Holders, etc.”)
1.
2.

“Proposal” includes acts of solicitation toward third parties.
Refers to share certificates, etc. stipulated in Article 27-23, Paragraph 1 of the Financial Instruments- 18 -

3.

4.

5.

and Exchange Act of Japan.
Refers to holders stipulated in Article 27-23, Paragraph 1 of the Financial Instruments and Exchange
Act of Japan, including parties deemed to be holders pursuant to Article 27-23, Paragraph 3 of theAct.
Refers to joint holders stipulated in Article 27-23, Paragraph 5 of the Financial Instruments andExchange Act of Japan, including parties deemed to be joint holders pursuant to Article 27-23,
Paragraph 6 of the Act.
Refers to the holding ratio of share certificates, etc. stipulated in Article 27-23, Paragraph 4 of the
Financial Instruments and Exchange Act of Japan. In this event, the number of share certificates, etc.
held by the holder or joint holders (refers to the number of share certificates, etc. held as stipulated
in the same Paragraph) shall also be added.
(ii)

A tender offer of the shares, etc. issued by the Company6 resulting in the party conducting
the takeover bid7 having a holding ratio of shares, etc.8 of 20% or more together with anumber of percentages of shares, etc. held by those parties with a special relationship9. (Theparty conducting the takeover bid and those parties with a special relationship arehereinafter collectively referred to as “Specific Large-volume Purchasers, etc.”)(b) Submission of Letter of Intent and Provision of Information
Prior to conducting the Action of Large-scale Purchase, etc., the Large-scale Purchaser subject
to the Plan shall submit an outline (including specific names, addresses, jurisdiction overincorporation, the names of representatives and contact information within Japan) of theLarge-scale Purchaser and their group (including joint holders, parties with a special relationship,
and partners and other constituent members in the case of a fund), the objectives, method andoutline of the Action of Large-scale Purchase, etc. (including the type and amount of thepurchase consideration, the timing, feasibility, and the structure and legality of the transaction
overall), a pledge expressing the intent to comply with the Large-scale Purchase Rules
prescribed in the Plan and compensation wording in the event of a violation, in a written form
prescribed by the Company (hereinafter, “Letter of Intent”) to the Board of Directors. All such
documents must be written in Japanese (the same shall apply to the documents and information
to be submitted by the Large-scale Purchaser).
Within 10 working days10 of receipt of the Letter of Intent, the Board of Directors shall provide
the Large-scale Purchaser with a list of necessary information required to enable ourstockholders to make judgment and the Board of Directors to evaluate and investigate the Actionof Large-scale Purchase, etc. (hereinafter, “Necessary Information”), and shall request theprovision of this Necessary Information (hereinafter, “Necessary Information Provision
Procedures”).
6.
7.
8.
9.

10.

Refers to share certificates, etc. stipulated in Article 27-2, Paragraph 1 of the Financial Instruments
and Exchange Act of Japan.
Refers to a takeover bid stipulated in Article 27-2, Paragraph 6 of the Financial Instruments andExchange Act of Japan.
Refers to the holding ratio of share certificates, etc. stipulated in Article 27-2, Paragraph 8 of the
Financial Instruments and Exchange Act of Japan.
Refers to parties with a special relationship stipulated in Article 27-2, Paragraph 7 of the Financial
Instruments and Exchange Act of Japan. However, regarding those listed in Article 27-2, Paragraph
7, Item 1, it excludes parties stipulated in Cabinet Office Ordinance Article 3, Paragraph 2
concerning the disclosure of a takeover bid for share certificates, etc. by parties other than theissuer.
Refers to days other than days specified in Article 1, Paragraph 1 of the Act on Holidays of
Administrative Organs.
The main points corresponding to the Necessary Information are as follows.
(i)

Details (including history, specific name, capital structure, financial condition, descriptionof business, and the existence, if any, and details of past transactions by the Large-scale
Purchaser similar to the Action of Large-scale Purchase, etc.) of the Large-scale Purchaser
and their group (including joint holders, parties with a special relationship, and partners
and other constituent members in the case of a fund)- 19 -

