June 29, 2022

Name of Company
Representative

K A G A E L E C T R O N I C S C O ., LT D .
Ryoichi Kado,
Representative Director, President & COO(Stock Code: 8154 Tokyo Stock Exchange, Prime Market)
Eiji Kawamura,ContactDirector, Managing Executive Officer
Head of Administration Headquarters
Tel: +81-(0)3-5657-0111

Notice Regarding Disposal of Treasury Shares for Restricted Stock Compensation
KAGA ELECTRONICS CO., LTD. (the "Company") hereby announces that, at a Board ofDirectors meeting held today, a resolution was passed to conduct disposal of its treasury shares("Disposal of Treasury Shares" or "Disposal"), details of which are as follows.
1. Outline of the Disposal(1)

Date of disposal

July 28, 2022

(2)

Class and number of shares
to be disposed

13,944 shares of common stock of the Company(3)

Disposal value\3,085 per share(4)

Total disposal value\43,017,240(5)Recipients of allotment andthe number thereof; numberof shares to be disposed

Directors of the Company (excluding Founder and CEO,and outsider directors)
6 persons, 13,944 shares(6)

OtherWith respect to the Disposal of Treasury Shares, asecurities statement has been filed in accordance with
the Financial Instruments and Exchange Act.

2. Purpose of and reasons for the Disposal
The Company resolved at a meeting of the Board of Directors held on May 24, 2018, tointroduce the Restricted Stock Compensation Plan (“Plan”) for the purpose of providing
directors of the Company, excluding outside directors (“Eligible Directors”), incentives toenhance the corporate value of the Company and a scheme for holding shares in theCompany to promote sharing of value with the shareholders. At the 50th Ordinary General
Meeting of Shareholders held on June 28, 2018, it was approved that, in accordance with thePlan, monetary compensation claims not exceeding \100 million per year would be paid tothe Eligible Directors as monetary compensation to serve as the property to be contributed
for acquisition of shares with transfer restriction (“Restricted Stock Compensation”), and thatthe transfer restriction on the restricted stock will apply for a period to be determined by theBoard of Directors which shall be a period between three to twenty years.
The outline of the Plan and other relevant matters are as follows.
-1-[Outline of the Plan and other matters]
The Eligible Directors will make in-kind contributions of all of the monetary compensation
claims provided by the Company in accordance with the Plan, and in return receive shares ofthe Companyʼs common stock that will be issued or disposed of by the Company. The total
number of shares of common stock to be issued or disposed of shall be no more than 60,000
shares per year and the amount to be paid in per share shall be the closing price of theCompanyʼs common stock on the Prime Market of the Tokyo Stock Exchange on the business
day immediately preceding the date of each resolution of the Board of Directors (or, if notransaction is closed on such day, the closing price on the most recent trading day precedingthat day).
For the purpose of issuing or disposing of shares of the Companyʼs common stock under thePlan, the Company shall enter into a restricted stock allotment agreement with the Eligible
Directors, which includes provisions that (1) Eligible Directors shall not, during a certain period,transfer, create a security interest on, or otherwise dispose of the shares of the Companyʼscommon stock allotted under the restricted stock allotment agreement, and (2) the Company
may acquire the said common shares without consideration if certain events occur.
After consultation and reporting by the Nomination and Compensation Committee, with due
consideration to the purpose of the Plan, business conditions of the Company, the scope of
responsibility of each Eligible Director and other circumstances, and with a view to increasing
motivation of the Eligible Directors, the Company has decided to grant the total sum of\43,017,240 of monetary compensation claims (“Monetary Compensation Claims”) and 13,944
shares of the Companyʼs common stock. Further, in order to realize the Planʼs objective ofachieving sharing of value with the shareholders over the medium to long term, the transfer
restriction period is set at 20 years.
For the Disposal of Treasury Shares, the six Eligible Directors, being the planned recipients ofthe allocation, will make an in-kind contribution of all of the Monetary Compensation Claims tothe Company in accordance with the Plan, and will receive the disposed shares of the Companyʼscommon stock (“Allotted Shares”). The outline of the restricted stock allotment agreement to beentered into by and between the Company and the Eligible Directors in connection with theDisposal of Treasury Shares (“Allotment Agreement”) is as described in 3. below.
3.

