The transactions pursuant to the share exchange described in this document involve securities of a Japanese company. The
share exchange is subject to disclosure requirements of Japan that are different from those of the United States. Financial
information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign
accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws,
since the issuer is located in Japan and some or all of its officers and directors reside outside of the United States. You may not
be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities laws. It
may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should
be aware that the issuer may purchase securities otherwise than under the share exchange, such as in the open market or
through privately negotiated purchases.
This document has been translated from the Japanese-language original for reference purposes only. In the event of any
conflict or discrepancy between this document and the Japanese-language original, the Japanese-language original shallprevail in all respects.

Securities code No.: 1734
February 16, 2024
Electronic provision measures commencement date: February 9, 2024
To shareholders
KITA KOUDENSHA Corporation
23-2-10, Kita 11-jō Nishi, Chuo-ku, Sapporo
Representative: Tatsuo Takahashi, President and Representative
Director

Notice of Extraordinary General Meeting of Shareholders Convocation
We hereby announce that an extraordinary general meeting of shareholders of the Company will be held as follows.
In convening this general meeting of shareholders, the Company has adopted measures for electric provision of
information, and the matters subject to the measures for electronic provision are posted online at the following website.
Company website: https://www.kitakoudensha.co.jp
In addition to the above, the matters subject to the measures for electronic provision are also posted online at the following
website.
Sapporo Securities Exchange website (Listed Companies site, List of Listed Companies page)https://www.sse.or.jp/listing/list
Please access the above Sapporo Securities Exchange website and click on “Construction Sector” and then “1734
KITA KOUDENSHA Corporation”, and then see the “Notice of General Meeting of Shareholders Convocation,etc.” in the “List of Submitted Documents” section.)
If you are unable to attend on the day of the meeting, you may exercise your voting rights in writing, so please see thegeneral meeting of shareholders reference materials included in the matters subject to the measures for electronic
provision and then express your approval or disapproval on the enclosed voting rights exercise form, and send it so that it
arrives by 5:30 p.m., on March 1, 2024 (Friday).

Particulars
1. Date and time:
2. Venue:
3. Purpose of meeting
Matters for resolution
Proposal No. 1:
Proposal No. 2:
Proposal No. 3

10 a.m., March 4, 2024 (Monday)
KITA KOUDENSHA Corporation
8F Conference Room, Head Office23-2-10, Kita 11-jō Nishi, Chuo-ku, Sapporo

Approval of the share exchange agreement between the Company and Mitsubishi Electric
Corporation
Partial amendment of articles of incorporation
Reduction of capital and capital reserve, and disposal of capital surplus
End

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Please note that we will not be handing out gifts to participants of the general meeting ofshareholders.
If attending the meeting in person, please present the enclosed voting rights exercise form to thereceptionist at the meeting venue.
Any voting rights exercise forms without an indication of approval or disapproval for proposals
will be deemed to have indicated approval.
If you exercise voting rights through a representative, such representative must be one othershareholder with voting rights. Please note a written document certifying the authority of therepresentative must be submitted.
The following matters have been omitted from the document (document stating matters to beprovided electronically) to be delivered to shareholders who have requested delivery of the
document in accordance with laws and regulations and Article 16 of the Articles of Incorporation of
the Company.
The following matters of Mitsubishi Electric Corporation included in the Reference Materials for
General Meeting of Shareholders(i) Articles of Incorporation(ii) Financial statements, etc., for the last fiscal year (from April 1, 2022 to March 31, 2023)
Any revision of the electronic provision measures matters will be notified on the above-mentioned
websites.

Reference Materials for General Meeting of Shareholders
Proposals and Reference Matters
Background to Submission of Proposals No. 1 through 3
The Company has been engaged in activities to establish social infrastructure, industrial infrastructure, andcomfortable office and living spaces mainly in Hokkaido, Japan, for more than 100 years since its foundation in 1910,
with the purpose to contribute to the local community through electrical equipment work. The Company engages inbusiness activities mainly including electrical equipment work and purchases and sales of FA Residential Environment
Equipment and Industrial Equipment.
On the other hand, Mitsubishi Electric Corporation (“Mitsubishi Electric,” and collectively with the Company, “TheCompanies”), in addition to its management policy that balances “growth,” “profitability and efficiency,” and“soundness,” positions its contribution to the realization of sustainability as the cornerstone of its management, basedon its fundamental principle to “provide solutions to social challenges through its businesses.” In addition, Mitsubishi
Electric is transforming into a “Circular Digital-Engineering Company” that provides solutions centralized on enhanced
component systems and data through integration and co-creation of knowledge within and outside the Mitsubishi
Electric corporate group (the “Mitsubishi Electric Group”), thereby contributing to solving diversifying social issues.
The relationship between Mitsubishi Electric and the Company started with Mitsubishi Electric’s capital investmentin the Company in 1955, and in 1972, the Company transferred its Home Appliance Sales Unit of the Trading Division
to Sapporo Mitsubishi Electric Product Sales Corporation. Currently, the Company receives orders for parts of electricalequipment work at facilities in the heavy electric-related business which Mitsubishi Electric focuses on, such as water
treatment facilities and power generation plants and substations, and also purchases and sells FA Residential
Environment Equipment and Industrial Equipment manufactured by Mitsubishi Electric.
The business environment surrounding the Company has changed drastically over the past few years. In recent years,
the business environment in Hokkaido, Japan, where the Company engages in business, has been more severe anduncertain within and without, such as the rising energy prices due to the Russia-Ukraine conflict and the sharp
depreciation of the yen, chronic labor shortages, and increasing construction costs due to soaring construction materials
prices.
In addition, as a result of contractual default following the bankruptcy of a small wind turbine manufacturer’s
subsidiary for sales to Japan, which the Company had a sales agent agreement with, and due to the occurrence of a blade
falling accident caused by a manufacturing defect, the Company judged that it would be difficult to ensure the quality
and safety of the product, and decided to discontinue the import and sales of the products which led the Company tocompensate the power generation companies and incur expenses related to the withdrawal from the small wind turbine
business (the “Withdrawal From the Small Wind Turbine Business”).
Furthermore, a suspicion of inappropriate accounting treatment for solar power plant construction work and someother projects (the “Inappropriate Accounting Treatment for Solar Power Projects”) arose, and as a result of theestablishment and investigation of the special investigation committee, it was decided to make some corrections to thesecurities reports and the like for the fiscal year ended March 31, 2021 and earlier. The Company takes seriously thecause analysis and recommendations made by the special investigation committee in its investigation report, and upon
repeatedly considering measures to prevent recurrence of such incident, the Company decided on the measures toprevent the recurrence of the incident at the Board of Directors’ meeting and launched the implementation of suchmeasures. Despite such effort, owing to the significant increase in the construction costs for part of the solar power plantconstruction work, the Company recorded an operating loss of 2,741.628 million yen, an ordinary loss of 2,588.925
million yen, and a net loss of 2,787.443 million yen, and the balance of loans increased to 3,700 million yen in the fiscal
year ended March 31, 2022, which has been giving significant impact on the Company’s fund management plan.
Amid such a rapidly worsening financial situation, the Company, with the intent to rebuilding its management, hasbeen developing measures to prevent recurrence of the Inappropriate Accounting Treatment for Solar Power Projects
and formulating a medium- to long-term management plan. However, the Company recorded net assets of 47.027
million yen as at the end of the third quarter of the fiscal year ended March 31, 2022 (net assets as at the end of the fiscal
year ended March 31, 2021 was 3,109.903 million yen) due to the recording of losses related to the Inappropriate
Accounting Treatment for Solar Power Projects. Thus, in addition to the pressing issue of enhancing capital, since there
is a significant uncertainty regarding the going concern assumption due to the lack of prospect in restoring a soundfinancial position, the Company reached the conclusion that it is difficult to rebuild on its own. Accordingly, theCompany came to believe that in order to enhance its corporate value over the medium- to long-term, it is necessary to
first recover a sound financial position. Hence, on March 4, 2022, the Company requested that Mitsubishi Electric
consider making the Company its wholly owned subsidiary and also additionally investing in the Company.
Under such circumstances, based on the history that the Company had been stably recording revenues and profits
grounded on a steady business management policy rooted in the region until the fiscal year ended March 31, 2020,
when large losses were incurred due to the Withdrawal From the Small Wind Turbine Business as well as the solar
power plant construction work and some other projects, Mitsubishi Electric had been recognizing the necessity of theCompany developing a sound financial base and a robust corporate governance system in order to expand the businessby returning to solid business operations, targeting among others, the future redevelopment of Sapporo City’s centralarea, the extension of the Hokkaido Shinkansen (the Series H5 Bullet Train) to Sapporo, and the Hokkaido-Honshu
HVDC link and equipment (the underground cable installation within the Seikan Tunnel). As such, in response to therequest from the Company, Mitsubishi Electric started to consider various options for supporting the Company, mainlyon the Share Exchange (as defined in Proposal No. 1; the same applies hereinafter).
However, in early December 2022, the Company reported to Mitsubishi Electric that additional loss has occurred inrelation to the Company’s Takayama Solar Hills Solar Power Plant construction work (the “Takayama Project”)
resulting from significant delays in civil engineering work and the increase in civil engineering costs due to theunseasonable weather caused by long rainfall and measures to deal with soft ground and underground obstacles such as
and rocks and stones, and that it was unclear how much such loss would expand. As a result of Mitsubishi Electric
deciding that it is difficult to proceed with the Share Exchange without the amount of loss from the Takayama Project
being determined and realizing that it had no choice but to suspend the considerations on the Share Exchange, onJanuary 25, 2023, the Company received notification from Mitsubishi Electric of the discontinuation of theconsiderations on the Share Exchange and other supporting measures.
Subsequently, as announced by the Company on May 10, 2023 in the “Notice Concerning the Record ofExtraordinary Loss,” the Company received a claim for delay penalty that exceeded the Company’s assumptions during
the discussions with the project owner and the promoter regarding the civil engineering delay in the Takayama Project,and consequently, the Company recorded 1,071.958 million yen as such delay penalty and a total extraordinary loss of
1,106.976 million yen in its fiscal year ended March 31, 2023.
Owing partly to the occurrence of such extraordinary loss, the Company recorded an operating loss of 2,059.254
million yen, an ordinary loss of 2,064.358 million yen, and a net loss of 2,880.902 million yen, resulting in an insolvencyof 2,638.814 million yen for the fiscal year ended March 31, 2023. As a result, the Company received notification fromthe Sapporo Securities Exchange (“SSE”) of a stock in the grace period commencing on April 1, 2023 and ending on
March 31, 2024 pertaining to delisting on and effective as of June 29, 2023, pursuant to the provision of Article 2(1)(v)

of the Stock Delisting Criteria.
On July 18, 2023, the Company notified Mitsubishi Electric via written report that the delivery to the promoter of the
Takayama Project has been completed as of June 30, 2023 and that the closing of the project is now in sight, and that
the Company requests (the “Reconstruction Support Request”) that the plan to support its reconstruction be reconsidered
including the plan to making the Company a wholly owned subsidiary of Mitsubishi Electric and also additionallyinvesting in the Company, which was suspended due to the reason that the effect of the Takayama Project on thecorporate valuation cannot be foreseen.
In this regard, if the Share Exchange is not carried out, in light of the fact that the Company has recorded operating
loss, ordinary loss and net loss for the past three consecutive fiscal years up to the fiscal year ended March 31, 2023, it
is realistic to assume that the Company will also be insolvent in the fiscal year ending March 31, 2024 and becomedelisted. In the event that the Company is delisted, the Company’s shareholders will not be able to trade their shares on
the stock exchange, and there is a possibility that the Company’s shareholders may suffer the disadvantage of theirCompany stock becoming virtually difficult to be traded. Furthermore, as it will be difficult for the Company to repay
and refinance, as agreed, its loans which will mature in April 2024 given the Company’s financial situation without the
Share Exchange, if the Share Exchange is not carried out, it can be concretely envisioned that the Company’s cash flow
will be disrupted and it will become bankrupt.
At the same time, however, despite the Company’s efforts to resolve the insolvency on its own as stated in the “NoticeConcerning the Plans for the Resolution of Insolvency” published on June 30, 2023, it has not managed to promptly
and radically improve its business conditions through such efforts, and it will be difficult for it to maintain its market
listing and continue business on its own without carrying out the Share Exchange.
In order to explore measures advantageous for minority shareholders than the Share Exchange, parallel to the Share
Exchange negotiations with Mitsubishi Electric, the Company sounded out eight prominent revitalization-type
investment funds (the “Market Check”), but the terms proposed were less favorable terms for minority shareholders
than the Share Exchange proposed by Mitsubishi Electric. As a result, the Company concluded that it is difficult to finda candidate that could offer measures more advantageous for minority shareholders than the Share Exchange.
Based on the above, the Company believes the Share Exchange is the sole measure that avoids disadvantages ofdelisting and subsequent bankruptcy for stakeholders of the Company such as shareholders, clients and trading banks.
In light of this situation, Mitsubishi Electric has been considering various options to support the Company in responseto the Reconstruction Support Request mentioned above from the Company.
If the Company continued to be insolvent, were to be delisted with its current shareholder composition, and further
went bankrupt, its business and corporate values would be impaired, and Mitsubishi Electric will suffer, among otherthings, damage to the value of the Company’s shares held by Mitsubishi Electric and loss in transactions, and there will
be significant impact on the stakeholders of Mitsubishi Electric and the Company. Thus, Mitsubishi Electric decided
that there is a need to avoid such situation.
Based on the above considerations, Mitsubishi Electric reached a conclusion that, making the Company a wholly
owned subsidiary of Mitsubishi Electric through the Share Exchange and then considering all options that contribute to
the maintenance and enhancement of the corporate value of both the Company and Mitsubishi Electric while Mitsubishi
Electric provides financial support to the Company, will allow the Company’s business to continue in the future and itis the optimum measure to contribute to the maintenance and enhancement of the corporate value of both Mitsubishi
Electric and the Company, and has decided to conduct the Share Exchange.
Furthermore, as it is difficult for the Company to maintain its listing and continue business on its own due to therealistic assumption that it will become delisted and bankrupt if the Share Exchange is not carried out, and as the resultof the Market Check shows that there is no potential candidate who could propose more favorable terms for minority
shareholders, the Company came to conclude that the Share Exchange that Mitsubishi Electric proposes is the solemeasure wherein the Company can benefit from maintaining credibility from the stakeholders while avoiding thedisadvantage from the Company becoming delisted and bankrupt, and it is the optimum measure from the perspectiveof business continuity and maintenance and enhancement of the Company’s corporate value.

