This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail. The
Company assumes no responsibility for this translation or for direct, indirect or any other forms of damage
arising from the translation.

Securities code: 5367
May 31, 2024
(Date of commencement of electronic provision measures: May 30, 2024)
To Shareholders with Voting Rights:
Hiroshi Ohnishi
Director and President
Nikkato Corporation
3-2-24 Oriono-cho, Sakai-ku, Sakai,
Osaka Prefecture, JapanNOTICE OF
THE 154th ANNUAL GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We would like to express our appreciation for your continued support and patronage.
We hereby inform you that the 154th Annual General Meeting of Shareholders of Nikkato Corporation(the “Company”) will be held as described below.
When convening this General Meeting of Shareholders, the Company has taken measures for electronic
provision and has posted matters subject to measures for electronic provision as “Notice of Convocation
Annual General Meeting 2024” on the following website on the Internet.
The Company website: https://www.nikkato.co.jp/english/
Please access the above website and select “Investor Relations,” “IR Library,” and “General Meeting of
Shareholders” to view the information.
In addition to the above, the information is also posted on the following website on the Internet.
Tokyo Stock Exchange website:
https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show
Please access the above website, enter the name of the Company or its securities code, and click “Search.”Then, select “Basic information” and “Documents for public inspection/PR information” to view the
information.
Shareholders not attending on the day of the meeting may exercise their voting rights in writing by postal
mail or electronically via the Internet or other such means, so please review the Reference Documents for
the General Meeting of Shareholders found in the posted matters subject to measures for electronic
provision, and use either of the methods indicated on page 3 of the Japanese version to exercise your voting
rights by Thursday, June 20, 2024 at 4:45 p.m. Japan time.

-1-1. Date and Time:

Friday, June 21, 2024 at 10:00 a.m. Japan time
(Registration begins at 9:00 a.m.)

2. Place:

Garden Court, 3rd Floor, HOTEL Agora Regency Osaka Sakai
4-45-1 Ebisujima-cho, Sakai-ku, Sakai, Osaka Prefecture

3. Meeting Agenda:
Matters to be reported:

The Business Report and Non-Consolidated Financial Statements for
the Company’s 154th Fiscal Year (April 1, 2023 - March 31, 2024)

Proposals to be resolved:
Appropriation of Surplus
Proposal 1:
Election of Three (3) Directors (excluding Directors who are Audit &Proposal 2:
Supervisory Committee Members)
Election of One (1) Substitute Director who is an Audit & Supervisory
Proposal 3:
Committee Member
Payment of Bonuses to Directors
Proposal 4:
Continuation of Policy against Large-Scale Purchases, etc. of the Company’s
Proposal 5:
Shares (Takeover Response Policy)
1. Shareholders attending the General Meeting of Shareholders on the day of the meeting are requested
to submit the enclosed Voting Rights Exercise Form at the venue’s registration desk.
2. Materials for the general meeting of shareholders (Reference Documents for the General Meeting of
Shareholders, Business Report, Non-Consolidated Financial Statements, and Audit Report), whichhave been provided in paper form, will be posted on a web site in accordance with enforcement of themeasures for electronic provision in response to amendments to the Companies Act. Please access the
web site mentioned on page 1 for these materials. This notice of convocation includes the Reference
Documents for the General Meeting of Shareholders so the shareholders will have the materials at
hand for reviewing.
3. The printed copies, which have been sent to shareholders who have made a request for delivery of
printed materials, do not include the matters mentioned below in accordance with laws and regulations
and the Company’s Articles of Incorporation. As such, the printed copies are part of the documents
audited by the Audit & Supervisory Committee and Accounting Auditor in the preparation of audit
reports.
- “Statements of Changes in Equity” and “Notes to Financial Statements” among Non-Consolidated
Financial Statements
For the General Meeting of Shareholders to be held after the 154th Meeting, shareholders who wish toreceive printed copies but have not yet made the request, are asked to complete the procedures before
the record date. For details about the procedure for the request for delivery of printed copies or otherinformation, please contact your securities company or Mizuho Trust & Banking Co., Ltd., theCompany’s shareholder registry administrator.
4. Should revisions arise to the matters subject to the measures for electronic provision, they will be
posted on the corresponding websites.

-2-Reference Documents for the General Meeting of Shareholders
Proposals and References
Proposal 1:

Appropriation of Surplus

The Company has a basic policy of maintaining a stable dividend. It proposes to appropriate surplus
as follows based on a consideration of operating results and future business development.
Items related to the year-end dividend(1) Type of dividend property
Cash(2) Allotment of dividend property to shareholders and its total amount
Per share of the Company’s common stock: ¥13
Total: ¥157,186,107
Note: 1. The full-year dividend for the fiscal year under review, which includes the interim dividend, is ¥24
per share (¥23 per share for the previous fiscal year).
2. The total amount of dividends includes the dividend in the amount of ¥2,028,000 for the Company’s
shares owned as the trust assets of Board Benefit Trust-Restricted Stock (BBT-RS).

(3) Effective date of the distribution of surplus
June 24, 2024

-3-

Proposal 2:

Election of Three (3) Directors (excluding Directors who are Audit & Supervisory
Committee Members)

The terms of office of all three (3) Directors (excluding Directors who are Audit & Supervisory
Committee Members) will expire at the close of this General Meeting of Shareholders. Accordingly, theCompany proposes to appoint three (3) Directors.
For this proposal, consideration has been made at the Audit & Supervisory Committee, where noconcern has been raised.
The candidates for Directors (excluding Directors who are Audit & Supervisory Committee Members)
are as follows.
No.

Name
(Birthdate)

Career summary, positions, responsibilities,
and significant concurrent positions
April 1981
April 1998
June 2003

1

2

3

Joined the Company
General Manager of R&D Department
Senior General Manager, General Manager of R&D
Department
June 2010
Director, General Manager of R&D Department
April 2016
Director, General Manager of Production Division,
General Manager of Production Management Department
Hiroshi Ohnishi
Managing Director, General Manager of Production(March 15, 1958) June 2016
Division, General Manager of Production Management
Department
June 2017
Representative Director and Managing Director, General
Manager of Production Division, General Manager of
Production Management Department
June 2018
Representative Director and President (current position)
April 1987
Joined The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho
Bank, Ltd.)
April 2008
Branch Manager of Ikeda Branch
June 2011
Branch Manager of Marunouchi-Chuo Branch
April 2013
Branch Manager of Nanba Branch
May 2016
Joined the Company
Etsuo Hamada
General Manager in charge of Accounting Department(May 26, 1964)
June 2017
Director, General Manager of Accounting Department
June 2021
Managing Director, General Manager of Accounting
Department
June 2023
Managing Director, Managing Executive Officer, General
Manager of Accounting Department (current position)
December 2011 Registered as an attorney
Joined Nakanoshima Chuo Law OfficeFebruary 2013 Academic Advisor, Graduate School of Law, Kansai
University
June 2014
Joined Management Jurists Associations
November 2015 Member, Higashiosaka City Planning Commission(current position)
Eriko Tanabe
July 2018
Seconded as Fixed-Term Official (International Research(January 12, 1985)
Officer), Osaka Regional Taxation Bureau
July 2020
Returned to Nakanoshima Chuo Law Office
January 2021 Partner (current position)
June 2022
Director, the Company (current position)
November 2023 Outside Auditor, JFLA Holdings Inc. (current position)(Significant concurrent position)
Outside Auditor, JFLA Holdings Inc.

