Note: This is an unofficial translation of the Japanese original version and is provided foryour reference and convenience only. Where there are any discrepancies between
the Japanese original and the translated document, the original Japanese
document shall prevail.
To Our Shareholders:

Stock Code: 6741
May 26, 2022
Nippon Signal Co., Ltd.
5-1, Marunouchi, 1-Chome,
Chiyoda-ku, Tokyo
President & CEO & COO
Hidehiko Tsukamoto

Notice of Convocation of the Ordinary General Meeting of
Shareholders for the 139th Business Term
Notice is hereby given that the Ordinary General Meeting of Shareholders for the 139th
Business Term of Nippon Signal Co., Ltd. (hereinafter referred to as the ‘Company’) will
be held as described below.
Your attendance at the meeting is cordially requested.

1. Date and Time: Friday, June 24, 2022 at 10:00 a.m. (Japan time)(Reception will start at 9:00 a.m.)
2. Venue:Hall of Otemachi Sankei Plaza 4th Floor, Tokyo Sankei Building
7-2, Otemachi 1-chome, Chiyoda-ku, Tokyo

3. Agenda for the Meeting：[Matters for Reporting]
1 - Reports on the contents of the Business Report and Consolidated Financial
Statements for the 139th Business Term (from April 1, 2021 to March 31, 2022),
and reports on the Auditing Results of Accounting Auditor and Audit & Supervisory
Board regarding the Consolidated Financial Statements.
2 - Reports on the content of the Financial Statements for the 139th Business Term(from April 1, 2021 to March 31, 2022).
[Matters for Resolution]
1 - Partial Amendments to the Articles of Incorporation
2 - Election of nine Directors
3 - Renewal of the Countermeasures in Response to Large-scale Acquisition ofCompany’s Shares (Takeover Defense Measures)
The Company will hold its General Meeting of Shareholders upon implementing
appropriate precautionary measures in order to prevent the spread of the novel
coronavirus infection.
This General Meeting of Shareholders will be streamed live via the Internet.
Shareholders are requested to exercise the voting rights in advance by postal mail or1via the Internet, and from the standpoint of preventing the spread of the infection,
consider watching the proceedings online instead of attending the Meeting in person.

2

Guide to the Exercise of Voting Rights
Voting by postal mail:Please indicate your approval or disapproval concerning the proposals shown on the
Voting Form and send it back to us.
Deadline for exercising voting rights:
Voting Form must be received by 5:05 p.m. on Thursday, June 23, 2022 (Japan time)
Internet
Please input your approval or disapproval concerning each proposal via the voting
website designated by the Company (https://soukai.mizuho-tb.co.jp/).
Deadline for exercising voting rights:
No later than 5:05 p.m. on Thursday, June 23, 2022 (Japan time)
Voting by “Smart Exercise”
Please input your approval or disapproval by the deadline for exercising voting rights
after scanning the QR code for “Smart Exercise” on the lower right of the enclosed
Voting Form using a smartphone or tablet device.
* QR Code is registered trademark of DENSO WAVE INCORPORATED.

Deadline for exercising voting rights:
No later than 5:05 p.m. on Thursday, June 23, 2022 (Japan time)● When you exercise the voting rights through a proxy, such proxy must be only one
shareholder who is entitled to attend the general meeting of shareholders. In this case,please submit a written power of attorney and the enclosed Cards for Exercise of
Voting Rights to the receptionist of the Meeting.
● Any changes in the matters described in Reference Documents for General Meetingof Shareholders, Business Report, Consolidated Financial Statements and Financial
Statements will be posted on our website (https://www.signal.co.jp/ir/).
● In accordance with the provisions of laws and regulations and Article 16 of the Articles
of Incorporation, the following items are posted on our website(https://www.signal.co.jp/ir/meeting/) and thus they are not included in this Notice ofConvocation.
• “Basic Policy on Parties Who Control Decisions on the Company’s Financial andBusiness Policies” in the Business Report.
• “Consolidated Statements of Changes in Net Assets” and “Note to Consolidated
Financial Statements” in Consolidated Financial Statements• “Statements of Changes in Net Assets” and “Notes to Financial Statements” inFinancial Statements
The above documents disclosed on our website have been audited as part of theBusiness Report audited by the Audit & Supervisory Board Members, and theConsolidated Financial Statements and the Financial Statements audited by the
Audit & Supervisory Board Members and the Accounting Auditor.

3

No.1 – Partial Amendments to the Articles of Incorporation
1. Reasons for the proposal of the amendments
The revised stipulations stipulated in the proviso of Article 1 of the supplementaryprovisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019)will be enforced on September 1, 2022. Accordingly, the Company proposes thefollowing amendments to the Company’s Articles of Incorporation in preparation for
the implementation of the system for electronic provision of materials for general
meetings of shareholders.
(1)
Article 16, Paragraph 1 of the proposed amendments stipulates that
information that is the content of reference documents for the general meeting ofshareholders, etc., shall be provided electronically.
(2)
Article 16, Paragraph 2 of the proposed amendments establishes stipulations
to limits on the scope of matters to be recorded in physical documents that areprovided to shareholders who request provision of physical documents.
(3)
As stipulations concerning provision of documents relevant to General Meetingof Shareholders (Article 16 of the current Articles of Incorporation) will no longer benecessary, these shall be deleted.
(4)Supplementary provisions shall be established concerning the effective date,etc., in line with the new establishments and deletions above.
Also, other required changes articles shall be performed in line with thechanges above.
2. Contents of the amendments
The contents of the amendments are as follows.
(Underlines indicate amended sections)
Current Articles of Incorporation(Provision of documents relevant to General
Meeting of Shareholders)
Article 16 At the time of convention of theGeneral Meeting of Shareholders,
information relevant to theGeneral Meeting of Shareholders,annual report, financial statement
andconsolidated
financialstatement shall be announced inpublic by way of Internet
stipulated in law by Ministry ofJustice and it shall be deemed as
information officially provided toshareholders.

Proposed amendments<Deleted><Newly established>(Measures for electronic provision, etc.)
Article 16 In the convocation of general
meetings of shareholders, theCompany
shallprovideelectronically information that isthecontentofreference
documents for the general
meeting of shareholders, etc.

4Current Articles of Incorporation

Proposed amendments
2. Of the matters to which electronic
provision measures apply, theCompany may choose not torecord all or part of matters
stipulated in the Ordinance of the
Ministry of Justice in the physicaldocuments
provided
toshareholders who made requests
forprovisionofphysicaldocuments by the record date forvoting rights.
(Supplementary provisions)
1. The amendments of Article 16 shall takeeffect from the date of enforcement of therevised stipulations stipulated in theproviso of Article 1 of the supplementaryprovisions of the Act Partially Amending
the Companies Act (Act No. 70 of 2019;
the “Enforcement Date”).
2. Notwithstanding the provisions of theprevious paragraph, Article 16 (Provisionof documents relevant to General Meetingof Shareholders) of the current Articles ofIncorporation shall remain valid forgeneral meetings of shareholders held ona day that is within six months of the
Enforcement Date.
3. These supplementary provisions shall bedeleted on the day after which six months
have elapsed since the Enforcement Dateor the day after which three months haveelapsed since the day of the general
meeting of shareholders in the previous
paragraph, whichever is later.

<Newly established>5

No.2 – Election of nine Directors
The terms of all nine Directors will expire at the end of this General Meeting of
Shareholders. Accordingly, the Company requests the election of nine Directors.
The candidates for the Directors are as follows.
In addition, in selecting candidates for the Directors, the Company receives a
recommendation by the “Appointment and Remuneration Committee,” a majority ofthe members of which are Independent Outside Directors, in order to enhance theobjectivity and transparency in the decision-making process.

No.

Name

Current status

Primary
responsibilities

President and Chief
Executive Officer andChief Operating Officer

Overallmanagement

1

Reappointment

Hidehiko
Tsukamoto2

Reappointment

TakeshiFujiwara

Director
Deputy Chief
Executive Officer

3

Reappointment

Hideo
OshimaDirector
Managing Executive
Officer4

Reappointment

5

Reappointment

6

New Appointment

Masahiro
Kubo

Director
Managing Executive
Officer

Masayoshi
Sakai

Director
Managing Executive
Officer

Kazuhiro
HiranoManaging Executive
Officer

6

In charge ofbusinessmanagement
Responsible
for transportsystems
Responsible
for Smart
Mobility
Systems
Promotion
Division
Responsible forbranch offices
Overseasbusiness
In charge ofinternational
projects
In charge ofbusiness
administration
In charge oftechnology
research anddevelopment
Responsible for
TQM Promoting
Dept.
Responsible
for Kuki Plant
Chief
GeneralManager,
Osaka
BranchOfficeResponsible
for westernJapan area

Attendanceat the Boardof Directors’Meetings
13 / 13
meetings
13 / 13
meetings

13 / 13
meetings

13 / 13
meetings
10 / 10meetings(After his appointment
on June 25, 2021)-

7

Reappointment
OutsideIndependent

YasukoMatsumotoOutside Director–

13 / 13
meetings

8

Reappointment
OutsideIndependent

Yuriko Inoue

Outside Director–

13 / 13
meetings

9

Reappointment
OutsideIndependent

Yoshiyuki
MurataOutside Director–

9 / 10meetings(After his
appointment onJune 25, 2021)* “Criteria for the Independence of Outside Officers” is as described on page 23.
* The Company has entered into a directors and officers liability insurance agreement as stipulated in Article
430-3, Paragraph 1 of the Companies Act with an insurance company. The insurance covers damages tobe borne by the insured parties that arise from the insured parties as individuals being subject to a claim
for damages such as derivative lawsuits and third-party lawsuits. The candidates will be included as
insured parties under the insurance agreement. The Company intends to renew the agreement with theabove contents at the time of renewal in July 2022.

7

Competence (knowledge, experience, and capabilities) required of candidates for
Director
The Group aims to continue being a provider that supports evolution of infrastructure with safe
and trustworthy solutions. In order to lead sustainable business growth, the Company selects
as candidates for Director those who possess strong acumen and experience as a corporate
manager, deep insight into technological development surrounding the Company, capabilities
to drive the expansion of business domains conducted on a global scale, and expert knowledge
that contributes to corporate governance.
[Candidates for Director selected from within the Company]
The Company selects those who possess strong acumen for overall management, withknowledge regarding the business environment surrounding the Company and its industries,
understanding of the Company’s strengths and issues through manufacturing, technologicalresearch and development, marketing, and sales activities, and experience in managementadministration such as accounting, legal affairs, and risk management.
[Candidates for Outside Director]
The Company selects those who can provide advice on management strategies and perform
an effective supervisory function on management by drawing on advanced and specialized
knowledge and experience in fields other than the Group’s business domains, while
appropriately ensuring well-rounded diversity. Furthermore, in order to sufficiently incorporate
opinions from an objective and independent position into management of the Company, theCompany selects those who meet the requirements for Independent Officers as stipulated by
the Tokyo Stock Exchange, Inc. as candidates for Outside Director. In addition, the Company
selects candidates for Director so that at least one-third of the candidates are candidates for
Outside Director, and at least one of the candidates for Outside Director must possess
experience in management in other companies.
Because of the characteristics of the Company involved in the work of an extremely highly public
nature, deep understanding of the Company’s business is required for business judgment.
Therefore, the Company considers it is appropriate that the proportion of Independent Outside
Directors to all the Directors is around one-third.

8

Skills Matrix of the Board of Directors of the Company is as follows.
◆Knowledge, experience, and capabilities of Directors

Name

Corporate
Management

Finance/
Accounting

Riskmanagement
Legal affairs

Globalexperiences

Technology●●

Hidehiko
Tsukamoto●TakeshiFujiwara

●

●

Hideo
Oshima●●Masahiro
Kubo●

Masayoshi
Sakai●

Kazuhiro
HiranoNew
Appointment

YasukoMatsumoto

Independent

YurikoInoue

Independent

Yoshiyuki
MurataIndependent

●

●

●
●

Manufacture

Sales
Marketing

●

●

●

●

●

●

●

●

●

●
●

●

Outside●OutsideOutside

●

R&D

●

●

●

●

The above table shows the areas of expertise of Directors the Company particularly expects.