Proposal No. 1 Approval of the share exchange agreement between the Company and Mitsubishi Electric Corporation
The Company and Mitsubishi Electric Corporation resolved at the Board of Directors’ meeting of the Company and the
Executive Officers’ Meeting of Mitsubishi Electric held on January 9, 2024 to conduct a share exchange (the “Share
Exchange”) wherein Mitsubishi Electric is the wholly owning parent company resulting from the share exchange and theCompany is the wholly owned subsidiary resulting from the share exchange, and on the same day, the Companies concluded
a share exchange agreement (the “Share Exchange Agreement”).
Accordingly, we request your approval of the Share Exchange Agreement in this proposal.
The Share Exchange is scheduled to be carried out with the effective date as April 15, 2024 upon the Company obtaining
approval at this general meeting of shareholders. Mitsubishi Electric, on the other hand, will not obtain approval by aresolution of the general meeting of shareholders in accordance with the simplified share exchange procedure pursuant to
Article 796(2) of the Companies Act.
Prior to the effective date of the Share Exchange, the Company stock is scheduled to be delisted from the SSE as of April
11, 2024 (the last trading date will be April 10, 2024).
1.

Reasons for the Share Exchange
Please see “Background to Submission of Proposals No. 1 through 3.”

2.

Outline of the Contents of the Share Exchange Agreement
The contents of the Share Exchange Agreement concluded between the Company and Mitsubishi Electric on January
8, 2024 are as follows.

Share Exchange Agreement (Copy)
Mitsubishi Electric Corporation (“Mitsubishi Electric”) and KITA KOUDENSHA Corporation (“KITA KOUDENSHA”)
hereby enter into this share exchange agreement (this “Agreement”) as follows as of January 9, 2024 (the “Agreement
Execution Date”).
Article 1 Method of share exchange
Mitsubishi Electric and KITA KOUDENSHA, in accordance with the stipulations in this Agreement, shall conduct a shareexchange whereby Mitsubishi Electric will become the wholly owning parent company resulting from the share exchange
and KITA KOUDENSHA will become the wholly owned subsidiary resulting from the share exchange (the “Share
Exchange”).
Article 2 Trade name and address
The trade name and address of Mitsubishi Electric and KITA KOUDENSHA are as follows.
(1) Mitsubishi Electric:(Trade name)(Address)

Wholly owning parent company resulting from the share exchange
Mitsubishi Electric Corporation
7-3 Marunouchi 2-chome, Chiyoda-ku, Tokyo(2) KITA KOUDENSHA: Wholly owned subsidiary resulting from the share exchange(Trade name)(Address)

KITA KOUDENSHA Corporation
23-2-10, Kita 11-jō Nishi, Chuo-ku, Sapporo

Article 3 Money, etc. to be delivered at the time of the Share Exchange, and allocation thereof
1.

At the time of the Share Exchange, Mitsubishi Electric shall deliver to shareholders of KITA KOUDENSHA(excluding Mitsubishi Electric; the “Allotment Qualifying Shareholders”) a number of shares of Mitsubishi Electricequal to the number of shares of KITA KOUDENSHA held by such shareholders immediately prior to the Share
Exchange becoming effective multiplied by 0.260.
2.

At the time of the Share Exchange, Mitsubishi Electric shall allot Mitsubishi Electric stock to the Allotment Qualifying
Shareholders at a ratio of 0.260 shares of Mitsubishi Electric per share of owned KITA KOUDENSHA stock.

3.

Any fractions of less than one share of Mitsubishi Electric stock delivered by Mitsubishi Electric to the Allotment
Qualifying Shareholders in accordance with Article 3.1 and Article 3.2 above shall be processed in accordance with
Article 234 of the Companies Act.

Article 4 Capital and capital reserves of Mitsubishi Electric
The capital and capital reserves of Mitsubishi Electric shall not be increased as a result of the Share Exchange.
Article 5 Effective Date
The Share Exchange shall become effective (the “Effective Date”) as of April 15, 2024; provided, however, that Mitsubishi
Electric and KITA KOUDENSHA may amend the Effective Date through discussion and agreement if necessary due tothe progress of procedures for the Share Exchange or if otherwise necessary.
Article 6 General meeting of shareholders resolutions
1. Mitsubishi Electric will carry out the Share Exchange without obtaining approval for this Agreement in the form of aresolution of a general meeting of its shareholders as set forth in Article 795(1) of the Companies Act in accordance withthe provisions of Article 796(2) of the Companies Act; provided, however, that if it becomes necessary to obtain approval
for this Agreement by a resolution of a general meeting of its shareholders in relation to the Share Exchange as set forthin Article 796(3) of the Companies Act, Mitsubishi Electric shall seek a resolution of a general meeting of its
shareholders for the approval of this Agreement and necessary matters for the Share Exchange by the day prior to the
Effective Date.
2. KITA KOUDENSHA shall seek a resolution of a general meeting of its shareholders for the approval of thisAgreement and necessary matters for the Share Exchange by the day prior to the Effective Date.
Article 7 Treatment of own shares
KITA KOUDENSHA shall, immediately prior to the time the Share Exchange becomes effective, cancel all treasury shares
it holds immediately prior to the time the Share Exchange becomes effective (including treasury shares to be acquired
through the purchase of shares pertaining to the dissenting shareholders’ appraisal rights as provided in Article 785(1) of theCompanies Act to be exercised in connection with the Share Exchange) pursuant to a resolution at a meeting of its Board of
Directors of held no later than the day prior to the Effective Date.
Article 8 Management, etc. of company assets
Between the Agreement Execution Date and the Effective Date, Mitsubishi Electric and KITA KOUDENSHA shall eachperform their business and the management and operation of assets with the care of a prudent manager, and conduct mattersthat have a material effect, or may have a material effect, on their assets or their rights and obligations (including the
distribution of capital surplus by KITA KOUDENSHA) only after consulting and agreeing with the other party in advance.
Article 9 Amendment of the terms of the Share Exchange and cancellation of this Agreement
Between the Agreement Execution Date and the Effective Date, Mitsubishi Electric and KITA KOUDENSHA may,through consultation and agreement, amend the terms of the Share Exchange or otherwise amend the content of or cancel
this Agreement if there is a major change in the assets or the business situation of Mitsubishi Electric or KITA
KOUDENSHA, a major obstacle to the implementation of the Share Exchange has occurred or become apparent, or if it isotherwise difficult to achieve the purpose of the Share Exchange.

Article 10 Effect of the Share ExchangeThis Agreement shall become invalid if, prior to the Effective Date, the approval of the general meeting of shareholders of
Mitsubishi Electric and KITA KOUDENSHA set forth in Article 6 is not obtained, the necessary approval, etc. of relevant
authorities, etc. that are legally required prior to the Share Exchange being implemented (including the waiting period for
notifications to be made for the Share Exchange by Mitsubishi Electric and the Allotment Qualifying Shareholders pursuant
to the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947) not ending by the
day before the Effective Date, and measures or procedures being taken by the Japan Fair Trade Commission that impede
the Share Exchange, such as a cease and desist order, etc.), or if this Agreement is cancelled pursuant to Article 9.
Article 11 Governing law and jurisdiction
1. This Agreement shall be governed by, and interpreted in accordance with, the laws of Japan.
2. The Tokyo District Court shall be agreed exclusive court in the first instance for any disputes relating to this Agreement.
Article 12 Consultation matters
Mitsubishi Electric and KITA KOUDENSHA shall consult and agree on matters necessary for the Share Exchange that are
not set forth in this Agreement, in accordance with the purpose of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by affixing their names
and seals hereto, and each has retained one copy hereof.
January 9, 2024
Mitsubishi Electric:

Mitsubishi Electric Corporation
7-3 Marunouchi 2-chome, Chiyoda-ku, Tokyo
Kei Uruma, Representative Executive Officer

KITA KOUDENSHA:KITA KOUDENSHA Corporation
23-2-10, Kita 11-jō Nishi, Chuo-ku, Sapporo
Tatsuo Takahashi, Representative Director

3. Adequacy of Share Exchange Consideration(1) Total Share Exchange Consideration and Adequacy of Total Amount(i)
Details of the Allotment Pertaining to the Share Exchange
Company name
Allotment ratio of shares pertaining to
the Share Exchange
Number of shares to be delivered as aresult of the Share Exchange(Note 1) Allotment ratio of shares

Mitsubishi Electric(Wholly owning parent company
resulting from the share exchange)

The Company(Wholly owned subsidiary
resulting from the share exchange)

1

0.260

Common stock of Mitsubishi Electric: 118,834 shares (planned)

0.260 shares of Mitsubishi Electric common stock (the “Mitsubishi Electric Stock”) shall be allotted anddelivered for each the Company stock. Provided, however, that no shares will be allotted through the Share
Exchange for the Company stock held by Mitsubishi Electric (173,600 shares as of January 9, 2024). The
aforementioned share exchange ratio is subject to change upon consultation and agreement between the
Companies in the event of any material change in the terms and conditions on which the calculation is based.
(Note 2) Number of Mitsubishi Electric Stock to be delivered as a result of the Share Exchange
Mitsubishi Electric shall deliver the number of Mitsubishi Electric Stock calculated based on theallotment ratio (the “Share Exchange Ratio”) applicable to the shares pertaining to the Share Exchange thatwill be used in the Share Exchange as described in 3(1)(i). “Details of the Allotment Pertaining to the Share
Exchange” above to the shareholders of the Company (excluding Mitsubishi Electric) at the time (the“Standard Time”) immediately prior to the time when Mitsubishi Electric acquires all the Company stock(excluding the Company Stock held by Mitsubishi Electric) through the Share Exchange in exchange of theCompany stock they hold. Furthermore, pursuant to the resolution of the Board of Directors’ meeting of theCompany to be held no later than the day prior to the effective date of the Share Exchange, the Company
plans to cancel all of the treasury shares it holds and the treasury shares it will hold up to the Standard Time(including the treasury shares to be acquired through the purchase of shares pertaining to the dissenting
shareholders’ appraisal rights as provided in Article 785(1) of the Companies Act to be exercised inconnection with the Share Exchange) as of the Standard Time. The number of shares to be delivered by
Mitsubishi Electric as a result of the Share Exchange is subject to change in the future due to the acquisitionand cancellation of the Company’s treasury shares.
The Mitsubishi Electric Stock to be delivered through the Share Exchange are planned to be allocatedentirely from the treasury shares held by Mitsubishi Electric, and Mitsubishi Electric does not plan to issue
new shares.
(Note 3) Handling of shares less than one unit
Shareholders who will hold shares less than one unit of Mitsubishi Electric as a result of the Share
Exchange may use the following systems applicable to Mitsubishi Electric Stock. Shares less than one unit
cannot be sold on the financial instruments exchange market.
A System requiring additional purchase for shares less than one unit (additional purchase to constitute 100
shares)Pursuant to the provision of Article 194(1) of the Companies Act, shareholders who hold shares lessthan one unit of Mitsubishi Electric may purchase from Mitsubishi Electric additional number of sharesthat constitute one share unit together with the number of shares they already hold.
B System requesting purchase of shares less than one unit (sale of shares less than one unit)
Pursuant to the provision of Article 192(1) of the Companies Act, shareholders who hold shares lessthan one unit of Mitsubishi Electric may request Mitsubishi Electric to purchase the shares less than one
unit that they hold.

(Note 4) Handling of fractional share
Pursuant to the provision of Article 234 of the Companies Act and other related laws and regulations, theshareholders of the Company who will receive an allotment of fractional share of Mitsubishi Electric Stockthrough the Share Exchange shall be entitled to sell the number of Mitsubishi Electric Stock equivalent to
the total number of such fraction (any fraction of less than one share in the total number shall be roundeddown), and Mitsubishi Electric shall pay the proceeds of the sale to such shareholders in proportion to thefraction of the share.