Number ofshares of theCompany
held

33,0001,500-

Notes: 1. There are no special interest relationships between the Company and any of the candidates.
2. Ms. Eriko Tanabe is a candidate for Outside Director.
Ms. Tanabe possesses knowledge and experience as an attorney in such specialized fields as intellectual property andlabor relations. The Company believes she will provide appropriate advice and supervision for the Company’s
management and initiatives for sustained growth and raising its corporate value, and is therefore proposing that she beappointed as an Outside Director. From an independent perspective, she will continue to provide appropriate advice
and proposals on management, which gives the Company leverage to sustain growth and raise its corporate value. She-4-

will have held the position of Outside Director of the Company for two (2) years at the close of this General Meetingof Shareholders.
3. Ms. Eriko Tanabe has met the independence requirements set forth by the Tokyo Stock Exchange. She is registered as
an independent director in accordance with Rule 436-2 of the Tokyo Stock Exchange’s Securities Listing Regulations
and if her appointment is approved, she will continue holding the position as an independent director.
4. The Company has entered into an agreement with Ms. Eriko Tanabe that limits her liability for damages under Article
423, Paragraph 1 of the Companies Act. If her reappointment is approved, the Company intends to continue the liability
limitation agreement with her. Under the agreement, liability is limited to the minimum amount stipulated in Article
425, Paragraph 1 of the act.

-5-For Reference: Specialization and Experience of the Company’s Directors and Directors who are Audit &Supervisory Committee Members (Skill Matrix)
Specific areas of specialization
Name

Position at theCompany

Attributes

Representative
Director andPresident
Managing Director,
Managing
Executive Officer,
Etsuo Hamada
General Manager
of Accounting
Dept.
HiroshiOhnishi

Eriko Tanabe

Director

Yuji Doi

Director

MotoakiNishimura

Director

Shinji Usuma

Director

Independent
OutsideFull-Time Audit &Supervisory
Committee Member
Independent
OutsideAudit &
Supervisory
Committee Member
Independent
OutsideAudit &
Supervisory
Committee Member

Years
in
officeCorporate Manufactur
manageme
ing andnt
research

14

●

7

●

●

Sales andmarketing

Financialaffairs

●

●

Legal
affairs andriskmanageme
nt

●

●

●

12

●

9

●

●

●

●

●

2

9

Nominatio
n andCompensat
ion
Committee●●●

Note: 1. This skill matrix shows the composition of the Board of Directors assuming Proposal 2 is approved as originallyproposed at the General Meeting of Shareholders.
2. Directors (Audit & Supervisory Committee Members) Yuji Doi, Motoaki Nishimura, and Shinji Usuma are not thecandidates for the proposal for election of Directors at this General Meeting of Shareholders.

-6-Proposal 3:

Election of One (1) Substitute Director who is an Audit & Supervisory Committee
MemberTo prepare for a contingency in which the number of Directors who are Audit & Supervisory
Committee Members falls below that required by laws and regulations, the Company proposes to appoint
one (1) substitute Director who is an Audit & Supervisory Committee Member.
The above appointment may be nullified by a resolution of the Board of Directors with the consent of
the Audit & Supervisory Committee only before the candidate assumes office.
The Company has already obtained the consent of the Audit & Supervisory Committee for this
proposal.
The candidate for the substitute Director who is an Audit & Supervisory Committee Member is asfollows.
Name(Birthdate)

Kenji Tabuchi(May 18, 1959)

Note:

Career summary, positions, responsibilities,
and significant concurrent positions
March 1985
October 1987
April 1990
April 1990
April 1995
June 2001

Graduated from Faculty of Law, Kyoto University
Passed the bar examination
Registered as an attorney (Osaka Bar Association)
Joined Tsukaguchi Law OfficeOpened Tabuchi Law OfficeOpened Tabuchi Nishino Law Office (current position)

Number ofshares of theCompanyheld–

1. There are no special interest relationships between the Company and the candidate.
2. Mr. Kenji Tabuchi, as an attorney, possesses extensive knowledge and experience. The Company believes that he will
properly audit and supervise the performance of duties of the Directors from a neutral and objective standpoint,
enhancing the company management and the function of the Company’s Board of Directors. Therefore, the Company
proposes that he be appointed as a substitute Director. Although Mr. Tabuchi has no direct experience in corporate
management, we expect him to provide appropriate opinions and supervise the management from an independent
standpoint by leveraging his expertise and wide-ranging experience, which we believe leads to the Company’ssustained growth and improvement of the corporate value. Therefore the Company proposes that he be appointed asa substitute Director.
3. The Articles of Incorporation of the Company provides that the Company may enter into a contract with Directors(excluding executive directors, managers, or any other type of employees) to limit their maximum liability for damages
to the Company within a certain range under Article 427, Paragraph 1 of the Companies Act. Accordingly, if Mr. Kenji
Tabuchi is appointed, the Company intends to enter into the limited liability agreement with him.
4. Mr. Kenji Tabuchi is a candidate for Outside Director. If he is appointed, the Company intends to register him as anindependent director in accordance with the rules of Tokyo Stock Exchange.

-7-

Proposal 4:

Payment of Bonuses to Directors

The Company proposes to pay a total of ¥26,240,000 in bonuses to the two (2) Directors who wereincumbents as of the end of the fiscal year under review (excluding one (1) Outside Director and three (3)Directors who are Audit & Supervisory Committee Members) based on a consideration of performance forthe fiscal year and other factors.
Bonuses are paid to Directors (excluding one (1) Outside Director and three (3) Directors who are
Audit & Supervisory Committee Members) in the form of cash compensation that is reflective of key
performance indicators in order to increase awareness of improving performance each fiscal year. The
bonuses are calculated based on the degree to which an operating margin target of 10% is achieved eachfiscal year, and they are paid at a fixed time each year. Bonuses are determined upon the deliberations andreports of the Nomination and Compensation Committee based on the Policies concerning Decisions on
Details of Compensation for Directors, and the Company judges this to be appropriate. It is proposed thatthe amounts to be paid for individual Directors (excluding one (1) Outside Director and three (3) Directors
who are Audit & Supervisory Committee Members) be left to the discretion of the Board of Directors.

-8-

Proposal 5:

Continuation of Policy against Large-Scale Purchases, etc. of the Company’s Shares(Takeover Response Policy)

The Company introduced the “Policy against Large-Scale Purchases, etc. of the Company’s Shares”(Current Plan) with the approval of shareholders at the 151st Annual General Meeting of Shareholders heldon June 18, 2021. The effective period of the Current Plan will expire at the close of the Company’s Annual
General Meeting of Shareholders for the 154th fiscal year ended March 31, 2024 to be held on June 21,2024 (hereinafter, “this Annual Shareholders Meeting”). Accordingly, the Company has continued toconsider how the Current Plan should be like in the future for the purpose of continuing to achieve theCompany’s sustained growth as well as ensuring and enhancing its corporate value and the common
interests of shareholders over the medium to long term. Then, at a meeting held on May 1, 2024, the Boardof Directors passed a resolution to continue the Current plan (hereinafter, the continued response policy isreferred to as the “Plan”) as part of measures to prevent decisions on the Company’s financial and operating
policies from being controlled by a party deemed inappropriate (as provided for in Article 118, Item 3 (b)(2) of the Regulations for Enforcement of the Companies Act) in light of the Basic Policy on Persons WhoControl Decisions on the Company’s Financial and Operating Policies (as provided for in Article 118, Item
3 of the Regulations for Enforcement of the Companies Act; hereinafter, the “Basic Policy on Control of
the Company”), subject to approval of a majority of the voting rights of the shareholders present at thisAnnual Shareholders Meeting. The aforementioned meeting of the Board of Directors was attended by allsix (6) Directors, including three (3) Outside Directors, of the Company and they unanimously determinedthe content of this policy and its proposal at this Annual Shareholders Meeting.
The Plan, to be proposed at this Annual Shareholders Meeting, is a policy to respond to actions topurchase shares of the Company for the purpose of increasing the ratio of voting rights of a specificshareholder group to 20% or more; actions to purchase shares of the Company that would result in a
specific shareholder group holding 20% or more of the voting rights of the Company; or agreements, etc.
with other shareholders of the Company that will increase the ratio of voting rights of a specific shareholder
group to 20% or more (hereinafter, such a purchase or agreement, etc. is referred to as a “Large-Scale
Purchase” and a party conducting or intending to conduct a Large-Scale Purchase is referred to as a “LargeScale Purchaser”). While the Company has not received any proposal concerning a Large-Scale Purchaseat present, the Plan has been so designed that, if the Company receives any such proposal in the future, it
enables shareholders to make a decision on whether they should accept the proposal with sufficient timeand sufficient and accurate information.
I.