9

●

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 1982
May 2005

Reappointment

Hidehiko
Tsukamoto(September
15, 1958)
Age:631

Years in office as
Director: 10
years (at the endof this Meeting)Attendance at theBoard of Directors’
meetings:
13 / 13 (100%)

Joined the Company
General Manager ofAutomatic Fare Collection
Sales Dept. of Automatic
Fare Collection Systems
Division
June 2006
Executive Officer
June 2010
Director
Managing Executive
OfficerJune 2014
Deputy Chief Executive
Officer
April 2015
Representative Director
Executive Vice President& Chief Operating Officer
June 2016
President (to present)
June 2020
Chief Executive Officer
April 2021
Chief Executive Officer (topresent)[Significant concurrent positions]
None[Reason for nomination as a candidate for
Director]
Hidehiko Tsukamoto, as the Company’s
Representative Director, possesses a wealthof experience and achievements in leading thebusiness management of the Company. We
have determined that he is qualified to play animportant role as the Company pursues
business structural reforms to adapt to rapidchanges in the business environment such as
globalization and technical innovations since
he is also well-versed in technicaldevelopment and has contributed to creating
new businesses and expanding businessareas. Therefore, we have nominated him as a
candidate to continue as a Director.

Number of theCompany’s
shares held

100,800

There are no special interests between the Company and Hidehiko Tsukamoto.

10

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 1983
July 2009

Reappointment

TakeshiFujiwara(November 7,
1959)
Age:62
2

Years in office as
Director: 9 years(at the end of thisMeeting)
Attendance at theBoard of Directors’
meetings:
13 / 13 (100%)

Joined the Company
General Manager ofPrivate Railways Sales
Dept. of Railway Signal
Systems Division
June 2010
Executive Officer
April 2013
Managing Executive
OfficerJune 2013
Director (to present)
April 2016
Chief General
Manager of Sales
and Marketing Head
OfficeApril 2019
Responsible for Domestic
Business and Branch
Offices
April 2020
Deputy Chief Executive
Officer (to present)
Responsible for Domestic
and Overseas Businesses
and Branch Offices
June 2020
Responsible for Smart
Mobility Section
April 2022
In charge of business
management,
Responsible for Transport
Systems, Smart Mobility
Systems Promotion
Division, and Branch
Offices(to present)[Significant concurrent positions]
None[Reason for nomination as a candidate for
Director]
Takashi Fujiwara has achievements of leading
our domestic business, having held positions
including the manager of the Business Head
Office handling railway signals and Automatic
Fare Collection systems, and deep insightbased on his broad experience. We havedetermined that he is qualified to lead theCompany in expanding its business areas
including those overseas and enhancing its
competitiveness in the future. Therefore, wehave nominated him as a candidate tocontinue as a Director.

Number of theCompany's
shares held

47,300

There are no special interests between the Company and Takeshi Fujiwara.
11

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 1979
September 2004

Number of theCompany's
shares held

Joined the Company
General Manager of
MEMS Business
Development Dept. of
Visionary Business Center

July 2008

Chief General Manager of
Visionary BusinessCenterApril 2009
Chief General Manager ofReappointment
Overseas Division
May 2011
Executive Officer
Hideo Oshima April 2016
Managing Executive Officer(to present)(July 25, 1956)
June 2016
Director (to present)
Age: 65
April 2019
Responsible for Corporate
Strategy Department andYearsin
officeas342,100
Director: 6 years
Overseas Business(at the end of thisApril 2020
Responsible for Kuki
Meeting)
Plant and Total Quality
Attendance at theManagement Promoting
Board of Directors’
Department
meetings:
13 / 13 (100%)
April 2021
Responsible for Overseas
Business and in charge ofInternational Projects(to present)[Significant concurrent positions]
None[Reason for nomination as a candidate for
Director]
Hideo Oshima possesses experience andachievements, having held positions including
the manager of the new businesses and theOverseas Division and contributing to the
expansion of businesses. We havedetermined that his knowledge will bebeneficial to the Company in further expanding
the business areas and promoting global
management. Therefore, we have nominatedhim as a candidate to continue asa Director.
There are no special interests between the Company and Hideo Oshima.

12

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 1983

Number of theCompany's
shares held

Joined the Company

July 2006

General Manager of
Accounting Dept.
July 2009
General Manager of
Tohoku Branch Office
June 2014
General Manager ofGeneral Affairs Dept.,
Business Administration
Division
April 2016
Executive Officer,
General Manager ofCorporate Strategy Dept.
April 2018
Chief General Manager ofKuki Plant, Monodukuri
Reappointment
Division
Masahiro Kubo
April 2019
Senior Executive Officer,(April 13,
General Manager of1960)
Corporate Strategy Dept.,
Age: 62
Responsible for FinanceDept.
429,200Years in office as
April 2020
Managing Executive
Director: 2 years
Officer (to present), In(at the end of thisMeeting)
Charge of Business
Administration (toAttendance at theBoard of Directors’present)
meetings:
June 2020
Director (to present)
13 / 13 (100%)[Significant concurrent positions]
None[Reason for nomination as a candidate for
Director]
Masahiro Kubo possesses experience andachievements in strengthening themanagement foundation of the Group, having
held positions including the manager of a wide
range of divisions such as the Business
Administration Division of the Company. We
have determined that his knowledge will bebeneficial to the Company in pursuingsustained enhancement of corporate value.
Therefore, we have nominated him as a
candidate to continue as a Director.
There are no special interests between the Company and Masahiro Kubo.

13

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 1985
July 2006

July 2010

June 2014

April 2016
Reappointment

Masayoshi
Sakai(September 20,
1960)
Age: 615

April 2020

Years in office as
Director: 1 year
(at the end of thisMeeting)
Attendance at theBoard of Directors’
meetings:
10 / 10 (100%)

April 2021

Joined the Company
General Manager of
Safety Technology
Research Dept.,
Research Center
Chief General Manager ofResearch & Development
CenterChief General Manager ofKuki Plant, Monodukuri
Division
Executive Officer,
Chief General Manager ofResearch & Development
Center, TechnicalDevelopment Head Officeand Chief General
Manager of Visionary
Business Center
Senior Executive Officer,
In charge of research anddevelopment, Chief
General Manager ofResearch & Development
Section, Chief General
Manager of ANSHIN
Center, General Manager
of Safety Technology
Research Dept., andGeneral Manager ofAdvanced Railway
System Development
SectionManaging Executive
Officer (to present),
In charge of technology,
research anddevelopment (to present),
Chief General Manager ofResearch & Development
Section, General
Manager of PatentManagement Dept.,
General Manager of14

Number of theCompany's
shares held

20,800Advanced Railway
System Development
Section, Responsible for
TQM Promoting Dept.
(to present),
Department
and Responsible for Kuki
Plant (to present)
June 2021
Director (to present)[Significant concurrent positions]
None[Reason for nomination as a candidate for
Director]
Having held positions including the manager
of research and development divisions,
Masayoshi Sakai possesses experience andachievements in promoting advanced
technological strategies that make use of ICT.
We have determined that he is qualified tolead the development of new technologies
utilizing IoT and AI. Therefore, we havenominated him as a candidate to continue asa Director.
There are no special interests between the Company and Masayoshi Sakai.

15

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 1983
July 2006

New Appointment

6

Kazuhiro
Hirano(August 6,
1960)
Age: 61

Joined the Company
General Manager ofRailway Signal Division of
Osaka Branch
July 2009
General Manager ofTransport information
Systems of Transport
Information Systems
Division
May 2011
Chief General Manager ofTransport Information
Systems Division
June 2014
Executive Officer
Chief General Manager ofRailway Signal Division ofBusiness Division
April 2019
Senior Executive
Officer
Chief General Manager ofRailway Signal Division
April 2020
Chief General Manager ofTransport Systems Division
April 2021
Managing Executive
Officer (to present)
Responsible for Transport
Systems,
Chief General Manager ofTransport Systems
Division, andResponsible for Smart
Mobility Systems
Promotion Division
April 2022
Chief General Manager,
Osaka Branch Office (topresent)
Responsible for westernJapan area (to present)[Significant concurrent positions]
None

Number of theCompany’s
shares held

16

22,600No.

Name(Date of birth)

Biography, status, and responsibilities

Number of theCompany’s
shares held

[Reason for nomination as a candidate for
Director]
Kazuhiro Hirano has achievements of leading
our domestic business, having held positions
including the manager of the Business Head
Office handling railway signals and transport
signals, and deep insight based on his broad
experience. We have determined that he isqualified to lead the Company in expanding its
business areas and enhancing its
competitiveness in the future. Therefore, wehave nominated him as a new candidate for a
Director.
There are no special interests between the Company and Kazuhiro Hirano.

17

No.

Name
(Date of birth)

Biography, status, and responsibilities
Registered as Attorney
Joined Yamashita Oshima
Law Office
Part-time Lecturer ofApril 2000
Seikei University
Member of Independent
February 2001
Administrative Institution
Evaluation Committee, theMinistry of Economy,
Trade and Industry
April 2007
Part-time Lecturer ofTokyo University of theArts
Outside Director of theJune 2015
Company (to present)[Significant concurrent positions]
None

Number of theCompany's
shares held

April 1978

Reappointment
OutsideIndependent

7

YasukoMatsumoto(September 2,
1953)
Age: 68
Years in office as
Outside Director:
7 years (at theend of thisMeeting)

3,800[Reason for nomination as a candidate for
Outside Director and an outline of
expected roles]
Attendance at theBoard of Directors’ Yasuko Matsumoto possesses advanced
meetings:
knowledge and experience as a legal expert,
13 / 13 (100%)and has provided advice and proposals on
legitimacy and adequacy from a professional
viewpoint. We expect that she will exercise
effective supervisory function on the
Company’s management. Therefore, we havenominated her as a candidate to continue as
an Outside Director.
Yasuko Matsumoto has served as an Outside
Director for seven years at the end of this
General Meeting of Shareholders.
1. There are no special interests between the Company and Yasuko Matsumoto.
2. Yasuko Matsumoto is an Outside Director candidate.
3. Yasuko Matsumoto meets the conditions of an Independent Officer as defined by
Tokyo Stock Exchange, Inc.
4. If Yasuko Matsumoto is elected as an Outside Director, the Company plans to enter
into a limited liability agreement with her, which limits her liability for damages
under Article 423, Paragraph 1 of the Companies Act. However, based on theagreement, the minimum liability amount will be the amount prescribed by laws
and regulations.

18

No.

Name
(Date of birth)

Biography, status, and responsibilities
November 1993

Reappointment
OutsideIndependent

8

Yuriko Inoue(May 29, 1963)
Age: 59
Years in office as
Outside Director:
4 years (at theend of thisMeeting)
Attendance at theBoard of Directors’
meetings:
13 / 13 (100%)

Full-time Lecturer ofGraduate Schools for Law
and Politics, The
University of Tokyo
April 2004
Professor of Graduate
School of Law, Kobe
University
October 2010
Professor of The Graduate
School of International
Corporate Strategy,
Hitotsubashi University
April 2018
Professor of Business Law
Department, Graduate
School of Law,
Hitotsubashi University
June 2018
Outside Director of theCompany (to present)
Outside Director of
Dai-ichi Life Holdings, Inc.
(to present)
April 2020
Professor of Business Law
Department, Graduate
School of Law,
Hitotsubashi University(Chair of Department) (topresent)[Significant concurrent positions]
Professor of Business Law Department,
Graduate School of Law, Hitotsubashi
University (Chair of Department)
Outside Director of Dai-ichi Life Holdings, Inc.
[Reason for nomination as a candidate for
Outside Director and an outline of
expected roles]
Yuriko Inoue is a professional in intellectual
property right and possesses sophisticatedand specialized knowledge and experience.
We expect that she will offer advice on the
Company’s management and strategies
including advice mainly on corporate law,data governance and brand strategy, andexercise effective management supervisory
function by making use of her capabilities inher specialized field. Therefore, we havenominated her as a candidate to continue as
an Outside Director. Yuriko Inoue has served

Number of theCompany's
shares held

19

2,100

No.

