This document has been translated from the Japanese original for the convenience of non-Japanese shareholders. In theevent of any discrepancy between this translation and the Japanese original, the original shall prevail.

Stock Code: 4626
June 1, 2017
To Our Shareholders:Eiji Sato
President and CEO

TAIYO HOLDINGS CO., LTD.
2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, JapanNOTICE OF 71ST ORDINARY GENERAL SHAREHOLDERS’ MEETING
You are cordially invited to attend the 71st Ordinary General Shareholders’ Meeting of Taiyo Holdings Co.,
Ltd. (the “Company”), which will be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights by postal mail,Internet, or other means.
Please review the attached Reference Documents for the General Shareholders’ Meeting and exercise yourvoting rights no later than 5:00 p.m. on Tuesday, June 20, 2017 (Japan Standard Time).
Meeting Details
1.

Date and Time:

Wednesday, June 21, 2017 at 10:00 a.m.

2.

Venue:

Ballroom Fuji, 3F, Hotel Metropolitan Tokyo Ikebukuro
1-6-1 Nishi-Ikebukuro, Toshima-ku, Tokyo, Japan(See the General Shareholders’ Meeting Venue Diagram at the end)

3.

Purpose:Items to be reported:
1. Business Report and Consolidated Financial Statements for the 71st Period (from April 1,2016 to March 31, 2017), and results of the audit of the Consolidated Financial Statements by
the Accounting Auditor and the Board of Corporate Auditors
2. Non-Consolidated Financial Statements for the 71st Period (from April 1, 2016 to March 31,
2017)
Items to be resolved:
Proposal 1:

Appropriation of Surplus

Proposal 2:

Partial Amendment of the Articles of Incorporation (1)Proposal 3:

Partial Amendment of the Articles of Incorporation (2)Proposal 4:

Partial Amendment of the Articles of Incorporation (3)Proposal 5:

Partial Amendment of the Articles of Incorporation (4)Proposal 6:

Partial Amendment of the Articles of Incorporation (5)Proposal 7:

Election of Two (2) Directors

Proposal 8:

Election of One (1) Alternate Audit & Supervisory Board Member

Proposal 9:

Revision of the Compensation System for Directors

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4.

Exercise of Voting Rights
Institutional investors who have requested electronic exercise of voting rights in advance may use theElectronic Voting System Platform run by Investor Communications Japan (ICJ), which wasestablished by Tokyo Stock Exchange Inc. in partnership with Broadridge Financial Solutions, Inc.

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Reference Documents for the General Shareholders’ Meeting
Proposal 1:

Appropriation of Surplus

The Company regards profit distribution to shareholders in cash as an important policy and will effectuate acontinuous, stable profit distribution at high levels. We use the dividend on equity ratio as our target index,
and aim to keep this figure at a minimum of 5% of consolidated financial results for the mid-to long-term.
We intend to declare the following year-end dividends, based on this policy.
The year-end dividends for Series 1 Class A shares and Series 2 Class A shares will also be the sameamount declared for common shares, as specified in the issuance guidelines for each class of shares.
(1) Dividend typeCash(2) Details of dividend allocation and total amount
65.10 yen per common share
65.10 yen per Series 1 Class A Company shares
65.10 yen per Series 2 Class A Company shares

Total dividends: 1,873,354,382 yen
Total dividends:
1,406,160 yen
Total dividends:
2,792,790 yen(3) Effective distribution date for dividends of surplus
June 22, 2017
Annual dividends for the current term will be 120.10 yen per share, including an interim dividend of 55 yen
per share which has already been distributed. This is a 10.10 yen increase compared to annual dividends per
share last term.

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Proposal 2:
1.

Partial Amendment of the Articles of Incorporation (1)Reason for Proposal
A new purpose has been added to Article 2 of the current Articles of Incorporation in order for theCompany and its subsidiaries to make the leap from being a company mainly engaged in thedevelopment and manufacture of solder resist for printed wiring board (PWB) to becoming acomprehensive chemical company engaged in business of inventing a wide range of products
based on chemicals, and the necessary adjustments have been made to the numbering in this
Article.

2.

Description of Amendments
A description of the amendments is provided below.
(Amended parts are underlined)
Current Articles of Incorporation

Article 1

Article 1(Same as current)(Purpose)
Article 2(Purpose)
Article 2(Deleted)

1.