(ii)
Basis for the Details of Allotment Pertaining to the Share Exchange
A Basis and Reasons for the Details of the Allotment
In order to ensure fairness and appropriateness in calculating the Share Exchange Ratio, Mitsubishi Electric and
the Company have separately requested third-party valuation institutions independent of the Companies to calculate
the Share Exchange Ratio. Mitsubishi Electric appointed Daiwa Securities Co. Ltd. (“Daiwa Securities”) aroundlate September 2022 and the Company appointed AGS Consulting Co., Ltd. (“AGS”) around mid-November 2022
as its financial advisor and third-party valuation institution, respectively. Further, the Company selected Plutus
Consulting Co., Ltd. (“Plutus”) as an additional third-party valuation institution around mid-December 2023 asnominated by the Special Committee (defined below).
As described in 3. (3)(i) “Measures to Ensure Fairness” below, as a result of extensive negotiations anddiscussions between the Companies, based on the share exchange ratio valuation report received as of January 5,2024 and financial advice from Daiwa Securities, which is Mitsubishi Electric’s financial advisor and third-party
valuation institution, as well as advice from Mori Hamada & Matsumoto, which is Mitsubishi Electric’s legal
advisor, and the results of due diligence conducted by Mitsubishi Electric on the Company, and upon
comprehensively considering factors including the financial conditions, asset conditions, future outlooks of
Mitsubishi Electric and the Company, Mitsubishi Electric reached the conclusion that the Share Exchange Ratio is
appropriate and will not harm the interests of the shareholders of Mitsubishi Electric, and thus, Mitsubishi Electric
determined that it is appropriate to carry out the Share Exchange based on the Share Exchange Ratio.
Meanwhile, the Company conducted a careful examination and discussion upon taking into account the shareexchange ratio valuation report received from AGS, which is the Company’s financial advisor and third-party
valuation institution, the share exchange ratio valuation report received from Plutus, an additional third-party
valuation institution, as nominated by the Special Committee, and the written opinion stating that the Share
Exchange Ratio is appropriate or fair from a financial point of view (the “Fairness Opinion”), advice from HibiyaNakata, which is the Company’s legal advisor, results of due diligence conducted by the Company on Mitsubishi
Electric, and instructions, advice, reports, etc. from a special committee (the “Special Committee”) consisting of
independent members who have no interest in Mitsubishi Electric as described in B(B) “Outline of the calculation”
below and 3. (3)(i) “Measures to Ensure Fairness” below regarding the Share Exchange Ratio. As a result, theCompany has determined it is appropriate to carry out the Share Exchange based on the Share Exchange Ratio andthat it will not harm the interests of the shareholders of the Company. Although the exchange consideration for the
Share Exchange is a discount from the recent market value of the Company, the Company determined that theexchange consideration for the Share Exchange is appropriate in light of, as mentioned above, the difficulty in the
Company maintaining its listing and continuing business on its own due to the realistic assumption that it will
become delisted and bankrupt if the Share Exchange is not carried out, and the result of the Market Check showingthat there is no potential candidate who could propose more favorable terms for minority shareholders, as well as
the discount rates adopted in similar cases in similar circumstances.
Accordingly, in accordance with the resolutions of the Executive Officers’ Meeting of Mitsubishi Electric and
the Board of Directors’ meeting of the Company both held on January 9, 2024 respectively regarding theimplementation of the Share Exchange based on the Share Exchange Ratio, the Companies concluded the Share
Exchange Agreement.
Pursuant to the Share Exchange Agreement, the Share Exchange Ratio is subject to change upon consultation
between the Companies in the event of any material change in the terms and conditions on which the calculation isbased.
B Matters Concerning Calculation(A) Name of the valuation institution and relationship with the listed company
Daiwa Securities, the third-party valuation institution of Mitsubishi Electric, and AGS and Plutus, the thirdparty valuation institution of the Company, are both valuation institutions independent of Mitsubishi Electricand the Company. Daiwa Securities and AGS are not related parties of Mitsubishi Electric or the Company, anddo not have any significant interest in the Share Exchange that should be noted.
In addition, after confirming that there are no independence issues with AGS and Plutus, the Special
Committee approved it as a third-party valuation institution of the Company.
The compensation to AGS and Plutus pertaining to the Share Exchange is comprised solely of fixedcompensation to be paid regardless of the success or failure of the Share Exchange, and does not include
contingency fees to be paid upon the condition of successful completion of the Share Exchange.
(B) Outline of the calculation
For Mitsubishi Electric, since it is listed on a financial instruments exchange and there exists a market shareprice, Daiwa Securities adopted the market share price average method for the calculation (using January 5,2024 as the base date, which is the calculation base date, the market share price was analyzed based on thesimple average closing price of Mitsubishi Electric Stock on the Prime Market of Tokyo Stock Exchange, Inc.
(the “TSE”) over the last six-months period from July 6, 2023 to the calculation base date, the last three-months
period from October 6, 2023 to the calculation base date, the last one-month period from December 6, 2023 tothe calculation base date, and the closing price as of the base date).
As to the Company, since it is listed on a financial instruments exchange and has a market share price, themarket share price average method was adopted (using January 5, 2024 as the base date, which is the calculationbase date, the market share price was analyzed based on the average closing price for the days which trading
volumes were recorded for the Company stock on the SSE over the last six-months period from July 6, 2023
to the calculation base date, the last three-months period from October 6, 2023 to the calculation base date, thelast one-month period from December 6, 2023 to the calculation base date, and the closing price as of the basedate), as well as the discounted cash flow (the “DCF”) method in order to reflect the status of future businessactivities in the evaluation.
Under the DCF method, the corporate value and share value are assessed by discounting the future cash flows
based on the business plan for the fiscal years ending March 31, 2024 through March 31, 2027, prepared by theCompany, to the present value at a certain discount rate. The discount rate ranges from 7.08% to 7.91%. The
perpetual growth rate method is used to calculate the going concern value, and the perpetual growth rate is
0.00% to 0.50%.
The calculation range of the share exchange ratio of the Company stock under the respective valuation
methods when the share value per share of Mitsubishi Electric Stock is set at one is as follows.
Adopted method
Mitsubishi Electric
The Company
Market share price average
Market share pricemethodaverage method
DCF method

Calculation range of the share exchange ratio
0.644 to 0.682
0.098 to 0.745

In calculating the above share exchange ratio, Daiwa Securities used materials and information that wasprovided from the Companies and information available to the public principally on an as is basis on theassumption that the entire materials and information used for the analysis and examination are accurate andcomplete, and Daiwa Securities has not independently verified, and assume no obligation to do so, the accuracy
or the completeness of such materials and information. Daiwa Securities assumed, among other things, that
there are no facts undisclosed to Daiwa Securities that could have a material impact on the calculation of theshare exchange ratio. Daiwa Securities has not undertaken an independent evaluation, appraisal or assessmentof any of the assets or liabilities (including, but not limited to, financial derivative instruments, off-balance-sheet
assets and liabilities, and other contingent liabilities) of Mitsubishi Electric and the Company and theirsubsidiaries and affiliated companies, including analysis and evaluation of the individual assets and liabilities,
nor did it make any request to a third party for an evaluation, appraisal or assessment. Daiwa Securities assumed
that the financial forecasts and other forward-looking information provided by the Companies have beenreasonably reviewed, considered or prepared based on the best currently available forecasts and judgments by
the management of the Company, and with the consent of the Company, Daiwa Securities has relied on suchinformation without independent verification. Calculations by Daiwa Securities are based on financial,economic, market and other conditions as of January 5, 2024.
The calculation results of the share exchange ratio submitted by Daiwa Securities do not express an opinion
on the fairness of the share exchange ratio in the Share Exchange.
The business plan of the Company, which Daiwa Securities used as the premise for the calculation using the
DCF method, includes a fiscal year in which a significant increase or decrease in profit is expected. Specifically,
increase in profit is expected in the fiscal year ending March 31, 2024 owing to the facts that the delivery to thepromotor of the Takayama Project has been completed, and the cost of revenue due to the significant increasein civil engineering costs for the Takayama Project that was recorded in the fiscal years ended March 31, 2022
and 2023 respectively will not be recorded. In addition, excluding the reduction in costs to maintain listing, thesynergy effects expected to be realized by the implementation of the Share Exchange are not reflected in thefinancial forecasts used as the basis for the DCF method valuation, because it is difficult to estimate specificallythe impact on earnings at this time. However, as the financial forecasts reflect the impact of the financial support
expected to be realized from the implementation of the Share Exchange, assuming the continuation of theCompany’s business, it is based on the assumption that the Share Exchange will be implemented. The financial
forecasts that do not assume the implication of the Share Exchange anticipate difficulties in continuing thebusiness during the planned term, so they are not used as the basis for the DCF method valuation.
In addition, the business plan of the Company, which Daiwa Securities used as the basis for the calculation
using the DCF method, has factored in the tax burden reduction effect from the reduction of capital and capitalreserve with an effective date of March 29, 2024, which is described in Proposal No. 3 “Reduction of capitaland capital reserve, and disposal of capital surplus.”
Meanwhile, for Mitsubishi Electric, since it is listed on a financial instruments exchange and there exists a
market share price, AGS adopted the market share price method for the calculation, and for the Company, since
it is listed on a financial instruments exchange and there exists a market share price, the market share pricemethod was adopted, as well as the DCF method in order to reflect the status of future business activities in theevaluation.
The calculation range of the share exchange ratio of the Company stock under the respective valuation
methods when the share value per share of Mitsubishi Electric Stock is set at one is as follows.
Adopted method
Mitsubishi Electric
The Company
Market share price method
Market share pricemethodDCF method

Calculation range of the share exchange ratio

0.644 to 0.682
0.000 to 0.529

Under the market share price method, for Mitsubishi Electric, using January 5, 2024 as the calculation basedate, the simple average closing price of Mitsubishi Electric Stock on the Prime Market of TSE over the lastsix-months period from July 6, 2023 to the calculation base date, the last three-months period from October 6,2023 to the calculation base date, the last one-month period from December 6, 2023 to the calculation base date,
and the closing price as of the base date were adopted. For the Company, using January 5, 2024 as the calculationbase date, the simple average closing price of the Company of SSE over the last six-months period from July 6,2023 to the calculation base date, the last three-months period from October 6, 2023 to the calculation base date,
the last one-month period from December 6, 2023 to the calculation base date, and the closing price as of thebase date were adopted.
Under the DCF method, the corporate value and share value are assessed by discounting the future cash flows
based on the business plan for the fiscal years ending March 31, 2024 through March 31, 2027, prepared by theCompany, to the present value at a certain discount rate. The discount rate ranges from 5.89 % to 6.89%. The
perpetual growth rate method is used to calculate the going concern value, and the perpetual growth rate is 0%.
In calculating the above share exchange ratio, AGS used materials and information that was provided fromthe Companies and information available to the public principally on an as is basis on the assumption that theentire materials and information used for the analysis and examination are accurate and complete, and AGS has
not independently verified, and assume no obligation to do so, the accuracy or the completeness of suchmaterials and information. AGS assumed, among other things, that there are no facts undisclosed to AGS that
could have a material impact on the calculation of the share exchange ratio. AGS has not undertaken an
independent evaluation, appraisal or assessment of any of the assets or liabilities (including, but not limited to,financial derivative instruments, off-balance-sheet assets and liabilities, and other contingent liabilities) of
Mitsubishi Electric and the Company and their subsidiaries and affiliated companies, including analysis andevaluation of the individual assets and liabilities, nor did it make any request to a third party for an evaluation,
appraisal or assessment. AGS assumed that the financial forecasts and other forward-looking information
provided by the Companies have been reasonably reviewed, considered or prepared based on the best currently
available forecasts and judgments by the management of the Company, and with the consent of the Company,
AGS has relied on such information without independent verification. Calculations by AGS are based on
financial, economic, market and other conditions as of January 5, 2024.
The calculation results of the share exchange ratio submitted by AGS do not express an opinion on thefairness of the share exchange ratio in the Share Exchange.
The business plan of the Company, which AGS used as the premise for the calculation using the DCF method,
includes a fiscal year in which a significant increase or decrease in profit is expected. Specifically, increase inprofit is expected in the fiscal year ending March 31, 2024 owing to the facts that the delivery to the promotorof the Takayama Project has been completed, and the cost of revenue due to the significant increase in civilengineering costs for the Takayama Project that was recorded in the fiscal years ended March 31, 2022 and2023 respectively will not be recorded. In addition, the synergy effects expected to be realized by the
implementation of the Share Exchange are not reflected in the financial forecasts used as the basis for the DCF
method valuation, because, excluding the reduction in costs to maintain listing, it is difficult to estimate
specifically the impact on earnings at this time. However, as the financial forecasts reflect the impact of thefinancial support expected to be realized from the implementation of the Share Exchange, assuming thecontinuation of the Company’s business, it is based on the assumption that the Share Exchange will be
implemented. The financial forecasts that do not assume the implication of the Share Exchange anticipate
difficulties in continuing the business during the planned term, so they are not used as the basis for the DCF
method valuation.
In addition, the business plan of the Company, which AGS used as the basis for the calculation using the
DCF method, has factored in the tax burden reduction effect from the reduction of capital and capital reservewith an effective date of March 29, 2024, which is described in Proposal No. 3 “Reduction of capital and capitalreserve, and disposal of capital surplus.”
For Mitsubishi Electric, since it is listed on a financial instruments exchange and there exists a market shareprice, Plutus adopted the market share price method for the calculation, whereas for the Company, since it islisted on a financial instruments exchange and there exists a market share price, the market share price method
was adopted, as well as the DCF method in order to reflect the status of future business activities in theevaluation.
The calculation range of the share exchange ratio of the Company stock under the respective valuation
methods when the share value per share of Mitsubishi Electric Stock is set at one is as follows.
Adopted method
Mitsubishi Electric
The Company
Market share price method
Market share pricemethodDCF method

