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 shall prevail.

Securities Code: 7976
March 4, 2020
To our shareholders:Eiichiro Suhara
Representative Director, Chairman and President
Mitsubishi Pencil Co., Ltd.
5-23-37, Higashi-ohi, Shinagawa-ku, Tokyo

Notice of the 145th Annual General Meeting of Shareholders
You are cordially invited to attend the 145th Annual General Meeting of Shareholders of Mitsubishi Pencil Co., Ltd.
(the “Company”), which will be held as indicated below.
If you are unable to attend the meeting in person, you may exercise your voting rights in writing or via the Internet.
Please review the attached Reference Documents for the General Meeting of Shareholders and exercise your voting
rights by 5:10 p.m. on Wednesday, March 25, 2020 (JST).
1. Date and Time: Thursday, March 26, 2020 at 10:00 a.m. (The venue opens at 9:00 a.m.)
2. Venue:
Event Hall, 7F, Shinagawa General Culture Community Center (Curian)
5-18-1, Higashi-ohi, Shinagawa-ku, Tokyo
3. Purpose of the Meeting
Matters to be reported:
1. Business Report and Consolidated Financial Statements for the 145th fiscal year (from January 1, 2019 to
December 31, 2019), and the results of audits of the Consolidated Financial Statements by the Financial
Auditor and the Audit & Supervisory Board
2. Non-consolidated Financial Statements for the 145th fiscal year (from January 1, 2019 to December 31,
2019)
Matters to be resolved:
Proposal No. 1
Appropriation of Surplus
Proposal No. 2
Election of Eight (8) Directors
Proposal No. 3
Election of One (1) Audit & Supervisory Board Member
Proposal No. 4
Election of One (1) Substitute Audit & Supervisory Board Member
Proposal No. 5
Decision on Remuneration for Allotment of Restricted Shares to Directors (Excluding
Outside Directors)-

Of the documents to be provided at the time of this notice, the Consolidated Statement of Changes in Equity and the Notes toConsolidated Financial Statements, and the Non-consolidated Statement of Changes in Equity and the Notes to the Nonconsolidated Financial Statements are posted on our website below in accordance with relevant laws and regulations and theCompany’s Articles of Incorporation, and are not stated in this notice. Note that the Consolidated Financial Statements and theNon-consolidated Financial Statements audited by Audit & Supervisory Board Members and the Financial Auditor include theabove Consolidated Statement of Changes in Equity, the Notes to the Consolidated Financial Statements, the Non-consolidated
Statement of Changes in Equity, and the Notes to the Non-consolidated Financial Statements.
Company’s website: https://www.mpuni.co.jp/ir/index.html- If there are any amendments made to the Business Report, Consolidated Financial Statements, Non-consolidated Financial
Statements and Reference Documents for the General Meeting of Shareholders, we will post them on our website as noted above.

-1-

Reference Documents for the General Meeting of Shareholders
Proposal No. 1

Appropriation of Surplus

The Company proposes the appropriation of surplus as follows:
1. Year-end dividends
The Company has given consideration to the business performance of the fiscal year and future businessdevelopment, and it proposes to pay year-end dividends for the 145th fiscal year as follows:(1) Type of dividend property
Cash(2) Allotment of dividend property and the total amount
15 JPY per common share of the Company
In this event, the total dividends will be 879,817,875 JPY.
(3) Effective date of dividends of surplus
March 27, 2020
2. Other appropriation of surplus
The Company proposes the following appropriation of surplus as for the retained earnings in order tostrengthen the management foundation in preparation for aggressive business development in the future:(1) Item of surplus to be decreased and amount of decrease
Retained earnings brought forward: 2,000,000,000 JPY(2) Item of surplus to be increased and amount of increase
General reserve: 2,000,000,000 JPY-2-

Proposal No. 2

Election of Eight (8) Directors

The terms of office of all nine (9) Directors will expire at the conclusion of this meeting. Therefore, the Company
proposes the election of eight (8) Directors, decreasing the number of Directors by one (1) to ensure swift
management decision making. The candidates for Directors are as follows:
Candidate
Name
No.
1
Eiichiro Suhara
2
Shigehiko Suhara
3