The purpose of the Company is to hold the shares of or
equity interest in companies engaged in the following
businesses and all businesses incidental or related to suchbusinesses to control and manage the business activities ofsuch companies, and for the Company itself to engage inthe following businesses and all businesses incidental or
related to such businesses.
(Deleted)

(1)

(2)
(3)
(4)
(5)

(Article text omitted)

Proposed Amendments

The purpose of the Company is to engage inthe following businesses.
The purpose of the Company is to hold shares incompanies engaged in the following businesses tocontrol and manage the business activities of suchcompanies.

Development, manufacture, and sale of printing ink
and coatings for printed wiring boards (PWB),
adhesives and applied products
Manufacture and sale of general printing ink andadjuvants
Manufacture and sale of chemicals for producing
boardsDevelopment, manufacture, and sale of synthetic
resins for PWB electronic components
Purchase and sale of manufacturing equipment andaccessories for PWB(Deleted)(Deleted)(Deleted)(Deleted)-4-Current Articles of Incorporation(6)

Development, manufacture, and sale of inks,
coatings, adhesives and applied products for plasma
display panels and liquid crystal panels(New)

Proposed Amendments(Deleted)(1)

Businesses related to the development, manufacture,and sale of the following products
Insulation materials and components for electronic
devices and applied products
Conductive materials and components for electronic
devices and applied products
General printing ink and adjuvantsDyes, pigments, coatings, adhesives, and solvents
Pharmaceutical drugs, quasi-drugs, veterinary drugs,
and cosmetics
Insecticides, fungicides, herbicides, and otheragrochemicals
Organic chemicals, inorganic chemicals
Products related to each of the above products
Raw materials related to each of the above products
Real estate leasing and management
Businesses related to power generation withrenewable energy, etc. and power supply, sale, etc.
Import/export relating to each of the above items(Deleted)(Deleted)

(New)

1)

(New)

2)

(New)
(New)
(New)

3)
4)
5)

(New)

6)

(New)
(New)
(New)
(7) Real estate leasing and management(8) Businesses related to power generation withrenewable energy, etc. and power supply, sale, etc.
(9) Import/export relating to each the above items(10) All businesses incidental to the above items
2.
Directly engaging in each of the businesses above

7)
8)
9)
(2)
(3)

Articles 3 through 49 (text of articles omitted)

Articles 3 through 49(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(4)* The details of other amendments are dealt with individually in Proposals 3 through 6.

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Proposal 3:
1.

Partial Amendment of the Articles of Incorporation (2)Reason for Proposal
To amend the representations in current rules to clearly describe the existing business activities of
the Company and its subsidiaries and also prepare for diversification of the Company’s businessactivities to help the Company fulfill its corporate social responsibilities in the future, and makethe necessary changes to the numbering in this Article consistent with such amendments.

2.

Description of Amendments
A description of the amendments is provided below.
Please note that a description of changes that duplicate the content of Proposal 2, Partial
Amendment of the Articles of Incorporation (1), has been omitted.
Moreover, the numbering listed for the proposed amendments is the numbering that will be used if
the Proposal 2, Partial Amendment of the Articles of Incorporation (1), is approved. If Proposal 2
is not approved, Items (4) through (6) in Article 2 of the proposed amendments will be Items (9)through (11) in Article 2, Paragraph 1, and Item (10) in Article 2, Paragraph 1 of the current
Articles of Incorporation will be Item (12) in Article 2, Paragraph 1.
(Amended parts are underlined)
Current Articles of Incorporation

Article 1(Article text omitted)(Purpose)
Article 2(Article text omitted)(1) through (8)(Article text omitted)

(New)
(New)
(9)

Import/Export relating to each of the above-noted
items
(10)
(Article text omitted)
2.

Proposed Amendments
Article 1(Purpose)
Article 2(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(1) through (3)(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(4) Agriculture, forestry and fisheries(5) Operation of tourism, health, healthcare, sports,
training, childcare, and lodging and dining facilities(6) Import/Export relating to each of the above items(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(Article text omitted)

Articles 3 through 49 (Article text omitted)(Same as current)

Articles 3 through 49(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)* The details of other amendments are dealt with individually in Proposal 2 and Proposals 4 through 6.

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Proposal 4:
1.