Calculation range of the share exchange ratio
0.644 to 0.682
0.000 to 0.369

Under the market share price method, for Mitsubishi Electric, using January 5, 2024 as the calculation basedate, the simple average closing price of Mitsubishi Electric Stock on the Prime Market of TSE over the lastsix-months period from July 6, 2023 to the calculation base date, the last three-months period from October 6,2023 to the calculation base date, the last one-month period from December 6, 2023 to the calculation base date,
and the closing price as of the base date were adopted. For the Company, using January 5, 2024 as the calculationbase date, the simple average closing price of the Company of SSE over the last six-months period from July 6,2023 to the calculation base date, the last three-months period from October 6, 2023 to the calculation base date,
the last one-month period from December 6, 2023 to the calculation base date, and the closing price as of thebase date were adopted.
Under the DCF method, the corporate value and share value are assessed by discounting the future cash flows
based on the business plan for the fiscal years ending March 31, 2024 through March 31, 2027, prepared by theCompany, to the present value at a certain discount rate. The discount rate ranges from 6.033% to 7.704%. The
perpetual growth rate method is used to calculate the going concern value, and the perpetual growth rate is 0%.
The business plan of the Company, which Plutus used as the premise for the calculation using the DCF
method, includes a fiscal year in which a significant increase or decrease in profit is expected. Specifically,
increase in profit is expected in the fiscal year ending March 31, 2024 owing to the facts that the delivery to thepromotor of the Takayama Project has been completed, and the cost of revenue due to the significant increasein civil engineering costs for the Takayama Project that was recorded in the fiscal years ending March 31, 2022
and 2023 respectively will not be recorded. In addition, the synergy effects expected to be realized by the
implementation of the Share Exchange are not reflected in the financial forecasts used as the basis for the DCF
method valuation, because, excluding the reduction in costs to maintain listing, it is difficult to estimate
specifically the impact on earnings at this time. However, as the financial forecasts reflect the impact of thefinancial support expected to be realized from the implementation of the Share Exchange, assuming thecontinuation of the Company’s business, it is based on the assumption that the Share Exchange will be
implemented. The financial forecasts that do not assume the implication of the Share Exchange anticipate
difficulties in continuing the business during the planned term, so they are not used as the basis for the DCF
method valuation.
In addition, the business plan of the Company, which Plutus used as the basis for the calculation using the
DCF method, has factored in the tax burden reduction effect from the reduction of capital and capital reservewith an effective date of March 29, 2024, which is described in Proposal No. 3 “Reduction of capital and capitalreserve, and disposal of capital surplus.”
The Company obtained the Fairness Opinion from Plutus on January 5, 2024. The Fairness Opinion
expresses the view that the Share Exchange ratio agreed between both parties is fair to minority shareholders of

the Company from a financial point of view in light of the business plan prepared by the Company and theresult, etc. of share exchange ratio calculations based on the market share prices of both parties. The Fairness
Opinion was issued after Plutus received disclosure from the Company of its business situation and futurebusiness plan, etc., the result of the share exchange ratio calculation after receiving an explanation of such factors,
and examined through a question and answer session on the outline, background, and purpose of the Share
Exchange from both parties, and the business environment of both parties, the economy, market and financial
climate, etc. to the extent considered necessary by Plutus, as well as completion of a review procedure by areview committee independent of the engagement team at Plutus.
(Note 1) In preparing and submitting the Fairness Opinion, and calculating the above share exchange ratio on which
this was based, Plutus assumed and relied on the basic materials that were provided by the Company,
information available to the public, and information heard from both companies being accurate and complete,
and there being no matters that may have a material impact on the calculation of the share exchange ratiothat are undisclosed, and has not independently verified, and assumes no obligation to do so, the accuracy or
the completeness of such materials and information outside the above procedures.
Plutus has not undertaken its own evaluation or appraisal of any of the assets or liabilities (including, but
not limited to, off-balance-sheet assets and liabilities, and other contingent liabilities) of Mitsubishi Electric,
the Company or Mitsubishi Electric’s affiliated companies, including analysis and evaluation of theindividual assets and liabilities, and has not received submission of any written evaluation or written
appraisal on such matters from Mitsubishi Electric, the Company or Mitsubishi Electric’s affiliatedcompanies. Plutus has not evaluated the creditworthiness of Mitsubishi Electric, the Company or Mitsubishi
Electric’s affiliated companies under applicable laws in relation to insolvency, payment suspension, or
matters similar to these.
Plutus assumes that the business plan and other materials of the Company used as basic materials havebeen reasonably prepared based on the best currently available forecasts and judgments by the managementof the Company, and Plutus does not guarantee their feasibility, nor represent any view on the analysis andforecasts based on which they were prepared, or the assumptions that formed the basis of these.
Plutus assumes that the Share Exchange Agreement was lawfully and validly prepared and executed andapproved at the General Meeting of Shareholders of the Company, that the Share Exchange will be lawfully
and validly implemented in accordance with the terms of the Share Exchange Agreement, and that the Share
Exchange is completed in accordance with the terms of the Share Exchange Agreement without waiver,revision or amendment of material conditions and agreed matters in the Share Exchange Agreement. Plutus
also assumes that the Share Exchange is lawfully and validly implemented, that the tax effect of the Share
Exchange does not differ to the expectations of the parties, and that all consents, approvals and authorizations
from the government, regulatory authorities and others necessary for the implementation of the Share
Exchange have been obtained without any loss of benefits expected to be gained from the Share Exchange,
and assumes no obligation to independently examine these. Plutus has not been requested by the Company
to examine the decision-making of the Company in relation to the implementation of the Share Exchange,or to examine the Share Exchange in comparison with other strategic choices, and has not done so. Plutus
is not an accounting, tax, or legal expert, and has not independently analyzed or examined the legality or
validity of any matter relating to the Share Exchange, or the adequacy of accounting or tax treatment, andassumes no obligation to do so. Plutus has assumed that the envisaged tax effect for the Share Exchange as
presented by the Company will be realized.
The Fairness Opinion states the views of Plutus as of the preparation date as to whether or not the Share
Exchange Ratio agreed between the parties is fair to minority shareholders of the Company from a financial
point of view based on financial and capital markets, economic conditions, and other circumstances as ofthe preparation date, as well as information shared with or obtained by Plutus up to the preparation date, andPlutus has no obligation to revise, amend, or supplement the Fairness Opinion in the event such basischanges due to subsequent developments. Plutus does not speculate or suggest a view on matters other thanmatters explicitly mentioned in the Fairness Opinion or subsequent to the submission date of the Fairness
Opinion. The Fairness Opinion only expresses an opinion on the fairness of the Share Exchange Ratio forminority shareholders of the Company from a financial point of view, and expresses no opinion on theowners, creditors, or other related parties for securities issued by the Company, and does not recommend
any action in relation to the Share Exchange to shareholders of the Company.
The Fairness Opinion was submitted by Plutus for the purpose of being used as basic materials for the
Board of Directors and the Special Committee of the Company to make a decision on the Share Exchange
Ratio, and cannot be relied on by anyone else.

(2) Reasons for Selecting such Types of Assets as Share Exchange Consideration
The Company and Mitsubishi Electric have selected the common stock of Mitsubishi Electric, which will be thewholly owning parent company resulting from the share exchange, as the consideration for the Share Exchange.
With regard to such exchange consideration, the Company determined that the Mitsubishi Electric Stock would
be appropriate exchange consideration for the Share Exchange based on factors such as (i) the Mitsubishi Electric
Stock being listed on the Prime Market of the TSE, meaning it will continue to be tradable on the Prime Market of
the TSE following the Effective Date of the Share Exchange, and (ii) the shareholders of the Company, who will
become shareholders of Mitsubishi Electric, being able to enjoy the benefits produced by the integration effects
resulting from the Company becoming a wholly owned subsidiary through the Share Exchange going forward.
As a result of the Share Exchange, the Company will become a wholly owned subsidiary of Mitsubishi Electric
as of its effective date (scheduled for April 15, 2024). Prior to this, the Company stock are scheduled to be delisted
as of April 11, 2024 (the last trading date will be April 10, 2024) following the prescribed procedures pursuant to
the delisting criteria of the SSE. The Company stock will no longer be tradable on the SSE after the delisting, but
Mitsubishi Electric Stock which will be allotted to the shareholders of the Company on the effective date of the
Share Exchange is listed on the Prime Market of the TSE. Thus, although some shareholders may only receive anallotment of shares less than one unit, shares of one unit or more will continue to be tradable on the financial
instruments exchange and the liquidity of the shares continues to remain available.
On the other hand, shareholders who will hold shares less than one unit of Mitsubishi Electric as a result of the
Share Exchange will not be able to sell such shares less than one unit on the financial instruments exchange, butsuch shareholders are entitled to use the system requesting purchase of shares less than one unit applicable to
Mitsubishi Electric Stock. It is also possible to use the system requiring additional purchase for shares less than one
unit applicable to Mitsubishi Electric Stock and additionally purchase from Mitsubishi Electric the number of sharesnecessary to constitute one unit together with the number of shares already held by such shareholder. Please refer to
3. (1)(i)(Note 3) “Handling of shares less than one unit” above for an outline of such handling. For details on thehandling of fractional share arising from the Share Exchange, please refer to 3. (1)(i) (Note 4) “Handling of fractional
share” above.
The common shareholders of the Company may continue to trade their Company stock on the SSE as in the past
until the last trading day, namely April 10, 2024 (scheduled), or may exercise their legal rights provided for in the
Companies Act and other relevant laws and regulations.
(3) Matters Considered to Prevent Harming the Interests of Shareholders of the Company(i)Measures to Ensure Fairness
In light of the facts that Mitsubishi Electric holds 173,600 shares of the Company stock (representing 27.53%(rounded to the nearest two decimal places; the same applies hereinafter regarding the calculation of ownership
ratio) of the proportion (the “Ownership Ratio”) to the aggregate of 630,655 shares of outstanding shares (excluding

treasury shares) as of September 30, 2023) making Mitsubishi Electric the largest and major shareholder of theCompany, and there are directors at the Company who concurrently serve as officers and employees of Mitsubishi
Electric as well as directors who formerly worked at Mitsubishi Electric, the Companies determined that it isnecessary to ensure the fairness of the Share Exchange, and implemented the following measures to ensure fairness.
A Valuation reports obtained from independent third-party valuation institutions
Mitsubishi Electric appointed Daiwa Securities, a third-party valuation institution independent from
Mitsubishi Electric and the Company, as the valuation institution pertaining to the share exchange ratio for the
Share Exchange, and obtained a valuation report on the share exchange ratio as of January 5, 2024. Please refer
to 3. (1)(ii)B “Matters Concerning Calculation” above for an overview of the valuation report.
The Company appointed AGS and Plutus, a third-party valuation institution independent from Mitsubishi
Electric and the Company, as the valuation institution pertaining to the share exchange ratio for the Share
Exchange, and obtained a valuation report on the share exchange ratio from each of AGS and Plutus as ofJanuary 5, 2024. Please refer to 3. (1)(ii)B “Matters Concerning Calculation” for an overview of the valuation
report.
Further, the Company has obtained the Fairness Opinion from Plutus, a third-party valuation institution thatis independent of the Company and Mitsubishi Electric.
B Advice from independent law firms
Mitsubishi Electric appointed Mori Hamada & Matsumoto as its legal advisor for the Share Exchange, andreceives legal advice from Mori Hamada & Matsumoto regarding the various procedures of the Share
Exchange and methods and processes of decision-making of the Executive Officers’ Meeting. Mori Hamada& Matsumoto is independent from Mitsubishi Electric and the Company, and does not have any materialinterest in Mitsubishi Electric or the Company.
The Company appointed Hibiya-Nakata as its legal advisor for the Share Exchange, and receives legal advice
from Hibiya-Nakata regarding the various procedures of the Share Exchange and methods and processes ofdecision-making by the Board of Directors. Hibiya-Nakata is independent from Mitsubishi Electric and theCompany, and does not have any material interest in Mitsubishi Electric or the Company.
(ii)

Measures to Avoid Conflicts of Interest
Since Mitsubishi Electric holds 173,600 shares (Ownership Ratio: 27.53%) of the Company stock and is thelargest and major shareholder of the Company, and there are directors at the Company who concurrently serve as
officers and employees of Mitsubishi Electric as well as directors who formerly worked at Mitsubishi Electric, theCompany has implemented the following measures to avoid conflicts of interest.
A Obtainment by the Company of a report from special committee with no interest
The Company, by the resolution of the Board of Directors’ meeting held on December 13, 2022, in the aim
to use cautiousness in its decision-making regarding the Share Exchange, as well as to eliminate possible
arbitrariness and conflict of interest in its Board of Directors’ decision-making process and ensure fairness
thereof, while confirming that the resolution by its Board of Directors to carry out the Share Exchange is notdisadvantageous to its minority shareholders, established the Special Committee consisting of three members,
namely, Mr. Masayuki Hirobe (attorney at law, Hirobe & Yagi Law Office), who does not have any interest in
Mitsubishi Electric and is the Company’s outside director and registered as the Company’s independent officer
with the SSE, and Mr. Masaaki Suda (certified public accountant, Suda Certified Public Accountant Office),
who is an outside expert having no interest in Mitsubishi Electric or the Company and has knowledge of financeand accounting gained through his experience as certified public accountant, and Mr. Hidetaka Nishina