Outline of the Allotment Agreement(1)

Transfer restriction period

July 28, 2022 – July 27, 2042

(2)

Conditions for removal of transfer restriction

On the condition that an Eligible Director has served as director of the Company
continuously during the transfer restriction period, the Company shall remove thetransfer restriction on all of the Allotted Shares upon expiration of the transfer restriction
period.
(3)

Treatment in case of retirement of an Eligible Director during the transfer restriction

period due to expiration of the term of office, or any other justifiable reasons① Timing of removal of transfer restriction
In the event an Eligible Director retires from office due to expiration of the term of officeor other justifiable reasons (inclusive of retirement due to death; hereafter the same),-2-

transfer restriction will be removed immediately after retirement of the said Eligible
Director.
② Number of shares subject to removal of transfer restriction(i) If an Eligible Director retires after the completion of the period extending from June29, 2022, which is the start date of the term of office, up to the conclusion of theOrdinary General Meeting of Shareholders in 2023 (“Service Period”), all of theAllotted Shares held by the said Eligible Director at the said point in time shall besubject to removal of transfer restriction.
(ii) If an Eligible Director retires during the Service Period, the number of shares subject
to removal of transfer restriction shall be the number obtained by multiplying thenumber of Allotted Shares held by the said Eligible Director at the time of retirement
set forth in ① above by the value obtained by dividing the period in office (expressedin months) of the Eligible Director within the transfer restriction period by the numberof months of Service Period attributable to the relevant Allotted Shares (any fractions
less than one share unit resulting from the calculation shall be discarded).
(4)

Acquisition without consideration by the Company

The Company shall, by rights, acquire without consideration any Allotted Shares on
which transfer restriction has not been removed at the time of expiration of the transfer
restriction period or at the time of removal of the transfer restriction set forth in (3)above.
(5)

Management of shares

The Allotted Shares shall be managed in dedicated accounts at Nomura Securities Co.,
Ltd. opened by the Eligible Directors throughout the transfer restriction period in order toprevent transfer to a third party, creation of security interest on or any other disposal of
the said shares during the transfer restriction period. The Company has entered into anagreement with Nomura Securities Co., Ltd. in relation to the management of theaccounts of the Allotted Shares held by the Eligible Directors to ensure the effectivenessof the transfer restriction and other relevant matters pertaining to the Allotted Shares.
The Eligible Directors shall consent to the details relating to the management of theaccounts.
(6) Treatment in reorganization etc.
In the event that, during the transfer restriction period, a merger agreement in which theCompany is the disappearing company, a share exchange agreement or a share transfer
plan in which the Company becomes a wholly-owned subsidiary, or any other matter
concerning reorganization etc. is approved at a General Meeting of Shareholders of theCompany (or by the Board of Directors of the Company if the approval at the CompanyʼsGeneral Meeting of Shareholders is not required for the said reorganization etc.), therelevant transfer restriction will be removed, based on resolution of the Board of Directors,on (1) all of the Allotted Shares if the Service Period was completed, or (2) if such event
occurs during the Service Period, the number of shares obtained by multiplying thenumber of shares of the Allotted Shares held at such point in time by the value obtainedby dividing the number of months from the starting month of the transfer restriction period
up to the month that includes the date of the relevant approval of the reorganization, by-3-the number of months of Service Period attributable to the said Allotted Shares (anyfractions less than one share unit resulting from the calculation shall be discarded), thetiming of such removal being immediately before the preceding business day of theeffective date of reorganization, etc. Further, for any Allotted Shares on which transferrestriction is not removed at the time immediately after the removal of the transferrestriction, the Company shall, by rights, acquire all such Allotted Shares without
consideration.
4. Basis of calculation of the payment amount and details thereof
The Disposal of Treasury Shares to the planned recipients of the allocation will be conductedusing the Monetary Compensation Claims provided to them in accordance with the Plan as theRestricted Stock Compensation for the 55th business year of the Company, to be treated as
property for contribution. To eliminate any arbitrariness in pricing, the disposal value shall be theclosing price of the common stock of the Company on the Prime Market of the Tokyo Stock
Exchange on June 28, 2022 (which is the business day immediately preceding the date of theresolution of the Board of Directors), such price being \3,085. This value is deemed to be rationaland not particularly favorable because it is the market share price on the day immediately
preceding the date of resolution by the Board of Directors.

-4-