Basic Policy on Persons Who Control Decisions on the Company’s Financial and Operating Policies
The Company believes that persons who control decisions on the Company’s financial and operating
policies must fully understand the characteristics of the Company’s business; the relationships built
between the Company and its stakeholders, including shareholders, business partners, local
communities, and employees; and the Company’s corporate value to protect the Company’s corporate
value and the common interests of shareholders over the medium to long term and enhance themcontinuously or sustainably.
The Company also believes that, when a large-scale purchase of the Company’s shares is conducted,
a decision on whether or not to accept the proposal should ultimately be made by the free will andjudgment of shareholders. In addition, the Company will not categorically reject all cases involving alarge-scale purchase, provided that such case will benefit the Company’s corporate value and thecommon interests of shareholders.
Nevertheless, it is undeniable that some large-scale purchases, judging by their purpose, would
obviously infringe upon the Company’s corporate value and the common interests of shareholders.

-9-For that reason, the Company regards a specific person or group who intends to conduct a large-scalepurchase of the Company’s shares detrimental to the ensuring and enhancing of the Company’s
corporate value and the common interests of shareholders as a party inappropriate for controlling theCompany’s financial and operating policies. The Company therefore considers that it is essential totake necessary and appropriate action against such large-scale purchases to ensure and enhance theCompany’s corporate value and the common interests of shareholders.
II.
1.

Measures to ensure and enhance the Company’s corporate value and the common interests ofshareholders
Details of measures taken by the Company
Since its foundation in June 1913, Nikkato Corporation has earned a high reputation fordeveloping and delivering ceramics products, heating equipment, and temperature measurement
equipment systems that always meet the demands of the times. The Company’s basic corporate
philosophy is to contribute to the development of science, technology, and industry through the
production of creative and reliable products, aim for the growth and development of the Company,
and contribute to society through friendly management. With this philosophy, the Company fulfills
its social responsibilities for various stakeholders, including shareholders, business partners, local
communities, and employees, and aims for the sustained enhancement of corporate value. The
Company reviews its medium-term management strategies every year and will push forward withthose strategies based on the “Medium-term Management Plan” covering the coming three years.
The priority issues set forth in the plan are as follows:(1) Ramp up production capacity for zirconia balls and heat treatment members for piezoelectric
substances and next-generation batteries(2) Improve product quality and production technology and promote the rationalization of
production through efficient energy use, such as reduction of greenhouse gas emissions, andthrough production reforms(3) Develop and increase sales of new ceramics products and new engineering products that meetmarket needs(4) Achieve workstyle reforms, secure medium- to long-term workforce, and promote personnel
education(5) Strengthen risk management based on the construction of internal control systems and further
develop internal management systems through the enhancement of internal audits
Through the above initiatives, will aim to be a leading company of ceramics in the specific areas
we excel at as well as temperature measurement and heating equipment and strive to ensure andenhance the Company’s corporate value and the common interests of shareholders.

2.

Strengthening of corporate governance
The Company aims to continuously enhance its corporate value by ensuring the efficiency,
soundness, and transparency of management. We recognize that, today, the key to the Company’s
future growth lies in promptly responding to changes in the surrounding environment and in how
timely and accurately we can make decisions and take organizational initiatives. For that end, theCompany has worked to strengthen its corporate governance, with an emphasis on speeding up its
management, ensuring the transparency of its corporate behavior and, in particular, enhancing its
disclosure and accountability to shareholders. In order to further strengthen its audit and supervisory
functions by granting voting rights of the Board of Directors to those in charge of audits, theCompany transitioned to a company with an audit & supervisory committee and newly appointed
Outside Directors, with approval at the 145th Annual General Meeting of Shareholders held on June
19, 2015.

- 10 -

The Company has also set up a helpline within the Audit & Supervisory Committee to gather awide range of information.
The Company’s basic management policy is to enhance its corporate value for each individualsof its stakeholders, including shareholders, business partners, local communities, and employees. To
this end, the Company has established and implemented the compliance rules and CSR Code andStandards of Conduct to ensure that Directors and employees comply with law and regulations, theCompany’s Articles of Incorporation, and other rules. At the same time, the Company is striving toenhance its internal control systems by, for example, working to strengthen its risk management
system in accordance with the crisis management rules.
III. Necessity of measures to prevent decisions on the Company’s financial and operating policies frombeing controlled by a party deemed inappropriate in light of the Basic Policy on Control of theCompany
In light of the Basic Policy on Control of the Company mentioned in I. above, when a large-scalepurchaser conducts a large-scale purchase of the Company’s shares, the large-scale purchaser shallcomply with the Plan described below. The Company considers that it needs to take measures toprevent decisions on the Company’s financial and operating policies from being controlled by a party
deemed inappropriate in light of the Basic Policy on Control of the Company by setting out certain
response policies for cases where the large-scale purchaser is or is not in compliance with the Plan.
1.

Necessity of continuation of the Plan
As a listed company that allows its shares to be freely traded, the Company’s Board of Directors
will not categorically reject a so-called “hostile takeover,” which is conducted without the consent
of the Board of Directors, provided that such takeover will benefit the Company’s corporate value
and the common interests of shareholders. The Board of Directors also believes that a decision onwhether the Company should accept a takeover proposal, which will be accompanied by the transfer
of control of the Company, should ultimately be made by shareholders.
Nevertheless, if the Company receives a takeover offer from a purchaser as an outsider, it would
not always be easy for its shareholders to make an appropriate decision in a short period of time as
to the possible impact of the proposed takeover on the Company’s corporate value and the common
interests of the shareholders, with the full understanding of Company’s tangible and intangible
management resources, potential effects of the Company’s far-sighted initiatives, and other factors
constituting the Company’s corporate value. Therefore, when a takeover proposal is made, theCompany must first secure an opportunity for its shareholders to make an appropriate decision toreflect their will properly. To do this, the Company’s Board of Directors must conduct an honest andcareful examination of the takeover proposal within a necessary and reasonable period of time andthen provide shareholders with necessary and sufficient information for making the decision (and/or
an alternative proposal from the Board of Directors in some cases).
Meanwhile, not a few takeovers conducted by purchasers would be detrimental to the Company’s
corporate value and the common interests of shareholders, such as those that, judging by their
purpose or manner, are designed exclusively to pursue the profit of the purchaser without regard to
the corporate value of the company subject to the takeover and the common interests of its
shareholders; those that would effectively force shareholders to sell their shares; and those that do
not allow a reasonable amount of time or information for the Board of Directors and shareholders toconsider the details of the proposed takeover or for the Board of Directors to offer an alternative
proposal. In the first place, in order to ensure and enhance the corporate value and the common
interests of shareholders built up by the Company, it is essential to maintain relationships of trust
built over years with all stakeholders surrounding the Company, including its employees who- 11 -

support its research and development, production, and sales. The Company’s corporate value andthe common interests of shareholders would be impaired unless the purchaser of the Company’s
shares ensure and enhance these relationships over the medium to long term.
Based on this recognition, the Company’s Board of Directors judged that, to deter large-scalepurchases detrimental to the Company’s corporate value and the common interests of shareholders,
it is necessary to continue the Plan and set out concrete procedures to be complied with by a party
who intends to conduct a large-scale purchase (hereinafter, a “Large-Scale Purchaser”) and theCompany’s Board of Directors, when a proposal of the large-scale purchase is made.
Accordingly, the Company seeks the approval of shareholders for the continuation of the Plan,
given that such continuation and the triggering of countermeasures thereunder would have a certain
impact on them.
2.