(attorney at law, Nakamura, Tsunoda & Matsumoto), who has a wealth of experience and knowledge as anexpert cultivated through many years of legal work including corporate legal affairs. Thereupon, to consider the
Share Exchange, the Company resolved at the aforementioned Board of Directors’ meeting to consult theSpecial Committee on whether: (i) the purpose of the Share Exchange should be deemed reasonable (therefore
the Share Exchange as a whole will lead to contributing to the enhancement of the Company’s corporate value);(ii) the fairness of the terms and conditions of the Share Exchange (including the exchange ratio) has been
secured; (iii) the procedures of the Share Exchange are fair, and sufficient consideration is given to the interestsof the minority shareholders; and (iv) the Share Exchange is not disadvantages to the minority shareholders ((i)
to (iv) are collectively referred to as the “Matters for Consultation”). Furthermore, in establishing the Special
Committee, the Company’s Board of Directors resolved that the Board of Directors which shall consider theappropriateness of the Share Exchange shall respect the content of the Special Committee’s responses pertaining
to the Matters for Consultation to the maximum extent in light of the purpose of establishing the Special
Committee, and in particular, if the Special Committee decides that the implementation of the Share Exchange
is not appropriate, the Company’s Board of Directors shall not carry out the Share Exchange, and in addition,(i) the Special Committee itself may negotiate with Mitsubishi Electric, and even if the Company’s personnel
or advisors conduct the negotiations with Mitsubishi Electric, the Special Committee may receive timely reportson the negotiation status, express its opinions at important points and give instructions and requests, thereby
substantially influence the negotiation process regarding the terms and conditions of the transaction; (ii) theSpecial Committee is granted the right to, as necessary, appoint its own external advisors including financial
advisor, third-party valuation institution, legal advisor (expenses in such cases shall be borne by the Company),or otherwise, nominate or approve (including subsequent approval) the external advisors to be appointed by theCompany; and (iii) the Special Committee is granted the right to approve the Company to appoint AGS andHibiya-Nakata, respectively, as external advisors on the Share Exchange which are experts independent fromthe Company and Mitsubishi Electric. In the aforementioned Board of Directors’ meeting of the Company held
on December 13, 2022, among the Company’s then five Directors, Mr. Ichiro Miyaki, who held an executive
position at Mitsubishi Electric at that time was absent from such Board of Directors’ meeting, and Mr. Tatsuo
Takahashi and Mr. Yoshiyasu Matsushita, who are recognized as having certain relationships with Mitsubishi
Electric in the past, such as working as an employee or assuming an executive position of Mitsubishi Electric,
decided not to participate in the deliberation and the resolution of such Board of Directors’ meeting and thus,
Mr. Naoki Mabuchi chaired such Board of Directors’ meeting, and two Directors, namely Mr. Naoki Mabuchi
and Mr. Masayuki Hirobe participated in the deliberation and unanimously resolved as aforementioned.
Likewise, as to the three Audit & Supervisory Board members, Mr. Masaki Hase, who holds an executive
position at Mitsubishi Electric, and Mr. Osamu Oketani, who has an ongoing business relationship with
Mitsubishi Electric, was absent from such Board of Directors’ meeting, and Mr. Hiroyuki Higuchi, who isrecognized as having a certain relationship with Mitsubishi Electric in the past did not participate in the
deliberation of such Board of Directors’ meeting and has not expressed any opinion. Furthermore, from theviewpoint of securing a quorum of the Board of Directors’ meeting, a total of four directors, including Mr.
Tatsuo Takahashi and Mr. Yoshiyasu Matsushita, both Directors, and Mr. Hiroyuki Higuchi, Audit &Supervisory Board member, all of whom only held a position as an officer or employee of Mitsubishi Electricin the past and are considered to having a relatively low conflict of interest, participated and deliberated, and thefour Directors unanimously resolved as aforementioned once more. The Company has also received an opinion
from the Audit & Supervisory Board that they do not have any objection.
Each member of the Special Committee shall be paid a fixed amount of compensation for their duties,
regardless of the content of their reports.
The Special Committee held four meetings between December 19, 2022 and January 13, 2023, 11 meetings
between August 24, 2023 and January 5, 2024 after the suspension due to the discontinuation of theconsideration of the Share Exchange, adding up to 15 meetings (approximately 20 hours in total), and also
carefully considered the Matters for Consultation by using emails, among other tools, to express opinions,exchange information or gather information, or otherwise, held consultations as necessary outside thecommittee. The Special Committee has elected Mr. Hidetaka Nishina as the Chair of the Special Committee
through mutual election among the members. In addition, at the first meeting of the Special Committee, theSpecial Committee approved AGS, which is a financial advisor and a third-party valuation institution appointed
by the Company, as the Company’s financial advisor and third-party valuation institution, and Hibiya-Nakata,which is a legal advisor appointed by the Company, as the Company’s legal advisor, after confirming that there
are no issues with their independence. Furthermore, the Special Committee approved the Company’s internal
review and negotiation system after confirming that their members are composed of persons other than those
who have interests with Mitsubishi Electric, and that there are no problems from the viewpoint of conflict ofinterest with Mitsubishi Electric. In addition, the Special Committee also appointed Plutus, a third-party
valuation institution, to obtain the Fairness Opinion that verified the fairness of the Share Exchange Ratio, andthe Special Committee confirmed there was no issue with the independence of Plutus.
The Special Committee sent a written inquiry to Mitsubishi Electric on the following points, among others:(i) the reason and background for choosing the Share Exchange; (ii) the reason and background for choosing
the specific timing of the Share Exchange; (iii) measures for enhancement and countermeasures related to theCompany’s management issues and business problems after the Share Exchange, and the assumptions thereforin the medium- to long-term; (iv) the Company’s governance and management system after the Share
Exchange; (v) pros and cons to the Share Exchange; and (vi) the concept of the methods adopted in calculating
the Share Exchange Ratio in the Share Exchange. The Special Committee received direct explanations on thesematters from Mitsubishi Electric followed by a question and answer session.
In addition, the Special Committee received from the Company an explanation on the content andbackground of the preparation of the business forecasts which it prepared, and confirmed the reasonableness ofsuch matters. Subsequently, as described in 3. (1)(ii)B(B) under “Matters Concerning Calculation” above, given
the fact that AGS and Plutus calculated the value of the Company stock based on the business forecasts preparedby the Company, the Special Committee received explanation from AGS and Plutus on the calculation method
adopted in calculating the value of the Company stock, the reason for adopting such calculation method, andthe content of calculation based on each calculation method as well as important assumptions, and after holding
a question and answer session as well as deliberations and considerations, the Special Committee confirmed thereasonableness on these matters. Furthermore, the Special Committee received advice from Hibiya-Nakata
regarding the measures to ensure fairness of the procedures of the Share Exchange as well as the measures toavoid conflict of interest including the method and process of decision-making by the Company’s Board of
Directors regarding the Share Exchange, and conducted a question and answer session on these matters.
Additionally, after collecting information on the Share Exchange based on the submitted materials related to the
Share Exchange, the Special Committee carefully discussed, examined and deliberated the Matters for
Consultation taking in concern such information collectively. The Special Committee received timely reportson the background and content of the discussions and negotiations between the Company and Mitsubishi
Electric regarding the Share Exchange, and each time provided to the Company its views on the acceptance orrejection of the proposed share exchange ratio by Mitsubishi Electric, and on how to set the ratio and the grounds
for this when the Company rejected the proposal from Mitsubishi Electric and instead issued its own proposal
for the ratio, and has been involved in the process of negotiation with Mitsubishi Electric, including giving
opinions to the Company, from after the 10th Special Committee meeting until receiving a final proposal from
Mitsubishi Electric regarding the Share Exchange Ratio.
Upon the background described above, and based on such explanations, calculation results, the Fairness
Opinion, and other materials for consideration, the Special Committee determined with respect to the Mattersfor Consultation (i) that the purpose of the Share Exchange is reasonable, and that the Share Exchange will
improve the overall corporate value of the Company, (ii) determined that the procedure for the Share Exchange
is fair and sufficient consideration has been paid to the interests of minority shareholders, (iii) determined thatthe procedure for the Share Exchange is fair and sufficient consideration has been paid to the interests ofminority shareholders, and (iv)submitted a report to the Company’s Board of Directors as of January 5, 2024
(the “Report”) stating that the Share Exchange is deemed not to be disadvantageous to the minority shareholdersof the Company. The summary of the opinion of the Special Committee is as follows.
(i) Whether it should be deemed that the purpose of the Share Exchange is reasonable (therefore it isdeemed that the Share Exchange as a whole will lead to contributing to the enhancement of theCompany’s corporate value)(A) Current understanding of the Company and issues
The greatest issue is that the Company has a pressing need to recover a sound financial
position, as it is insolvent as of the submission date of the Report, and, amongst other things, isbeing asked to provide a guarantee from Mitsubishi Electric to receive loans from banks.
Next, given its current financial position, the Company’s shares will be delisted if it is not
solvent by the end of the fiscal year ending March 31, 2024, which is highly likely to have a large
adverse effect on the Company’s shareholders. Avoiding this situation is another pressing need.
Another important issue is improvement of the Company’s governance, which has shown
failings in governance functions in operational and business management respects, as shown by
the occurrence of multiple events that have greatly degraded the Company’s financial position,such as the Inappropriate Accounting Treatment for Solar Power Projects, the Withdrawal From
the Small Wind Turbine Business (and compensation for this to power generation companies),
and the Takayama Project.
Another issue is whether the Company will be able to improve results from only the Hokkaido
market area (redevelopment is expected to end in 2030). Although it has withdrawn from thesolar power business and the small wind turbine business, it needs to continue venturing into new
businesses such as renewable energy. However, given its current financial situation, there is thedifficulty of being unable to invest large sums to participate in new businesses.
This will require long-term personnel investment, given that the Company has no personnel
with specialist knowledge (no training scheme, or intention to newly establish a specialist
department) of such new areas (such as the development of renewable energy business).
However, the issue of its impaired financial situation will need to be resolved prior to personnel
investment.
From the above, the following issues can be raised about the future business development of
the Company.
(a) Recovery of a sound financial position is the greatest issue.
(b) At the same time there is the urgent issue of avoiding the large adverse effect onshareholders and other stakeholders resulting from delisting and bankruptcy if thecurrent situation persists.
(c) Improvement of the management of its management and business is also important.
(d) On the operations side there is a need to venture into new businesses such as renewableenergy business.
(e) There is a need for new personnel investment to hire personnel with specialist
knowledge in new areas.
Accordingly, although implementing measures (a) through (e) above (including, but notlimited to, M&A) that contributes to the business and issues of the Company requiresconsideration of the individual risks and accompanying demerits of such measures, it is believed
that, at least in general terms, they will improve the corporate value of the Company.
(B) Corporate value enhancement effect of the Share Exchange
The corporate value enhancement measures planned by Mitsubishi Electric and their effectenvisaged by Mitsubishi Electric after the implementation of the Share Exchange are describedin (a) through (d) below.
(a) Reduction of interest payments by using Mitsubishi Electric intra group financing
The Company’s interest payment burden can be reduced by replacing borrowing with
Mitsubishi Electric intra group financing.
(b) Avoidance of insolvency
The term of debt guarantees provided by Mitsubishi Electric for bank borrowing by
the Company will end on April 30, 2024, and it will be difficult for the Company torefinance its current debt given its current financial situation. Mitsubishi Electric believes
it is highly likely that the Company will struggle to refinance and will be insolvent
without the support of Mitsubishi Electric. The Share Exchange attempts to avoid
damage to the Company’s business and corporate value, as well as avoid a large negative
effect on the Company’s stakeholders, by delivering Mitsubishi Electric shares to theCompany’s shareholders and providing the financial support in (a) above.
(c) Contribution to governance strengthening
If the Company becomes a wholly-owned subsidiary of Mitsubishi Electric throughthe implementation of the Share Exchange, this will make it possible for it to strengthen
its compliance structure through the provision of Mitsubishi Electric Group’s
compliance expertise, and utilization of Mitsubishi Electric Group’s audit resources, etc.
(d) Reduction of listing maintenance costs
The Share Exchange will reduce the service and cost burden (including audit
company costs) for maintaining the share listing of the Company, and allow for effective
use of management resources.
The Company also believes that the explanations of Mitsubishi Electric on corporate valueenhancement measures and the envisaged effects of the Share Exchange described in (a) through(d) above are feasible and effective corporate value enhancement measures in light of theCompany’s current issues.
(a) Reduction of interest payments by using Mitsubishi Electric intra group financing
Joining the Mitsubishi Electric Group umbrella will allow it to access low-interest
intra-group financing, which will stabilize its financing.
(b) Avoidance of bankruptcy
It will be difficult for the Company to resolve its insolvency by March 31, 2024 on its
own, and it is expected to be in conflict with delisting standards of the SSE. Being
insolvent, it is unlikely that the Company will be able to secure sufficient financing fromthe capital market or sufficient support from the Mitsubishi Electric Group. Being unable
to secure financing will endanger its business operations, leading to the inevitable loss ofclients and employee turnover. Avoiding this situation through the Share Exchange isessential to improve the business.
(c) Contribution to governance strengthening
Making progress on urgent financing stabilization and management improvement
will require support from the Mitsubishi Electric Group as well as advancing personnel
exchange. However, but as the benefits of management improvements may low out tothe general shareholders, it will be difficult to gain sufficient support from the Mitsubishi
Electric Group while maintaining the Company’s existing shareholder relations.
Conversely, the Share Exchange will enable personnel support to strengthen governance.
(d) Reduction of listing maintenance costs
Audit remuneration, etc. costs tens of millions of yen annually, which is not a lightburden with the Company currently being insolvent.
The Company also envisages the effects in (e) and (f) below in addition to those in (a)through (d).
(e) Strengthening of creditworthiness with clients, etc. by joining the Mitsubishi ElectricGroup umbrella(f) With its financial situation impaired, the Company is unable to invest in areas that requirea long-term business perspective such as investing in personnel and venturing into new
business as it must prioritize short-term benefits in consideration of minority
shareholders. The changing of its shareholder composition through the Share Exchange
will make long-term investments possible.
The Special Committee also believes that the measures to enhance corporate value in (a)through (f) will contribute to the situations in (A) above (namely, (a) soundness of financial
situation, (b) avoidance of large adverse effect on stakeholders, (c) improved management ofmanagement and business, (d) venture into new business, and (e) personnel investment) given
as major points to enhance the corporate value of the Company in the future. It sees no significant
demerit to the Company from the Share Exchange.
(C) Comparison with the scenario where the Share Exchange is not implemented
Mitsubishi Electric has expressed its intention not to support the Company as sponsor if the
Share Exchange is not implemented due it being rejected at the General Meeting of Shareholders
or any other reason.
It will be difficult for the Company to resolve its insolvency by March 31, 2024 on its own,
and if the Share Exchange is not implemented, it will be unable to secure financing which will
endanger its business operations, and in turn lead to bankruptcy.
In preparation for the Share Exchange not being implemented, the Company carried out theMarket Check, but it revealed that no party would offer financing or other support to theCompany.
Based on objective circumstances such as the financial situation of the Company and the resultof the Market Check, as well as the intentions of Mitsubishi Electric and the Company, it isreasonably envisaged that the Company will go bankrupt (and will have to file for legal
reorganization proceedings or voluntary reorganization proceedings) if the Share Exchange is
not carried out.
(D) Summary
The corporate value enhancement measures for the Company planned by Mitsubishi Electric
after the Share Exchange are not at odds with the understanding of the Company, and there is noinconsistency between the awareness of Mitsubishi Electric and the Company in relation to theprospects of achieving such corporate value enhancement, etc. No significant demerit for the
corporate value of the Company can be found for the implementation of the Share Exchange,
and the Share Exchange is the sole means for the business continuation of the Company, and noother realistically possible means have been found for the Company. From these factors, even if
the Share Exchange does result in delisting, the merits from the transaction outweigh this demeritfor the Company.