(ii)Objectives, method and outline of the Action of Large-scale Purchase, etc. (including thepresence of management participation intent, type and amount of the purchaseconsideration, the timing, feasibility, and the structure and legality of the transaction
overall)(iii) Basis for calculating the purchase consideration for the Company’s shares, etc. (including
the underlying facts and assumptions for the calculation, the calculation method and thenumerical data used in the calculation, the details and calculation basis of any expectedsynergies created through a series of transactions relating to the Action of Large-scale
Purchase, etc., and information concerning the price of consideration in the event that the
Action of Large-scale Purchase, etc. is conducted with consideration other than cash)(iv) Procurement status of the funds required for the Action of Large-scale Purchase, etc.
(including the specific name of the provider of the funds (including substantial providers),
procurement method, and details of the transaction)(v) Timing of all past acquisitions of the Company’s shares, etc. by the Large-scale Purchaser
and the group, the number of acquisitions and the acquisition price for each period, thetiming of all past sales of the Company’s shares, etc. and the number of sales and sales
price for each period(vi) Reasons for and details of any plan for further acquisition of the Company’s shares, etc.
after the Action of Large-scale Purchase, etc.
(vii) In the event of any lease contracts, collateral contracts, resale contracts, purchasereservation contracts or any other important contracts or agreements (hereinafter,“collateral contracts, etc.”) concerning the Company’s shares, etc. that the Large-scale
Purchaser has already acquired or will acquire in the future, specific details of thecollateral contracts, etc., including the type of contract, the counterparty of the contract,
and the number of the Company’s shares, etc. that will be subject to the contract(viii) The Company’s management policies, business plans, financial plans, capital policies,
dividend policies and asset utilization policies, etc. after the Action of Large-scale
Purchase, etc. (in the event that the Company’s shares, etc. are expected to be delisted, thefacts and reasons)(ix) Treatment and policies concerning the Company’s employees, business partners,
customers, local communities and other stakeholders after the purchase, etc.
(x) Other information the Board of Directors or the Independent Committee reasonably
deems necessary
The Board of Directors may, as necessary, set a deadline for the Large-scale Purchaser toprovide this Necessary Information from the perspective of ensuring the prompt application of
the Large-scale Purchasing Rules. However, this deadline may be extended should theLarge-scale Purchaser request an extension based on reasonable reasons.
Additionally, in the event that, as the result of careful examination by the Board of Directors of
the information initially provided by the Large-scale Purchaser in accordance with theaforementioned list of Necessary Information, the Board of Directors reasonably deems that the
information is insufficient for the judgment of our stockholders and evaluation and investigation,etc. by the Board of Directors in light of the details and terms of the Action of Large-scale
Purchase, etc., the Company may, upon setting a new deadline, request the Large-scale
Purchaser to provide additional information to receive the Necessary Information. With regard to
the judgment as to whether the Necessary Information provided by the Large-scale Purchaser issufficient, and whether the details and scope of the Necessary Information requested by the
Board of Directors are appropriate, the Board of Directors shall comply with the advice andrecommendations of the Independent Committee in order to eliminate any arbitrary judgment.
In the event that the Company reasonably deems that the provision of information concerning
the Action of Large-scale Purchase, etc. by the Large-scale Purchaser is completed, theCompany shall provide the Large-scale Purchaser with a notification to this effect (hereinafter,“Notification of Completion of Information Provision”). Furthermore, notwithstanding a request
by the Board of Directors for the additional provision of Necessary Information, in the event that
the Large-scale Purchaser presents a reasonable explanation to the effect that the provision ofsaid information is difficult in part, the Board of Directors may recognize that the provision of
information by the Large-scale Purchaser has been completed even if the Necessary Information
requested by the Board of Directors has not been received, and may issue the Notification ofCompletion of Information Provision.

- 20 -

In the event that the Board of Directors receives a Letter of Intent from the Large-scale
Purchaser; in the event that the list of Necessary Information is sent to the Large-scale
Purchaser; or in the event that the provision of Necessary Information by the Large-scale
Purchaser is deemed to be complete, the Board of Directors shall make a prompt announcement
to this effect. Furthermore, the Board of Directors shall disclose to our stockholders andinvestors the Necessary Information provided to the Board of Directors in a timely andappropriate manner in accordance with applicable laws and regulations and the rules of the
Financial Instruments Exchange.
(c) Evaluation and Investigation, etc. by the Board of Directors
After issuing a Notification of Completion of Information Provision, the Board of Directors
shall set a period as in (i) and (ii) below, calculated starting from the following day, during
which the Board of Directors evaluates, investigates, negotiates, forms opinions, and formulates
alternative proposals (hereinafter, “Board of Directors’ Investigation Period”) in accordance withthe level of difficulty of evaluating the Action of Large-scale Purchase, etc.
(i) A maximum period of 60 days if purchasing all of the Company’s shares through a tender
offer in exchange for cash (yen) only.
(ii) A maximum of 90 days if the Action of Large-scale Purchase, etc. is by other methods.
However, in the event that the Board of Directors fails to reach a judgment as to whether or not
to introduce countermeasures before the expiration of the Board of Directors’ Investigation
Period as noted in either of the aforementioned (i) or (ii) for such reasons that the Independent
Committee fails to make a recommendation within the Board of Directors’ Investigation Period
concerning the invoking or non-invoking of countermeasures as specified in the
below-mentioned 3. (2) 1) (d) Establishment of the Independent Committee andRecommendations to the Board of Directors, the Board of Directors may pass a resolution toextend the Board of Directors’ Investigation Period within a reasonable extent, upon consultation
with the Independent Committee. In this event, the Board of Directors shall notify theLarge-scale Purchaser of the specific period of extension and the reasons for deeming theextension necessary, and shall disclose the information to stockholders and investors. Any suchextension shall be limited to a single extension for a maximum of 30 days.
During the Board of Directors’ Investigation Period, the Board of Directors shall adequately
evaluate and investigate Necessary Information provided while receiving advice andrecommendations from the Independent Committee as well as advice, as necessary, fromindependent external experts (financial advisors, certified public accountants, attorneys-at-law,and other experts), and shall carefully compile and publish their opinions as the Board of
Directors with regard to the Action of Large-scale Purchase, etc. Furthermore, the Board of
Directors may, as necessary, negotiate improvement of conditions related to the Action of
Large-scale Purchase, etc. with the Large-scale Purchaser and present alternative proposals to
the Company’s stockholders.
(d)Establishment of the Independent Committee and Recommendations to the Board of Directors
The Company will establish an Independent Committee as an independent organization toappropriately implement the Plan and prevent arbitrary decisions by the Board of Directors. The
Independent Committee shall consist of three or more members who shall be appointed fromamong the Company’s Outside Directors, Outside Audit & Supervisory Board Members, andexternal experts (including attorneys-at-law, certified public accountants, corporate managers
with a wealth of management experience, and academic experts) to ensure fair and neutral
judgments. An outline of the Independent Committee is as stated in Appendix 3, and the names
and past experience and positions of members of the Independent Committee are as stated inAppendix 4.
The Board of Directors shall promptly provide the Independent Committee with the Letter ofIntent and the Necessary Information submitted by the Large-scale Purchaser upon their receipt,
and shall promptly provide the Independent Committee with the results of the Board of
Directors’ evaluation and analysis of the Necessary Information and alternative proposals, etc.
upon their compilation. In addition, the Board of Directors shall consult with the Independent
Committee with regard to: (i) the adequacy of the Necessary Information provided by theLarge-scale Purchaser; (ii) the need, if any, for an extension of the Board of Directors’- 21 -