Hiroshi Yokoishi

4Nobuyuki Nagasawa

5

Kazuhisa Kirita

Current position and responsibility in the Company

Attribute

Representative Director, Chairman and President
Representative Director, Vice President
Director, Managing Executive Officer in charge of International
Affairs
Director, Managing Executive Officer in charge of Human
Resources, General Affairs, Legal Affairs, and ComplianceDirector, Managing Executive Officer in charge of Engineering,Intellectual Property Rights, Cosmetics and Industrial Materials

Reelection
Reelection

6

Kenichiro Senoh

Outside Director

7

Tojiro Aoyama

Outside Director

8

Asako Yano

Outside Director

Reelection
Reelection
Reelection
Reelection
OutsideIndependent
DirectorReelection
OutsideIndependent
DirectorReelection
OutsideIndependent
DirectorFemaleReelection: Candidate for Director to be reelected
New election: Candidate for Director to be newly elected
Outside: Candidate for Outside Director
Independent Director: Independent Director as defined by the securities exchange-3-Candidate
No.

1

2

Number of the
Career summary, and position and responsibility in the
Company’s sharesCompany
owned(Important concurrent positions)Aug. 1974
Joined the Company
Mar. 1980
Director
Mar. 1982
Managing Director
Mar. 1985
Director, Vice President
Mar. 1987
Representative Director, President
Eiichiro Suhara
June 2015
Outside Director of Eisai Co., Ltd.
(July 19, 1948)
274,650 sharesMar. 2019
Representative Director, Chairman andReelection
President of the Company (current position)[Important concurrent positions]Representative Director, President of Yamagata Mitsubishi
Pencil Precision Co., Ltd.
Chairman of Mitsubishi Pencil Vietnam Co., Ltd.
[Reasons for nomination as a candidate for Director]
Ever since his appointment as Representative Director, President in 1987, Eiichiro Suhara has exhibited superiorleadership and has been leading the Company’s business for many years. He has played an important role in achieving
sustainable growth and increasing the corporate value of the Group. His abundant experience and wide breadth ofknowledge, as well as his perspective that takes a big-picture view of the Group, are essential for us in our aim tofurther strengthen the supervisory function hereafter. Therefore, the Company proposes his reelection as Director.
Apr. 2005
Joined the Company
Apr. 2010
General Factory Manager of Gunma Factory
Apr. 2012
General Manager of Sales Planning Department
Mar. 2013
Director in charge of Corporate Planning
Nov. 2015
Director in charge of Corporate Planning andGeneral Manager of International Operations
Planning Department
Shigehiko Suhara(February 11, 1979)
46,440 sharesMar. 2016
Director in charge of Product Development andReelection
New Business Development
Mar. 2017Managing Director in charge of Writing
Business, New Business Development, ProductDevelopment and Quality Assurance
Mar. 2018
Director, Vice President
Mar. 2019
Representative Director, Vice President (current
position)[Reasons for nomination as a candidate for Director]
Shigehiko Suhara has served as General Factory Manager of Gunma Factory and General Manager of Domestic andInternational Sales Planning, and has been in charge of Corporate Planning, Product Development, and New Business
Development. He has diverse experience and knowledge ranging from production to sales in Japan and abroad. He has
exhibited superior management execution capabilities and leadership since assuming office as Representative Director,
Vice President in 2019, and has played an important role in efforts aimed at further enhancing the flexible management
decisions and swift business execution, as well as at achieving business growth and increasing the corporate value of
the Company. Therefore, the Company proposes his reelection as Director.
Name(Date of birth)-4-

Candidate
No.