Name
(Date of birth)

Biography, status, and responsibilities

Number of theCompany's
shares held

as an Outside Director for four years at theend of this General Meeting of Shareholders.
A subsidiary of Dai-ichi Life Holdings, Inc.,the Dai-ichi Life Insurance Company, Limited
where Yuriko Inoue serves as an Outside
Director is a major shareholder and business
partner of the Company. However, its voting
rights ratio is less than 2% and thetransaction amount is immaterial (less than
0.1% of the consolidated net sales of the said
company and of the Company), and wetherefore believe that it does not affect her
independence as an Outside Director.
1. There are no special interests between the Company and Yuriko Inoue.
2. Yuriko Inoue is an Outside Director candidate.
3. Yuriko Inoue meets the conditions of an Independent Officer as defined by Tokyo
Stock Exchange, Inc.
4. If Yuriko Inoue is elected as an Outside Director, the Company plans to enter intoa limited liability agreement with her, which limits her liability for damages under
Article 423, Paragraph 1 of the Companies Act. However, based on the agreement,
the minimum liability amount will be the amount prescribed by laws and regulations.

20

No.

Name
(Date of birth)

Biography, status, and responsibilities
April 2009

Reappointment
OutsideIndependent

9

Yoshiyuki
Murata(July 19, 1954)
Age: 67
Years in office as
Outside Director:
1 year (at theend of thisMeeting)
Attendance at theBoard of Directors’
meetings:
9 / 10 (90%)

President andRepresentative Directorof TAISEI HOUSINGCORPORATION
April 2011
Executive Officer of
TAISEI CORPORATION
April 2013
Managing Executive
Officer of TAISEICORPORATION
June 2013
Member of the Board of
TAISEI CORPORATION
April 2015
President and Chief
Executive Officer,
Representative Directorof TAISEICORPORATION
June 2020
Vice Chairman,
Representative Directorof TAISEICORPORATION
June 2021
Outside Director of theCompany (to present)
Director and Executive
Vice President of DAIWA
HOUSE INDUSTRY CO.,LTD. (to present)
April 2022
Outside Director of Fujita
Corporation (to present)[Significant concurrent positions]Executive Vice President, Head ofTechnology Coordination Department, Headof Production Headquarters, and Head of
Research Headquarters of DAIWA HOUSEINDUSTRY CO., LTD.
Outside Director of Fujita Corporation

Number of theCompany's
shares held

[Reason for nomination as a candidate for
Outside Director and an outline of expectedroles]
Yoshiyuki Murata possesses a wealth ofexperience, achievements and knowledge asa manager, and we expect him to use thesecapabilities for the benefit of the Company’s
management and exercise effective
management supervisory function.
Therefore, we have nominated him as a
candidate to continue as an Outside Director.
21

400

No.

Name
(Date of birth)

Biography, status, and responsibilities

Number of theCompany's
shares held

Yoshiyuki Murata has served as an Outside
Director for one year at the end of this General
Meeting of Shareholders.
A subsidiary of DAIWA HOUSE INDUSTRY
CO., LTD., Daiwa House Parking Co., Ltd.,
where Yoshiyuki Murata serves as Directorand Executive Vice President is a business
partner of the Company. However, thetransaction amount is immaterial (less than
0.1% of the consolidated net sales of the said
company and of the Company), and wetherefore believe that it does not affect his
independence as an Outside Director.
As of March 31, 2022, there is no capital
relationship between Daiwa House Parking
Co., Ltd. and the Company.
1. There are no special interests between the Company and Yoshiyuki Murata.
2. Yoshiyuki Murata is an Outside Director candidate.
3. Yoshiyuki Murata meets the conditions of an Independent Officer as defined by
Tokyo Stock Exchange, Inc.
4. TAISEI CORPORATION, where Yoshiyuki Murata served as Representative
Director until June 2021, has received a cease and desist order from the Japan
Fair Trade Commission in December 2020 on the grounds of violating the
Antimonopoly Act in relation to construction work on the Chuo Shinkansen.
However, the said company has filed an action for the revocation of the order,
and the case is now pending.
5. If Yoshiyuki Murata is elected as an Outside Director, the Company plans to enter
into a limited liability agreement with him, which limits his liability for damages
under Article 423, Paragraph 1 of the Companies Act. However, based on theagreement, the minimum liability amount will be the amount prescribed by laws
and regulations.
6. Yoshiyuki Murata is scheduled to be appointed Executive Vice President of
DAIWA HOUSE INDUSTRY CO., LTD. on June 29, 2022.

22

(Reference) Criteria for the Independence of Outside Officers
The Company prescribes the following criteria for the independence of Outside Officers
to objectively determine the independence of Outside Officers. If an Outside Officer falls
under any of the following items, the Company determines that the Outside Officer is not
sufficiently independent from the Company.
An Outside Officer designated as an Independent Officer as stipulated under the Tokyo
Stock Exchange, Inc. shall endeavor to maintain independence as prescribed in thisCriteria until resignation. If the Outside Officer loses his/her independence, the Outside
Officer shall notify the Company in advance (or as soon as possible after an event underunavoidable circumstances).
1. A person who is, or has been in the past 10 years, a business executor (*1) or
Non-executive Director (if the person is an Outside Audit & Supervisory Board
Member) at the Group (i.e. the Company or its subsidiaries).
2. Any person (party) who falls under any of the following items (1) to (8) in thepast three years.
(1) A party for whom the Group is a major business partner (*2) or a business executorof such party(2) A major business partner of the Group (*3) or a business executor of such partner(3) A consultant, accounting professional, or legal professional who has received asignificant amount of money (*4) or other property from the Group other than officer
remunerations (if a party who receives such property is a corporation, association,or any other entity, a party who belongs to the relevant entity)(4) A current major shareholder of the Group (*5) or a business executor of suchshareholder(5) A business executor of a corporation that is a current major shareholder of theGroup (*5)(6) A person who belongs to the appointed audit firm for the statutory audit of theGroup(7) A business executor of an entity whose Outside Officer is also a businessexecutor of the Group(8) A person, an officer or other business executor of a corporation, association, or
any other entity who receives a large amount of donation or grant (*6) from theGroup
3. If a person who falls under 1. and 2. above is a key person (*7), close relatives(spouse, first or second degree relatives) of such person
4. A person who has assumed the office of Outside Officer for eight years or morein total(*1) A business executor refers to a person who executes the duties of a Director (excluding an
Outside Director), Executive Officer, or employees, etc.
(*2) A party for whom the Group is a major business partner refers a party who has business
transactions with the Group, with total amount of sales in any of the fiscal year within the last
three fiscal years exceeding 2% of the consolidated net sales of such business partner. Such23

business partner shall include its parent company and important subsidiaries if suchbusiness partner is a corporation.
(*3) A major business partner of the Group refers to a party with whom the Group has business
transactions, with total amount of sales in any of the fiscal year within the last three fiscal
years exceeding 2% of the consolidated net sales of the Group, or a party who has made aloan to the Group in the amount at 2% or more of the consolidated net assets of the Company
at the end of the most recent fiscal year.
(*4) A significant amount of money refers to the yearly average money exceeding 10 million yen
over the three most recent fiscal years.
(*5) A major shareholder refers a shareholder who holds, directly or indirectly, 10% or more of thetotal voting rights. Such major shareholder shall include its parent company or important
subsidiaries if such major shareholder is a corporation.
(*6) A large amount of donation or grant refers to a yearly average amount exceeding 10 million
yen over the three most recent fiscal years.
(*7) A key person refers to a Director, Corporate Officer, Executive Officer, business executor
who serves as a General Manager or in a higher rank, or business executor who has
authority equivalent to that of a General Manager or higher position.

24

No.3 - Renewal of the Countermeasures in Response to Large-scale Acquisition ofCompany’s Shares (Takeover Defense Measures)
The Company introduced the Countermeasures in Response to Large scale
Acquisition of Company’s Shares (Takeover Defense Measure), for the purpose of
ensuring and enhancing its corporate value and common interests of its
shareholders, based on the approval of shareholders at the 127th Ordinary General
Meeting of Shareholders held on June 24, 2010. Afterwards, renewal of the
Takeover Defense Measure involving necessary amendments thereto wasapproved by the shareholders at the 130th Ordinary General Meeting of
Shareholders held on June 25, 2013, the 133rd Ordinary General Meeting of
Shareholders held on June 24, 2016, and the 136th Ordinary General Meeting of
Shareholders held on June 21, 2019 (the Takeover Defense Measure after the
renewal being referred to hereinafter as “the Old Plan”). The Old Plan will beeffective until the conclusion of this General Meeting of Shareholders.
The Board of Directors decided to renew the Old Plan with partial amendments to its
contents (where such amended plan shall be hereinafter referred to as the “Plan”) at
its meeting held on May 10, 2022, subject to the approval of shareholders at this
General Meeting of Shareholders. Thus, shareholders are kindly requested toapprove the renewal as follows. Thus, shareholders are kindly requested to approve
the renewal as follows.
The reason for the renewal, the major amendments and the purpose thereof, andthe impact on shareholders are as follows.

Reason for the
renewalMajor
amendments
and thepurposethereof

The Company is engaged in a business of a highly-public nature involving
human lives, including railway signals and traffic information.
There has been growing demand for Japan’s high-quality infrastructure fromaround the world, and the Company holds many of these important
technologies.
The Company will realize traffic infrastructure of a comfortable society byproviding advanced solutions with AI and digital processing based on dataobtained from sensing technologies in the future.
Therefore, the Company believes that the Company must avoid theCompany’s business and technology being sold off in pieces by the
Acquirer who aims to only short-term profit from the perspective ofensuring the economic security, and maintaining and ensuring the safetyof society. Upon the emergence of an Acquirer, it is an obligation of the Boardof Directors meeting to consider whether the Acquirer possesses legitimate
purpose which enhances medium- to long-term corporate value of the Company
or not.
The Company proposes the renewal of the Takeover Defense Measure in the
belief that when a takeover that could harm the Company’s corporate value is
proposed, providing proper and sufficient information and time to shareholders
and ensuring the opportunity to seek their decision are essential.
Composition of Independent Committee
In association with expiration of the terms of the members of the Independent
Committee, three Outside Audit & Supervisory Board Members, Mikio
Shiokawa, Masayuki Tamagawa, and Naoko Shimura, are elected as
Independent Officers who meet the conditions defined by Stock Exchange,
Inc.
Description of New Medium-Term Management Plan
The Company’s new Medium-Term Management Plan, “Next Stage 24” ismentioned as special initiatives that will contribute to achieving the basic
policy in an effort to further enhance corporate value.

25

Review Period of Independent Committee
The period of Independent Committee can be extended up to 30 days,
however, it cannot be re-extended.

Impact on
shareholders

If the Takeover Defense Measure is implemented and the gratis allotment ofstock acquisition rights is executed, one stock acquisition right shall be granted
per one share held by the shareholder.
If the shareholder does not exercise his or her stock acquisition rights and theamount equivalent to the exercise of the stock acquisition rights is not paid in,there is a possibility of the shares held by the shareholder being diluted due tothe exercise of stock acquisition rights by other shareholders.
However, the Company may acquire the stock acquisition rights fromshareholders other than the acquirer and issue shares in exchange forthose stock acquisition rights. In such cases, shareholders other than theacquirer shall receive the Company’s shares without exercising stockacquisition rights or the payment of the amount equivalent to the exerciseof the stock acquisition rights, and thus, as a general rule, shall notundergo a dilution of the shares held.

26

The Board of Directors meeting resolving on the Takeover Defense Measure
based on the Plan was attended by all Audit & Supervisory Board Members of theCompany, including Outside Audit & Supervisory Board Members, who unanimously
expressed their view in support of the Plan, on condition that specific operation of thePlan will be conducted appropriately.
In addition, the Company has not received, from any third party, notice or proposal
on an intention of the Large-Scale Acquisition of Company’s Shares at present.
Contents of the Outline of the Procedures for the Plan are as follows.