Details of the Plan
(1) Outline of the Plan
1) Request for provision of information by and setting of waiting period for the Large-Scale
Purchaser
For the purpose of ensuring and enhancing the Company’s corporate value and thecommon interests of shareholders, the Plan sets out the procedures through which, when alarge-scale purchase of the Company’s shares is conducted, the Company’s Board of
Directors (i) requests a Large-Scale Purchaser to provide necessary and sufficient
information on the proposed large-scale purchase in advance; (ii) secures time to collectinformation to examine the large-scale purchase; and (iii) presents a plan or alternative
proposal formulated by the Company’s management to shareholders, and negotiates with
the Large-Scale Purchaser. Added to this, to meet the intent and purpose of such procedures,the Board of Directors also requests the Large-Scale Purchaser and shareholders who
belong to its specific shareholder group (as defined in III. 2. (2) below; the same applies
hereinafter) to refrain from commencing the large-scale purchase until the procedures set
out in the Plan have been completed.
2)

Establishment of the Independent Committee and consultation with the committee
In order to properly operate the Plan and eliminate any arbitrary decisions by theCompany’s Board of Directors, the Company has decided to establish an Independent
Committee composed solely of outside experts (persons with experience of corporate
management, attorneys, certified public accountants, academics, and other experts) who are
independent from the Company’s management.
For the details of the name and career summary of each member of the Independent
Committee as of the time of continuation of the Plan, please refer to Appendix 1.
The Plan stipulates that significant decisions in such cases as where a countermeasure is
triggered shall be made based on an objective judgment of the Independent Committee. The
Company’s Board of Directors shall respect recommendations from the Independent
Committee to the maximum extent possible and promptly pass a resolution as to whether
or not the countermeasure should be triggered to the extent deemed reasonable from theperspective of ensuring and enhancing the Company’s corporate value and the common
interests of shareholders based on said recommendations, within the period of evaluationby the Board of Directors.
The details of the establishment, authority, and other matters on the Independent
Committee are as stated in Appendix 4 “Independent Committee Rules.”- 12 -

(2) Purchases, etc. subject to the Plan
The Plan shall apply to: (i) the purchases of shares3 of the Company for the purpose ofincreasing the ratio of voting rights2 of a specific shareholder group1 to 20% or more (theseinclude having the right to request delivery of shares under a sale and purchase or otheragreement, and engaging in any of the transactions provided for in Article 6, Paragraph 2 or
Article 14-6 of the Order for Enforcement of the Financial Instruments and Exchange Act, andare except for those by whom already approved by the Company’s Board of Directors inadvance, irrespective of the specific method of purchase, such as a market transaction or tender
offer; the same applies hereinafter); (ii) a actions to purchase shares of the Company that would
result in a specific shareholder group holding 20% or more of the voting rights of the Company;or (iii) agreements, etc.4 with other shareholders of the Company that will increase the ratio ofvoting rights of a specific shareholder group to 20% or more (hereinafter, such a purchase or
agreement, etc. is referred to as a “Large-Scale Purchase”; the same applies hereinafter).
(3) Submission of a letter of intent by the Large-Scale Purchaser
When a Large-Scale Purchaser intends to conduct a Large-Scale Purchase as defined in III.
2. (2) above, the Large-Scale Purchaser shall first submit to the Company a letter of intent prior
to making the Large-Scale Purchase. The letter of intent shall clearly specify the name andaddress of the Large-Scale Purchaser, governing law for establishment, the name ofrepresentative, contacts in Japan, and an outline of the proposed Large-Scale, and include apledge that the Large-Scale Purchaser will comply with the procedures set out in the Plan inJapanese, unless otherwise permitted by the Company’s Board of Directors.
(4) Request for provision of information by the Large-Scale Purchaser
After receiving a letter of intent from the Large-Scale Purchaser, the Company’s Board of
Directors shall set an appropriate submission deadline for the Large-Scale Purchaser, and thendeliver a list of information necessary and sufficient for the Company’s shareholder to make adecision and for the Board of Directors to form opinions (hereinafter the “Required
Information”) to the Large-Scale Purchaser to request for the submission of information inaccordance with said list.
The Independent Committee shall be provided with the Required Information through theCompany’s Board of Directors.
While the specific nature of the Required Information will vary depending on the attributesof the Large-Scale Purchaser and the details of the Large-Scale Purchase, the generally required
information shall be as follows:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
1. A “specific shareholder group” means: (i) a holder (including those considered holders under Article 27-23, Paragraph 3 of the Financial Instruments andExchange Act (the “Act”); the same applies hereinafter) of stock certificates and other securities (meaning the stock certificates and other securities
provided for in Article 27-23, Paragraph 1 of the Act) of the Company and its join holder(s) (meaning the join holders provided for in Article 27-23,
Paragraph 5 of the Act and including those deemed to be joint holders under Paragraph 6 thereof; the same applies hereinafter); or (ii) a party who
conducts the purchase, etc. (meaning the purchase, etc. provided for in Article 27-2, Paragraph 1 of the Act and including purchases conducted in asecurities market formed by a stock exchange, irrespective of whether or not conducted through the auction method) of stock certificates or other securities(meaning the stock certificates and other securities provided for in Article 27-2, Paragraph 1 of the Act) of the Company and its special related party(s)(meaning the special related parties provided for in Article 27-2, Paragraph 7 of the Act; the same applies hereinafter).
2. In the calculation of the ratio of voting rights, the denominator shall be the total number of voting rights of all the issued shares of the Company at thetime of calculation, less the number of treasury shares held by the Company as stated in the most recently filed document among: an Annual Securitas
Report, Quarterly Securities Report, and Share Buyback Report.
3. “Shares” mean the stock certificates and other securities provided for in Article 27-23, Paragraph 1 of the Financial Instruments and Exchange Act. The
same applies hereinafter, unless otherwise specified.
4. “Agreements, etc.” mean the agreements to jointly acquire or transfer stock certificates or other securities of the Company or to exercise the voting rights
or other rights as a shareholder of the Company; company split and other restructuring activities; and all other actions that result in a holder falling under
the joint holder provided for in Article 27-23, Paragraph 5 and Paragraph 6 of the Financial Instruments and Exchange Act.

- 13 -

1)

Details of the Large-Scale Purchaser and its group (joint holders, special related parties, (inthe case of funds) partners, managing partners, and other members, as well as parties who
continuously provide investment advice to these entities) (including the names, capital
structure, financial conditions, lines of business, experience in managing the same type ofbusiness as that of the Company, the details and results of past transactions similar to theLarge-Scale Purchase);

2)

The status of shares of the Company held by the Large-Scale Purchaser and all pasttransactions involving the Company’s shares entered into by the Large-Scale Purchaser(including the nature of the transactions, prices, locations and methods of the transactions,and counterparties to the transactions);

3)

If the Large-Scale Purchaser has concluded any contracts, arrangements, and agreements
involving the Company’s shares (meaning all lease contracts, collateral contracts, resale
contracts, sale and purchase reservation contracts, and other contracts and arrangements,
including those made orally, irrespective of the likelihood of their fulfillment; hereinafter,“collateral contracts, etc.”), the specific details of collateral contracts, etc., including thetypes of the collateral contracts, etc., counterparties, and the number of shares subject
thereto;4)

If the Large-Scale Purchaser plans to conclude any collateral contracts, etc. and otheragreements with a third party(s) involving shares of the Company to be acquired in the
Large-Scale Purchase, the specific details of the planned collateral contracts, etc. and otheragreements with the third party(s), including the types of said collateral contracts, etc. andother agreements with the third party(s), counterparties, and the number of shares subject
thereto;5)

Purpose, method, and details of the Large-Scale Purchase (including the amount and typeof consideration of the Large-Scale Purchase, timing of the Large-Scale Purchase, thescheme of related transactions, legality of the Large-Scale Purchase method, any possibilityof the Company’s stock being delisted following the completion of the Large-Scale
Purchase and reason thereof, and feasibility of the Large-Scale Purchase and relatedtransactions);

6)

If there exist any communications with a third party(s) with regard to the Large-Scale
Purchase (including contracts and other agreements or arrangements to jointly conduct thepurchase of the Company’s shares after the submission date of the Required Information),the purpose and details thereof, as well as the outline of said third party(s);7)

Basis for calculation of the purchase price of the Large-Scale Purchase (including facts as
the basis for the calculation, calculation method, quantitative information used for the
calculation, information regarding the amount of consideration when the Large-Scale
Purchase is to be conducted with consideration other than cash, and the details of any
synergy expected to arise as a result of a series of transactions related to the Large-Scale
Purchase (including the amount or details of synergies to be distributed to minority
shareholders )) and supporting evidence for the funds to be used for the Large-Scale
Purchase (including the name of the fund provider (including any substantial provider),financing method, and the details of related transactions);