Based on the above consideration, the objective of the Share Exchange is found to bereasonable and the Share Exchange will, overall, contribute to the enhancement of the corporate
value of the Company.
(ii) Securing minority shareholder interests through fair procedures
In relation to matter for consultation “Whether the fairness of the terms and conditions of the Share
Exchange (including the exchange ratio) has been secured,” examine whether or not the interests ofminority shareholders have been secured through fair procedures through confirmation of the status of
the adoption and operation of measures to ensure fairness set out in the Fair M&A guidelines issued by
the Ministry of Economy, Trade and Industry on June 28, 2019 (the “M&A Guidelines”).
(A) Establishment of Special Committee
The Special Committee is a committee comprising a total of three members: one independent
outside director of the Company and two independent experts.
When examining matters for consultations, the Special Committee is to fulfil the role set out
for it in the M&A Guidelines of ① examining and deciding whether to conduct the M&A fromthe perspective of whether it improves the corporate value of the target company, and ② fromthe perspective of the interests of minority shareholders, (i) examining and deciding on theadequacy of transaction terms and (ii) the fairness of procedures.
Additionally, (a) the Special Committee was established at the very initial stage of thetransaction after Mitsubishi Electric verbally proposed the Share Exchange to the Company on
November 11, 2022, (b) the independence of all members of the Special Committee from
Mitsubishi Electric and from the outcome of the Share Exchange has been secured, no member
has agreed to receive a contingency fee if the Share Exchange is completed, and one member isan outside director considered most eligible as a committee member in the M&A Guidelines, (c)the Company has granted the Special Committee authority for it to substantially influence thenegotiation process for transaction terms, (d) based on (c) above, if it consults with Mitsubishi
Electric on the Share Exchange Ratio, the Company is required to seek the confirmation of theSpecial Committee prior to or promptly after, which ensures that the Special Committee receives
timely reports on negotiations, is able to give its opinion at important stages, and can give
instructions and make requests to be able to substantively influence the negotiation process fortransaction terms, (e) the Board of Directors of the Company has decided not to approve theShare Exchange if the Special Committee decides the terms of the Share Exchange are notsuitable, (f) the Board of Directors of the Company has granted the Special Committee theauthority to appoint its own external advisors, etc. as necessary, and the authority to nominate or
approve (including subsequent approval) the external advisors to be appointed by the Company,(g) and as a result of (f) above, the Special Committee decided it was essential to obtain a fairness
opinion to verify the fairness of the Share Exchange Ratio, hired Plutus as a third-party
independent valuation institution, and obtained the share exchange ratio valuation report and the
Fairness Opinion, (h) the Special Committee members provide expertise on the businesscharacteristics of the Company, expertise on the company value appraisal, and legal expertise,and have sufficient capabilities to examine the Matters for Consultation, and (i) the Special
Committee, on behalf of minority shareholders, obtained disclosure documents planned for the
Share Exchange and material information on anticipated synergies, conducted detailed
confirmation of the Share Exchange through interviews with relevant parties, and carried out its
examination and made decisions based on these. Further, the Board of Directors of the Company
has decided that, for additional resolutions when it passes a resolution to consult the Special
Committee, it will pay the utmost respect to the views of the Special Committee when it passes

a resolution on the Share Exchange.
From the above establishment and operation of the Special Committee, it is found that theSpecial Committee is validly functioning as a measure to secure fairness.
(B) Decision-making process of the Company
Among the Directors of the Company, Mr. Kensuke Miyaji holds an executive position at
Mitsubishi Electric, and Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita are from
Mitsubishi Electric. Thus, from the standpoint of avoiding any doubt of conflicts of interest, theagenda regarding the Share Exchange that was brought before the Board of Directors’ meetingof the Company, was deliberated upon by two directors of the Company, namely, Mr. Naoki
Mabuchi and Mr. Masayuki Hirobe, and was unanimously approved. Thereafter, from theviewpoint of securing a quorum of the Board of Directors’ meeting, of the five directors, a totalof four directors, including Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita, both of whom
only held a position as an officer or employee of Mitsubishi Electric in the past and are considered
to have a relatively low conflict of interest, participated and deliberated in the aforementioned
Board of Directors’ meeting, and the four directors unanimously resolved as aforementioned
once more.
Furthermore, among the auditors of the Company, from the standpoint of avoiding any doubtof conflict of interest, Mr. Masaki Hase, who holds an executive position at Mitsubishi Electric,
Mr. Osamu Oketani, who is considered as having an ongoing business relationship with
Mitsubishi Electric, and Mr. Hiroyuki Higuchi, who only had a certain relationship with
Mitsubishi Electric in the past, did not participate in the deliberation and the resolution of theBoard of Directors. Auditor Mr. Hiroyuki Higuchi, who only held a certain relationship with
Mitsubishi Electric in the past and is considered to have a relatively low conflict of interest,
participated in the deliberation conducted by the aforementioned four Directors, and expressed
an opinion that he has no objection.
Given that the M&A Guidelines state that it is sufficient if arrangements are made that officersof Mitsubishi Electric with concurrent roles be excluded provided that an independent special
committee has been established and is validly functioning, the above decision-making processof the Company is reasonable and there are no aspects that are unfair in the arrangement ofinterests.
Further, the Board of Directors of the Company is ultimately expected to unanimously pass a
resolution. For a Board of Director’ resolution to approve or reject this M&A, the unanimous
approval of all directors and the unanimous opinion of all auditors that they have no objection isconsidered one of the circumstances that demonstrates that measures to secure fairness arevalidly functioning for such M&A.
From the above, in light of the M&A Guidelines, there are no issues over the fairness of thedecision-making process of the Company.
(C) Obtaining expert advice, etc. from external experts
The Special Committee interviewed and otherwise inquired of Hibiya Nakata, AGS and
Plutus regarding their transactional ties with the Company and Mitsubishi Electric, andconfirmed that there were no issues with their independence.
The Company received advice on decision-making from attorneys at its legal advisor Hibiya
Nakata, and expects to continuously receive independent expert advice from attorneys.
The Board of Directors of the Company obtained the share exchange ratio valuation reportfrom an independent third-party valuation institution AGS to ensure the fairness of the Share
Exchange Ratio. As explained below, care was taken to ensure that an arbitrary ratio was notcalculated in the share exchange ratio valuation report, and there are no circumstances that cast
doubt over the fairness of the calculation either. The share exchange ratio valuation report isrecognized as a share exchange ratio valuation report from an independent third-party valuation
institution.
In addition, the Special Committee obtained the share exchange ratio valuation report and the
Fairness Report from an independent third-party valuation institution Plutus to ensure the fairnessof the Share Exchange Ratio. A fairness report differs from a share exchange ratio valuation
report in the sense that the third-party valuation institution is the opinion-forming entity and thesubject of the opinion is the fairness of specific terms agreed between the parties for generalshareholders of a target company, and as it can be direct and highly important reference
information, is considered to have an effective function during the transaction terms formation
process when dealing with the issues of structural conflicts of interest and imbalances in
information.
In addition, under the M&A Guidelines, obtaining a fairness opinion from a third-party
valuation institution with elements such as (a) independence and neutrality, (b) a careful issuanceprocess, (c) high-level expertise and a proven track record, and (d) a good reputation, is positively
evaluated as a measure for securing fairness. The Special Committee confirmed (a) and (b)through an interview with Plutus, and it is objectively clear that Plutus satisfies (c) and (d).
Therefore, the Special Committee can positively evaluate the Fairness Opinion as a measure forsecuring fairness.
(D) Market check
The Company carried out a proactive market check by requesting eight prominent
revitalization-type investment funds to consider investing in the Company, but none of the funds
offered funds or other support to the Company.
In the M&A Guidelines too, if a buyer is not a controlling shareholder, a proactive market
check is often considered to function more effectively than an indirect market check, and if
implemented, this is more positively evaluated as a measure for securing fairness.
In this case, based on the above, the Special Committee is assessed as having been able toconfirm that there was no potential candidate willing to enter into a transaction comparable with
the Share Exchange by carrying out a proactive market check.
(E) Enhancing information provision to minority shareholders and ensuring process transparency
The M&A Guidelines emphasize the informed judgement of minority shareholders, and to
this end, it is recommended that material for determining the fairness, etc. of transaction terms
and conditions for minority shareholders be provided. Specifically, information expected to be
subject to enhanced disclosure include ① information on the special committee, ② informationon the share exchange valuation report, and ③ other information.
First, for the special committee, the M&A Guidelines advise on disclosure of (a) informationon the eligibility of committee members such as independence and expertise, etc., (b)information on the content of the authority granted to the special committee, (c) information on
the background to examination by the special committee and involvement in the negotiation
process, (d) the basis and grounds for decisions of the special committee, the content of reports,
etc., and (e) committee member remuneration structure. Looking at the present case, the jointpress release for the Share Exchange by the Company and Mitsubishi Electric (the “Press
Release”) is planned to include all of (a) through (e).
Next, for the share exchange ratio evaluation report, the M&A Guidelines provide as
examples of disclosure, especially for DCF analysis, (i) free cash flow forecasts of the Company

that are the basis of its calculations, and whether they assume the implementation of such M&A,(ii) background to the preparation of financial forecasts that form the basis of the calculations,(iii) types of discount rates and calculation bases, and (iv) the approach to the free cash flow
forecast period and approach to going concern value such as the envisaged growth rate after theforecast period , etc.(these are examples, and there is no obligation imposed to state them all).
The Press Release is planned to state (the fact that the Special Committee has confirmed
reasonableness, and that in the business plan, the comparison versus previous years includes afiscal year in which a significant increase or decrease in profit is expected, and the details thereof)for (ii), the discount ratio for (iii), and the going concern calculation method (that a perpetual
growth rate method was used, and the perpetual growth rate) for (iv). Finally, enhanced
information is also expected to be included in other information in the Press Release.
(F) Elimination of coercion
Shareholders of the Company that oppose the Share Exchange or the Share Exchange Ratio
have the right to request purchase of their shares (and the right to file for price determination
pursuant to such right) under the Companies Act.
Accordingly, it is acknowledged that measures have been taken to eliminate coercion for the
Share Exchange.
(G) Summary
For the present case, the Special Committee has been established and the Special Committee
has thoroughly exercised the authority granted to it and carried out a detailed examination froman independent viewpoint; the decision-making process of the Company has carefully
considered conflicts of interest in light of the guidance in the M&A Guidelines; the Company
has obtained the expert advice of a legal advisor; share exchange ratio valuation reports wereobtained from multiple third-party valuation institutions, with the Company obtaining theirs
from AGS and the Special Committee obtaining theirs from Plutus (in particular, a fairness
opinion was also obtained from Plutus); a proactive market check, a rarely adopted measure in
Japan, was carried out; the Press Release will contain enhanced information provision forminority shareholders; and also the scheme is found to be not coercive.
Measures to secure fairness have also been carried out in practice, to the letter, through theactivities of the Special Committee.
As shown above, for the Share Exchange, a policy with sufficient measures to ensure fairness
has been adhered to as can be seen from ensuring that the transaction terms formation process
was undertaken in circumstances equivalent to a transaction between independent parties, andensuring minority shareholders have the opportunity to make an appropriate decision based on
sufficient information (M&A Guidelines 2.4). Therefore, it is found that the procedure for the
Share Exchange is fair and that sufficient consideration has been given to the interests of minority
shareholders.
(iii) Adequacy of terms and conditions(A) Examination approach
The adequacy of terms and conditions will be examined in relation to the matter for
consultation “whether the procedures of the Share Exchange are fair, and sufficient consideration
is given to the interests of the minority shareholders”.
The fairness (adequacy) of terms and conditions for the Share Exchange will be examined inlight of the M&A Guidelines with respect to (a) ensuring that reasonable efforts were made in
the transaction terms and conditions consultation and discussion process with Mitsubishi Electric
to conduct the M&A with as favorable as possible transaction terms and conditions for minority