Investigation Period; and (iii) the appropriateness, etc. of invoking countermeasures to the
Action of Large-scale Purchase, etc.
The Independent Committee shall, during the Board of Directors’ Investigation Period,
investigate the details of the Action of Large-scale Purchase, etc. from the perspective ofensuring and enhancing the corporate value of the Company and the common interests of ourstockholders, and shall make recommendations to the Board of Directors, including theappropriateness of invoking countermeasures (including recommendations with a reservationthat the intentions of stockholders should be confirmed), based on the below-mentioned 3. (2) 2)Countermeasures in the Event of Action of Large-scale Purchase, etc. In order to ensure that the
judgments of the Independent Committee contribute to the corporate value of the Company andthe common interests of our stockholders, the Independent Committee may, at the Company’s
expense, obtain advice from independent external experts (financial advisors, certified public
accountants, attorneys-at-law, and other experts) and request the attendance of the Company’s
Directors, Audit & Supervisory Board Members, and employees, etc. at meetings of the
Independence Committee to seek explanations in regard to necessary information. Additionally,in the event that the Independent Committee seeks the provision of investigative materials andany other information or consultation and negotiations through the Board of Directors, theLarge-scale Purchaser must respond promptly to such requests.
The Company shall promptly disclose information regarding the outline of therecommendations by the Independence Committee and any other matters deemed appropriate, in
accordance with the applicable laws and regulations and the rules of the Financial Instruments
Exchange.
(e) Resolutions by the Board of Directors, and General meeting of stockholders for Confirmation of
Stockholders’ Intentions
The Board of Directors shall comply with the aforementioned recommendations of the
Independence Committee and, as an entity under the Companies Act, pass a resolution
concerning the invoking or non-invoking of countermeasures against the Action of Large-scale
Purchase, etc.
Furthermore, in the event that the Independent Committee makes a recommendation that theintentions of stockholders should be confirmed with respect to invoking countermeasures against
the Action of Large-scale Purchase, etc., the Board of Directors shall convene a General meetingof stockholders to confirm the will of stockholders (hereinafter, “General meeting ofstockholders for Confirmation of Stockholders’ Intentions”) as soon as practically possible andconfirm the intentions of stockholders with regard to the invoking of countermeasures, excluding
cases when convening a General meeting of stockholders is very difficult for practical reasons.
In the event that the decision is made to hold a General meeting of stockholders for
Confirmation of Stockholders’ Intentions, the Board of Directors shall set a period of a
maximum of 60 days during which stockholders may adequately consider whether or not to
invoke countermeasures against the Plan (hereinafter, “Stockholders’ Investigation Period”), andshall hold a General meeting of stockholders for Confirmation of Stockholders’ Intentions
during the Stockholders’ Investigation Period. (It should be noted that the Board of Directors’
Investigation Period shall terminate at the same time as the commencement of the Stockholders’
Investigation Period. The Stockholders’ Investigation Period shall terminate at the conclusion of
the General meeting of stockholders for Confirmation of Stockholders’ Intentions.) In the eventthat a General meeting of stockholders for Confirmation of Stockholders’ Intentions is held, theBoard of Directors shall abide by the judgment of stockholders at the General meeting ofstockholders for Confirmation of Stockholders’ Intentions. In the event that the Board of
Directors passes a resolution concerning the invoking or non-invoking of countermeasuresagainst the Action of Large-scale Purchase, etc., or in the event that the Board of Directors
passes a resolution to convene a General meeting of stockholders for Confirmation of
Stockholders’ Intentions, the Board of Directors shall promptly disclose information on theoutline of the resolution and other matters deemed appropriate by the Board of Directors.
(f) Action of Large-scale Purchase, etc. Waiting Period
The Large-scale Purchaser shall not execute the Action for Large-scale Purchase, etc. during
the period from the commencement of procedures relating to the Large-scale Purchase Rules
until the expiration of the Board of Directors’ Investigation Period (however, in the event thatthe aforementioned Stockholders’ Investigation Period is established, the period shall be until the- 22 -

termination of the period combining the Board of Directors’ Investigation Period and theStockholders’ Investigation Period).
2) Countermeasures if the Action of Large-scale Purchase, etc. Takes Place(a) Conditions for invoking countermeasures(i)

When a Large-scale Purchaser does not comply with the Large-scale Purchase Rules
In the event that the Large-scale Purchaser does not comply with the Large-scale Purchase
Rules stipulated in the Plan, and it is not corrected within five working days after the Boardof Directors requests such correction in writing, in cases other than where it is obvious that
there is a necessity not to invoke countermeasures for the sake of ensuring and enhancing thecorporate value of the Company and the common interests of our stockholders and otherspecial circumstances, the Independent Committee shall, in principle, recommend that theBoard of Directors invoke countermeasures. (However, there may be cases when the
Independent Committee makes a recommendation with a reservation that the intentions ofstockholders should be confirmed.)
The Board of Directors shall decide to invoke the countermeasures in accordance with therecommendations of the Independent Committee. However, in the event that, in addition to
the recommendation procedures by the Independent Committee with regard to invoking thecountermeasures, a General meeting of stockholders for Confirmation of Stockholders’Intentions is held as stipulated in the aforementioned 3. (2) 1) (e), the Board of Directors
shall decide to invoke countermeasures pursuant to the judgment of stockholders at theGeneral meeting of stockholders for Confirmation of Stockholders’ Intentions.
When determining whether the Large-scale Purchase Rules have been complied with or not,it is necessary to adequately consider the circumstances of the Large-scale Purchaser within areasonable extent and not to certify that the Large-scale Purchase Rules have not been
complied with simply for the reason that the Necessary Information has not been provided in
part.