8)

If the purpose of the Large-Scale Purchase is to acquire control or participate in management,
the method of acquiring control or participating in management of the Company
contemplated after the completion of the Large-Scale Purchase, and management policy
after the acquisition of control or plans after the participation in management and policy on
exercising voting rights; past experience in investment, management, and businessinvolvement in relation to any company or any other legal entity (including those outside
Japan) whose purpose is to conduct the same type of business as that of the Company anddetails and actual results thereof;

9)

If the Large-Scale Purchase is conducted for the purpose of pure investment or strategic
investment, policies on holding and sale and purchase of the Company’s shares, policy on- 14 -

exercising voting rights after the Large-Scale Purchase, and reasons thereof; if the LargeScale Purchase is conducted as strategic investment with the purpose of long-term capitalalliance, the necessity thereof; any possibility of changing the purpose of the Large-Scale
Purchase to acquiring control or participating in management in the future, and information
on in what cases the purpose will be changed;10) If the purpose of the Large-Scale Purchase is to conduct an important proposal act, etc.5, orif there is any possibility of conducting an important proposal act, etc. after the Large-Scale
Purchase, the purpose, details (if any change is made to the composition of officers,
including the names of candidates for officers after the change), necessity, and timing ofsuch important proposal act, etc., and information on in what cases such important proposal
act will be conducted;11) Whether the Large-Scale Purchaser plans to change the relationships between the Company
and its business partners, customers, employees, and other stakeholders after the completionof the Large-Scale Purchase and details thereof;
12) Specific measures to be taken to avoid the conflict of interest with other shareholders of theCompany; and13) Other information deemed reasonably necessary by the Company’s Board of Directors or
Independent Committee.
The Company’s Board of Directors shall immediately provide the Independent Committeewith the information provided by the Large-Scale Purchaser, and make a judgment on whether
or not the provided information is sufficient as the Required Information after careful
examination of its content, respecting recommendations from the Independent Committee tothe maximum extent possible. If, as a result, the Required Information is judged to be
insufficient, the Board of Directors shall request the Large-Scale Purchaser to submit additional
information after setting an appropriate deadline for the submission (in principle, a maximumof 60 days). In such a case, the Large-Scale Purchaser shall additionally submit the Required
Information by said deadline.
The fact of a proposal of a Large-Scale Purchase and the Required Information provided to
the Company’s Board of Directors shall, if deemed necessary for the Company’s shareholder
in making their judgment, be disclosed, except for information deemed inappropriate to bedisclosed in such terms as trade secrets, at the time the Board of Directors deems appropriate.
For the Required Information and additional information to be submitted, the original copy
must be submitted in Japanese, no matter in what language such information is submitted, inorder to appropriately disclose the information to shareholders.
(5) Examination of the details of the Large-Scale Purchase, negotiation with the Large-Scale
Purchaser, and consideration of alternative proposal
The Company’s Board of Directors and Independent Committee shall set a period of 60days (in the case of a purchase of all shares of the Company through a tender offer in exchange
for cash (in Japanese yen) only) or 90 days (in the case of other Large-Scale Purchases),counting from the day following the expiry of a period allowed for a Large-Scale Purchaser toprovide the Required Information or after a Large-Scale Purchaser has completed providing
the Required Information (first day not to be counted in either case), as a period for the Boardof Directors to examine the proposed purchase (hereinafter, the “Board Examination Period”).
Provided, however, that the Company’s Board of Directors may, after consulting theIndependent Committee, extend the Board Examination Period to the extent necessary to, for~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
5. An “important proposal act, etc.” means the important proposal act, etc. provided for in Article 27-26, Paragraph 1 of the Financial Instruments andExchange Act, Article 14-8-2, Paragraph 1 of the Order for Enforcement of the Financial Instruments and Exchange Act, and Article 16 of the Cabinet
Office Order on Disclosure of the Status of Large-Volume Holdings in Share Certificates; the same applies hereinafter.

- 15 -

example, examine the details of the Large-Scale Purchase, negotiate with the Large-Scale
Purchaser, and prepare an alternative proposal to ensure and enhance the Company’s corporate
value and the common interests of shareholders, respecting recommendations from the
Independent Committee to the maximum extent possible. However, the extension of the Board
Examination Period shall be limited to the extent deemed necessary to, among other things,
evaluate and examine the information provided by the large-Scale Purchaser, negotiate with theLarge-Scale Purchaser, and prepare an alternative proposal, and to the extent not exceeding 30
days.
In the case of having decided to extend the Board Examination Period based on therecommendation from the Independent Committee, the Company’s Board of Directors shallpromptly disclose the reason that led to the decision to extend the Board Examination Period,
the extension period, and other matters deemed appropriate immediately after the resolution on
the extension has been passed.
During the Board Examination Period, the Company’s Board of Directors shall evaluate andexamine the details of a Large-Scale Purchase proposed by a Large-Scale Purchaser from theperspective of ensuring and enhancing the Company’s corporate value and the common
interests of shareholders based on information and material documents provided by the LargeScale Purchaser, while consulting the Independent Committee and, if necessary, receiving
advice from external experts and other professionals. The Board of Directors shall thencarefully summarize its own opinions and publish them, respecting recommendations from the
Independent Committee to the maximum extent possible.
Furthermore, the Company’s Board of Directors may discuss and negotiate with the LargeScale Purchaser to improve the terms and conditions of the Large-Scale Purchase as necessary,and may present its own alternative proposal to shareholders.
No Large-Scale Purchaser and shareholders who belong to its specific shareholder group
may initiate a Large-Scale Purchase until the Board Examination Period has elapsed.
3.

Policy on responses in the case of commencement of a Large-Scale Purchase(1) When the Large-Scale Purchaser complies with the procedures set out in the Plan
When the Large-Scale Purchaser complies with the procedures set out in the Plan, theCompany’s Board of Directors shall, in principle, not take any countermeasures against theLarge-Scale Purchase.
However, even if the Large-Scale Purchaser complies with the Plan, the Company’s
Independent Committee may recommend the Board of Directors take a countermeasure toprotect the interests of the Company’s shareholders, if the Independent Committee judges that
the Large-Scale Purchase is counter to ensuring and enhancing the Company’s corporate value
and the common interests of the shareholders and that it is appropriate to take thecountermeasure. In triggering the countermeasure, the Company’s Board of Directors shallconvene a General Meeting of Shareholders to confirm the will of the Company’s shareholders
on the triggering of the countermeasure. The Company shall not trigger the countermeasureunless obtaining approval of a majority of the voting rights of the shareholders present at theGeneral Meeting of shareholders held to confirm the will of the shareholders. In such a case,the Large-Scale Purchaser may not commence the Large-Scale Purchase until the will of theCompany’s shareholders is confirmed and a decision as to whether or not to trigger thecountermeasure is made.
Specifically, if a Large-Scale Purchase is deemed to fall under any of the following
categories, the Large-Scale Purchase is, in principle, considered to fall under the cases deemed- 16 -

to be counter to ensuring and enhancing the Company’s corporate value and the common
interests of shareholders.
1)

When the Large-Scale Purchase would obviously infringe upon the Company’s corporate
value and the common interests of shareholders due to the following or other similar actions:(i)Action involving buying out the Company’s shares to demand that the Company
repurchase said shares at an inflated price(ii) Action involving conducting business that benefits the Large-Scale Purchaser or its
group companies to the detriment of the Company, such as taking temporary control of
the Company’s management for the low-cost acquisition of material assets of theCompany(iii) Action involving diverting the Company’s assets to secure or repay debts of the LargeScale Purchaser or its group companies(iv) Action involving taking temporary control of the Company’s management to disposeof high-value assets that are not presently related to the business of the Company anddeclaring temporarily high dividends from the disposal, or selling the shares at a highprice, taking advantage of the opportunity afforded by the sudden rise in the share pricecreated by the temporarily high dividends
2)