27

Countermeasures in Response to Large-scale Acquisition of Company’s Shares(Takeover Defense Measure)
I. Basic Policies on Parties Who Control the Company’s Decisions on Financial andOperational Policies (hereinafter referred to as the “Basic Policies”)
The Company believes that ultimately its shareholders at their own discretion must
make the decision on any proposed acquisition that would involve a transfer ofcorporate control of the Company. Also, the Company would not categorically reject alarge-scale acquisition of the shares in the Company if it would contribute to thecorporate value of the Group and, in turn, the common interests of its shareholders.
Nonetheless, Japanese capital markets have recently witnessed a trend of sudden
hostile acquisitions of large quantities of shares or similar acts without any process of
discussion with the senior management of the target company or obtaining the approval
thereof. There are some forms of corporate acquisition that benefit neither the corporate
value of the target company nor the common interests of its shareholders including
without limitation, those with a purpose that would obviously harm the corporate value ofthe target company and the common interests of its shareholders, those with thepotential to substantially coerce shareholders into selling their shares, those that do notprovide sufficient time or information for the target company's board of directors andshareholders to consider the details of the large-scale acquisition or for the target
company's board of directors to make an alternative proposal and those that require thetarget company to discuss or negotiate with the acquirer in order to procure morefavorable terms for shareholders than those presented by the acquirer.
In this regard, the Company believes that the persons who control decisions on the
Company’s financial and business policies must be persons who fully understandNippon Signal’s corporate philosophy of “contribute to society through superior
technology that generates safety and reliability, aiming to realize a more comfortablesociety for all” and the source of the Company’s corporate value and, in turn, thecommon interests of its shareholders in II. 1. (2) below, and who will maintain andenhance the Company’s corporate value and, in turn, the common interests of its
shareholders from the medium to long-term view, while maintaining relationships of
mutual trust with the stakeholders of the Company such as customers, shareholders,business partners, local communities and employees, and responding to their
expectations.
Therefore, the Company believes that persons who would make a large-scaleacquisition of the shares in the Company in a manner that does not contribute to thecorporate value of the Company or the common interests of its shareholders would beinappropriate to become persons who control decisions on the Company's financial andbusiness policies. The Company made it a basic policy to ensure the corporate value of
the Group and, in turn, the common interests of its shareholders by taking thenecessary and reasonable countermeasures for the purpose of deterring acquisitions
that are detrimental to the corporate value of the Company and, in turn, the common
interests of its shareholders.

28II. Special measures for Realization of Basic Policy
1. Measures for Ensuring and Enhancing Corporate Value of the Company and theCommon Interest of its Shareholders(1) Management Philosophy of the Group and the Basic Concept of its Business
Operation
The Company has been constantly engaged in the field of traffic infrastructure since
its operations began in February 1929, and celebrated its 93rd anniversary in
February 2022, under Nippon Signal’s corporate philosophy of “contribute tosociety through superior technology that generates safety and reliability, aiming torealize a more comfortable society for all.”As such, the Company consistently assumes the significant social responsibility
and public mission as a company that has long continued providing society withproducts in the business domains of a highly public nature. Therefore, the Company
believes that it is indispensable for our business operations to be based on a longterm perspective with full consideration of the fact that the Company manufactures
the products involving human lives, not to mention product quality management
backed by excellent professional skills and rigorous ethics education, as well as
new product development that supports safer and more comfortable traffic
infrastructure.
On the other hand, the Company believes that taking boldly on the challenges ofcreation of new businesses, applying the core technologies and know-how
accumulated as a dedicated manufacturer of railway signal and traffic information
systems, is prominent in terms of achieving sustainable and constant growth for theCompany. In particular, automatic fare collection (AFC) systems and parking
systems solutions have now grown to become one of the pillars of the earnings of
the Company, representing a good example of new businesses. Recently, 3D Laser
Ranging Image Sensors, which use the resonant mirror ECO SCAN realized byMicro Electro Mechanical Systems (MEMS) technology, are being utilized in various
fields including platform screen doors, construction machinery and self-driving
vehicles thanks to its high resistance to ambient light, resulting in the developmentof new businesses.
Business of the Company is summarized as follows.
The Company is engaged in a business of a highly-public nature involving human
lives, including railway signals and traffic information. In addition, there has been
growing demand for Japan’s high-quality infrastructure from around the world, andthe Company holds many of these important technologies.
The Company will realize traffic infrastructure of a comfortable society by providing
advanced solutions with AI and digital processing based on data obtained fromsensing technologies in the future.
[Transportation Infrastructure Business]
In the “Railway Signal Systems”, the Company supports our nation’s railway,
which prides itself on its constant and safe operations running on tight schedules
with its core products, including operational control systems such as centralized
traffic control (CTC) systems, train control systems such as automatic train control(ATC) systems, automatic train stop (ATS) systems, automatic train operation(ATO) systems and Simple structure and high Performance ATC by Radio
Communication System (SPARCS), as well as interlocking systems that control
railway switches, and signal lights and guidance transportation information system
29

for railway operators. The Company also plays a major role in exporting
infrastructure mainly to Asia.
In the “Smart Mobility Systems”, the Company is striving to reduce the number oftraffic accidents and relieving traffic congestions with its core products, including
traffic control systems that controls traffic lights, traffic information systems thatindicate accidents, congestions and other traffic information. The Company
participates in various self-driving experiments and is working to develop solutions
that leverage its strengths as an infrastructure manufacturer.
[ICT solution business]
In the “Automatic Fair Collection (AFC) Systems”, the Company has achieved theautomation and speeding up of station operations through providing the “Station
Network Systems”, such as automatic ticket gates, automatic ticket vending
machines, and automatic fee collection machines, while contributing to achievingsmooth transportation by means of IC cards such as Suica and PASMO. The
Company has also entered the airport market and overseas markets, whileproviding various solutions that apply the wireless individual identification
technology, and is working to enhance the safety of station platforms by, forproviding platform screen doors.
In the “Smart City Systems”, the Company is driving various solutions that support
office security including security gates and the high security demands of event
venues and airports.
The Company develops and markets various robots including cleaning robots
utilizing the Company’s sensing technologies to the maximum which realize laborsaving and work efficiency.
(2) The Source of the Company’s Corporate Value and, in Turn, the Common Interestsof Its Shareholders
The Company believes that the source of the Company’s corporate value and, inturn, the common interests of its shareholders is found in i) the technologicalcapabilities and quality strength that supported the safe and comfortable traffic andtransportation infrastructure over many years, ii) human resource capabilities as amanufacturer who involves in the work of a highly public nature with a strong senseof pride and mission, and iii) the new product development capabilities that apply
the core technologies and know-how from railway signal systems and traffic
information systems for roadways.
For enhancing the source of corporate value of the Company and the common
interest of its shareholders, the Company is engaged in the following specificmeasures.
- The Company is striving to further enhance its competitiveness as well as
customer satisfaction, through its continuous efforts in reviewing the operation
system, production system and the Group management system, as well as
speeding up management decision-making and improving operational quality.
- The Company is working to develop and operate a personnel system geared toenhancing motivation and skill-up of employees from the perspective of humanresources development, in addition to striving to recruit superior talents.
- The Company is aiming to further enhance R&D activities by adopting aframework in which technological development system and market development
system collaborate with each other for promoting R&D.

30

(3) The Long-Term Management Plan “Vision-2028 EVOLUTION 100” “(hereinafterreferred to as the “Long-Term Management Plan”) and the Medium-Term
Management Plan “Next Stage 24”
The Company launched its new Long-Term Management Plan from the fiscal year
2019. Currently, we are in the midst of a major transformation as existing industries
are being driven out by digital disruption (destructive innovation with digitaltechnologies). Under “Long-Term Management Plan,” we will transition to new
businesses that are not mere extensions of existing businesses, solve social
issues both in Japan and overseas by supporting the evolution of infrastructureswith safe and comfortable solutions and aim to become a corporate group that isrespected by the people around the world.
In the second Medium-Term Management Plan “Next Stage 24” launched from thefiscal year 2022, the basic policy “Supporting Next Stage of infrastructure” is set
in light of lifestyle changes following the spread of COVID-19, structure reform ofcustomers, implementation of sustainability such as decarbonization in addition toenvironmental changes we initially assumed. The Company aims to create
sustainable and safe transportation infrastructure with solutions utilizing the powerof digital for a new society, economic activities, and lifestyle of the COVID-19
pandemic.
While implementing the following three priority measures, “Collaborative Value
Creation with customers after COVID-19 pandemic,” “expansion of international
business and improvement of profitability,” and “Enhanced design prowess andmanufacturing prowess in the era of software first,” the Company promotes “ESG
(environmental, social and governance) Management for sustained value
creation.” The Company aims to realize these initiatives by investment of scale oftotaling 50 billion yen, structure reform of customers, developing new products andacceleration of social implementation to promote solving issues, and value chain
reform of design and manufacturing etc., accordingly, the Company set the targets
for final fiscal year of the Medium-Term Management Plan Next Stage 24 atconsolidated net sales of 130 billion yen, operating income margin of 11%, andROE of 10%.

31

(4) Views on Shareholder Returns
The Company will establish a stable foundation for profits and management with along-term perspective and strengthen financial standing through fulfilling
responsibility as a company engaged in the development of transportation
infrastructure, and provide investors with stable dividends and returns
commensurate with performance. We have set a target payout ratio of around 30%
on a consolidated basis.
2. Framework that Serves as the Basis for Enhancing Corporate Value of the Company andthe Common Interest of its Shareholders (Development of Corporate Governance) The
Group’s basic policy on corporate governance emphasizes management that values all
stakeholders, that provides satisfaction for them and that gives back to society. To engage
in initiatives following this basic policy, the Group continues to carry out structural reformsof management with the goal of reinforcing corporate governance and enhancing themanagement structure to enable response to change in the business environment in a
flexible and prompt manner.

III. Measures to Prevent Control over the Decisions on the Company’s Financial andOperational Policies by Parties Deemed Inappropriate under the Basic Policies
1. Objectives of the Introduction of the Plan
The Plan shall be introduced with the intent of ensuring and enhancing corporate valueof the Company and the common interest of its shareholders, in line with the Basic
Policies described in I. above.
The Board of Directors of the Company decided that, in the case of receiving a
proposal for a Large-Scale Acquisition, it is essential for the Company to retain aframework to ensure sufficient time and information for shareholders to decide whether
or not to accept such proposal, or for the Board of Directors of the Company to makealternative proposals to shareholders, and to allow the Board to discuss and negotiatewith the Large-scale Acquirer on behalf of shareholders, so that the Company can deter
the Large-Scale Acquisition of the Company’s Shares that goes against corporate valueof the Company and the common interest of its shareholders.
Thus, the Board of Directors of the Company decided to introduce the Plan as part ofthe measures for preventing a party inappropriate in light of the Basic Policies fromexerting control over the decisions on the Company’s financial and operational policies.
2. Details of the Plan
(1) Outline of the Plan(a) Procedures for the Plan
In preparation for the case of the acquisition, other similar acts or such proposals
being made (hereinafter referred to as the “Acquisition, etc.” as defined specificallyin (2) (a) “Applicable Acquisitions, etc.” below) with respect to share certificates, etc.
of the Company (as defined specifically in (2) (a) “Applicable Acquisitions, etc.”
below), the Plan sets out procedures for presenting shareholders with the32Company’s plan and the alternative proposals, etc. prepared by the senior
management, or for engaging in negotiation with the Acquirer (as defined
specifically in (2) (a) “Applicable Acquisitions, etc.” below), after requesting theAcquirer to provide information regarding the Acquisition, etc. in advance, andensuring sufficient time for collecting and considering such information regarding
the Acquisition, etc. (Please refer to (2) “Procedures for the Plan” below). The
Acquirer shall comply with the procedures for the Plan, and shall not proceed with
the Acquisition, etc. during the period from the start of the procedures for the Plan
to the resolution at the Board of Directors on whether or not to implement the gratis
allotment of the stock acquisition rights.
(b) Use of Gratis Allotment of Stock Acquisition Rights
If the Acquirer fails to comply with the procedures as prescribed by the Plan andconducts the Acquisition, etc. or in the event of any Purchase by an Acquirer that
may harm the corporate value of the Company (for details of such criteria, pleaserefer to (3) “Criteria for the gratis allotment of the Stock Acquisition Rights” below)
and, in turn, the common interests of its shareholders, etc., the Company willconduct a gratis allotment (as prescribed in Article 277 and subsequent Articles of
the Companies Act) of new share acquisition rights (hereinafter referred to as the“Stock Acquisition Rights”; as summarized in (4) “Outline of the Gratis Allotment of
the Stock Acquisition Rights” below) to all shareholders at such time with terms thatprohibit the Acquirer and its specific group of shareholders (hereinafter referred toas the “Acquirer, etc.”; as defined specifically in (2) (a) “Applicable Acquisitions, etc.”
below) from exercising such rights and with a condition to acquire Share Acquisition
Rights in exchange for the Company’s shares.
(c) Use of the Independent Committee for the Purpose of Excluding Arbitrary Decisions
by Directors
As a rule, the Company shall follow the decision by the Independent Committee,
made in line with its regulations (for the outline, please refer to the Appendix 1), in
order to prevent the directors from making an arbitrary decision concerning thetrigger or non-trigger of the gratis allocation of the Share Acquisition Rights or othermatters concerning the acquisition pursuant to the Plan. In addition, the Company
shall ensure transparency by seeking the said decision of the Independent
Committee, which will be comprised of members appointed from experts withprofessional knowledge and experience in corporate management, etc., who shallbe independent from its executive officers who conduct operations of theCompany, as well as by timely disclosure of relative information to all theshareholders of the Company (unless following the recommendation is considereda violation of Directors’ obligation to exercise due care of a prudent manager.)
Furthermore, even in cases where the Independent Committee deems theimplementation of gratis allotment of the Stock Acquisition Rights to beappropriate, if it has decided that it would be appropriate to obtain the approval of
the General Meeting Shareholders on the implementation of gratis allotment of theStock Acquisition Rights, it shall recommend to the Board of Directors of theCompany to convene a General Meeting of Shareholders to deliberate theproposal on the implementation of gratis allotment of the Stock Acquisition Rights,
33