3

4

Number of the
Career summary, and position and responsibility in the
Company’s sharesCompany
owned(Important concurrent positions)Oct. 1985
Joined the Company
Apr. 1998
General Manager of International Business
Department
Mar. 2001
Director and General Manager of International
Business Department
Apr. 2005
Director and General Manager of International
Hiroshi Yokoishi
Operations Department
12,200 shares(April 17, 1959)
Reelection
Mar. 2017Managing Director and General Manager ofInternational Operations Department
Mar. 2018
Managing Director in charge of International
AffairsMar. 2019
Director, Managing Executive Officer in chargeof International Affairs (current position)[Reasons for nomination as a candidate for Director]
Hiroshi Yokoishi has been devoting efforts to cultivate new sales channels by leading international operations divisions
for a long time with his extensive management experience in the International Operations Department. We consider that
his wide-ranging insight will be essential for us in further expanding our business in the global market. In addition, he
has played an important role in management decision-making. Therefore, the Company proposes his reelection as
Director.
Apr. 1980
Joined the Company
Apr. 2001
General Manager, assistant to International
Business Department
Apr. 2003
General Manager of Financial Resources andAccounting Department
Mar. 2006
Director and General Manager of Financial
Resources and Accounting Department
Jan. 2008
Director in charge of Financial Affairs, Legal
Affairs and Information System
Apr. 2010
Director in charge of Financial Affairs, Legal
Nobuyuki Nagasawa
Affairs, Information System and Internal(April 3, 1957)
21,100 shares
Control
Reelection
Mar. 2016
Director in charge of Corporate Planning andInformation System
Mar. 2017Managing Director in charge of Human
Resources, Corporate Planning and Information
SystemMar. 2018
Managing Director in charge of Human
Resources, General Affairs, Legal Affairs andComplianceMar. 2019
Director, Managing Executive Officer in chargeof Human Resources, General Affairs, Legal
Affairs and Compliance (current position)[Reasons for nomination as a candidate for Director]
Nobuyuki Nagasawa has extensive knowledge and experience in managerial divisions, including accounting, finance,
legal affairs, and information system, and his achievements include establishing a group-wide compliance system andrisk management system. He can grasp the Company’s situation from a diversified perspective by leveraging his
insights, and has played an important role in the strengthening of business execution supervising functions and inmanagement decision-making. Therefore, the Company proposes his reelection as Director.
Name(Date of birth)-5-

Candidate
No.

5

6

Number of the
Career summary, and position and responsibility in the
Company’s sharesCompany
owned(Important concurrent positions)Apr. 1981
Joined the Company
Apr. 2003
General Manager of Product Development
Department
Apr. 2007
General Manager of Gunma Research andDevelopment Center
Apr. 2011
General Manager of Product Development
Department
Mar. 2012
Director and General Manager of ProductKazuhisa Kirita
Development Department(November 13, 1958)
5,800 sharesMar. 2016
Director in charge of Engineering, Patent
Reelection
Administrations and Cosmetics
Mar. 2018
Managing Director in charge of Engineering,Intellectual Property Rights, Cosmetics and
New Business Development
Mar. 2019
Director, Managing Executive Officer in chargeof Engineering, Intellectual Property Rights,
Cosmetics and Industrial Materials (current
position)[Reasons for nomination as a candidate for Director]
Leveraging his experience in research and development, Kazuhisa Kirita has been involved in Product Development,
Cosmetics, New Business Development, and other areas. Furthermore, he has made many achievements andaccumulated wide experience of commercialization based on the combination of technology and business. We judgedthat his insight grounded on such extensive experience will contribute to the search and development of new business
opportunities, and he plays an important role in management decision-making. Therefore, the Company proposes his
reelection as Director.
Apr. 1976
Joined Fuji Photo Film Co., Ltd. (currently
FUJIFILM Corporation)
Dec. 1999
Representative Director, Vice President of Keio
Academic Enterprise Co., Ltd.
Apr. 2001
Professor at the Graduate School of Media andGovernance, Keio University
Apr. 2004
President of the Industry-Academia
Collaboration Initiative Nonprofit Organization(current position)
Kenichiro Senoh
June 2012
Independent Outside Director of Teijin Limited(January 1, 1954)
Reelection
Member of the Advisory Board of Teijin
OutsideLimitedIndependent Director
Mar. 2017
Outside Director of the Company (current
position)
Feb. 2019
External Director of giftee, Inc. (current
position)[Important concurrent positions]
President of the Industry-Academia Collaboration Initiative
Nonprofit Organization
Director of the Intellectual Property Association of Japan
External Director of giftee, Inc.
[Reasons for nomination as a candidate for Outside Director]
Based on his diverse experience and knowledge of practical research that connects the both fields of technology andbusiness, Kenichiro Senoh has actively made comments that have contributed to enhancing governance system from an
objective, multi-pronged perspective. Therefore, the Company proposes his reelection as Outside Director. His term ofoffice as Outside Director of the Company will be three (3) years at the conclusion of this General Meeting of
Shareholders.
Name(Date of birth)-6-