When the Large-Scale is likely to effectively force shareholders to sell shares, such as a socalled coercive two-tier tender offer (meaning the purchase of shares through such meansas tender offer by setting more unfavorable purchase terms in the second stage than the firststage, or without clarifying purchase terms in the second stage):

3)

When it is judged that the acquisition of the Company’s control by the Large-Scale
Purchaser would not enhance the Company’s corporate value on a medium- to long-termbasis compared to the Company’s projected corporate value without such acquisition

4)

When the Large-Scale Purchase involves inadequate or inappropriate purchase terms(including the amount and type of consideration, timing of the Large-Scale Purchase,legality of the Large-Scale Purchase method, feasibility of the Large-Scale Purchase, andthe treatment and other policies for the Company’s employees, business partners, customers,
and other stakeholders after the Large-Scale Purchase) in light of the intrinsic value of theCompany

5)

When the Large-Scale Purchase is expected to impair the Company’s corporate value bydestroying relationships with employees, customers, business partners, and otherstakeholders of the Company that are essential to generating the Company’s corporate valueor the Company’s corporate brand value or corporate culture

6)

When the Large-Scale Purchase is likely to hinder the stable supply of ceramics and otherproducts of the Company due to an inadequate or inappropriate post-purchase management
policy or business plans and other measures prepared by the Large-Scale Purchaser

7)

When it is judged that the growth and stability of the Company’s business is likely to be
impeded due to an in adequate or inappropriate post-purchase management policy and othermeasures prepared by the Large-Scale Purchaser

8)

When otherwise the Large-Scale Purchase is similar to those set forth in 1) through (7)above and is deemed likely to impair the Company’s corporate value and the common
interests of shareholders(2) When the Large-Scale Purchaser does not comply with the procedures set out in the Plan
When the Large-Scale Purchaser does not comply with the procedures set out in the Plan,
the Company’s Independent Committee shall recommend the Board of Directors take acountermeasure for the purpose of ensuring and enhancing the Company’s corporate value andthe common interests of shareholders, irrespective of the specific purchase method. In
triggering the countermeasure, the Company’s Board of Directors shall convene a General- 17 -

Meeting of Shareholders to confirm the will of the Company’s shareholders on the triggeringof the countermeasure. The Company shall not trigger the countermeasure unless obtaining
approval of a majority of the voting rights of the shareholders present at the General Meetingof shareholders held to confirm the will of the shareholders. In such a case, the Large-Scale
Purchaser may not commence the Large-Scale Purchase until the will of the Company’s
shareholders is confirmed and a decision as to whether or not to trigger the countermeasure ismade.
(3) Specific content of countermeasures
Countermeasures that could be triggered against a Large-Scale Purchase under Plan include
the gratis allotment of stock acquisition rights and other actions permitted under the Companies
Act and other laws and regulations and the Company’s Articles of Incorporation.
The Company’s Board of Directors shall select the specific countermeasure that it deems
most appropriate at the time, respecting recommendations from the Independent Committee tothe maximum extent possible.
If the Board of Directors selects to conduct a gratis allotment of stock acquisition rights asa countermeasure against a Large-Scale Purchase, an outline of such countermeasure is asprovided in Appendix 2 “Outline of Gratis Allotment of Stock Acquisition Rights.”(4) Suspension, etc. of triggering of countermeasures
If the Company’s Board of Directors judges that it is inappropriate to trigger acountermeasure—for example, when the Large-Scale Purchaser withdraws or alters the natureof the Large-Scale Purchase, or when the Large-Scale Purchase proposed by the Large-Scale
Purchaser no longer meets any of the requirements provided in III. 3. (1) or III. 3. (2) above asa result of changes in the facts based on which said recommendation was made, the Board of
Directors may suspend or change the triggering of the countermeasure, even after it has decided
to trigger the countermeasure under the response policy, respecting the recommendation fromthe Independent Committee to the maximum extent possible.
For example, when conducting a gratis allotment of stock acquisition rights as acountermeasure, if the Company’s Board of Directors deems it inappropriate to trigger thecountermeasure, such as when the Large-Scale Purchaser withdraws or alters the nature of theLarge-Scale Purchase after shareholders who are entitled to receive the stock acquisition rights
have been determined, the Board of Directors may suspend the triggering of thecountermeasure as follows, respecting the recommendation from the Independent Committee
to the maximum extent possible.
1) The Board of Directors may cancel the gratis allotment of stock acquisition rights at any
time up to the effective date of the stock acquisition rights.
2)

The Company may acquire the stock acquisition rights without consideration at any time
up to the day preceding the start date of the exercise period after the effective date of thestock acquisition rights.

If it decides to suspend the triggering of countermeasure as just described, the Company’s
Board of Directors shall promptly disclose relevant information in accordance with laws andregulations, financial instruments exchange rules, and other such rules applicable to such cases,
along with matters the Independent Committee deems necessary.

- 18 -

4.

Impact on shareholders and investors, etc.
(1) Impact on shareholders and investors, etc. at the time of continuing the Plan
The purpose of the Plan is to provide information necessary for the Company’s shareholders
to make a decision as to whether they should accept the proposed Large-Scale Purchase, toprovide the opinions of the Company’s Board of Directors that is actually responsible for theCompany’s management to the shareholders, and furthermore, to ensure opportunities for theshareholders to be presented with alternative proposals.
This enables the Company’s shareholders to make an appropriate decision on whether theyshould accept the proposed Large-Scale Purchase with sufficient information, which we believe
will ensure and enhance the Company’s corporate value and the common interests of theshareholders. We therefore consider that the establishment of the Plan will be the basis for
Company’s shareholders and investors to make an appropriate investment decision andcontribute to the interests of the shareholders and investors.
As we mentioned in III. 3. above, since the response of the Company to a Large-Scale
Purchase will vary depending on whether the Large-Scale Purchaser complies with theprocedures set out in the Plan or not, the Company’s shareholders and investors should pay
attention to the actions of the Large-Scale Purchaser.
(2) Impact on shareholders and investors, etc. at the time of triggering countermeasures
The Company’s Board of Directors may take countermeasures permitted under theCompanies Act and other laws and the Company’s Articles of Incorporation for the purpose of
ensuring and enhancing the Company’s corporate value and the common interests ofshareholders, subject to the approval of shareholders at a General Meeting of Shareholders. Evenin such a case, due to the scheme of said countermeasures, the triggering of the countermeasures
will not directly have any specific impact on the legal rights or economic interests of theCompany’s shareholders (excluding those who are defined in Paragraph 7 of Appendix 2“Outline of Gratis Allotment of Stock Acquisition Rights” as “Non-Qualified Parties,” who are
not permitted to exercise their rights such as the Large-Scale Purchaser and shareholders who
belong to its specific shareholder group in order to ensure the effectiveness of thecountermeasure). In the event that the Company’s Board of Directors decides to take a specificcountermeasure, the Board will make timely and appropriate disclosure in accordance with laws
and regulations and the relevant financial instruments exchange rules.
If the Company’s Board of Directors selects to conduct a gratis allotment of stock acquisitionrights as a countermeasure, the stock acquisition rights shall be allotted without consideration toshareholders as of the record date for the allotment separately determined by its resolution on thegratis allotment of stock acquisition rights at a rate separately determined by the Board of
Directors, which shall be at least one stock acquisition right for each share of the Company’scommon stock held. If a shareholder fails to complete the procedures to exercise his/her stockacquisition rights within the exercise period, the value of shares held by the shareholder will be
diluted as a result of the exercise of stock acquisition rights by other shareholders.
Meanwhile, if the Company’s Board of Directors decides to cancel the gratis allotment of said
stock acquisition rights or acquire the issued stock acquisition rights without consideration after
receiving the recommendations from the Independent Committee, no dilution of per share value
will occur. However, shareholders or investors who have purchased or sold the Company’s shareson the assumption that the per share value will be diluted on or after the ex-rights date withrespect to the gratis allotment of said stock acquisition rights may suffer unexpected losses as aresult of fluctuations in the stock price.
- 19 -

(3) Necessary procedures for shareholders upon the triggering of countermeasures
When conducting a gratis allotment of stock acquisition rights as a countermeasure, theCompany shall publicly notice the record date for the gratis allotment of stock acquisition rights.
The stock acquisition rights shall be allotted without consideration to shareholders who arerecorded in the final registry of shareholders as of the record date for allotment.
The Company will disclose to or notify shareholders of the particulars of the allotment method,
exercise method, method of acquisition by the Company, and other relevant information after aresolution of the Board of Directors on the countermeasure has passed, so we request thatshareholders review the content at the time.
5.