and the Board of Directors of the Company shall resolve to promptly convene a
General Meeting of Shareholders, unless it is extremely difficult for practical
purposes to do so, and propose an agenda on the implementation of gratis
allotment of the Stock Acquisition Rights.
The Independent Committee comprises three highly independent members.
Names and career summary of the Committee members are stated in the Appendix
2 (as for the standards for electing the members of the Independent Committee,
requirements for resolutions and matters for resolutions, please refer to the
Appendix 1).
(d) Exercise of the Stock Acquisition Rights, and the Acquisition of the Stock Acquisition
Rights by the Company
If the Stock Acquisition Rights are exercised by shareholders other than the
Acquirer, etc. following the gratis allotment of the Stock Acquisition Rights under thePlan, or if shares in the Company are granted to shareholders other than the
Acquirer, etc. in exchange for acquisition of the Stock Acquisition Rights by theCompany, percentage of voting rights of the shares in the Company held by the
Acquirer, etc. may be diluted.
(2) Procedures for the Plan(a) Applicable Acquisitions, etc.
The Plan is applicable to the act of acquisition of share certificates, etc.[3] issued by
the Company, by a specific shareholders group[1] resulting in, or aiming at 20% or
higher ownership of voting rights[2], or other similar acts, or proposals of such acts
[1] Referred to as (i) a holder (including a party who falls under the category of a holder prescribed in Article 27-23,
Paragraph 3 of the Financial Instruments and Exchange Act; hereinafter the same shall apply) of the share certificate,etc. (referred to as share certificates, etc. prescribed in Article 27-23, Paragraph 1 of the same Act) of the Company,
and its joint-holder (referred to as a joint-holder prescribed in Article 27-23, Paragraph 5 of the same Act, including aparty deemed to be a joint-holder in accordance with Article 27-23, Paragraph 6 of the same Act, hereinafter the same
shall apply), and also a party in a certain relationship with such holder or its joint holder, which is similar to therelationship between the holder and its joint-holder (hereinafter “quasi-joint holder”), or (ii) a party conducting apurchase, etc. (referred to as a purchase, etc. prescribed in Article 27-2, Paragraph 1 of the same Act), of sharecertificates, etc. of the Company (referred to as share certificates, etc. prescribed in Article 27-2, Paragraph 1 of thesame Act) (hereinafter “Large-scale Acquirer”), and its specially related parties (referred to as a party in a special
relationship prescribed in Article 27-2, Paragraph 7 of the same Act).
[2] (i) In the case of (i) of [1] above, referred to as a combined share holding ratio of the holder and its joint-holder (referred
to as a combined share holding ratio prescribed in Article 27-23, Paragraph 4 of the Financial Instruments andExchange Act), as well as that of quasi-joint holder (as calculated in accordance with Article 27-23, Paragraph 4 of thesame Act; provided the portion overlapped with the combined share holding ratio of the holder and its joint-holder, ifany, shall be excluded), while (ii) in the case of (ii) of [1] above, referred to as a combined ownership ratio of sharecertificates, etc. (referred to as a combined ownership ratio of share certificates, etc. prescribed in Article 27-2,
Paragraph 8 of the same Act) of the Large-scale Acquirer and that of its specially related parties. For the purpose of
calculating holding ratios of share certificates, etc. and ownership ratios of share certificates, etc., securities reports,
quarterly reports and/or other information provided by the Company based on the same Act may be referred as
appropriate.
[3] In the case of (i) of [1] above, referred to as the share certificates, etc. prescribed in Article 27-23, Paragraph 1 of the
Financial Instruments and Exchange Act, while in the case of (ii) of [1] above, referred to as the share certificates, etc.
prescribed in Article 27-2, Paragraph 1 of the same Act.

34

(by whatever means including inside/outside market transactions and tender offer,excluding, however, cases recognized as a friendly act by the Board of Directors of
the Company; hereinafter called the “Acquisition, etc.” under the Plan). Any party
who conducts such Acquisition, etc. (hereinafter referred to as the “Acquirer”) shallfollow the procedures set out in advance under the Plan.
(b) Request for Information from the Acquirer
Prior to the execution of the Acquisition, etc., and unless the Acquisition, etc. isrecognized as a friendly act, etc. by the Board of Directors of the Company, theAcquirer shall be requested to submit to the Board of Directors of the Company, inthe form prescribed by the Company, the information as listed below (hereinafter
the “Required Information”) and the document containing the representations andwarranties to the effect that the Acquirer is, in the course of the Acquisition, etc. tocomply with the procedures set out under the Plan (hereinafter referred to as the“Statement of Intent for the Acquisition”).
If the procedure starts under the Plan, the Company shall promptly disclose it.
The Board of Directors of the Company shall promptly present the Statement ofIntent for the Acquisition to the Independent Committee upon its receipt. Following
the review of the Statement, if the contents are found insufficient, the Independent
Committee may request the Acquirer, directly or indirectly, to additionally provide
the Required Information by the time limit set out as appropriate (in principle, a timeframe within 60 days from the receipt of the Statement of Intent for the Acquisition).
In such case, the Acquirer shall be required to duly provide such additional
Required Information by such time limit.
Statement of Intent for the Acquisition or such additional Required Informationmust be prepared in Japanese.

35

List of the Required Information1)

Details of the Acquirer, etc. (including specific names or titles, capital structure,
financial positions, experiences of past transactions similar in nature to theAcquisition, etc. proposed by the Acquirer, etc. and its outcome, the impacts ofsuch past transactions on the corporate value of the targeted companies).
2) Prior and existing business relationship or competition between the Acquirer, etc.
and the main business partners of the Company, if any3) Objective, method and other details of the Acquisition, etc. (including informationon the price and type of consideration for the Acquisition, etc., its timing, structureof its related transactions, legitimacy of its method and its feasibility)4) Basis for calculating the price of consideration for the Acquisition, etc. (including
facts and assumptions that serve as the basis for calculation, method of
calculation, numerical data used for the calculation, contents of the synergies
expected to be created as a result of a series of transactions related to theAcquisition, etc., contents of such synergies distributable to minority
shareholders)5) Source of the fund that finances the Acquisition, etc. (including specific names ofthe providers of the fund (including all indirect providers), funding methods,
details of the related transactions)
6) Management policies, business plans, capital policies, dividend policies, andmeasures for enhancing corporate value of the Company after the Acquisition,etc.
7) Policies after the Acquisition, etc. for dealing with the Company’s stakeholders,
including its employees, business partners and customers8) Arrangements between the Acquirer and third parties regarding the disposal of
the shares in the Company held by the Acquirer, and/or exercise of associatedvoting rights
9) Specific measures for avoiding conflicts of interest with other shareholders of theCompany10) Other information reasonably considered necessary by the Independent Committee
When the Acquirer is considered to have started the Acquisition, etc. without
following the procedures set out under the Plan, the Independent Committee, in
principle, makes a recommendation of gratis allotment of the Stock Acquisition
Rights to the Board of Directors of the Company as described in (d) 1) below, unlessexceptional circumstances arise where there is a need for further
discussion/negotiation with the Acquirer for the submission of Statement of Intent for
the Acquisition.

(c) Review of the Details of the Acquisition, etc., and of the Negotiation with the Acquirer
and the Draft of Alternative Proposals
1) Request for information to the Board of Directors of the Company
Upon submission from the Acquirer of the Statement of Intent for the Acquisition
and the Required Information additionally requested by the Independent
Committee (if any), the Independent Committee may set a time limit for a reply
set out as appropriate (a time frame within 60 days in principle, considerednecessary for the Board to prepare and present its opinion, evidence that36

supports such opinion and other information/materials, etc. considerednecessary as appropriate by the Independent Committee according to the resultof the study by outside experts; however, the Board shall conduct such required
review as soon as possible) in consideration of the time period necessary for the
Board of Directors of the Company to collect relevant information and to review
the corporate assessment, for the purpose of comparative analysis between thedetails of Statement of Intent for the Acquisition as well as the additionallysubmitted Required Information, and the business plan presented by, as well as
the corporate assessment of the Acquirer conducted by the Board of Directors of
the Company, from the perspective of ensuring and enhancing corporate valueof the Company and the common interest of its shareholders, and may request
the Board of Directors of the Company to show its opinion over the details of theAcquisition, etc. proposed by the Acquirer (including the Board’s position towithhold its opinion, hereinafter the same shall apply), evidence that supports
such opinion, alternative proposals (if any) and other information/materials
considered necessary by the Committee as appropriate, etc.
2) Review by the Independent Committee
In the case where the Independent Committee considers that the Acquirer andthe Board of Directors of the Company (if having requested to provide
information/materials as mentioned in 1) above) have provided sufficient
information/materials, the Independent Committee shall establish a review
period up to 60 days in principle (which, however, may be subject to extensionof such period based on the resolution at the Independent Committee up to 30
days, in the cases described in (d) 3) below. Hereinafter referred to as the“Independent Committee Review Period”). The Independent Committee shallconduct review of the Acquisition, etc. proposed by the Acquirer, collection of
information and comparative analysis regarding the business plans, etc. both by
the Acquirer and by the Board of Directors of the Company, review of thealternative proposals presented by the Board during the Independent
Committee Review Period. The Independent Committee shall also discuss andnegotiate with the Acquirer, directly or indirectly via the Board of Directors of theCompany, or present shareholders with the alternative proposals submitted by
the Board, if necessary, for altering the Acquisition, etc. with a view to ensuring
and enhancing corporate value of the Company and the common interest of its
shareholders.
To ensure that the decision by the Independent Committee be made with aview to ensuring and enhancing corporate value of the Company and thecommon interest of its shareholders, the Independent Committee may seek
advice from independent third parties (such as financial advisors, certified public
accountants, attorneys, consultants and other experts) at the cost of theCompany.
The Acquirer shall be obliged to promptly provide review materials and/or
other information, or to discuss and negotiate with the Independent Committee,
if it is requested by the Independent Committee directly or indirectly via theBoard of Directors of the Company.
3) Information disclosure37