Candidate
No.

7

Number of the
Career summary, and position and responsibility in the
Company’s sharesCompany
owned(Important concurrent positions)Mar. 1979
Ph.D. in Engineering at Keio University
Apr. 1988
Assistant Professor, Department of MechanicalEngineering, Faculty of Science andTechnology, Keio University
Apr. 1995
Professor, Department of MechanicalEngineering, Faculty of Science andTechnology, Keio University
Apr. 1996
Professor, Department of System Design
Engineering, Faculty of Science andTechnology, Keio University
July 2009
Dean of Faculty of Science and Technology and
Dean of Graduate School of Science andTojiro Aoyama
Technology, Keio University(August 29, 1951)
June 2015
Outside Director of DMG MORI CO., LTD.
Reelection(current position)
OutsideIndependent Director
Mar. 2016
President of the Japan Society for Precision
Engineering
Mar. 2017
Outside Audit & Supervisory Board Member of
the Company
Apr. 2017
Professor Emeritus, Keio University
May 2017
Vice-President of Keio University (current
position)Mar. 2019
Outside Director of the Company (current
position)[Important concurrent positions]Vice-President of Keio University
Outside Director of DMG MORI CO., LTD.
[Reasons for nomination as a candidate for Outside Director]
In addition to having extensive knowledge and experience in mechanical engineering, production engineering, andother fields, Tojiro Aoyama has served as Vice-President of Keio University, and possesses a wide breadth ofknowledge. Based on this experience, he has been able to give beneficial opinions and advice from a viewpoint that is
not confined to the industry to which the Company belongs, which will lead to improved soundness and transparency ofmanagement decision making. Therefore, the Company proposes his reelection as Outside Director. His term of officeas Outside Director of the Company will be one (1) year at the conclusion of this General Meeting of Shareholders. His
total term of office, including his time as an Outside Audit & Supervisory Board Member, will be three (3) years.
Name(Date of birth)-7-