Partial Amendment of the Articles of Incorporation (3)Reason for Proposal
The Company is working to relocate and consolidate headquarter functions to improve operational
efficiency, and the location of headquarters will change from Nerima-ku, Tokyo in Article 3 of thecurrent Articles of Incorporation to Ranzan-machi, Hiki-gun, Saitama Prefecture.

2.

Description of Amendment
A description of the amendment is provided below.
(Amended parts are underlined)
Current Articles of Incorporation

Articles 1 and 2(Article text omitted)

Proposed Amendments
Articles 1 and 2(No changes made to maintain consistency with thisamendment of the Articles of Incorporation)(Location of Headquarters)
Article 3
The Company headquarters is located in
Nerima-ku, Tokyo.

(Location of Headquarters)
Article 3
The Company headquarters is located in
Ranzan-machi, Hiki-gun, Saitama
Prefecture.

Articles 4 through 49 (Article text omitted)

Articles 4 through 49(No changes made to maintain consistency with thisamendment of the Articles of Incorporation)* The details of other amendments are dealt with individually in Proposal 2, Proposal 3, and Proposals 5 and 6.

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Proposal 5:
1.

Partial Amendment of the Articles of Incorporation (4)Reason for Proposal
To amend the text concerning convocation of the General Shareholders’ Meeting in Article 13 of
the current Articles of Incorporation in an effort to provide information to shareholders quickly,
and add new article text on disclosure of the Reference Documents for the General Shareholders’Meeting and other information in the current Articles of Incorporation via the Internet and new
article text on deemed provision to enable efficient and enhanced disclosure of information toshareholders.

2.

Description of Amendments
A description of the amendments is provided below.
(Amended parts are underlined)
Current Articles of Incorporation

Proposed Amendments

Article 1 through Article 12-2 (Article text omitted)

Article 1 through Article 12-2
(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(Convocation)
Article 13 The Company’s ordinary General
Shareholders’ Meeting is convened in Juneof each year, and an extraordinary General
Shareholders’ Meeting is convened asnecessary.

(Convocation)
Article 13 The Company’s ordinary General
Shareholders’ Meeting is convened within
three (3) months of the day after the final
day of each fiscal year, and an extraordinary
General Shareholders’ Meeting is convened
as necessary.

Articles 14 and 15 (Article text omitted)

Articles 14 and 15(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(New)

Articles 16 through 49 (Article text omitted)(Disclosure of Reference Documents for the General
Shareholders’ Meeting and Other Information via theInternet and Deemed Provision)
Article 15-2 When convening a General Shareholders’Meeting, the Company may deem provision
to shareholders by using the Internet todisclose information that should be included
or represented in the Reference Documents
for the General Shareholders’ Meeting,business reports, non-consolidated financial
statements, and consolidated financial
statements, as specified in the laws andordinances.
Articles 16 through 49(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)* The details of other amendments are dealt with individually in Proposals 2 through 4, and Proposal 6.

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Proposal 6:
1.

Partial Amendment of the Articles of Incorporation (5)Reason for proposal
To amend the provisions concerning limited liability agreements in Articles 31 and 42 of thecurrent Articles of Incorporation to also enable the conclusion of limited liability agreements withdirectors who are not outside directors (excluding individuals who are executive directors, etc.) andaudit and supervisory board members who are not outside audit and supervisory board members
and thereby establish an environment that enables the appointment of a capable and diverse rangeof human resources to such positions and enables such individuals to fully manifest the roles
expected of them.
The Company has obtained the consent of each of the audit and supervisory board members
concerning amendment of Article 31 of the current Articles of Incorporation.

2.

Description of amendments
A description of the amendments is provided below.
(Amended parts are underlined)
Current Articles of Incorporation

Proposed Amendments

Articles 1 through 30 (Article text omitted)

Articles 1 through 30(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(Limited Liability Agreements for Outside Directors)
Article 31 Under Article 427, Paragraph 1 of theCompanies Act, the Company may conclude
an agreement with outside directors limiting
the liability for damages set forth in Article
423, Paragraph 1 of the same Act to the
Minimum Liability Amount mandated bylaw.

(Limited Liability Agreements for Directors)
Article 31 Under Article 427, Paragraph 1 of theCompanies Act, the Company may conclude
an agreement with directors (excluding
executive directors, etc.) limiting the liability
for damages set forth in Article 423,
Paragraph 1 of the same Act. However, thelimit on liability for damages based on suchan agreement shall be the legally mandated
amount.