(ii) When a Large-scale Purchaser complies with the Large-scale Purchase Rules
In the event that the Large-scale Purchaser complies with the Large-scale Purchasing Rules,
the Independent Committee shall, in principle, recommend that the Board of Directors does
not invoke countermeasures against the Action for Large-scale Purchase, etc. In such cases,
whether or not to respond to the Action for Large-scale Purchase, etc. by the Large-scale
Purchaser should be decided by our stockholders upon consideration of the details of the
Action for Large-scale Purchase, etc. and the opinions and alternative proposals, etc.
regarding the Action for Large-scale Purchase, etc. presented by the Company.
However, even if the Large-scale Purchasing Rules are complied with, in the event that the
Independent Committee deems that the party demonstrates any of the following
circumstances from (a) to (e) and as a result would bring about a significant loss of thecorporate value of the Company and the common interests of our stockholders for reasons
such as causing damage from which it would be difficult to recover, and when it is also
judged that the activation of countermeasures is appropriate, the Independent Committee
shall recommend that the Board of Directors invoke countermeasures against the Action forLarge-scale Purchase, etc. (However, there may be cases when the Independent Committee
makes a recommendation with a reservation that the intentions of stockholders should be
confirmed.) In this event, the Board of Directors shall decide to invoke countermeasures inaccordance with the same procedures as the abovementioned (i) in the Event the Large-scale
Purchaser does not comply with Large-scale Purchase Rules.
(a) When it is judged that the purchaser, despite having no intention of participating in the
management of the Company, is acquiring or is attempting to acquire the Company’s
shares, etc. for the purpose of raising the share price and forcing the Company or a party
affiliated to the Company to purchase the shares at a high price (so-called “greenmailer”)(b) When it is judged that the purchaser is acquiring the shares, etc. of the Company for the
purpose of temporarily controlling the management of the Company and transferring- 23 -

intellectual property rights, expertise, confidential business information and main
business partners and customers that are necessary for the business management of theCompany to the Large-scale Purchaser or their group companies, etc.
(c) When it is judged that the purchaser is acquiring the Company’s shares, etc. for the
purpose of diverting the Company’s assets as security or funds for repayment of debts of
the Large-scale Purchaser or their group companies, etc. after taking control of the
management of the Company(d) When it is judged that the purchaser is acquiring the Company’s shares, etc. for the
purpose of temporarily controlling the Company to sell or otherwise dispose of highvalue assets, including real estate and securities that are not related to our business forthe time being, and using the profits from such disposal to pay a temporarily highdividend or for the purpose of using the opportunity of the rapid rise in share value
resulting from the temporarily high dividend to sell the Company’s shares, etc. at a highprice(e) When it is judged that the purchase method of the Company’s shares, etc. proposed by
the Large-scale Purchaser may restrict the opportunity or the freedom for stockholders tomake a judgment and effectively force our stockholders to sell the Company’s shares,
etc., such as the so-called coercive two-step acquisition (refers to the purchase of sharessuch as a tender offer, in which the purchase of all the shares, etc. of the Company is not
induced in the first stage of purchase, and the purchasing conditions in the second stageof purchase are set unfavorably, or not stated clearly)(b) Details of countermeasures
Countermeasures against the Action of Large-scale Purchase, etc. by the Company inaccordance with the Plan shall be based on the gratis allotment of share options prescribed in
Article 277 and following articles of the Companies Act.
The outline of share options issued in the event that the gratis allotment of share options iscarried out as a countermeasure (hereinafter, the “Share Options”) is stated in Appendix 5. The
Share Options shall be allotted without contribution to stockholders recorded in the final
stockholder registry (excluding the Company) on a certain date (hereinafter, “record date ofallotment”) determined separately by resolution of the Board of Directors with regard to gratis
allotment of the Share Options (however, in the event that the General meeting of stockholders ismade the decision-making body for the gratis allotment of share options as the result of
amendments to the Articles of Incorporation, this decision shall be made by the General meetingof stockholders; hereinafter, “Gratis Allotment Resolution for the Share Options”) in the
proportions stipulated separately in the Gratis Allotment Resolution for the Share Options at therate of one or more share option for every one share of the Company.
The value of assets to be contributed upon exercise of one Share Option shall be one yen or
more and shall be determined separately by means of the Gratis Allotment Resolution for the
Share Options, and the exercise of one Share Option shall result in the issuance of one share of
the Company’s common stock to the holder of said Share Option. However, the Share Options
are subject to a discriminatory condition to exercise and share options held by the following
persons may not be exercised: (i) Specific Large-volume Holders, etc., (ii) Specific
Large-volume Purchasers, etc., (iii) persons who have acquired or inherited the Share Options
from persons who fall under (i) or (ii) without obtaining approval from the Board of Directors, or(iv) a related person11 with those who fall under any of (i) to (iii). (These persons shallhereinafter be collectively referred to as “nonqualified persons.”)3) Countermeasure Suspension Procedures
Even after a resolution for the gratis allotment of the Share Options is passed or the gratis
allotment of the Share Options is undertaken as a means of invoking countermeasures, in the eventthat it is judged that the invoking of countermeasures is not appropriate, for reasons such as theLarge-scale Purchaser rescinding or amending the Action of Large-scale Purchase, etc., the Boardof Directors will comply with the recommendations of the Independent Committee and halt the
invoking of countermeasures by way of suspending the gratis allotment of the Share Options
during the period up until the effective day of the gratis allotment of the Share Options, or by wayof the Company acquiring the Share Options without contribution during the period from theeffective day of the gratis allotment of the Share Options until the day prior to the commencement
day of the exercise period of the Share Options. This will enable the Company to suspend- 24 -