Number of the
Career summary, and position and responsibility in the
Company’s sharesCompany
owned(Important concurrent positions)Apr. 1990
Joined Mercedes-Benz Japan Co., Ltd.
Sept. 1997
Joined Boston Consulting Group Japan Co.,
Ltd.
Mar. 2000
Joined Louis Vuitton Japan K.K.
June 2002
COO of Celux Co., Ltd.
Oct. 2008
Established Dramatic Co., Ltd.; Representative
Director of Dramatic Co., Ltd.
May 2014
Established ten to four inc.; Representative
Asako Yano
Director of ten to four inc. (current position)(January 21, 1968)
FemaleJune 2015
Outside Director of Yaoko Co., Ltd. (current
Reelection
position)
OutsideAug. 2015
Director of Cogito Education and Management
Independent Director
Inc.
June 2018
Outside Director of Watabe Wedding
Corporation
Mar. 2019
Outside Director of the Company (current
position)[Important concurrent positions]Representative Director of ten to four inc.
Outside Director of YAOKO Co., Ltd.
[Reasons for nomination as a candidate for Outside Director]
In addition to extensive knowledge relating to business management and diversity management, Asako Yano possesses
a wide breadth of knowledge and achievement in marketing and branding. She has made diversified comments onenhancing corporate governance, promoting diversity, and other matters from a standpoint which is independent of theCompany’s management team. Therefore, as we have judged that this will lead to further invigoration of the Company’s
Board of Directors, the Company proposes her reelection as Outside Director. Her term of office as Outside Director of
the Company will be one (1) year at the conclusion of this General Meeting of Shareholders.
1. Eiichiro Suhara concurrently serves as Representative Director, President of Yamagata Mitsubishi Pencil Precision Co.,
Ltd. The Company purchases its specified products from this company and is also leasing real estate to this company.
2. Eiichiro Suhara concurrently serves as Chairman of Mitsubishi Pencil Vietnam Co., Ltd. The Company purchases its
specified products from this company.
3. Eiichiro Suhara concurrently serves as Representative Director, President of Ryoyu Trading Co., Ltd. The Company
sells and purchases its specified products, etc. to and from this company and is also leasing real estate to this company.
4. There is no special interest between each candidate for Director other than those stated in 1. to 3. and the Company.
5. Kenichiro Senoh, Tojiro Aoyama, and Asako Yano are candidates for Outside Directors.
6. Pursuant to the provisions of Article 427, paragraph 1 of the Companies Act, the Company has entered into limited
liability agreements with Kenichiro Senoh, Tojiro Aoyama, and Asako Yano to limit their liability for damages under
Article 423, paragraph 1 of the Companies Act, on the condition that the requirements stipulated by laws and regulations
are met. If their reelection is approved, the Company will continue the above-mentioned limited liability agreementswith them. The maximum amount of liability for damages under this agreement is 5 million JPY or the minimum
liability amount provided for under laws and regulations, whichever is the higher amount.
7. The Company has designated Kenichiro Senoh, Tojiro Aoyama, and Asako Yano as Independent Directors under theprovisions of the Tokyo Stock Exchange and has notified to the Exchange, and plans to continue to designate them as
Independent Directors.
8. Kenichiro Senoh, Tojiro Aoyama, and Asako Yano, who are candidates for Outside Directors, satisfy the “Independence
Criteria for Outside Directors and Outside Audit & Supervisory Board Members” stipulated by the Company on page 11.
9. Asako Yano’s registered name is Asako Saito.

CandidateNo.

8

Notes:

Name(Date of birth)-8-

Proposal No. 3

Election of One (1) Audit & Supervisory Board Member

Audit & Supervisory Board Member Kiyokazu Sakurai will retire as Audit & Supervisory Board Member at theconclusion of this meeting due to the expiration of his term of office. Therefore, the Company proposes the electionof one (1) Audit & Supervisory Board Member. The consent of the Audit & Supervisory Board has been obtained
for this proposal. The candidate for Audit & Supervisory Board Member is as follows.
Name(Date of birth)

Career summary and position in the Company(Important concurrent positions)Apr. 1981
Apr. 2005
Apr. 2008

Number of theCompany’s shares
ownedJoined the Company
General Manager of Production Engineering Department
General Manager of Production Control Department andGeneral Factory Manager of Yokohama Factory
Mar. 2009
Director, General Manager of Production Control
Department and General Factory Manager of Yokohama
Factory
Akira Fukai
Apr. 2010
Director and General Manager of Production Control(January 3, 1959)
8,200 shares
Department
New election
Mar. 2011
Director in charge of Production
Jan. 2012
Director in charge of Production and General FactoryManager of Yokohama Factory
Mar. 2018
Managing Director in charge of Production and General
Factory Manager of Yokohama Factory
Mar. 2019
Director, Managing Executive Officer in charge of
Production (current position)[Reasons for nomination as a candidate for Audit & Supervisory Board Member]
Akira Fukai has been in charge of the production division, in addition to serving as Director, etc. of multiple production subsidiaries
in Japan and abroad, and has extensive experience and knowledge in the production of the Company. Therefore, as we anticipate that
he will play an important role in enhancing audits and further strengthening the auditing system throughout the Group from his
perspective that is closer to production sites, the Company proposes his election as Audit & Supervisory Board Member. At theconclusion of this meeting, he will retire as Director, Managing Executive Officer of the Company.
Notes: There is no special interest between the candidate for Audit & Supervisory Board Member and the Company.