Effective period, abolishment, and revisions of the Plan
The Plan shall, subject to approval of shareholders at this Annual Shareholders Meeting, go into
effect on the date of such approval, and it shall expire at the close of the 157th Annual General
Meeting of Shareholders to be held no later than June 30, 2027.
Even before the effective period expires, the Plan may be abolished through a resolution to abolishthe Plan to be made at a General Meeting of Shareholders or by the Board of Directors of the Company.
Therefore, the Plan may be abolished in accordance with the will of shareholders.
If the Plan is extended or abolished with the approval of shareholders, the Company’s Board of
Directors shall promptly notify shareholders of such matters.
Moreover, even during the effective period of the Plan, the Company’s Board of Directors may
revise or modify the Plan, respecting recommendations from the Independent Committee to the
maximum extent possible, unless such revision or modification defeats the purpose of a resolution
made at a General Meeting of Shareholders (including cases where any law, regulation, financial
instruments exchange rule, or any other such rule relating to the Plan is newly established, amended,or abolished and it is appropriate to reflect such establishment , amendment, or abolition; where it isappropriate to revise the wording for reasons such as typographical errors and omissions; where such
revision or modification is not detrimental to the Company’s shareholders).
If the Plan is abolished, revised, or otherwise modified, the Company shall promptly disclose
information on the fact that such abolition, revision, or modification has made, (in the case of revisionor modification) the details of the revision or modification, and any other matters deemed appropriateby the Company’s Board of Directors.

IV. Statements that the Plan is in line with the Basic Policy on Control of the Company and that the Plan
is not detrimental to the common interests of shareholders, nor is it intended to maintain the positionof the Company’s officers, and reasons thereof
The Company believes that, upon the continuation of the Plan, the Plan is in line with the Basic Policy
on Control of the Company and not detrimental to the common interests of shareholders, nor is it
intended to maintain the status of its officers for the following reasons:
1.

Full regard being given to the “Guidelines for Takeover Defense Measures,” “Takeover Defense
Measures in Light of Recent Environmental Changes,” and “Guidelines for Corporate Takeovers”
The Plan gives full regard to the “Guidelines Regarding Takeover Defense for the Purposes ofProtection and Enhancement of Corporate Value and Shareholders’ Common Interests (Guidelines for
Takeover Defense Measures)” published on May 27, 2005 by the Ministry of Economy, Trade andIndustry (METI) and the Ministry of Justice as well as the content of the “Takeover Defense Measuresin Light of Recent Environmental Changes” and “Guidelines for Corporate Takeovers” published by
Corporate Value Study Group of the METI on June 30, 2008 and August 31, 2023, respectively.

- 20 -

2.

The Plan being introduced with the purpose of ensuring and enhancing the common interests ofshareholders
The plan is designed to be introduced when a Large-Scale Purchase of the Company’s shares isconducted, for the purpose of ensuring and enhancing the Company’s corporate value and thecommon interests of shareholders by, for example, enabling the shareholders to make a decision as towhether they should accept the proposed Large-Scale Purchase, ensuring necessary information andtime for the Company’s Board of Directors to present an alternative proposal, or enabling the Boardof Directors to negotiate with the Large-Scale Purchaser on behalf of the shareholders.
As the Plan is designed to enable the Company’s shareholders and investors to make anappropriate investment decision, the Company believes the Plan is not detrimental to their common
interests, but rather serves their interests.

3.

Valuing the will of shareholders
The Plan shall go into effect with the approval of shareholders at this Annual Shareholders Meeting.
In addition, as described in III. 5. above, even before the effective period expires, the Plan may be
modified or abolished through a resolution to modify or abolish the Plan to be made at a General
Meeting of Shareholders.
For these reasons, the decision on whether to abolish or retain the Plan depends on the will of theCompany’s General Meeting of Shareholders.

4.

Ensuring the objectivity and reasonableness of judgment of the Company’s Board of Directors
through the establishment of the Independent Committee
Upon the introduction of the Plan, the Company has established an Independent Committee toeliminate arbitrary decisions by the Company’s Board of Directors on the operation of the Plan,
including the activation of the Plan, on behalf of shareholders.
The Independent Committee shall comprise at least three members who shall be appointed fromamong outside experts (persons with experience of corporate management, attorneys, certified public
accountants, academics, and other experts) who are independent from the Company’s executive
management.
The Company’s Board of Directors shall respect the decisions made by the Independent
Committee to the maximum extent possible. This ensures a mechanism through which the Plan isoperated in a transparent way to the extent it benefits the Company’s corporate value and the common
interests of shareholders.

5.

Establishing reasonable and objective requirements for the activation of the Plan
As described in III. 3. above, the Plan is so designed that it will not be activated unless thepredetermined reasonable and objective requirements for activation are met. This ensures amechanism that prevents the Company’s Board of Directors from activating the Plan in an arbitrary
manner.

6.

Setting the term of office of the Company’s Director at one year
The Company sets the term of office of a Director at one year. This enables shareholders to reflect
their will in the Plan through the annual election of Directors, even during the effective period of thePlan.

- 21 -

7.

The Plan being neither “dead-hand” nor “slow-hand” takeover defense measure
As described in III. 5. above, the Plan may be abolished by the Board of Directors composed of
Directors who are elected at the Company’s General Meeting of Shareholders. This may allow a
Large-Scale Purchaser of the Company’s shares to elect Directors at the Company’s General Meetingof Shareholders and ultimately abolish the Plan through the Board of Directors composed of theelected Directors. The Plan, therefore, is not a dead-hand takeover defense measure (meaning a
takeover defense measure in which even if a majority of the Board of Directors are replaced, thetriggering of the measure cannot be stopped).
Even if the Plan is approved at this Annual Shareholders Meeting, as the Company does not adopt
the staggered board system, the Plan is not a slow-hand takeover defense measure (meaning a
takeover defense measure that requires time to stop the triggering of the measure due to the inability
to replace the Board of Directors all at once) either.

- 22 -

Appendix 1
Names and Career Summary of Members of the Independent Committee
Hiroshi Kitabayashi
Born on November 6, 1935
April 1965
Registered as attorney
April 1968
Opened Kitabayashi Legal Office
June 2004
Opened Honmachi Legal Office
Mr. Hiroshi Kitabayashi has no special interests or business relationships with the Company.
Kazuo Fujimaki
Born on October 14, 1943
April 1972
Registered as attorney
January 2001
Opened Fujimaki & Yamamoto Law Office
May 2020
Changed the office name to Minerva Law Office
Mr. Kazuo Fujimaki has no special interests or business relationships with the Company.
Hironori Watanabe
Born on October 23, 1967
October 1992
Joined Chuo Shinko Audit Corporation (later ChuoAoyama Audit Corporation)
April 1997
Registered as a certified public accountant
August 2000
Joined Yubisui Kaikei Center KK (currently Yubisui Public Tax Accountant’s Corp.)
August 2002
Registered as a certified public tax accountant
Mr. Hironori Watanabe has no special interests or business relationships with the Company.

- 23 -

Appendix 2
Outline of Gratis Allotment of Stock Acquisition Rights
1.

Total number of stock acquisition rights to be allotted
The total number of stock acquisition rights to be allotted shall be a number separately
determined by the Company’s Board of Directors, which shall be at least equal to the final total
number of issued shares of common stock of the Company (excluding the Company’s shares ofcommon stock held by the Company at that time) on a certain date as separately determined by the
Board of Directors (hereinafter, the “Allotment Date”) in a resolution of the Board of Directors on thegratis allotment of stock acquisition rights (hereinafter, the “Gratis Allotment Resolution”).

2.