countermeasures in the event that it is no longer appropriate to invoke countermeasures forreasons such as the Large-scale Purchaser rescinding or amending the purchase proposal or actionof purchase.
In this event, the Board of Directors will promptly disclose the information.
4) Effective Term, Abolition and Amendments of the Plan
The effective term of the Plan shall be up to the time of the conclusion of the Annual General
meeting of stockholders regarding the last business year ending within the three years (at theconclusion of the Annual General meeting of stockholders to be held in June 2023).
However, even prior to the expiration of the effective term of the Plan, the Company shallreview the Plan from time to time from the perspective of ensuring and enhancing the corporate
value of the Company and the common interest of our stockholders and, (i) in the event that theGeneral meeting of stockholders passes a resolution to abolish or amend the Plan or (ii) in theevent that the Board of Directors passes a resolution to abolish or amend the Plan, the Plan shallbe abolished or amended at that time. In the event of making important changes to the details of
the Plan, the Board of Directors shall submit a proposal to the General meeting of stockholders forthe continuation of the Plan after amendments in order to obtain the opportunity to appropriatelyreflect the intentions of stockholders. The Plan after amendments shall take effect on the condition
that the approval of stockholders is obtained for the proposal.
“A related person” refers to a person who substantially controls that person; a person who is
controlled by or under the joint control of that person (including any person the Board of Directors
recognizes as falling under this definition), or a person who the Board of Directors recognizes as
acting in collaboration with that person. “Control” means “when controlling decisions over thefinancial and business policies” of another company, etc.” (as prescribed in Article 3, Paragraph 3 of
Enforcement Regulations of the Companies Act).
In the event that the Plan is abolished or amended, etc. the Company shall promptly disclose
information, as necessary, about the facts of the abolition or amendment and (in the event of
amendment, etc.) the details and other matters regarding the amendment.
The provisions of laws and ordinances cites in the Plan are based on the provisions enacted as of
May 28, 2020 and, in the event that it becomes necessary in accordance with the establishment,
revision or abolition of laws and ordinances on or after that date, the Board of Directors may, upon
consideration of the intent of said establishment, revision or abolition, change the meaning ofclauses or terms in the Plan to a reasonable extent and within an extent that does not disadvantage
the stockholders.
Additionally, with regard to the Plan after the Annual General meeting of stockholders scheduled
to be held in June 2023, we intend to obtain the approval of stockholders for the continuation of
the Plan or the introduction of a plan with new content at the Annual General meeting ofstockholders scheduled to be held in June 2023 following the necessary review of the Plan by the
Board of Directors.
(3) Reasonableness of the Plan
1) Consistency with Guidelines and Timely Disclosure Rules for Anti-takeover Measures
The Plan satisfies the three principles set out in the “Guidelines Regarding Takeover Defenses
for the Purposes of Protection and Enhancement of Corporate Value and Stockholders’ Common
Interests” (hereinafter, “Anti-takeover Guidelines”) jointly released by the Ministry of Economy,
Trade and Industry and the Ministry of Justice on May 27, 2005: (i) the principle of the protectionand enhancement of corporate value and stockholders’ common interests; (ii) the principle of priordisclosure and the intentions of stockholders; and (iii) the principle of necessity and suitability,
and is in complete accordance with the Anti-takeover Guidelines.
The Plan also takes into full consideration the “Takeover Defense Measures in Light of Recent
Environmental Changes” released on June 30, 2008 by the Corporate Value Study Group of the
Ministry of Economy, Trade and Industry.
In addition, the Plan also fulfils the intent of the various regulations pertaining to theintroduction of anti-takeover measures prescribed by Tokyo Stock Exchange, Inc.

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2) Introduction for the Purpose of Ensuring and Enhancement of the Common Interests ofStockholders
As stated above, the Plan will be introduced for the purpose of ensuring and enhancement of thecorporate value and common interests of our stockholders by securing the necessary informationand time required for stockholders to judge whether the Action of Large-scale Purchase, etc. isappropriate, and enabling negotiations to be conducted for the benefit of stockholders when such
Action of Large-scale Purchase, etc. is carried out against the Company.
3) Sufficient Respect for Stockholders’ Intentions (Sunset Provision)
The Plan will be continued subject to the approval of stockholders at this Annual General
meeting of stockholders in order to ensure the opportunity to appropriately reflect the intentions ofstockholders on its continuation. The Plan will not be continued unless the approval of the
majority of stockholders present at this Annual General meeting of stockholders is obtained.
As stated in the abovementioned 3. (2) 1) (e) General meeting of stockholders for Confirmationof Stockholders’ Intentions, in the event that the Independent Committee makes a recommendationthat the intentions of stockholders should be confirmed with respect to invoking countermeasures,it shall be possible to confirm the intentions of stockholders with regard to the invoking or
non-invoking of countermeasures at the General meeting of stockholders.
In addition, if a resolution to abolish the Plan is passed at a General meeting of stockholders, orif a resolution to abolish the Plan is passed at a meeting of the Board of Directors, which
comprises Directors appointed at the General meeting of stockholders, the Plan shall be abolishedat that point even if it’s prior to the expiration of the effective term. In that sense the continuation,change, and abolition of the Plan will be based on the will of the Company’s stockholders.
4) Eliminating Arbitrariness of the Board of Directors
The Company has established the Independent Committee as a unit independent from theBoard of Directors to appropriately carry out this countermeasure, prevent arbitrary judgments
by the Board of Directors, and ensure the rationality and fairness of the judgments. The
Independent Committee is comprised of three or more members who shall be selected fromamong the Company’s Outside Directors, Outside Audit & Supervisory Board Members, andexternal experts (including attorneys-at-law, certified public accountants, corporate managers
with a wealth of management experience, and academic experts), all of whom are independent
from the management team that executes the Company’s business operations. (An outline of the
Independent Committee is as stated in Appendix 3, and the names, past experience and positionsof the members of the Independent Committee are as stated in Appendix 4.)
In the event that Action of Large-scale Purchase, etc. is taken against the Company, as stated in
the aforementioned 3. (2) 2) Countermeasures if the Action of Large-scale Purchase, etc. Takes
Place, the Independent Committee shall make a substantive judgment as to whether the Action of
Large-scale Purchase, etc. will damage the corporate value of the Company and the common
interests of our stockholders, and the Board of Directors shall make a decision in accordancewith this judgment as a body under the Companies Act. In this way, the Independent Committee
conducts strict oversight to ensure that the Board of Directors does not conduct arbitrary
operations of the Plan, including its invoking, and shall disclose an outline of its decisions tostockholders and investors to ensure a mechanism for the transparent operation of the Plan inorder to maintain the corporate value of the Company and the common interests of ourstockholders.
5) Setting Objective and Reasonable Requirements
As stated above, the Plan is designed in such a way that countermeasures will not be invoked
unless the Independent Committee deems that reasonable and detailed objective requirements
have been satisfied, and can be said to ensure a mechanism that prevents any arbitrary invoking
by the Board of Directors.
6) No Dead-hand or Slow-hand Anti-takeover Measure
The Plan is designed in such a way that it may be abolished even prior to the expiration of its
effective term by a decision of the Board of Directors, which comprises Directors appointed at
the General meeting of stockholders, or by the Board of Directors which comprises Directors
appointed by the General meeting of stockholders and nominated by a person who has purchaseda large number of the Company’s shares. Therefore, the Company believes that the Plan is of a