-9-Proposal No. 4

Election of One (1) Substitute Audit & Supervisory Board Member

The validity of election of Satoshi Sugano, who was elected as a Substitute Audit & Supervisory Board Member atthe 144th Annual General Meeting of Shareholders held on March 28, 2019, will expire as of commencement of
this meeting. Therefore, the Company requests approval for the election of one (1) Substitute Audit & Supervisory
Board Member to be ready to fill a vacant position should the number of Audit & Supervisory Board Members fall
below the number required by laws and regulations. The consent of the Audit & Supervisory Board has beenobtained for this proposal. The candidate for Substitute Audit & Supervisory Board Member is as follows:
Name(Date of birth)
Satoshi Sugano(December 17, 1965)
Reelection
OutsideCareer summary(Important concurrent positions)Apr. 1994

Number of theCompany’s shares
ownedRegistered as an attorney at law; joined Naritomi & Partners(currently Marunouchi Minami Law Office)Oct. 2003
Partner of Naritomi & Partners
June 2015
Established Nakadori Law Office; Representative Attorney
Independent Audit &at Law (current position)
Supervisory Board Member[Important concurrent positions]Representative Attorney at Law of Nakadori Law Office[Reasons for nomination as a candidate for Substitute Outside Audit & Supervisory Board Member]
Satoshi Sugano has no prior experience in the management of a company, but has advanced professional legal knowledge as an
attorney at law. As we judged that his extensive knowledge could be reflected in the Company’s auditing system and that he could
provide us with appropriate advice and suggestions for securing legal compliance from a standpoint which is independent from theCompany’s management team, the Company proposes his election as Substitute Outside Audit & Supervisory Board Member.
Notes: 1. There is no special interest between the candidate for Substitute Audit & Supervisory Board Member and the Company.
2. Satoshi Sugano is a candidate for Substitute Outside Audit & Supervisory Board Member.
3. If Satoshi Sugano has taken office of Audit & Supervisory Board Member, pursuant to the provisions of Article 427,
paragraph 1 of the Companies Act, the Company plans to enter into a limited liability agreement with him to limit his
liability for damages under Article 423, paragraph 1 of the Companies Act, on the condition that the requirements
stipulated by laws and regulations are met. The maximum amount of liability for damages under this agreement will be
1 million JPY or the minimum liability amount provided for under laws and regulations, whichever is the higher amount.
4. If Satoshi Sugano has taken office of Audit & Supervisory Board Member, the Company plans to designate him as an
Independent Audit & Supervisory Board Member under the provisions of the Tokyo Stock Exchange and notify to the
Exchange.
5. Substitute Outside Audit & Supervisory Board Member candidate Satoshi Sugano satisfies the “Independence Criteria
for Outside Directors and Outside Audit & Supervisory Board Members” stipulated by the Company on page 11.