Articles 32 through 41 (Article text omitted)

Articles 32 through 41(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)(Limited Liability Agreements for Outside Audit &Supervisory Board Members)
Article 42 Under Article 427, Paragraph 1 of theCompanies Act, the Company may conclude
an agreement with outside audit andsupervisory board members limiting theliability for damages set forth in Article 423,
Paragraph 1 of the same Act to the Minimum
Liability Amount mandated by law.

(Limited Liability Agreements for Audit and Supervisory
Board Members)
Article 42 Under Article 427, Paragraph 1 of theCompanies Act, the Company may conclude
an agreement with audit and supervisoryboard members limiting the liability fordamages set forth in Article 423, Paragraph
1 of the same Act. However, the limit on
liability for damages based on such an
agreement shall be the legally mandated
amount.

Articles 43 through 49 (Article text omitted)

Articles 43 through 49(No changes made to maintain consistency withthese amendments of the Articles of Incorporation)* The details of other amendments are dealt with individually in Proposals 2 through 5.

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Proposal 7:

Election of Two (2) Directors

The Company shall increase the number of directors by two (2) directors to strengthen the corporate
management structure, and requests that they be elected. If this proposal is approved, the terms of the
newly elected directors will last until the expiration of the terms of the other directors serving (until theconclusion of the General Shareholders’ Meeting scheduled in June of 2018), as specified in the
Company’s Articles of Incorporation.
Each of the candidates for director has agreed to serve as a director.
The candidates for director are as follows:No.

Brief resume of positions, responsibilities,
and important concurrent positions held

Name (Date of birth)
Apr. 1984

Joined The Fuji Bank, Limited (Current Mizuho
Bank, Limited)

Apr. 2009

General Manager of Kabutocho Corporate
Banking and Securities Business Division,
Mizuho Corporate Bank, Limited (Current
Mizuho Bank, Limited)
Executive Officer, General Manager ofCorporate Banking Division #11,
Mizuho Corporate Bank, Limited (Current
Mizuho Bank, Limited)
Joined DIC Corporation
Executive Officer, General Manager of Overseas
Business Coordination Department
Executive Officer, General Manager ofCorporate Planning Department,
DIC Corporation (Present post)
External Director, Renaissance Inc. (Present
post)

Apr. 2011
New
Masaya Nakafuji(December 20, 1961)

Apr. 2013

1
Jan. 2015

June 2016

Number of theCompany’s
shares owned[Reason chosen as a candidate for director]
Masaya Nakafuji has business experience in financial institutions and possesses extensive experience andknowledge as an executive officer of listed companies. He was selected as a candidate because the Company
wishes to use his expertise in corporate decision-making.

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

No.

Brief resume of positions, responsibilities,
and important concurrent positions held

Name (Date of birth)
Apr. 1981
Apr. 1989
Apr. 1991
Jan. 1994

Jul. 2004
Oct. 2005
New Outside
Keiko Tsuchiya(May 13, 1960)
2

Jan. 2009
Feb. 2011
Aug. 2015
Jan. 2016

Joined Dentsu, Co.Ltd.
Joined Ferag Japan Co.Ltd.
Joined Australian Trade Commission, Tokyo
Joined Becton Dickinson Co. Ltd.
HR Planning & Organizational EffectivenessDirector
Joined Human Value Co.Ltd.
Chief Researcher & Producer
Joined GE Toshiba Silicones Co., Ltd.
(Current Momentive Performance Materials
Japan LLC)
General Manager, Human Resources for PacificRegionJoined Cisco Systems LLC
Senior HR Manager
Joined Johnson & Johnson Medical Company
Vice President, Human Resources
Adecco Ltd.
CHRO, Japan
Adecco Ltd.
CHRO, Japan (Present post)