- 26 -

completely different nature to the rights plans known as the dead-hand anti-takeover measure (ananti-takeover measure in which the invoking of the measure cannot be prevented even if amajority of the members of the Board of Directors are replaced) and the slow-hand anti-takeovermeasure (an anti-takeover measure in which the invoking of the measure takes more time toprevent due to the inability to replace all of the directors at once) that make it impossible ordifficult for the management team to abolish a plan.
7) Acquiring the Opinions of Third-party Experts
The Plan enables the Independent Committee to receive advice from external experts (financial
advisors, certified public accountants, attorneys-at-law, consultants and other experts) at theCompany’s expense should a Large-scale Purchaser emerge. This mechanism more securely
guarantees the fairness and objectivity of judgments by the Independent Committee.
(4) Impact on our Stockholders and Investors
1) Impact on Stockholders and Investors on Continuation of the PlanAt the time of the continuation of the Plan, it will have no impact on the rights of stockholders
since no actual allocation of the Share Options will then be made.
2) Impact on Stockholders and Investors when Countermeasures are Invoked
In the event that a decision is made to invoke countermeasures based on the Plan and a
resolution is passed concerning the implementation of gratis allotment of share options pursuant
to the principles, stockholders who are recorded in the final stockholder registry on the record
date of allotment shall naturally become the holders of share options on the day when gratis
allotment of share options becomes effective, without making an application or following anyother procedures. As a result of this mechanism, even if the dilution of share value per share of
the Company held by stockholders arises at the time of gratis allotment of the Share Options,dilution of the overall economic value of shares held in the Company will not arise, andtherefore no direct or specific impact on the legal rights and economic interests with regard toshares of the Company held by stockholders and investors is assumed.
In the event that the Board of Directors recognizes that the invoking of countermeasures is not
appropriate for reasons such as the rescindment or amendment of the purchase action by theLarge-scale Purchaser, the Company may, until the day prior to the commencement date of theexercise period of the Share Options, halt the allotment of the Share Options or acquire the Share
Options without consideration and without delivering the Company’s shares in exchange for the
Share Options even after the gratis allotment resolution for the Share Options and effective dateof the gratis allotment of the Share Options. In such cases, since dilution of the value per sharewill not arise, any stockholders and investors who purchased the Company’s shares, etc.
assuming that the value of shares would be diluted may suffer significant damages due to thefluctuation in share price.
Furthermore, in the event that discriminatory terms are attached to the exercise or acquisitionof the Share Options, it is assumed that the legal rights and economic interests of the Large-scale
Purchaser will be affected upon such exercise or acquisition. However, even in this case, there is
no assumption of any direct and specific impact on the legal rights and economic interests of theCompany’s shares held by stockholders other than the Large-scale Purchaser.
3) Necessary Procedures for Stockholders upon the Gratis Allotment of the Share Options(a) Procedures for recording in the stockholder registry
In the event of a resolution to conduct the gratis allotment of the Share Options, the Company
shall announce the record date of allotment for the Share Options, pursuant to laws andregulations. As the Share Options will be allocated to the stockholders recorded in the final
stockholder registry on the record date of allotment, it is necessary for stockholders to berecorded in the final stockholder registry on the relevant record date of allotment.
(b) Necessary procedures on exercising or acquiring the Share Options- 27 -

The Company shall send claim forms and other documents required for exercising the rights of
the Share Options to stockholders recorded in the final stockholder registry on the record date ofallotment. When stockholders who have been allotted the Share Options exercise their rights
during the period for exercising rights, in principle by paying the amount separately stipulated by
the gratis allotment resolution for the Share Options of one yen or more to the payment-handlinginstitution after submitting the claim form for exercising the Share Options, one share of theCompany’s common stock shall in principle be issued for each share option. If stockholders fail
to complete the procedures for exercising the Share Options, including cash payment, the Share
Option will be terminated (Article 287 of the Companies Act) and the Company’s shares held
will be diluted as a result of the exercise of the Share Options by other stockholders. However, inthe event that the Board of Directors decides to acquire the Share Options pursuant to theprovision that allows the Share Options to be acquired in exchange for the Company’s shares, inaccordance with statutory procedures, stockholders, other than nonqualified persons, who havebeen deemed to have satisfied the requirements for the invoking of countermeasures, shall in
principle receive one share of the Company’s common stock for each Share Option as
consideration for the Company acquiring the Share Options, without making the cash payment
equivalent to the payment amount, on a day separately stipulated by the Board of Directors.
In addition to the above, the Company will announce or advise details of the payment method, etc.
to stockholders and investors after the resolution concerning the gratis allotment of the Share Options is
passed, so we would like to ask our stockholders to check the details at that time.