Of facts and information including the start of the Independent Committee
Review Period, presentation of an alternative proposal by the Board of Directorsof the Company to the Independent Committee, and the outline of the Required
Information, matters deemed appropriate by the Independent Committee shallbe disclosed at the point in time as considered appropriate by the Committee.
(d) Recommendation by the Independent Committee
Upon the emergence of an acquirer, the Independent Committee shall make thefollowing recommendations to the Board of Directors of the Company. In the casewhere the Independent Committee make resolutions for such matters as therecommendations as described in 1), 2) and 3) below to the Board of Directors, or if
deemed appropriate by the Independent Committee, such recommendations andresolutions made, their outlines, and matters deemed appropriate by theCommittee (including the period of extension of the Independent Committee
Review Period and the outline of its reasons, if such extension is enforced) shall bepromptly disclosed by the Company.
1) In the case of a recommendation for implementation of gratis allotment of theStock Acquisition Rights
The Independent Committee shall make a recommendation to the Board of
Directors of the Company for the implementation of gratis allotment of the Stock
Acquisition Rights, regardless of whether the Independent Committee Review
Period is started or terminated, if the Acquirer failed to comply with theprocedures set out under the Plan, or if the Independent Committee decides that
the Acquisition, etc. proposed by the Acquirer is deemed to meet any of thecriteria as set forth in (3) “Criteria for Gratis Allotment of the Stock Acquisition
Rights” below, following the review of the details of the Acquisition, etc. proposedby the Acquirer as well as the discussion and negotiation with the Acquirer, andthus the implementation of such gratis allotment of the Stock Acquisition Rights
is deemed appropriate.
However, even after the Independent Committee makes the recommendation
for the implementation of the gratis allotment of the Stock Acquisition Rights, if it
determines that the circumstance falls under any of the following, it may cancel
the gratis allotment up to two business days prior to the ex-rights date of thegratis allotment, and it may make a recommendation for the acquisition of theStock Acquisition Rights without compensation, in the period from the effective
date of gratis allotment of the Stock Acquisition Rights up to the day preceding
the start date of exercise period (as defined in (f) of (4) “Outline of Gratis
Allotment of the Stock Acquisition Rights” below).
a) In the case where the Acquisition, etc. is cancelled due to the withdrawal by
the Acquirer or other reasons.
b) In the case where there are changes to the facts on which the decision for
the recommendation is based, hence the Acquisition, etc. proposed by the
Acquirer no longer meets any of the criteria set out under (3) ”Criteria for theGratis Allotment of the Stock Acquisition Rights” below, or implementation ofsuch gratis allotment of the Stock Acquisition Rights or authorizing theimplementation are no longer appropriate, even though the Acquisition, etc.
proposed by the Acquirer still meets such criteria.
382) In the case where recommendation for non-implementation of gratis allotment of
the Stock Acquisition Rights is madeThe Independent Committee shall make a recommendation to the Board of
Directors of the Company for non-implementation of gratis allotment of the Stock
Acquisition Rights, regardless of whether the Independent Committee Review
Period is terminated or not, if the Independent Committee decides that theAcquisition, etc. proposed by the Acquirer is deemed not to meet any of thecriteria as set forth in (3) “Criteria for Gratis Allotment of the Stock Acquisition
Rights” below, following the review of the details of the Acquisition, etc. proposedby the Acquirer as well as the discussion and negotiation with the Acquirer, or the
implementation of such gratis allotment of the Stock Acquisition Rights is notdeemed appropriate, even though the Acquisition, etc. proposed by the Acquirer
meets such criteria.
However, even after the Independent Committee makes the recommendation
for non-implementation of the gratis allotment of the Stock Acquisition Rights, if
there are changes to the facts on which the decision for the recommendation isbased, hence it has come to decide that the Acquisition, etc. proposed by the
Acquirer is deemed to meet any of the criteria as set forth in (3) “Criteria for Gratis
Allotment of the Stock Acquisition Rights” below, and thus the implementation of
the gratis allotment of the Stock Acquisition Rights is deemed appropriate, theIndependent Committee may make new decisions including the recommendations
for the implementation of the gratis allotment of the Stock Acquisition Rights, andmake such a recommendation to the Board of Directors of the Company.
3) In the case where the Independent Committee Review Period is extended
If the Independent Committee failed to make a recommendation for
implementation or non-implementation of the gratis allotment of the Stock
Acquisition Rights by the expiry date of the Independent Committee Review
Period, the Independent Committee shall make resolutions for the extension of
the Independent Committee Review Period of a time frame within 30 days, to theextent reasonably deemed necessary for the review of the Acquisition, etc.
proposed by the Acquirer, discussion and negotiation with the Acquirer, and thereview of the alternative proposal.
If the Independent Committee Review Period is extended based on the
aforementioned resolution, it shall collect information and make reviews, etc. as
intended by such extension, and make a recommendation within the extended
period, for the implementation or non-implementation of the gratis allotment of theStock Acquisition Rights.
(e) Resolution of the Board of Directors
The Board of Directors of the Company shall promptly make resolutions, in fulfilling
its role as a body under the Companies Act, regarding the implementation or nonimplementation of the gratis allotment of the Stock Acquisition Rights, etc.
(including cancellation of the gratis allotment and acquisition of the issued Stock
Acquisition Rights without consideration) by following the aforementioned
recommendation by the Independent Committee (unless following therecommendation is considered a violation of Directors’ obligation to exercise
39due care of a prudent manager).
The Acquirer shall not be allowed to proceed with the Acquisition, etc. in the
period from the start of the procedure for the Plan up to the resolution of the Boardof Directors of the Company on the implementation or non-implementation of thegratis allotment of the Stock Acquisition Rights.
If the Board of Directors of the Company makes the resolution on theimplementation or non-implementation of the gratis allotment of the Stock
Acquisition Rights, it shall promptly disclose the outline of such resolution and othermatters it deems appropriate.
(3) Criteria for Gratis Allotment of the Stock Acquisition Rights
If the Acquisition, etc. proposed by the Acquirer is considered to fall under any of
the following, and that the implementation of the gratis allotment of the Stock
Acquisition Rights is deemed appropriate, the Company shall be bound to
implement the gratis allotment of the Stock Acquisition Rights according to theresolution at the Board of Directors of the Company as described in the
aforementioned (e) of (2) “Procedures for the Plan.” As described in the
aforementioned (d) of (2) “Procedures for the Plan,” decision on whether theAcquirer meets the following criteria, and on whether it is appropriate to implement
the gratis allotment of the Stock Acquisition Rights shall be made based on the
judgment of the Independent Committee without exception.

40

Criteria for Gratis Allotment of the Stock Acquisition Rights(a) In the case the Acquisition, etc. does not comply with the procedures set out under
the Plan listed below, including provision of information and securing of the
Independent Committee Review Period as prescribed in the aforementioned (b) of(2) “Procedures for the Plan.”
1) In the case the Acquisition, etc. is carried out, without allowing the Board of
Directors of the Company a time period reasonably necessary for presenting analternative proposal to the Acquisition, etc.
2) In the case the Acquisition, etc. is carried out without allowing the Independent
Committee the Independent Committee Review Period as set out under the Plan.
3) In the case the Acquisition, etc. is carried out without sufficiently providing theRequired Information and other information reasonably necessary for evaluating
the details of the Acquisition, etc.
(b) In the case the Acquisition, etc. may clearly damage the corporate value of theCompany and the common interest of its shareholders due to the following acts or
acts similar to these.
1) Act to buy out the Company’s share certificates, etc., followed by a demand for
repurchase at an inflated price2) Act by the Acquirer, etc. to temporarily control the Company, enforce management
under which it generates profits at the expense of the Company, such as acquiring
significant assets of the Company at a low price3) Act to appropriate the Company’s assets as collateral for the debt of, or as fund for
repayment
4) Act to temporarily control the Company, for the purpose of enforcing disposal of
expensive assets that are not involved in the Company’s business for theforeseeable future and payment of temporary high dividends based on theproceeds from such disposal, and/or enabling the Acquirer, etc. to sell its sharesin the Company at a profit by taking advantage of the soaring share price resulting
from such temporary high dividends
5) Act to buy out the Company’s shares, despite no genuine intention to participate in
the Company’s management, with the objective of primarily pulling up theCompany’s share price, and then asking the Company and its related parties
concerned to repurchase its shares at an inflated price.
(c) In the case where the Acquisition, etc. may virtually force shareholders to sell theirshares, such as coercive two-tier purchase (purchase of shares in the forms
including tender offer carried out without inducing purchase of all shares in the firstphase, and with the terms of purchase in the second phase made deliberately lessattractive, or unclear to shareholders).
(d) In the case the Acquisition, etc. involves significantly inadequate or inappropriate
terms (including the price and type of consideration for the Acquisition, etc., its timing,
structure of the related transactions, legitimacy of its method, and its feasibility) inlight of the intrinsic value that is the source of the common interest of the Company’s
shareholders.
41(e) In the case the Acquisition, etc. is deemed to pose threats to damage the corporate
value of the Company and the common interest of its shareholders, through the
impairment of the interest of its stakeholders including shareholders, employees,
customers and business partners, as a result of the acquisition of control over theCompany by the Acquirer, and the policy to treat such stakeholders as well as
business plans, etc.
(4) Outline of Gratis Allotment of the Stock Acquisition Rights
Outline of the gratis allotment of the Stock Acquisition Rights to be implemented
under the Plan is as follows.
(a) Number of the Stock Acquisition Rights
It shall be equivalent to the total number of shares outstanding in the Company, ona certain day (hereinafter referred to as the “Allotment Date”) as separately set out
by the resolution of the Board of Directors regarding the gratis allotment of theStock Acquisition Rights (hereinafter referred to as the “Resolution for Gratis
Allotment of the Stock Acquisition Rights”) (excluding, however, the number ofshares held by the Company as at the Allotment Date).
(b) Entitled Shareholders
One Stock Acquisition Right shall be allotted with no compensation for one share in
the Company held by shareholders other than the Company registered or recordedon the latest shareholder register of the Company on the Allotment Date. The
Company may conduct such gratis allotment of the Stock Acquisition Rights on
more than one occasion.
(c) Effective Date of the Gratis Allotment of the Stock Acquisition Rights
It shall be the date separately set out by the Resolution for Gratis Allotment of theStock Acquisition Rights.
(d) Number of Shares subject to Stock Acquisition Rights
Number of shares[4] subject to one Stock Acquisition Right (hereinafter referred toas the “Applicable Number of Shares”) shall be one share, unless otherwise
adjusted.
(e) The Amount of the Property to be Contributed upon Exercise of each Stock
Acquisition Right
Contributions upon exercise of the Stock Acquisition Rights are to be made in cash,
and the amount of property to be contributed upon exercise of each Stock
Acquisition Right, shall be the amount as separately set out by the Resolution for
Gratis Allotment of the Stock Acquisition Rights, within the range between the lower
limit of 1 yen and the upper limit of 50% of the market price of one share in the[4] If the Company becomes a corporation issuing class shares (in accordance with Article 2, Paragraph 13 of theCompanies Act), both 1) shares in the Company issued in association with the exercise of the Stock Acquisition Rights,
and 2) shares granted in exchange for the acquisition of the Stock Acquisition Rights refer to the same class of shares(i.e. common stock) as have already been issued as of this General Meeting of Shareholders.