Number of theCompany’s
shares owned[Reason chosen as a candidate for outside director]
Keiko Tsuchiya has management experience as a director of temporary employment agencies and staffing
agencies. She also possesses extensive experience and knowledge in the human resources area. She was selected asa candidate for outside director because the Company wishes to use her expertise in our Human Resources divisionand to strengthen the Company’s human resources.
Notes:
1. Neither candidate has a special vested interest in the Company.
2. Keiko Tsuchiya is a candidate for outside director.
3. If Keiko Tsuchiya is elected, the Company intends to conclude an agreement with her limiting liability for damages set
forth in Article 423, Paragraph 1 of the Companies Act, pursuant to Article 427, Paragraph 1 of the same Act. A generaloutline of the agreement provisions is as follows:• Assumption of liability for the legally mandated Minimum Liability Amount in the event the Company is found liablefor damages attributable to the neglect of duties by the director.
• Recognition of the limited liability mentioned above shall be limited to instances in which the director to whom theliability is attributable has executed her duties in good faith and without gross negligence.
Moreover, If Masaya Nakafuji is elected, the Company intends to conclude a similar limited liability agreement withhim, on the condition that Proposal 6, Partial Amendment of the Articles of Incorporation (5), is approved.
4. Keio Tsuchiya meets the requirements of an independent officer as stipulated by Tokyo Stock Exchange, Inc., and theCompany intends to report her as an independent officer to the exchange.

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Proposal 8:

Election of One (1) Alternate Audit & Supervisory Board Member

The election of Masahiko Todo, who was elected as an alternate audit & supervisory board member during
the 70th Ordinary General Shareholders’ Meeting on June 21, 2016 will remain valid until the 71st
Ordinary General Shareholders’ Meeting convenes. The Company is therefore requesting Mr. Todo’s
election as alternate audit & supervisory board member once again to maintain the legally mandated
number of audit & supervisory board members.
The Board of Corporate Auditors concurs with this proposal.
The alternate audit & supervisory board member also agrees to serve as an audit & supervisory board
member if the board lacks the legally mandated number of audit & supervisory board members.
The candidate for alternate audit & supervisory board member is as follows:
Brief resume of positions, responsibilities,
and important concurrent positions held

Name (Date of birth)
OutsideMasahiko Todo
(July 17, 1968)

Apr. 1997

Admitted in Japan (Dai-ni Tokyo Bar Association)

Jan. 2005

Joined Ushijima & Associates (Currently Ushijima &Partners)
Partner, Ushijima & Partners (Present post)

Number of theCompany’s
shares owned[Reason chosen as a candidate for alternate outside audit & supervisory board member]
Although Masahiko Todo has no past direct management experience, he was selected as a candidate for alternate outside
audit & supervisory board member because the Company determined that his professional knowledge and experience as an
attorney will enable him to properly execute the duties of this position.
Notes:
1. Masahiko Todo has no special vested interest in the Company.
2. Mr. Todo is a candidate for alternate outside audit & supervisory board member.
3. If Mr. Todo is appointed as an audit & supervisory board member, the Company intends to conclude an agreement withhim limiting liability for damages set forth in Article 423, Paragraph 1 of the Companies Act, pursuant to Article 427,
Paragraph 1 of the same Act. A general outline of the agreement provisions is as follows:• Assumption of liability for the legally mandated Minimum Liability Amount in the event the Company is found liablefor damages attributable to the neglect of duties by the audit & supervisory board member.
• Recognition of the limited liability mentioned above shall be limited to instances in which the audit & supervisoryboard member to whom the liability is attributable has executed his duties in good faith and without gross negligence.

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Proposal 9:

Revision of the Compensation System for Directors

The Company introduced the performance cash bonus deferral in restricted stock system at the 68th
Ordinary General Shareholders’ Meeting to motivate employees to increase the medium to long-term
corporate value of the Taiyo Group. Stock bonuses were paid to executive directors eligible under thesystem (directors mentioned in each provision of Article 363, Paragraph 1 of the Companies Act; the same
applies hereafter) in the 69th and 70th fiscal years.
This proposal will provide an even greater incentive for directors to work for ongoing improvement incorporate value, and the Company requests that shareholders approve the following introduction of a
restricted stock bonus system for executive directors as a new stock compensation system for directors anda change in the content of the existing performance cash bonus deferral in restricted stock system alongwith this, with the goal of further sharing the value with directors and shareholders.
The Company currently has seven (7) directors (two of which are outside directors). If Proposal 7 isapproved in its original form, there will be nine (9) directors (three of which will be outside directors), andfive (5) of which will be executive directors.
1.