- 28 -

Appendix 1

Flow Chart until the Invoking or Non-invoking of Countermeasures under the Plan

- 29 -

Appendix 2

Status of the Company’s Shares (as of March 31, 2020)

1. Total number of authorized shares
19,545,000 shares
2. Total number of issued shares
8,374,157 shares (including 284,205 shares of treasury stock)
3. Number of shares comprising one unit
100 shares
4. Number of stockholders with voting rights
7,316 stockholders
5. Status of major stockholders (top ten)
No.
1
2
3
4
5
6
7
8
9
10

Name
Toyota Motor Corporation
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Asahi Mutual Life Insurance Company
Nippon Piston Ring Employee Shareholding Association
DFA International Small Cap Value Portfolio
Shinsei Bank, Limited
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Japan Trustee Services Bank, Ltd. (Trust Account 5)

Number ofshares held
(1,000 shares)
418
407
373
259
209
204
165
157
148
147

Percentageofownership
5.17%
5.04%
4.61%
3.20%
2.59%
2.53%
2.04%
1.94%
1.83%
1.82%

(Notes)1. The number of shares held is rounded down to the nearest thousand shares. Percentages ofownership are rounded off to two decimal places.
2. The rations of shareholding are calculated by excluding the shares of treasury stock (284thousand shares).

- 30 -

Appendix 3

Outline of Independent Committee Rules

1. Establishment and Composition, etc.
 The Independent Committee shall be established by a resolution of the Board of Directors of theCompany.
 Members of the Independent Committee (hereinafter, “Independent Committee Members”) shallnumber three or more; shall satisfy all of the requirements below; and shall be appointed by aresolution of the Board of Directors from among Outside Directors, Outside Audit & Supervisory
Board Members, and external experts (including attorneys-at-law, certified public accountants,
corporate managers with a wealth of management experience, and academic experts), all of whom
are independent from the Company.
(1) Persons who are not, or who have never been, Directors, executive officers, employees or
Audit & Supervisory Board Members (excluding Outside Directors and Outside Audit &Supervisory Board Members) of the Company or its subsidiaries, or close relatives of those
persons (a “close relative” refers to a spouse or any family within the second degree, or a
relative living in the same household; hereinafter, the same)(2) Persons who are not a Director, executive officer or employee of the Company’s major
business partners (“major business partner” refers to a business partner to whom the annual
amount paid by the Company to said company as consideration for goods or services, or towhom the annual amount paid by said company as consideration for goods and services to
the Company exceeds 3% of the Company’s average consolidated net sales for the past five
years; hereinafter, the same)(3) Persons who are not an external advisor (“external advisor” includes, but is not limited to,external legal advisors, certified public accountants, tax accountants, judicial scriveners, andfinancial advisors) to the Company or its major business partners(4) Persons who have no special interest with the Company
2. Term of Office of Independent Committee Members
 The term of office shall be until the conclusion of the Annual General meeting of stockholders
regarding the last business year ending within the three years after the appointment.
3. Management and Resolutions, etc. of the Independent Committee
 The Independent Committee shall be convened by the Board of Directors or by an Independent
Committee Member.
 Resolutions of the Independent Committee shall, in principle, be passed with all Independent
Committee Members in attendance and by a majority of those in attendance. However, for reasonsof an accident or other special circumstances, resolutions may be passed with a majority of
Independent Committee Members in attendance and by a majority of their voting rights.
4. Activities, etc. of the Independent Committee
 The Independent Committee shall review and resolve the following matters, and makerecommendations to the Board of Directors with the reasons for those resolutions.
(1) Examine and consider the details of the purchase proposal submitted by the Large-scale
Purchaser(2) Determine the adequacy of the Necessary Information submitted by the Large-scale Purchaser(3) Determine the necessity, if any, for an extension of the Board of Directors’ Investigation
Period(4) Determine the invoking or non-invoking of countermeasures(5) Determine whether or not to consult the Board of Directors with regard to the appropriatenessof invoking the countermeasures(6) Determine whether or not to halt countermeasures that have been invoked(7) Other matters that the Independent Committee may undertake as stipulated in the Plan, andmatters over which the Board of Directors has sought consultation
 The Independent Committee shall review and resolve the above matters from the perspective ofwhether or not they will contribute to the corporate value of the Company and the common interestsof our stockholders.
 The Independent Committee may, at the Company’s expense, seek advice from attorneys-at-law,certified public accountants, tax accountants, financial advisors, and other experts.

