June 26, 2024
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)
Yasuhiro Ishihara,
Contact
Senior 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 25, 2024

(2)Class and number of shares
to be disposed

10,957 shares of common stock of the Company(3)

Disposal value\5,670 per share(4)

Total disposal value\62,126,190-(5)

Recipients of allotment andthe number thereof; numberof shares to be disposed

Directors of the Company 2 persons*, 4,091 shares
Executive officers not concurrently serving as directors of theCompany: 17 persons, 6,866 shares(Note) Excluding Founder and CEO, and outside directors

2. Purpose of and reasons for the Disposal
The Company resolved at meetings of the Board of Directors held on May 24, 2018, andJune 26, 2024, to introduce the Restricted Stock Compensation Plan (“Plan”) for the purposeof providing directors of the Company, excluding outside directors (“Eligible Directors”) and
executive officers not concurrently serving as directors (“Eligible Executive Officers” andcollectively with Eligible Directors, “Eligible Directors, etc.”), incentives to enhance thecorporate value of the Company and a scheme for holding shares in the Company to promotesharing 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 the Plan, monetarycompensation claims not exceeding \100 million per year would be paid to the Eligible
Directors as monetary compensation to serve as the property to be contributed for acquisitionof shares with transfer restriction (“Restricted Stock Compensation”), and that the transfer
restriction on the restricted stock will apply for a period to be determined by the Board ofDirectors 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, etc. 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 Company’s common stock under thePlan, the Company shall enter into a restricted stock allotment agreement with the Eligible
Directors, etc., which includes provisions that (1) Eligible Directors, etc. shall not, during a certain
period, transfer, create a security interest on, or otherwise dispose of the shares of theCompany’s common stock allotted under the restricted stock allotment agreement, and (2) theCompany 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 ofresponsibility of each Eligible Directors, etc. and other circumstances, and with a view toincreasing motivation of the Eligible Directors, etc., the Company has decided to grant the totalsum of \62,126,190 of monetary compensation claims (“Monetary Compensation Claims”) and10,957 shares of the Company’s common stock. Further, in order to realize the Plan’s objectiveof achieving 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 19 Eligible Directors, etc., being the planned
recipients of the allocation, will make an in-kind contribution of all of the Monetary Compensation
Claims to the Company in accordance with the Plan, and will receive the disposed shares of theCompanyʼs common stock (“Allotted Shares”). The outline of the restricted stock allotment
agreement to be entered into by and between the Company and the Eligible Directors, etc. inconnection with the Disposal of Treasury Shares (“Allotment Agreement”) is as described in 3.
below.
3.

Outline of the Allotment Agreement(1)

Transfer restriction period

July 25, 2024 – July 24, 2044

(2)

Conditions for removal of transfer restriction

On the condition that an Eligible Director, etc. had served as a director or executive
officer not concurrently serving as a director of the Company continuously during thetransfer restriction period, the Company shall remove the transfer restriction on all of theAllotted Shares upon expiration of the transfer restriction period.
(3)

Treatment in case of retirement of an Eligible Director, etc. during the transferrestriction period due to expiration of the term of office, or any other justifiable reasons① Timing of removal of transfer restriction
In the event that an Eligible Director, etc. retires from office as a director or executive-2-

officer not concurrently serving as a director of the Company due to expiration of theterm of office or other justifiable reasons (inclusive of retirement due to death;hereinafter the same), transfer restriction will be removed immediately after retirementof the said Eligible Director, etc.
② Number of shares subject to removal of transfer restriction(i) If an Eligible Officer retires after the completion of the period extending from June 26,
2024, the start date of the term of office as an Eligible Director, up to the conclusionof the Ordinary General Meeting of Shareholders in 2025, or from April 1, 2024, thestart date of the term of office as an Eligible Director, etc., through March 31, 2025(“Service Period”), all of the Allotted Shares held by the said Eligible Officer at the said
point in time shall be subject to removal of transfer restriction.
(ii) If an Eligible Director, etc. retire during the Service Period, the number of sharessubject to removal of transfer restriction shall be the number obtained by multiplying
the number of Allotted Shares held by the said Eligible Director at the time ofretirement set forth in ① above by the value obtained by dividing the period in office(expressed in months) of the Eligible Director, etc. within the transfer restriction
period by the number of months of Service Period attributable to the relevant AllottedShares (any fractions less than one share unit resulting from the calculation shall bediscarded).
(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 transferrestriction 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 Director, etc. throughout the transfer restriction period inorder to prevent transfer to a third party, creation of security interest on or any otherdisposal of the said shares during the transfer restriction period. The Company hasentered into an agreement with Nomura Securities Co., Ltd. in relation to themanagement of the accounts of the Allotted Shares held by the Eligible Director, etc. toensure the effectiveness of the transfer restriction and other relevant matters pertaining
to the Allotted Shares. The Eligible Director, etc. shall consent to the details relating tothe management of the accounts.
(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-3-

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
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 transfer
restriction is not removed at the time immediately after the removal of the transfer
restriction, 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 57th 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 25, 2024 (which is the business day immediately preceding the date of theresolution of the Board of Directors), such price being \5,070. 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.

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