- 10 -

[Reference] Independence Criteria for Outside Directors and Outside Audit & Supervisory Board Members
The Company deems that Outside Directors and Outside Audit & Supervisory Board Members (including
candidates) who do not fall under any of the criteria of the following items possess independence with regard to theCompany and do not pose a risk of conflict of interest with general shareholders.
1. Major shareholder
Major shareholder of the Company or its executing person. “Major shareholder” means any of those who
directly or indirectly hold 10% or more of voting rights at the end of the Company’s most recent fiscal year.
2. Major business partner(1) Our principal business partner or its executing person. “Our principal business partner” means any one of
the following:- The amount of payment from the said business partner to the Company in the most recent business year
exceeds 2% of the Company’s annual consolidated net sales.
- A business partner who is indispensable in fund procurement of the Company and whom the Company
relies on to the extent that there is no substitution.
(2) A party who considers the Company as a major business partner or its executing person. “A party who
considers the Company as a major business partner” means the following party:- The amount of payment from the Company to the said party in the most recent business year exceeds
2% of the said party’s annual consolidated net sales.
3. Professional service provider
A legal expert such as an attorney at law, accounting or tax specialist such as a certified public accountant or
tax accountant, consultant, corporate manager, university professor, etc. who obtains monetary or otherproperty profit exceeding 10 million JPY per year other than executive remuneration from the Company. Whensuch property is obtained by an organization such as a corporation or a partnership, this criterion applies to aperson belonging to such organization.
4. Donation/Grant
A person who receives donation or grant exceeding 10 million JPY per year from the Company. When such
donation or grant is obtained by an organization such as a corporation or a partnership, this criterion applies toan executing person of such organization.
5. A person who has fallen under any of the above 1. to 4. in the past three (3) years.
6. A spouse or a relative within second degree of kinship of a Director or an employee of the Company or theCompany’s subsidiary.
* In these criteria, the term “executing person” means a person who executes business in an organization such asa corporation or a partnership regardless of his/her title or position name such as director, executive officer,
employee, etc.

- 11 -

Proposal No. 5

Decision on Remuneration for Allotment of Restricted Shares to Directors (Excluding Outside
Directors)

Regarding the remuneration amount for Directors of the Company, it was approved at the 144th Annual General
Meeting of Shareholders held on March 28, 2019 that the amount of monetary remuneration to Directors for eachbusiness year shall be up to 500 million JPY (including the amount up to 60 million JPY per year for Outside
Directors, but excluding the employee salaries of Directors who serve concurrently as employees).
The Company intends to adopt a remuneration plan under which shares of common stock of the Company subject
to certain restrictions including a transfer restriction period and grounds for acquisition by the Company at no cost(“Restricted Shares”) will be allotted to Directors of the Company (excluding Outside Directors; “Eligible
Directors”) as follows for the purpose of providing Eligible Directors with an incentive to sustainably increase theCompany’s medium- to long-term business performance and corporate value and further promote the sharing ofvalue with shareholders.
Comprehensively taking into account various factors such as the purpose of the adoption of the above plan, theCompany proposes that the total amount of monetary remuneration claims to be provided as remuneration to
Eligible Directors related to the Restricted Shares be determined to be up to 100 million JPY (excluding theemployee salaries of Directors who serve concurrently as employees) for each business year in addition to the
remuneration amount for Directors described above. The Company also determined the following specific terms
and maximum number of the Restricted Shares to be allotted to Eligible Directors comprehensively taking into
account various factors such as the purpose of the adoption of the above plan, and the Company considers that they
are appropriate.
There are currently nine (9) Directors of the Company (including three (3) Outside Directors); if Proposal No. 2 isapproved, there will be eight (8) Directors (including three (3) Outside Directors).
Specific terms and maximum number of the Restricted Shares to be allotted to Eligible Directors
1.

Allotment and payment of the Restricted Shares
Based on the resolution at the Company’s Board of Directors, the Company provides to Eligible Directors
monetary remuneration claims as remuneration related to the Restricted Shares up to the amount for eachbusiness year as described above, and each Eligible Director receives an allotment of the Restricted Shares by
providing all of those monetary remuneration claims through contribution in kind.
The amount to be paid in for the Restricted Shares shall be determined by the Company’s Board of Directors
within an amount that is not particularly favorable to Eligible Directors who subscribe for those Restricted
Shares based on the closing price of the Company’s shares of common stock on the Tokyo Stock Exchange on
the business day immediately prior to the date of the relevant resolution of the Company’s Board of Directors
regarding the issuance or disposal thereof (or, if there are no transactions on such date, the closing price on
the trading day immediately before such day).
The monetary remuneration claims described above shall be provided on the condition that Eligible Directors
have agreed to the contribution in kind described above and have executed an agreement for allotment of
restricted shares containing the terms set out in 3. below.

2.