Description of Main Changes to the Amount of Director Compensation
The amount of Company director compensation approved to date includes: 1) aggregate basesalaries of no more than 300 million yen approved at the 64th Ordinary General Shareholders’Meeting held on June 22, 2010, 2) performance cash bonuses of no more than 1.6% ofconsolidated net income* in aggregate, in each fiscal year as performance-based compensation for
executive directors and cash payments of no more than 6.4% of consolidated net income* inaggregate, in each fiscal year for performance cash bonus deferral in restricted stock (premised on
the pay-in of funds for the purchase of class shares issued by the Company), approved at the 68th
Ordinary General Shareholders’ Meeting held on June 20, 2014.
The Company requests that shareholders approve this proposal, which will revise the amount of
director compensation mainly as follows: 1) in conjunction with the introduction of a new
restricted stock bonus system for executive directors, the aggregate amount of cash compensation
paid for the granting of restricted stock (hereafter, “restricted stock”) shall be no greater than 300
million yen a year and this shall be allocated separately from the base salary compensation, and 2)
some changes will be made to the existing performance cash bonus deferral in restricted stock: (i)the aggregate cash amount paid for performance cash bonus deferral in restricted stock shall be no
more than 3.4% of profit attributable to owners of parent in each fiscal year, and (ii) payment of
this cash is premised on its use as funds for payment for the acquisition of new common sharesissued or allocated by the Company.
Please note that no changes will be made to compensation in the form of the base salary andperformance cash bonus.
* Due to the revision of the accounting standard in September 2013, the amount which had
heretofore been stated as “net income” on the Consolidated Statement of Income has been statedas “profit attributable to owners of parent” since the 70th fiscal year. The performance cash
bonus deferral in restricted stock is therefore paid according to the baseline of “profit attributableto owners of parent,” however this represents no change from the prior baseline.

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2.

Overview of the New Director Stock Compensation System
The new director stock compensation system (hereafter, “the system”) consists of two types ofstock compensation systems: 1) the restricted stock system (hereafter, “System I”) and 2) the
performance cash bonus deferral in restricted stock system (hereafter, “System II”).
In either system, the Company allocates newly issued or allocated common shares to executive
directors via the private placement method, under the following conditions listed in Items 1)
through 3). However, executive directors eligible under System I are individuals who are executive
directors of the Company at the time common shares are allocated based on System I. Executive
directors eligible under System II are individuals who were executive directors of the Company
during the period extending from the date of the ordinary General Shareholders’ Meeting for the
fiscal year two years prior to the fiscal year in which common shares were allocated based on
System II to the day prior to the date of the ordinary General Shareholders’ Meeting for the pastfiscal year.
1)

The maximum aggregate number of common shares newly issued or allocated by theCompany under these systems (hereafter, “maximum number of shares issued”), namely theaggregate number of shares allocated based on the 1) the restricted stock system and 2) the
performance cash bonus deferral in restricted stock system (hereafter, “calendar year total”)
shall be the number calculated by subtracting the number of treasury shares on the day 10
days prior to the date of each Board of Directors resolution (however, when it is clear that the
number of treasury shares has changed as a result of the purchase or disposition of treasury
stock by the Company, the number shall be the number of treasury shares after the change)from the total number of shares issued on the business day prior to the date of each Board of
Directors resolution (hereafter, “the Board of Directors resolution date”) concerning adecision on proposals concerning offerings related to the common shares issued or allocatedin each fiscal year (hereafter, “total number of shares outstanding (net of treasury shares)”),and multiplying the resulting figure by 0.5% (fractional amounts disregarded).
Moreover, the calendar year total for a given fiscal year shall be the number derived byaggregating the common shares held by all executive directors (limited to individuals who are
an executive director of the Company at the time of receipt) who have received such commonshares and the total number of Series 1 and Series 2 Class A shares on the business day prior
to the Board of Directors resolution date. This aggregate number shall be less than the total
number of shares outstanding (net of treasury shares) on the business day prior to the Board of
Directors resolution date, multiplied by 5% (fractional amounts disregarded; hereafter,“maximum number of shares held by eligible individuals”).

2)

The number of common shares allocated based on the restricted stock system shall be given
priority in determining the number of shares allocated based on each of the restricted stockand the performance cash bonus deferral in restricted stock systems.

3)

The amount paid in per common share of the Company allocated based on these systems shallbe the closing price of the Company’s common shares on the Tokyo Stock Exchange on thebusiness day prior to the Board of Directors resolution date, in principle (if no trades were
executed on that day, the closing price on the most recent day on which the stock was traded).
The Board of Directors will determine an amount that does not afford the executive director
receiving the common shares a special advantage.