shareholders while also increasing corporate value, (b) confirming the reasonableness of detailsof share value calculations that are a material basis to determine the adequacy of transaction
conditions, and the financial forecasts and the preconditions, etc. this was based on, and (c) the
adequacy of the purchase method and purchase consideration type, etc., not just the purchaseprice level.
(B) Negotiation process
In the present case, it has been confirmed through the examination of matter for consultation“whether the fairness of the terms and conditions of the Share Exchange (including the exchange
ratio) has been secured” that fairness of procedures serving as elements to infer that “ensuringthat reasonable efforts were made to conduct the M&A with as favorable as possible transaction
terms and conditions for minority shareholders” has been satisfied.
In particular, in the negotiations for the Share Exchange Ratio, the Special Committee
proactively contributed to the negotiations for the Share Exchange Ratio based on the authority
granted to it. Specifically, this was undertaken by the process of the Company replying to
Mitsubishi Electric based on the Special Committee’s views on rejection or acceptance of the
Share Exchange Ratio proposal from Mitsubishi Electric and its statement of opinions on
counterproposals. As a result of the Special Committee rejecting the Share Exchange Ratio
proposal from Mitsubishi Electric and the proposed ratio being improved multiple times throughthis process, the Special Committee ultimately agreed to the Share Exchange Ratio of 1:0.260,
which was an increase of at least 80% for minority shareholders over the ratio of 1:0.142 thatwas initially proposed by Mitsubishi Electric, and the Share Exchange Ratio was finalized as aresult.
From the above, it can be evaluated that in the consultation and negotiation process fortransaction terms and conditions with Mitsubishi Electric, it was ensured that reasonable efforts
were made to conduct the M&A with as favorable as possible transaction terms and conditions
for minority shareholders while also increasing corporate value.
(C) Relationship between share value calculation and the Share Exchange Ratio(a) Business plan
In the present case, the business plan prepared by the Company for the purpose ofbeing used as the premise for the share exchange ratio valuation reports obtained fromAGS and Plutus, and the Fairness Opinion from Plutus (the “Business Plan”) does notreflect the synergy effects expected to be realized by the implementation of the Share
Exchange because it is difficult to estimate specifically the impact on earnings at thistime.
Generally in M&A transactions, it is difficult for the side being acquired toquantitatively estimate the synergies to be realized from the M&A transaction, and inmany M&A transactions, the Company business plan that forms the basis for the sharevalue calculation of the side being acquired would not assume the M&A transaction
would be realized and would be used on a so-called stand-alone-basis. On this basis, it is
not unreasonable in the present case that a stand-alone-basis business plan is used as thebasis of calculations. Even so, the Business Plan has factored in the tax burden reduction
effect from the reduction of capital and capital reserve with an effective date of March
29, 2024, which is described in Proposal No. 3 “Reduction of capital and capital reserve,and disposal of capital surplus,” has considered the reduction in borrowing interest rates
assuming financing support is received from Mitsubishi Electric, and includes, to theextent possible, some of the effects expected to be realized through the Share Exchange.

Therefore, the Business Plan contains more of a synergies base than a simple standalone-basis business plan, taking into consideration the interest of minority shareholders
to the extent possible.
There appears to be no arbitrariness in the formulation of the Business Plan, and thecontents of the Business Plan appears to contain no contradictions or unnatural contents
in relation to past the Company group performance.
From the above, as examining the formulation process, formulation method, andformulation contents of the Business Plan shows no arbitrary pressure from Mitsubishi
Electric, the contents of the Business Plan is reasonable.
(b) Method of calculation
An interview was held with AGS on the method of calculation, and it was confirmedthat the selection of the calculation methods by both companies was reasonable.
Valuation methods have various advantages and disadvantages, and they mutuallycomplement each other to cover disadvantages. For example, as to whether using only
the market share price method for a listed company will provide an objective sharevaluation, the preferential use of only the market share price method in all circumstances
may not always be reasonable, and it is beneficial to analyze form various aspects theuse of a calculation method other than the market share price method. Therefore, it isreasonable to use the DCF method adopted by AGS to value the share price of a listedcompany.
The M&A Guidelines also states that the special committee should examinetransaction terms and conditions taking into account the characteristics of calculation
methods used to value share price (M&A Guidelines 3.3.2.1), and based on thiscomment, calculation results are more reliable when multiple calculation methods areused to value share price as in the present case rather than a single calculation method.
Examining the AGS calculation in light of the above, using the market share pricemethod for a certain point in time cannot eliminate idiosyncrasies in the value formation
process, while using the market share price average over a long term cannot accurately
express a share value that takes into consideration the current profit level, etc.; therefore,
AGS has set the calculation base date as January 5, 2024, the day prior to theannouncement of the Transaction, and used the closing share price for the calculationbase date, and the simple average of the last one-month's closing share prices, the simple
average of last three-month’s closing share prices, and the simple average of last sixmonth’s closing share price for periods prior to the calculation base date. As the market
share price method reflects the objective share value of a company, it should be valued
based on the market share price as close as possible to the base date, but as the share priceconstantly changes due to speculation and other factors, it is considered beneficial toincrease the accuracy of the valuation by calculating the average share price over acontinuous set period. For this reason, it is reasonable to carry out a valuation using themarket share price over a set period.
For the DCF method, according to AGS, it calculated the FCF based on the Business
Plan, and then calculated the business value by applying a set discount rate to the FCF.
For the calculation to be reasonable, it is important that the Business Plan on which the
FCF calculation is based was appropriately prepared and, as explained above, the Special
Committee confirmed the reasonableness of the Business Plan.
In addition to this, the Special Committee then received a detailed explanation on theexamination process for the calculation in the DCF method (specifically, the view onnecessary operating funds, discount ratio range, interest-bearing debt, differences
between a case assuming financial support from Mitsubishi Electric and a case notassuming such financial support, and risk-free rate transition, etc.) from AGS, andconfirmed there appeared to be no unreasonable points for either method.
Additionally, as with AGS, an interview on the calculation method was also arranged
with Plutus. Specifically, Plutus and AGS use the same calculation method in the market
share price method, meaning the reasonability of this is recognized on the same grounds
as those given above for AGS. The Special Committee received a detailed explanationfrom Plutus on the examination process for the calculation in the DCF method, andconfirmed that there appeared to be no unreasonable points for either method.
From the above, both methods used by AGS and Plutus to calculate share price arereasonable, the results can be trusted and the Special Committee evaluated them as being
reliable.
(c) Results of share value calculation
According to the share exchange ratio valuation report obtained from Plutus, theresults of each calculation method for the share exchange ratio (Mitsubishi Electricshares: shares of the Company) are as per the table below.
Calculation method (Mitsubishi
Electric, the Company)
Market share price method, market
share price method,
Market share price method, DCF
methodCalculation Base date

Share exchange
ratio

January 5, 2024

1:0.644 to 1:0.682

January 5, 2024 for market share price method
December 22, 2023 for DCF method

1:0.000 to 1:0.369

According to the share exchange ratio valuation report obtained from AGS, the results of eachcalculation method for the share exchange ratio (Mitsubishi Electric shares: the Company shares)
are as per the table below.
Calculation method (Mitsubishi Electric, the Company)
Market share price method, market share price method,
Market share price method, DCF method

Calculation Base date
January 5, 2024
January 5, 2024

Share exchange ratio
1:0.644 to 1:0.682
1:0.000 to 1:0.529

Looking at the Share Exchange, the Share Exchange Ratio (i) is less than the lower limit of
the exchange ratio when the market share price method is applied to both Mitsubishi Electric and
the Company. By contrast, (ii) the Share Exchange Ratio is higher than the medium value of thecalculation results by Plutus and close to the medium value of the calculation results by AGS in
relation to the exchange ratio when the market share price method is applied to Mitsubishi
Electric and the DCF method is applied to the Company.
(D) Examination of discount
The Share Exchange Ratio is less than the lower limit of the exchange ratio when the market
share price method is applied to both Mitsubishi Electric and the Company, and to the Company’s
shareholders, is a ratio that constitutes a discount on the market share price. The level of discountcomparing the value derived by multiplying the Share Exchange Ratio by the closing share priceof Mitsubishi Electric Stock on the Tokyo Stock Exchange up to January 5, 2024 (the “Calculation
Base Date”) against the closing share price of the Company on Calculation Base Date and simple
average of closing share price of the Company over each period until Calculation Base Date is as
per the table below.
Reference value
Closing price on the Calculation Base Date

Discount level-59.60 %Simple average of closing share price for last one-month period prior
to the Calculation Base Date
Simple average of closing share price for last three-month periodprior to the Calculation Base Date
Simple average of closing share price for last six-month period prior
to the Calculation Base Date

-59.96 %-59.90 %-59.63 %When examining whether or not to accept a ratio that is a discount on a market share pricebasis from the viewpoint of the Company’s shareholders, assuming the efficiency of the market,
the market share price reflects the value in the market, so is indeed one indicator of a fair value
for the Company, and as the Share Exchange cannot be implemented at a discount, one option
would be to ask Mitsubishi Electric to alter its share exchange ratio. However, despite theCompany and the Special Committee repeatedly asking Mitsubishi Electric to improve the shareexchange ratio during the Share Exchange negotiation process, Mitsubishi Electric has refused
to offer a more advantageous ratio to the Company than the Share Exchange Ratio, citing thedifficulty of explaining such a move to Mitsubishi Electric’s shareholders, meaning there is no
realistic prospect of any change to the ratio.
On the other hand, the results of a market check by the Company resulted in no expression of
intent on terms more favorable to the minority shareholders than the Share Exchange proposedby Mitsubishi Electric. Further, it is difficult for the Company to resolve its state of insolvency
on its own within the short period up to March 31, 2024 (the stock delisting determination basedate) or April 30, 2024 (the end date of the debt guarantee provided by Mitsubishi Electric) given
its profitability and liabilities amount, and this is recognized by both the Company and Mitsubishi
Electric.
Care must be taken when endorsing a share exchange using a ratio far below the market shareprice in light of the present situation of a certain share value applying to shares currently owned
by minority shareholders. Even so, if the Share Exchange using the Share Exchange Ratio is not
accepted, it is highly likely that the Company will become bankrupt relatively soon around April
2024, and it is envisaged that seeking to avoid this will result in shareholders suffering a reduction
in share value from a greater discount ratio. Given this situation, the level of discount of the Share
Exchange Ratio is considered the option amongst those realistically available that places the leastburden on the minority shareholders.
(E) Adequacy of scheme
Examination on the adequacy of the purchase method and type of purchase consideration, etc.
required by the M&A Guidelines (M&A Guidelines 3.2.2). Looking at the purchaseconsideration first, a share exchange was adopted in the present case, and a tender offer was not
adopted.
A share exchange involves Mitsubishi Electric shares being delivered to minority shareholdersof the Company and the minority shareholders of the Company owning Mitsubishi Electricshares, and this means the Company can provide the minority shareholders with the benefit ofsynergies expected from the implementation of the various measures envisaged in the Share
Exchange, the business development and earnings growth of the Mitsubishi Electric Group fromachieving synergies, and the opportunity to benefit from this through receipt of share price rises
and dividends for Mitsubishi Electric shares.
Further, for shareholders seeking to cash in, although there may be a slight lag in timing, theliquidity of Mitsubishi Electric Stock means it will be easy for them to cash in their shares after
the Share Exchange, effectively ensuring that shareholders seeking to cash in will have thisopportunity.
From the above, it cannot be said that consideration in the form of shares of Mitsubishi Electricthrough the Share Exchange rather than cash is unreasonable for the minority shareholders of theCompany.
(F) Summary
As stated above, the Share Exchange Ratio is an exchange ratio level which is higher than themedium value of the calculation results by Plutus and close to the medium value of thecalculation results by AGS when the market share price method is applied to Mitsubishi Electricand the DCF method is applied to the Company, and although the Share Exchange Ratio is lessthan the lower limit of the exchange ratio when the market share price method is applied to both
Mitsubishi Electric and the Company, comparing the Company situation with similar cases, thediscount ratio is lower than the discount level in other similar cases, and in the Fairness Opinion,
Plutus was of the view that the Share Exchange Ratio was fair from a financial perspective forthe minority shareholders of the Company.
From the above, although approving a share exchange at a ratio significantly lower than themarket share price is seemingly disadvantageous to minority shareholders, given the
disadvantage that the minority shareholders may face in the near future, it is considered the option
amongst those realistically available as of the preparation date of the Report that places the leastburden on the minority shareholders.
Approving a share exchange at a ratio significantly lower than the market share price maylead to the comment from minority shareholders that such an action fails to even meet the notion
highlighted in the M&A Guidelines, indicating the “realizable value without conducting M&A,”
which all shareholders, including minority shareholders, should benefit from proportionate totheir shareholdings. However, rejecting the Share Exchange on the grounds that it is a discounted
proposal would mean a decision has been postponed despite the specific expectation that theCompany will be delisted and bankrupt in just two months’ time, and does not ultimately protect
the minority shareholders.
As a result, after gathering information to the extent possible (including the Fairness Opinion
independently obtained by the Special Committee), the Share Exchange Ratio was approved asa measure that protects the maximum interest realistically attainable for the minority shareholders.
Based on a comprehensive consideration of the circumstances provided above, the fairness ofterms and conditions of the Share Exchange (including the exchange ratio) are considered tohave been secured.
(iv) Whether the Share Exchange is not disadvantages to the minority shareholders
The matters requested to be discussed in matters for consultation (i) through (iii) are elements toconsider when examining whether the Share Exchange is not disadvantageous to the minority
shareholders.
It has been explained above that there are considered to be no issues with respect to matters for
consultation (i) through (iii).
From the above, the Special Committee reports that the Share Exchange is not considereddisadvantageous to the minority shareholders.
B Approval of all Directors and Audit & Supervisory Board members, excluding Directors and Audit &Supervisory Board members who have interests
Among the Directors of the Company, Mr. Kensuke Miyaji holds an executive position at Mitsubishi Electric,
and Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita are from Mitsubishi Electric. Thus, from thestandpoint of avoiding any doubt of conflict of interest, the agenda regarding the Share Exchange which was
brought before the Board of Directors’ meeting of the Company held on January 9, 2024, was deliberated by
two directors of the Company, namely, Mr. Naoki Mabuchi and Mr. Masayuki Hirobe, and was unanimouslyapproved. Thereafter, from the viewpoint of securing a quorum of the Board of Directors’ meeting, a total offour directors, including Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita, both of whom only held aposition as an officer or employee of Mitsubishi Electric in the past and are considered to having a relatively
low conflict of interest, participated and deliberated in the aforementioned Board of Directors’ meeting, and thefour Directors unanimously resolved as aforementioned once more. Furthermore, among the Audit &Supervisory Board members of the Company, Mr. Masaki Hase, who holds an executive position at Mitsubishi
Electric, and Mr. Osamu Oketani, who is considered as having an ongoing business relationship with Mitsubishi
Electric, did not participate in the deliberation and the resolution conducted by the aforementioned two Directors,
namely Mr. Naoki Mabuchi and Mr. Masayuki Hirobe, and neither did they participate in the deliberation
conducted by the aforementioned four Directors nor have they expressed any opinion. Mr. Hiroyuki Higuchi,
who only held a certain relationship with Mitsubishi Electric in the past and is considered to having a relatively
low conflict of interest, participated in the deliberation conducted by the aforementioned four Directors, andexpressed an opinion that he has no objection.
(4) Matters Concerning the Appropriateness of the Amount of Capital and Capital Reserves of Mitsubishi Electric thatwill be the Wholly Owning Parent Company resulting from the Share Exchange
The increase in the amount of the capital and capital reserves of Mitsubishi Electric, which will become the wholly
owning parent company resulting from the Share Exchange, will be adequately set out by Mitsubishi Electric in
accordance with Article 39 of the Regulation on Corporate Accounting. Such treatment was decided after
comprehensive consideration and examination of the financial position, capital policy, and other circumstances ofMitsubishi Electric and within the limits of laws and regulations, and are considered appropriate.
4.