Total number of the Restricted Shares
100,000 shares of the total number of the Restricted Shares to be allotted to Eligible Directors shall be themaximum number of the Restricted Shares to be allotted for each business year.
However, if it becomes necessary to adjust the total number of the Restricted Shares to be allotted in case of ashare split (including an allotment of shares of common stock of the Company at no cost) or shareconsolidation of the Company’s shares of common stock, or other similar cases on and after the date of theresolution of this Proposal, the total number of such Restricted Shares may be reasonably adjusted.

3.

Terms of the agreement for allotment of restricted shares
The agreement for allotment of restricted shares to be executed upon the allotment of the Restricted Shares,
based on the resolution at the Company’s Board of Directors, between the Company and Eligible Directors
who receive an allotment of the Restricted Shares shall include provisions that substantially have thefollowing content.
- 12 -

(1) Terms of restriction on transfer
Eligible Directors who receive an allotment of the Restricted Shares may not assign, pledge, create an
assignment-based security right over, provide as an inter vivos gift, bequeath, or in any other way disposeof, those Restricted Shares to a third party during the period from the day on which they receive adelivery of the Restricted Shares to the day on which they retire from all of the positions of Directors
and/or Executive Officers of the Company (excluding the cases where they are reappointed at the sametime as the retirement) (the “Transfer Restriction Period”).
(2) Release of restriction on transfer
On the condition that an Eligible Director who receives an allotment of the Transfer Restricted Shares has
continuously held a position as Director or Executive Officer of the Company throughout the period (the“Service Period”) from the date of the Annual General Meeting of Shareholders immediately prior to theresolution of the Company’s Board of Directors regarding the issuance or disposal of the Restricted
Shares allotted to that Eligible Director (the “Allotted Shares”) to the date of the Annual General Meetingof Shareholders of the Company immediately after the commencement date of the Transfer Restriction
Period, the Company shall release the restriction on transfer of all of the Allotted Shares held by that
Eligible Director when the Transfer Restriction Period expires.
However, if the relevant Eligible Director retires from all of the positions of Director and/or Executive
Officer of the Company before the expiration of the Service Period for any reason considered legitimate
by the Company’s Board of Directors, the Company will, upon the expiration of the Transfer Restriction
Period, release the restriction on transfer of such number of the Allotted Shares as reasonably adjusted
based on the time of retirement.
(3) Acquisition of the Restricted Shares at no cost
If an Eligible Director who receives an allotment of the Restricted Shares retires from all of the positionsof Director and/or Executive Officer of the Company before the expiration of the Service Period, theCompany will automatically acquire the Allotted Shares at no cost unless there is a reason consideredlegitimate by the Company’s Board of Directors.
The Company shall, immediately after the expiration of the Transfer Restriction Period, automaticallyacquire at no cost the Allotted Shares, if any, for which, as of the time of expiration of the Transfer
Restriction Period, the restriction on transfer has not been released pursuant to the reasons for release ofrestriction on transfer set out in (2) above.
(4) Treatment in case of organizational restructuring, etc.
If a proposal for a merger agreement under which the Company is a non-surviving company, a shareexchange agreement or share transfer plan under which the Company becomes a wholly-owned
subsidiary, or other organizational restructuring, etc. is approved by the Company’s Shareholders
Meeting (or, if an approval of the Company’s Shareholders Meeting regarding such organizational
restructuring, etc. is not required, by the Company’s Board of Directors) during the Transfer Restriction
Period, the Company shall, based on the resolution at the Company’s Board of Directors and prior to theeffective date of such organizational restructuring, etc., release the restriction on transfer of such numberof the Allotted Shares as reasonably determined by taking into account the period from thecommencement date of the Service Period to the date of the approval of such organizational restructuring,etc.
In this case, the Company will automatically acquire at no cost the Allotted Shares for which therestriction on transfer has not been released, immediately after the release of the restriction on transfer inaccordance with the provisions set out above.
Reference
The Company will allot shares with restriction on transfer similar to the Restricted Shares set out above to
Executive Officers of the Company after the conclusion of this General Meeting of Shareholders on the condition
that this Proposal is approved and adopted at this General Meeting of Shareholders.

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