42Company. “Market price” shall refer to the amount equivalent to the average closing
price (including trade quote) of ordinary transactions of the Company's common
stock on all trading days (excluding the days on which no trading is reported) at theTokyo Stock Exchange, during the period separately set out by the Board of
Directors in the range between 30 days and 180 days prior to the Resolution for
Gratis Allotment of the Stock Acquisition Rights, and any fraction of a yen shall be
rounded up to one yen.
(f) Exercise Period of the Stock Acquisition Rights
With the start date (hereinafter referred to as the “Start Date of Exercise Period”) as
separately set out by the Resolution for Gratis Allotment of the Stock Acquisition
Rights, the time period shall be separately set out by the Resolution for Gratis
Allotment of the Stock Acquisition Rights, in the range between one month andthree months, provided, however, that if the Company acquires the Stock
Acquisition Rights, the exercise period of the Stock Acquisition Rights associatedwith the acquisition in accordance with (i) 2) below, shall expire on the business day
preceding the date of such acquisition, or if the last day of the exercise period falls
on the holiday for the institution that handles the payment associated with theexercise, it shall expire on the business day prior thereto.
(g) Conditions for Exercising the Stock Acquisition Rights
The Acquirer, etc. may not exercise the Stock Acquisition Rights, in principle. In
addition, non-residents in Japan who are required to comply with certain
procedures set out under foreign laws and regulations for the purpose of exercising
the Stock Acquisition Rights shall not be allowed to exercise the Stock Acquisition
Rights in principle (provided, however, that certain parties entitled to use exemption
provisions under such applicable foreign laws and regulations may exercise theStock Acquisition Rights, while the Stock Acquisition Rights held by non-residents
in Japan shall be subject to the acquisition by the Company in consideration ofshares in the Company as described in (i) below). In addition, anyone who fails to
submit a written pledge in the form prescribed by the Company, including provisionsof representations and warranties regarding matters such as the fact that theysatisfy the exercise conditions of the Stock Acquisition Rights, indemnity clauses
and other covenants, shall not be allowed to exercise the Stock Acquisition Rights.
(h) Restriction to the Transfer of the Stock Acquisition Rights
Acquisition of the Stock Acquisition Rights by transfer thereof shall be subject to theapproval of the Board of Directors of the Company.
(i)

Acquisition of the Stock Acquisition Rights by the Company
1) Until the day before the Start Date of Exercise Period, based on therecommendation of the Independent Committee in principle, if the Board of
Directors of the Company decides that it is appropriate for the Company to acquire
the Stock Acquisition Rights, the Company may acquire all of the Stock Acquisition
Rights without compensation on the day as separately set out by the Board of
Directors of the Company.
2) On the day as separately set out by the Board of Directors of the Company, the43Company may acquire all of the Stock Acquisition Rights held by parties otherthan the Acquirer, etc. that have not been exercised by the business day
preceding such date set out by the Board of Directors of the Company, and in
exchange for them, grant the Applicable Number of Shares in the Company foreach such Stock Acquisition Right. The Company may conduct such acquisition of
the Stock Acquisition Rights on several occasions. (This applies to the case where
gratis allotment of the Stock Acquisition Rights is carried out several times, sinceacquisition of the Stock Acquisition Rights are conducted for each of the Stock
Acquisition Rights. If it turns out that, among holders of the Stock Acquisition
Rights excluded from the acquisition, which was made for holders other than the
Acquirer, etc., parties other than the Acquirer, etc. are included, the Company
may conduct additional acquisition targeting such other parties than the Acquirer,
etc.)3) In addition to the cases above, upon the actual Resolution for Gratis Allotment of
the Stock Acquisition Rights, the Company may set out matters related toacquisition of the Stock Acquisition Rights other than those set out in 1) and 2)
above (including the matters related to the acquisition of the Stock Acquisition
Rights from the Acquirer, etc.), if it is deemed reasonably appropriate subject tothe recommendation by the Independent Committee; provided, however, that
acquisition of the Stock Acquisition Rights owned by the Acquirer, etc. shall not
involve grant of consideration including payment of cash.
(j)Grant of the Stock Acquisition Rights in the Case of Merger, Absorption-type
Company Split, Incorporation-type Company Split, Share Exchange and Share
Transfer
It shall be set out separately by the Resolution for Gratis Allotment of the Stock
Acquisition Rights.

(k) Issuance of Stock Acquisition Right Certificates
Stock acquisition right certificates shall not be issued with respect to the Stock
Acquisition Rights.
(5) Procedures for the Renewal of the Plan
The effective period of the Plan shall be renewed subject to the approval ofshareholders after the deliberation of the proposal at this General Meeting of
Shareholders.
(6) Effective Period, Abolition, Amendment and Suspension of the Plan
Effective period of the Plan shall expire at the conclusion of the General Meeting of
Shareholders for the last fiscal year ending within three years after this General
Meeting of Shareholders.
However, even prior to the expiry of the effective period, the Plan and theentrustment based on the Plan shall be abolished and cancelled at the time when
1) resolution for the abolition of the Plan is made at this General Meeting of
Shareholders, or 2) resolution for the abolition of the Plan is made by the Board of
Directors of the Company.
44Meanwhile, even during the effective period of the Plan, the Board of Directors of
the Company may amend or temporarily suspend the Plan, if such amendment orsuspension does not go against the intention of the approval of (5) “Procedures for
the Renewal of the Plan” above, at this General Meeting of Shareholders (including
the cases where establishment, amendments and abolition of the laws, regulations
and rules of financial instruments exchanges relevant to the Plan are made, and it
is appropriate to reflect such establishment, amendments and abolition on the Plan,or the cases where it is appropriate to revise the wording of the Plan due tomisspelling and typographical errors, etc. or the cases where such amendment orsuspension is not disadvantageous to the Company’s shareholders) subject to theapproval of the Independent Committee.
In the case where such amendment or temporary suspension of the Plan isenforced, the Company shall promptly disclose the fact of such amendment orsuspension as appropriate, and the details of the amendment (in the case ofamendment) and other relevant matters.
(7) Amendment Required by Laws and Regulations
Provisions of laws and regulations referenced in the Plan are based on theprovisions in effect as of May 10, 2022. Thus, if any necessity arises for modifying
the provisions or definitions of terms set out above, due to the establishment,
amendment or abolition of the laws and regulations after such date, the reading ofprovisions or definitions of terms set out above shall be changed accordingly as
appropriate to a reasonable extent, taking into consideration the purposes of such
establishment, amendment or abolition.
3. Impact on Shareholders(1) Impact on Shareholders and Investors at the Time of the Introduction of the Plan
Since gratis allotment of the Stock Acquisition Rights is not implemented at the
introduction of the Plan, such introduction shall have no direct and specific impact
on shareholders and investors.
(2) Impact on Shareholders and Investors at the Time of the Implementation of theGratis Allotment of the Stock Acquisition Rights
Subject to the Resolution for Gratis Allotment of the Stock Acquisition Rights at theBoard of Directors of the Company, one Stock Acquisition Right shall be allottedwith no compensation for one share in the Company held by shareholders as of the
Allotment Date as separately set out by such Resolution for Gratis Allotment of theStock Acquisition Rights. If a shareholder does not follow the procedures for the
exercise of the Stock Acquisition Rights as described in detail in (a) of (3)“Procedures for Shareholders in association with Gratis Allotment of the Stock
Acquisition Rights” below during the exercise period, including the payment of cash,
shares in the Company held by such shareholder will be diluted as a result of theexercise of the Stock Acquisition Rights by other shareholders. However, theCompany may acquire the Stock Acquisition Rights from shareholders other thanthe Acquirer, etc. by the procedures described in (b) of (3) “Procedures for
Shareholders in association with Gratis Allotment of the Stock Acquisition Rights,”
and grant shares in the Company in exchange of the Stock Acquisition Rights. If theCompany follows such procedures for acquisition, shareholders other than the45Acquirer, etc. will receive shares in the Company without exercising the Stock
Acquisition Rights and paying the amount of cash equivalent to the exercise price,
resulting in the dilution of value per share held by each shareholder. However, thisdoes not basically cause any economic dilution of the total value of the shares in
the Company held by each shareholder. Given the restriction on the transfer of astock acquisition right itself, however, if shareholders are granted shares in the
Company after the Allotment Date, as a result of exercise of the Stock Acquisition
Rights or the acquisition by the Company, collection of invested capital by transfer
may be restricted to the extent attributable to the Stock Acquisition Rights from thevalue of the shares in the Company held by shareholders, until the shares in the
Company are recorded in the transfer accounts of shareholders. Shareholders arerequested to pay attention to this possible restriction.
Even after the Allotment Date or the effective date of the gratis allotment of theStock Acquisition Rights, the Company may cancel such gratis allotment of theStock Acquisition Rights, due to the withdrawal of the Acquisition, etc. by the
Acquirer or other reasons, up to two business days prior to the ex-rights date of thegratis allotment, or may acquire the Stock Acquisition Rights with no compensation
and without granting shares in the Company to the holders of the Stock Acquisition
Rights, in the period from the effective date of the Stock Acquisition Rights up to the
day preceding the Start Date of Exercise Period. Thus, the outcome may be thesame as the case where no gratis allotment of the Stock Acquisition Rights took
place at all. In such cases, the value per share is not diluted, and investors who
traded the shares in the Company in an anticipation of gratis allotment of the Stock
Acquisition Rights may accordingly suffer losses due to the share price fluctuations.
(3) Procedures for Shareholders in Association with Gratis Allotment of the Stock
Acquisition Rights(a) Procedures for the Exercise of the Stock Acquisition Rights
The Company shall send documents necessary for exercising the Stock Acquisition
Rights, including, in principle, the instruction form for the exercise of the Stock
Acquisition Rights (in the form prescribed by the Company, specifying the content
and number of the Stock Acquisition Rights to be exercised, date of such exercise,
information necessary for recording the shares in the Company including thetransfer account detail, a written pledge including provisions of representations andwarranties regarding matters such as the fact that the shareholder is not theAcquirer, etc., indemnity clauses and other covenants) to the shareholders
registered or recorded on the latest shareholder register of the Company on the
Allotment Date. After the gratis allotment of the Stock Acquisition Rights,
shareholders will be requested to submit the documents during the exercise period
but until the acquisition of the Stock Acquisition Rights by the Company becomes
effective, and pay the amount of consideration, as determined by the Resolution for
Gratis Allotment of the Stock Acquisition Rights at the Board of Directors of theCompany, within the range between the lower limit of 1 yen and the upper limit of
50% of the market price of one share in the Company for each Stock Acquisition
Right, to the institution that handles the payment associated with the exercise.
Subsequently, one share in the Company for each Stock Acquisition Right, inprinciple, will be issued.
Please bear in mind that, subject to the provisions of the laws concerning the46

transfer of bonds and shares, when exercising the Stock Acquisition Rights,
shareholders need to provide the Company with information on an account otherthan a special account, which is to be used as a transfer account for the purpose ofrecording the shares granted as a result of the exercise, and that shareholders
need to open a transfer account such as securities account before exercising the
Stock Acquisition Rights.
(b) Procedures for the Acquisition of the Stock Acquisition Rights by the Company Whenthe Board of Directors of the Company makes a decision on the acquisition of theStock Acquisition Rights, the Company shall acquire the Stock Acquisition Rights on
the date as separately set out by the Board of Directors of the Company, in
accordance with the statutory procedures. If the Company needs to grant the sharesin the Company to shareholders in exchange for the acquired Stock Acquisition
Rights, it shall promptly grant them. In this case, shareholders may be requested toseparately submit a written pledge in a form prescribed by the Company, including
provisions of representations and warranties regarding matters such as the fact thatthe shareholder is not the Acquirer, etc., indemnity clauses and other covenants.
Shareholders may also be requested to provide information on the transfer accountfor the purpose of recording the shares in the Company granted as consideration for
the acquisition of the Stock Acquisition Rights.
If certain provisions including the acquisition of the Stock Acquisition Rights fromthe Acquirer, etc. are set out in the Resolution for Gratis Allotment of the Stock
Acquisition Rights made based on the recommendation by the Independent
Committee, the Company may take such measures in accordance with suchprovisions.
In addition to the above, details of the method for the allotment and exercise of
the Stock Acquisition Rights and method for the acquisition by the Company shallbe disclosed or notified to shareholders after the Resolution for Gratis Allotment of
the Stock Acquisition Rights is made. Shareholders will be kindly asked to confirm
such disclosure and notification.
IV. Decisions by the Board of Directors of the Company on the Measures above under thePlan and its Reasons
1. The Plan is in Compliance with the Company’s Basic Policies
The Plan shall be in compliance with Company’s Basic Policies, as it is a framework forprotecting corporate value of the Company and the common interest of its shareholders,through ensuring sufficient information and time necessary for shareholders to decide
whether or not to accept the Acquisition, etc., or for the Board of Directors of theCompany to make alternative proposals to shareholders, or allowing the Board to
discuss and negotiate with the Large-scale Acquirer on behalf of shareholders in thecase of the Acquisition, etc. of the share certificates, etc. of the Company.
2. The Measures Do Not Damage the Common Interest of Shareholders, and Are Not
Meant to Preserve the Status of the Company Officers
The Company believes that the measures for preventing control by parties deemed
inappropriate under the Basic Policies do not damage the common interest ofshareholders, and are not meant to preserve the status of the company officers for thefollowing reasons.
47