Matters that Should be Taken into Consideration for the Exchange Consideration(1) Articles of Incorporation of Mitsubishi Electric
The articles of incorporation of Mitsubishi Electric are available on the Company’s website(https://www.kitakoudensha.co.jp) and SSE’s website (https://www.sse.or.jp/listing/list) pursuant to laws andregulations and Article 16 of the articles of incorporation of the Company.
(2) Share Conversion Method for the Exchange Consideration(i) Market for exchange consideration trading
The Mitsubishi Electric Stock is traded on the Prime Market of the TSE(ii) Persons conducting intermediary, brokerage and agency for the exchange consideration
The intermediary and brokerage, etc. for the transaction of the Mitsubishi Electric Stock is being conducted byfinancial instruments dealers (securities companies) in each country.
(iii) Restrictions on the transfer or other disposal of exchange consideration, if any
Not applicable(3) Price if there is a Market Price for Exchange Consideration
Using the business day prior to the day the execution of the Share Exchange Agreement was announced(January 9, 2024) as a reference, the simple average closing price of the Mitsubishi Electric Stock on the Prime
Market of the TSE during the one-month period, three-month period, and six-month period prior to the reference
date was 2,010 yen, 1,930 yen and 1,922 yen, respectively.
The latest market price, etc. of the Mitsubishi Electric Stock can be viewed on the TSE website(https://www.jpx.co.jp/), etc.
(4) Details of Balance Sheet for each Fiscal Year of Mitsubishi Electric Ended in the Past Five Years

Mitsubishi Electric has submitted a securities report pursuant to Article 24(1) of the Financial Instruments andExchange Act for every fiscal year, so details of its balance sheets are omitted.
5.

Matters Concerning the Appropriateness of Provisions for Stock Acquisition Rights for Share Exchange
Not applicable.

6.

Financial Statements, etc.
(1) Details of Financial Statements, etc. for the Last Fiscal Year of Mitsubishi Electric
The contents of calculation documents, etc. for the last fiscal year of Mitsubishi Electric (year ending March 31,2023) are available on the Company’s website (https://www.kitakoudensha.co.jp) and SSE’s website(https://www.sse.or.jp/listing/list) pursuant to laws and regulations and Article 16 of the articles of incorporationof the Company.
(2) Details of Dispositions of Major Assets occurring after the End of the Last Fiscal Year, Burden of Major Liabilities,
and Events that otherwise have a Material Effect on Company Assets(i) The Company
A The Company resolved at the Board of Directors’ meeting of the Company held on January 9, 2024 to
conduct the Share Exchange with Mitsubishi Electric, wherein Mitsubishi Electric is the wholly owningparent company resulting from the share exchange and the Company is the wholly owned subsidiary
resulting from the share exchange, and on the same day, concluded the Share Exchange Agreement. The
details of the Share Exchange Agreement are stated in 2. “Outline of the Details of the Share Exchange
Agreement” above.
B Pursuant to the resolution of the Board of Directors’ meeting of the Company to be held no later than the dayprior to the Effective Date of the Share Exchange, the Company plans to cancel all treasury shares it holds
immediately prior to the Standard Time (including treasury shares to be acquired through the purchase ofshares pertaining to appraisal rights as provided in Article 785(1) of the Companies Act to be exercised inconnection with the Share Exchange) immediately prior to the Standard Time.
C At the Board of Directors’ meeting of the Company held on January 9, 2024, the Company made a decision
to decrease the amount of its capital and capital reserve as follows, and conditional on such decrease being
effective, and after transferring the entire amount of the capital and capital reserve to be decreased to othercapital surplus, to dispose of the capital surplus to compensate for a deficit of capital. See Proposal No. 3“Reduction of capital and capital reserve, and disposal of capital surplus” for details.
Particulars(A) Reduction of capital amount(a) Amount of capital reduction 740,687,000 yen(b) Date the amount of capital reduction will become effective March 29, 2024 (scheduled)(B) Reduction of capital reserve amount(a) Amount of capital reserve reduction 687,087,000 yen(b) Date the amount of capital reserve reduction will become effective March 29, 2024 (scheduled)(C) Disposal of surplus(a) Type and amount of surplus reduction
Other capital surplus 1,427,795,150 yen(b) Type and amount of surplus increase
Surplus carried forward 1,427,795,150 yen(ii) Mitsubishi ElectricMitsubishi Electric resolved at the Executive Officers’ Meeting of Mitsubishi Electric held on January 9, 2024
to conduct the Share Exchange with the Company, wherein Mitsubishi Electric is the wholly owning parent
company resulting from the share exchange and the Company is the wholly owned subsidiary resulting fromthe share exchange, and on the same day, concluded the Share Exchange Agreement. The details of the Share
Exchange Agreement are stated in 2. “Outline of the Details of the Share Exchange Agreement” above.

Proposal No. 2 Partial amendment of articles of incorporation
1. Reasons for Proposal(1) In the event Proposal No. 1 for the Share Exchange is approved in its original form and the Share Exchangetakes effect, the shareholder of the Company will be only Mitsubishi Electric, and there will be no need to set
out the number of shares constituting one unit. As a result, conditional on the Share Exchange taking effect, theprovisions on the number of shares constituting one unit will be abolished by deleting Article 7 (Number of
Shares Constituting One Unit), Article 9 (Right of Shareholders with Less than One Unit of Stock to Request
Sale), and Article 10 (Restriction of Rights of Shareholders with Less than One Unit of Stock) of the current
articles of incorporation in full, and amending the wording of Article 8 (Share Handling Rules), and thenumbering of provisions shall be adjusted based on such amendments.
(2) In the event Proposal No. 1 for the Share Exchange is approved in its original form and the Share Exchangetakes effect, the shareholder of the Company will be only Mitsubishi Electric, and it will not be necessary to set
out the record date for voting rights at an ordinary general meeting of shareholders. As a result, conditional on
the Share Exchange taking effect, Article 12 (Record Date) of the current articles of incorporation shall be deleted
in full, and the numbering of provisions shall be adjusted based on such amendment.
(3) In the event Proposal No. 1 for the Share Exchange is approved in its original form and the Share Exchangetakes effect, the shareholder of the Company will be only Mitsubishi Electric, and there will be no need forprovisions on an electric provision system for general meetings of shareholders. As a result, conditional on the
Share Exchange taking effect, Article 16 (Electronic Provision Measures, etc.) of the current articles ofincorporation shall be deleted in full, and the numbering of provisions shall be adjusted based on such
amendments.
2. Details of Amendments
The details of amendments are as follows. On the condition of Proposal No. 1 for the Share Exchange being
approved in its original form at the extraordinary general meeting of shareholders and the Share Exchange taking
effect, the partial amendment of the articles of incorporation in this proposal will take effect on the Effective Date of
the Share Exchange (April 15, 2024).
(Amended parts are underlined)
Current articles of incorporation(Number of Shares Constituting One Unit)

Amendment proposal(Deleted)

Article 7 The number of shares constituting one unit of theshares of the Company will be 100 shares.

(Share Handling Rules)(Share Handling Rules)

Article 8

Article 7

The handling of shares and stock acquisition rights, including

The handling of shares and stock acquisition rights, including

the entry or record in the register of shareholders and thethe entry or record in the register of shareholders and theregister of stock acquisition rights, the purchase andregister of stock acquisition rights, and the procedures andadditional purchase by the Company of fractional shares

fees for the exercise of shareholder rights shall be decidedof less than one unit of stock, and the procedures and feesin accordance with laws and regulations and the Articles

for the exercise of shareholder rights shall be decided inof Incorporation, as well as the Share Handling Rules set

accordance with laws and regulations and the Articles ofout by the Board of Directors.

Incorporation, as well as the Share Handling Rules set out
by the Board of Directors.
(Right of Shareholders with Less than One Unit of Stock to(Deleted)Request Sale)
Article 9 A shareholder who holds shares in the Company
that are less than one unit may demand that the Company
sell shares of a number sufficient to constitute a share unit
when combined with the number of shares of less than one
unit held by that shareholder (“Additional Purchase”).

(Restriction of Rights of Shareholders with Less than One(Deleted)

Unit of Stock)
Article 10 Shareholders of the Company with less than one
unit of stock may not exercise rights other than thefollowing rights.
(1) Rights listed in Article 189(2) of the Companies Act(2) Right to request acquisition of shares with a put option.
(3) Right to receive allotment of shares for subscription
and share options for subscription.
(4) Right to request Additional Purchase for sharesconstituting less than one unit in Article 9.

Article 11 (Omitted)

Article 8 (No change)(Record Date)(Deleted)

Article 12
1

The Company shall deem any shareholder

with voting rights entered or recorded in the final registerof shareholders as of March 31 of each year to be ashareholder who is entitled to exercise rights as ashareholder at the ordinary general meeting ofshareholders for such fiscal year.
2

Notwithstanding the preceding paragraph, theCompany may, whenever necessary, set a record dateextraordinarily by a resolution of the board of directors
after giving prior public notice.

Articles 13-15 (Omitted)

Articles 9-11 (No change)(Electronic Provision Measures, etc.)(Deleted)

Article 16
1

When convening a general meeting ofshareholders, the Company shall provide the content ofreference materials, etc. for the general meeting ofshareholders in electronic form.
2

The Company may decide to omit some or allof the matters for which electronic provision measures aretaken and which are set forth in an ordinance of theMinistry of Justice from the paper form of referencematerials delivered by the reference date of the right tovote to shareholders who request such materials in paper
form.

Articles 17-54 (Omitted)

Articles 12-49 (No change)Proposal No. 3 Reduction of capital and capital reserve, and disposal of capital surplus
The Company has pursued the soundness of its financial situation. As part of this, the Company intends to reduce its capitaland capital reserve and dispose of capital surplus pursuant to Article 447(1) and Article 448(1) of the Companies Act inorder to supplement the current shortfall in surplus carried forward. There will be no change in the total number ofoutstanding shares or net assets, and the number of owned shares and net asset value per share of shareholders will not beaffected.
1. Details of reduction of capital amount(1) Amount of capital reduction
The amount of capital will be reduced by 740,687,000 yen from 840,687,000 yen to 100,000,000 yen, and theentire amount of the capital reduction will be transferred to other capital surplus.
(2) Date the amount of capital reduction will become effective
March 29, 2024 (scheduled)
2. Reduction of capital reserve amount(1) Amount of capital reserve reduction
The entire amount of the capital reserve of 687,087,000 yen will be reduced to 0 yen, and the entire amount of
the capital reserve reduction will be transferred to other capital surplus.
(2) Date the amount of capital reserve reduction will become effective
March 29, 2024 (scheduled)
3. Details of disposal of surplus
Pursuant to Article 452 of the Companies Act, conditional on the capital and capital reserve reductions in 1 and 2
above being effective, the Company will compensate for a deficit by appropriating the entire other capital surplus
amount of 1,427,795,150 yen to surplus carried forward.
(1) Type and amount of surplus reduction
Other capital surplus 1,427,795,150 yen(2) Type and amount of surplus increase
Surplus carried forward 1,427,795,150 yen
EndLocation Map for General Meeting of Shareholders Venue
Venue: 8F Conference Room, Head Office
KITA KOUDENSHA CORPORATION
2-10-23, Kita 11-jō Nishi, Chuo-ku Sapporo-shi
Tel: 011 (640) 2231

We will not be handing out gifts to participants of the general meeting of shareholders. We thankyou for your understanding.
TransitFive minutes’ walk from Exit 5 of Nijuyonken Station on the Subway Tozai Line
There is no parking at the venue, so please use public transportation.