Shareholders entitled to the allotment
The stock acquisition rights shall be allotted without consideration to shareholders who arerecorded in the final registry of shareholders as of the Allotment Date at a rate separately determinedby the Company’s Board of Directors, which shall be at least one (1) stock acquisition right for eachshare of the Company’s common stock held (excluding the Company’s shares of common stock heldby the Company at that time).

3.

Effective date of the gratis allotment of stock acquisition rights
The effective date of the gratis allotment of stock acquisition rights shall be separately
determined by the Company’s Board of Directors in the Gratis Allotment Resolution.

4.

Class and number of shares to be delivered upon exercise of stock acquisition rights
The class of shares to be delivered upon the exercise of stock acquisition rights shall be sharesof the Company’s common stock, and the number of shares of common stock to be so delivered perstock acquisition right shall be separately determined by the Company’s Board of Directors(hereinafter, the “Applicable Number of Shares.” However, if the Company conducts a stock split,
stock consolidation, or any other similar event, the necessary adjustments shall be made.

5.

Nature and amount of assets to be contributed upon exercise of stock acquisition rights
The assets to be contributed upon the exercise of stock acquisition rights shall be cash, and theamount of such assets shall be one (1) yen for each share of the Company’s common stock to bedelivered by the Company upon the exercise of the stock acquisition rights.

6.

Restriction on transfer of stock acquisition rights
Any transfer of the stock acquisition rights will require the approval of the Company’s Board of
Directors.

7.

Conditions for exercise of stock acquisition rights
Parties who fall under any of (i) through (iii) below may not exercise the stock acquisition rights:(i) a Large-Scale Purchaser and shareholders who belong to its specific shareholder group, or any
other parties deemed applicable by the Company’s Board of Directors (provided, however, that thisshall not be applied to such parties for whom the Board of Directors deems the acquisition or holdingof the Company’s shares not detrimental to the Company’s corporate value or the common interestsof shareholders and who are otherwise so specified by the Board of Directors in the Gratis Allotment
Resolution); (ii) parties to whom the stock acquisition rights have been transferred or succeeded fromparties falling under (i) without the approval of the Board of Directors; or (iii) any related parties6 tothose falling under either (i) or (ii) (such parties are hereinafter collectively referred to as “Non-- 24 -

Qualified Parties”). The details of such conditions shall be separately determined in the Gratis
Allotment Resolution.
8.

Acquisition of stock acquisition rights by the Company
The Company may acquire the stock acquisition rights held by parties other than Non-Qualified
Parties on a date separately determined by the Company’s Board of Directors, and in consideration
thereof, deliver the Applicable Number of Shares of the Company’s common stock as of the date ofsaid acquisition per stock acquisition right in exchange for the stock acquisition rights. The details ofcall provisions for the stock acquisition rights shall be separately determined in the Gratis Allotment
Resolution. Provided, however, that the Board of Directors may not set forth any call provisions to
the effect that the Company delivers cash as consideration for the acquisition of stock acquisitionrights held by Non-Qualified Parties.

9.

Gratis acquisition in the cases of suspending triggered countermeasures, etc.
If the Company’s Board of Directors resolves to suspend or change a triggered countermeasureor otherwise specified by the Board of Directors in the Gratis Allotment Resolution, the Company
may acquire all the stock acquisition rights without consideration.

10. Issuance of certificates of stock acquisition rights
The Company shall not issue any certificates representing the stock acquisition rights.
11. Period for exercising stock acquisition rights, etc.
The period for exercising the stock acquisition rights and other necessary matters shall beseparately determined by the Company’s Board of Directors in the Gratis Allotment Resolution.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
6. “Related parties” to a certain party mean any parties deemed by the Company’s Board of Directors to substantially control such a party, or be controlled
by such a party, or be under common control with such a party, or any parties deemed by the Board of Directors to act in concert with such a party.
“Control” in this context means “controlling decisions on the financial and operating policies” of another company or any other entity (as provided forin Article 3, Paragraph 3 of the Regulations for Enforcement of the Companies Act).

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Appendix 3
Status of Major Shareholders of the Company
The status of the Company’s major shareholders as of March 31, 2024 is as follows:

Nikkato Clients Shareholding Association
Tosoh Corporation
CHINO CORPORATION
Mizuho Bank, Ltd.
Nikkato Employee Shareholding Association
KYOWA ELECTRONIC INSTRUMENTS CO., LTD.
The Master Trust Bank of Japan, Ltd. (Trust Account)
Asahi Mutual Life Insurance Company
TSUBAKI NAKASHIMA CO., LTD.
Takashi Nishimura
Total

Status of capital contribution to the Company
Number of shares held
Shareholding ratio (%)(Thousands of shares)
821
6.8
599
5.0
574
4.7
499
4.1
400
3.3
400
3.3
387
3.2
353
2.9
300
2.5
290
2.4
4,625
38.3

Notes: 1. The total number of issued shares is 12,135,695 shares (including 44,456 treasury shares, which excludes 156,000
shares of the Company held by the Custody Bank of Japan, Ltd. (Trust Account E) established upon the introductionof Board Benefit Trust-Restricted Stock (BBT-RS)).
2. The shareholding ratio is the ratio to the total number of issued and outstanding shares, which is obtained by deducting
the number of treasury shares from the total number of issued shares, and the ratio is calculated by rounding it off toone (1) decimal place.
3. The number of shares held is rounded down to the nearest thousand.

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Appendix 4
Independent Committee Rules
1.

Establishment
The Independent Committee shall be established by a resolution of the Company’s Board of
Directors.

2.

Committee members
The Independent Committee shall comprise at least three (3) members, and in order to enable
fair and neutral judgment, the members shall be appointed by the Board of Directors from among
Outside Directors and outside experts (persons with experience of corporate management, attorneys,
certified public accountants, academics, and other experts) who are independent from the Company’s
executive management.
The members of the Independent Committee and the Company shall, in principle, conclude anagreement that includes a provision on the duty of care and diligence to the Company.
The outside experts shall be appointed from among persons with proven experience of corporate
management, persons familiar with investment banking, attorneys, certified public accountants,
academics whose main research interests include the Companies Act, or persons with similar
qualifications.

3.

Term of office
The term of office of a member of the Independent Committee shall expire at the close of theAnnual General Meeting of Shareholders to be held for the last fiscal year ending within three (3)years after the appointment, unless otherwise specified by a resolution of the Board of Directors.

4.

Convocation
A meeting of the Independent Committee may be convened by any member of the Independent
Committee in the event that a Large-Scale Purchase is conducted or at any time for other reasons.

5.

Resolution
In principle, resolutions of the Independent Committee shall be, with all members of the
Independent Committee attending, made by a majority of vote of those in attendance; provided,
however, that if there are compelling reasons, such resolutions shall be, with a majority of themembers of the Independent Committee attending, made by a majority of the voting rights of themembers in attendance.

6.

Matters to be resolved and other matters(1) In the event that the Company’s Board of Directors consults the Independent Committee, thecommittee shall consider the matters set forth in the following items according to mattersconsulted by the Board, decides the results of its consideration, and give recommendations to theBoard of Directors , along with the reasons thereof:
1) whether the information submitted by the Large-Scale Purchaser is sufficient or not andwhether the Independent Committee should request the Large-Scale Purchaser to provide
additional information or not2) whether the Board Examination Period should be extended or not3) careful examination and consideration of the details of the Large-Scale Purchase4) whether it can be evaluated that the Large-Scale Purchaser has complied with the Plan
5) whether or not to trigger a countermeasure- 27 -

6)
7)
8)
9)

specific content of countermeasures to be triggeredsuspension, cancellation, or change of countermeasures
revision or modification of the Plan
matters otherwise prescribed by the Board of Directors as executable by the Independent
Committee(2) To ensure that the judgment of the Independent Committee is made in a manner that benefits theCompany’s corporate value and the common interests of shareholders, the Independent
Committee may, at the expense of the Company, obtain advice from independent third parties(including financial advisors, certified public accountants, attorneys, consultants, and otherexperts).
(3) Each member of the Independent Committee must make the above decisions solely from theperspective of whether such decisions benefit the Company’s corporate value and the common
interests of shareholders and not for the purpose of pursuing their own personal interests.

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