(1) The Measures Completely Meet the Requirements of the Guidelines Regarding
Takeover Defense.
The Plan is completely in compliance with the three principles set out under the“Guidelines Regarding Takeover Defense for the Purposes of Protection andEnhancement of Corporate Value and Shareholders’ Common Interests” publishedon May 27, 2005 jointly by the Ministry of Economy, Trade and Industry and theMinistry of Justice. The Plan is also in conformity to the proposals in “Takeover
Defense Measures in Light of Recent Environmental Changes” published on June30, 2008, by the Corporate Value Study Group of the Ministry of Economy, Tradeand Industry.
(2) The Plan is Designed to Respect the Intention of Shareholders
As described in III. 2. (5) “Procedures for the Renewal of the Plan” above, for the
purpose of reflecting the intent of shareholders, the Company has made proposals
at this General Meeting of Shareholders on the introduction of the Plan. Uponshareholders’ approval on the Plan at this General Meeting of Shareholders, thePlan shall be renewed to cover the period up to the conclusion of the Ordinary
General Meeting of Shareholders for the last fiscal year ending within three years
after this General Meeting of Shareholders.
In addition, as described in III. 2. (6) “Effective Period, Abolition, Amendment
and Suspension of the Plan” above, the Plan may be abolished at the time when aresolution for the abolition of the Plan is made at a General Meeting of
Shareholders, or a resolution for the abolition of the Plan is made by the Board of
Directors comprising Directors appointed by a General Meeting of Shareholders,even prior to the expiry of its effective period.
Additionally, the Company sets the term of office of Directors to be one year, andeven during the effective period of the Plan, the shareholders’ intention can bereflected through the election of Directors at the annual General Meeting of
Shareholders. Thus, the shareholders’ intention will be reflected in the decisions
whether or not to maintain the Plan.
(3) Due Consideration to the Decision by Independent Outside Experts, and Information
Disclosure
At the introduction of the Plan, the Company has established the Independent
Committee as a body for objectively making substantive judgment for shareholders,regarding the implementation and abolition of the Plan while excluding Directors’
arbitrary judgments.
If Acquisition, etc. is actually made, the Independent Committee shall makesubstantive judgment on whether such Acquisition, etc. damages the corporate
value of the Company and the common interest of its shareholders, in accordancewith the Independent Committee Rules as described in III. 2. (2) “Procedures for thePlan” above, while the Board of Directors of the Company shall make resolutions infulfilling its role as a body under the Companies Act, by following such judgment of
the Independent Committee (unless following the recommendation is considered aviolation of Directors’ obligation to exercise due care of a prudent manager).
Thus, the Independent Committee shall rigorously monitor possible arbitrary
actions by Directors of the Company while outline of any judgment made by the48

Committee shall be disclosed to shareholders. Thus, the framework for transparent
operations of the Plan is ensured to the extent beneficial to corporate value of theCompany and the common interest of its shareholders.
The Independent Committee comprises three Outside Audit & Supervisory
Board Members who are subject to shareholder derivative action, and enablesprecise decisions. (As for the standards for electing the members of the
Independent Committee, requirements for reaching resolutions and matters to beresolved, please refer to the Appendix 1. Names and career summaries of theCommittee members are stated in the Appendix 2.)(4) Establishment of Reasonable and Objective Criteria
As described in III. 2. (2) (d) “Recommendation by the Independent Committee” andIII. 2. (3) “Criteria for the Gratis Allotment of the Stock Acquisition Rights” above, thePlan is set to be implemented only when reasonable, detailed and objective criteria
are met. Thus, the framework is ensured for preventing the Board of Directors of theCompany from arbitrarily implementing the Plan.
(5) Hearing the Opinions of Outside Experts
Upon the emergence of an Acquirer, the Independent Committee shall be able toseek advice from independent third-party experts (including financial advisors,certified public accountants, attorneys, consultants, and other experts) at the cost of
the Company, thereby further ensuring impartiality and objectivity of the judgmentof the Independent Committee.
(6) Not being a Dead-Hand or Slow-Hand Takeover Defense Measure
As described in III. 2. (6) “Effective Period, Abolition, Amendment and Suspensionof the Plan” above, the Plan is designed to allow abolition by the Directors
nominated by the party who conducted the large-scale acquisition of sharecertificates, etc. of the Company, and elected by the General Meeting of
Shareholders, which, therefore, is not a dead-hand takeover defense measure (atakeover defense measure that cannot be stopped even after a majority of themembers of the Board have been replaced) or a slow-hand takeover defense
measure (a takeover defense measure that requires time for it to be stopped due tothe fact that the members of the Board cannot be replaced all at once).

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Appendix 1
Outline of the Independent Committee Rules- The Independent Committee shall be established by the resolution of the Board of
Directors of the Company.
- The Independent Committee shall comprise three or more and five or less members,
elected by the Board of Directors of the Company, from among the persons who are
independent from the senior management engaged in executing the business of theCompany and fall into any of the three categories, namely (i) Outside Directors of theCompany, (ii) Outside Audit & Supervisory Board Members of the Company, or (iii)
outside experts.
Provided, however, outside experts must be corporate executives with proven trackrecords, ex-government officials, university staff, persons familiar with investmentbanking business or the lines of business conducted by the Company, attorneys,
certified public accountants, or researchers specializing in the Companies Act, or otherexperts with similar qualifications and/or experiences and must have entered into anagreement with the Company, which includes provisions of due care of a prudent
manager as specified by the Company.
- Term of office of the Independent Committee members shall expire at the conclusion of
the Ordinary General Meeting of Shareholders for the last fiscal year ending within three
years after this General Meeting of Shareholders, unless otherwise specified by the
resolution of the Board of Directors of the Company. When a member of the
Independent Committee, who has been an Outside Director of the Company or an
Outside Audit & Supervisory Board Member of the Company, ceases to be a Director
or an Audit & Supervisory Board Member (unless as a result of reappointment), his/herterm of office as a member of the Independent Committee shall automatically terminate
at the same time.
- The Independent Committee shall make decisions on the matters as listed below, andsuch decisions along with reasons shall be advised to the Board of Directors of theCompany in the form of recommendations. The Board of Directors of the Company
shall make resolutions regarding the implementation or non-implementation of thegratis allotment of the Stock Acquisition Rights in fulfilling its role as a body under theCompanies Act, by following such recommendation by the Independent Committee(unless following the recommendation is considered a violation of Directors’ obligation
to exercise due care of a prudent manager). Each member of the Independent
Committee and each Director of the Company must participate in such decision-making
process from the perspective of whether or not it is beneficial to corporate value of theCompany and the common interest of its shareholders, and not solely for the purposeof achieving personal gain for himself/herself or collectively for the senior managementof the Company.
1) Implementation or non-implementation of the gratis allotment of the Stock
Acquisition Rights
2) Cancellation of gratis allotment of the Stock Acquisition Rights, or acquisition of theStock Acquisition Rights with no compensation
3) Other matters which is subject to the decision by the Board of Directors of theCompany, but has been consulted with the Independent Committee50

- In addition to those mentioned above, the Independent Committee shall carry out thefollowing:1) Decisions on information to be provided to the Independent Committee from theAcquirer as well as the Board of Directors of the Company, and the time limit of suchprovision.
2) Examination and review of the details of the Acquisition, etc. as proposed by the
Acquirer3) Negotiations and discussions with the Acquirer
4) Request for submission of an alternative proposal from the Board of Directors of theCompany, review of the alternative proposal and its presentation to shareholders
5) Establishment of the Independent Committee Review Period and the decision on its
extension6) Approval on the amendment or suspension of the Plan
7) Other matters authorized to be conducted by the Independent Committee under thePlan8) Matters authorized to be conducted by the Independent Committee separately
determined by the Board of Directors of the Company- If the information presented has been found insufficient as the Required Information,
the Independent Committee shall request the Acquirer to additionally provide theRequired Information. Upon submission from the Acquirer of the Statement of Intent for
the Acquisition and the Required Information additionally requested by the Committee,
the Independent Committee may also request the Board of Directors of the Company
to show its opinion over the details of the Acquisition, etc. proposed by the Acquirer,
evidence that supports such opinion, alternative proposals and otherinformation/materials considered necessary by the Committee as appropriate, etc.
within a certain period of time.
- The Independent Committee shall also discuss and negotiate with the Acquirer, directly
or indirectly via the Board of Directors of the Company, or present shareholders withthe alternative proposals submitted by the Board, if necessary, for altering theAcquisition, etc. with a view to ensuring and enhancing corporate value of the Company
and the common interest of its shareholders.
- The Independent Committee shall be authorized to request Directors, Audit &Supervisory Board Members and employees of the Company as well as other persons
as considered necessary by the Committee for attendance to the Committee meeting,and to ask them to explain the matters as required by the Committee for the purposeof collecting necessary information.
- The Independent Committee shall be able to seek advice from independent third parties(including financial advisors, certified public accountants, attorneys, consultants, andother experts) at the cost of the Company.
- In the case of the Acquisition, etc. or others, each member of the Independent
Committee shall be able to call a Committee meeting at any time.
- In principle, resolution of the Independent Committee shall be made with theattendance of all members of the Committee and by a majority thereof, provided,
however, that if any member of the Committee is unable to attend due to an accident
or other unavoidable circumstance, resolution may be made with the attendance of amajority of the members, and by a majority thereof.

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Appendix 2
Career Summary of the Independent Committee members
The Independent Committee comprises the following four members.
Name (Date of Birth)

Career Summary

April 1982
August 2002
April 2004

1

Mikio Shiokawa(August 26, 1959)

January 2013
January 2014
August 2015
September 2017
June 2019
April 1981
June 2000
July 2007

2

Masayuki Tamagawa(January 15, 1958)

July 2011
July 2012
October 2016

May 2017
June 2019
April 1999

3

Naoko Shimura(June 5, 1974)

April 2005
January 2008
May 2016
June 2018
September 2018
June 2019

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Joined National Police Agency
Head of Security Department, Kanagawa
Prefectural Police Headquarters
Head of Counter International Terrorism
Division, Foreign Affairs and Intelligence
Department, Security Bureau, National
Police Agency
Chief of Hyogo Prefectural Police
Councilor of Deputy Director General,
Commissioner General's Secretariat,
National Police Agency
Deputy Head of Cabinet SatelliteIntelligence Center, Cabinet Secretariat
Ambassador Extraordinary andPlenipotentiary of Embassy of Japan in
Tunisia
Outside Audit & Supervisory Board
Member of the Company(to present)
Joined the Ministry of Finance
Deputy Director General of Monetary
Financial System Bureau, International
Monetary Fund (IMF)
Regional Commissioner of Sapporo
Regional Taxation Bureau
Deputy Financial Officer of Japan
Tobacco Inc.
Head of Asia External Representation
Office, African Development Bank (AfDB)Specially-appointed Professor of
Education Development Center,
Education Support Functions, Kogakuin
University (to present)
Managing Director of Kogakuin University(to present)
Outside Audit & Supervisory Board
Member of the Company (to present)
Registered as Attorney
Joined Nishimura & Partners (currently
Nishimura & Asahi)
Registered as Attorney of New York State
Partner of Nishimura & Asahi (to present)
External Auditor of TABIKOBO Co. Ltd.
(to present)
Outside Director of mixi, Inc. (to present)Part-time Lecturer of Business Law
Department, Graduate School of Law,
Hitotsubashi University (to present)
Outside Audit & Supervisory Board
Member of the Company (to present)

(Notes)
1. Mikio Shiokawa, Masayuki Tamagawa and Naoko Shimura are candidates for Outside Audit &Supervisory Board Members who meet the requirements for Outside Audit & Supervisory Board
Members, as prescribed in Article 2, Item 16 of the Companies Act.
2. There are no special interests between the Company and each member mentioned above.

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