- 31 -

Appendix 4

Introduction of the Independent Committee Members

The following five individuals are expected to be the members of the Independent Committee upon the
introduction of the Plan.
Ryosuke Nagumo
Born in 1953
April
June

1975
2005

January

2006

June

2007

June
June

2014
2015

Joined RHYTHM WATCH CO., LTD.
Director, General Manager, Tokyo Branch, Domestic Sales
Division, RHYTHM WATCH CO., LTD.
Director, General Manager, Sales Headquarters, Domestic
Sales Division, RHYTHM WATCH CO., LTD.
President and Representative Director, RHYTHM
KAIHATSU CO., LTD.
Part-time Advisor, RHYTHM WATCH CO., LTD
Outside Director, the Company (to present)

Kan Ishii
Born in 1954
April

1977

October

2008

January
AugustAugust
June
June

2010
2011
2015
2017
2018

Joined Japan Development Bank (presently Development
Bank of Japan Inc.)
Managing Executive Officer, Development Bank of JapanInc.
Deputy Trustee, Japan Airlines Co., Ltd.
President and C.E.O., Fukuoka Jisho Co., Ltd.
Vice Chairman / Director, Fukuoka Jisho Co., Ltd.
Outside Director, the Company (to present)
Director, The Nishinippon Shimbun Co., Ltd. (to present)

Hiromi Nakazawa
Born in 1964
April

1988

October

1995

January

1998

April
September
June
June
June
June

1999
2012
2013
2015
2017
2020

Joined The Mitsui Bank, Ltd. (present Sumitomo Mitsui
Banking Corporation)
Joined Taiyo Audit Corporation (present Grant Thornton
Taiyo LLC)
Joined Ota Showa & Co. (present Ernst & Young ShinNihon
LLC)
Registered as certified public accountant
Joined Nidec Corporation
Audit & Supervisory Board Member, C’BON Co.,Ltd
Executive Officer, C’BON Co.,Ltd.
Audit & Supervisory Board Member, C’BON Co.,Ltd(to present)

Scheduled to be appointed as Outside Director, the Company- 32 -

Osamu Takai
Born in 1947
April
April

1992
2012

June

2013

June

2014

April

2018

Professor, School of Engineering, Nagoya University
Professor Emeritus, Nagoya University (to present)
Professor, College of Engineering, Kanto Gakuin University,
Vice Director, Materials & Surface Engineering ResearchInstitute, Kanto Gakuin University
External Audit & Supervisory Board Member, JCU
CORPORATION
Audit & Supervisory Board Member (Outside), the Company(to present)
Director, Materials & Surface Engineering Research Institute,
Kanto Gakuin University (to present)

Yoshihide Hino
Born in 1962
April

1990

April
October

2000
2013

March

2015

April

2016

April

2017

April

2018

Housing Dispute Resolution Body Examination Committee Member,
Japan Federation of Bar Associations (to present)

January
June

2020
2020

Human Rights Volunteer, Ministry of Justice (to present)
Scheduled to be appointed as Audit & Supervisory Board
Member (Outside), the Company

Registered as Attorney-at-Law, Joined Sakano Seo Hashimoto
Law OfficePartner, Tokyo Hachobori Law Office (to present)Part-time Judge, Civil, Tokyo District Court (Civil Conciliation
Act)
Substitute Auditor, LOOK HOLDINGS INCORPORATED (topresent)
Member of Mediation Committee, Tokyo Summary Court (topresent)
Chairman of Committee for Housing Dispute Settlement
Agency, Daini Tokyo Bar Association- 33 -

Appendix 5

Outline of Share Options

1. Total number of allotted Share Options
The total number of allotted Share Options shall be not less than the total number of the Company’s
issued common stock on the record date of allotment stipulated in the Gratis Allotment Resolution for
the Share Options (excluding the number of the Company’s common stock held by the Company atthe same time), and shall be stipulated separately in the Gratis Allotment Resolution for the Share
Options.
2. Stockholders eligible for allotment
The Share Options shall be allocated at a ratio stipulated separately in the Gratis Allotment
Resolution for the Share Options at one option or more per share owned in the Company (excluding
the Company’s common stock held by the Company) to stockholders recorded in the stockholder
registry on the record date of allotment.
3. Effective date of the gratis allotment of the Share Options
The date shall be stipulated separately in the Gratis Allotment Resolution for the Share Options.
4. Class and number of shares subject to the Share Options
The class of shares subject to the Share Options shall be the Company’s common stock, and thenumber of shares subject to one Share Option shall be one share (hereinafter, “number of subject
shares”). However, the necessary adjustments shall be made if the Company splits shares orconsolidates shares.
5. Details and price of property to be contributed upon exercise of the Share Options
The object of contribution upon the exercise of the Share Options shall be cash, and the amount per
share of the Company’s common stock as property to be contributed upon exercise of the Share
Options shall be one yen or more, and shall be stipulated separately in the Gratis Allotment Resolution
for the Share Options.
6. Restrictions on transfer of the Share Options
Acquisition of the Share Options by transfer shall require the approval of the Board of Directors.
7. Requirements for exercising the Share Options
Nonqualified persons cannot exercise the Share Options they hold. Details of exercise conditions for
the Share Options are stipulated separately in the Gratis Allotment Resolution for the Share Options.
8. Acquisition of the Share Options by the Company
The Company may acquire the Share Options held by persons other than nonqualified persons on
the date stipulated separately by the Board of Directors, and may grant the number of subject shares of
the Company’s common stock per one Share Option in exchange for the Share Option as consideration.
Furthermore, the Company will not deliver any cash or other economic benefits as consideration for
the acquisition of Share Options held by nonqualified persons.
Details of the acquisition clause for the Share Options are stipulated separately in the Gratis
Allotment Resolution for the Share Options.
9. Gratis acquisition when halting the invoking of countermeasures, etc.
In the event that the Board of Directors halts the invoking of countermeasures or in any other event
stipulated separately by the Board of Directors in the Gratis Allotment Resolution for the Share
Options, the Company may acquire all of the Share Options without consideration.
10. Period for exercising the Share Options
The period for exercising the Share Options and other necessary matters shall be stipulated
separately in the Gratis Allotment Resolution for the Share Options.

- 34 -