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The following is an overview of the restricted stock system and the performance cash bonus deferral in
restricted stock system.
(1) Restricted Stock System (System I)
Under System I, the Company may pay restricted stock bonuses of no more than 300 million yen a
year in aggregate, granting restricted stock to executive directors.
Each executive director who is compensated by the Company with restricted stock shall pay in theentire cash bonus credit for that compensation as an investment in kind, and shall receive commonshares newly issued or allocated by the Company. The Company would like to leave the specifictiming of payment and allocation to each executive director and other details up to the discretion of
the Board of Directors.
Executive directors conclude a restricted stock allocation agreement with the Company having thegeneral outline and content described below and agree to pay-in the entire cash bonus credit they
have been paid as a restricted stock bonus as investment in kind for allocation of common shares in
the Company that the Company has newly issued or allocated. Moreover, the conditions forpayment are that the executive director holds the position of an executive director of the Company
immediately prior to the pay-in date for the new shares or allocated treasury shares subject to thestated allocation, and that the new share issue or treasury share allocation subject to the statedallocation has not been halted on the grounds of revocation, injunction, or other reason.
1)

The director concerned shall not transfer, post as collateral, or otherwise dispose of (hereafter,“transfer restriction” in (1) of this section) the common shares of the Company which havebeen allocated pursuant to the allocation agreement (hereafter, “the allocated shares” in (1) of
this section) for 10 years from the pay-in date (hereafter, “transfer restriction period” in (1) of
this section).

2)

The director concerned may rescind the transfer restriction on all of the allocated shares once
the transfer restriction period has expired (however, the period may be separately adjusted if
the director abdicates the position due to death), on the condition that the director has
continuously remained in the position of executive director of the Company during the
restricted stock payment eligibility period (extending from the date of the ordinary General
Shareholders’ Meeting for the fiscal year prior to the fiscal year in which the restricted stockbonus was paid to the day prior to the ordinary General Shareholders’ Meeting for the current
fiscal year; hereafter, the same for System I). If the director leaves during the payment
eligibility period (including instances in which he/she has ceased being an executive director),
the Company shall, as a matter of course, adjust the number of allocated shares subject tofuture expiration of the restriction period according to the length of time in the position datingfrom the first day of the payment eligibility period, and shall acquire the remaining allocatedshares on which the transfer restriction has not expired gratis, immediately after the director
leaves the position.

3)

The Company may rescind the restriction period on the allocated shares by resolution of theBoard of Directors if a proposal concerning a merger agreement that would render theCompany defunct, or a proposal concerning a share transfer agreement, a share transfer plan,
organizational restructuring or other such proposal that would make the Company a wholly
owned subsidiary is approved at a General Shareholders’ Meeting of the Company (theCompany’s Board of Directors for an organizational restructuring or other such proposal that
does not require approval of the General Shareholders’ Meeting), or if action is taken as aresult of a change in the Company’s majority shareholder during the transfer restriction period,
the provisions in 1), above, notwithstanding. If such corporate reorganization or other suchproposal is approved during the payment eligibility period for the restricted stock in question,
the Company may, of course, adjust the number of allocated shares on which the transfer
restriction is rescinded according the period of time extending from the first day of thepayment eligibility period to the date on which the reorganization or other such proposal isapproved, or the date on which the change in majority shareholder of the Company becomes
effective, and acquire the allocated shares on which the restricted period has not expired gratis.
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(2) Performance Cash Bonus Deferral in Restricted Stock System (System II)
Under System II, the Company may pay cash equivalent to no more than 3.4% of profit
attributable to owners of parent in aggregate, in each fiscal year as a performance cash bonus
deferral in restricted stock to executive directors to be used as funds for payment for theacquisition of common stock newly issued or allocated by the Company.
Each executive director who has been paid a performance cash bonus deferral in restricted stock
shall pay in the cash amount of that bonus (however, this excludes amounts equivalent to income
tax, local income tax and other taxes and the social insurance premium, as well as the commission
on payment, the amount by which the cash pay-in in insufficient for the number of shares in one
unit, etc. The same applies hereafter) after the payment eligibility period (under System II, thisrefers to the period extending from the date of the ordinary General Shareholders’ Meeting for two
fiscal years prior to the fiscal year in which the performance cash bonus referral in restricted stock
was paid to the day prior to the date of the ordinary General Shareholders’ Meeting for theprevious fiscal year) has ended and receive common shares newly issued or allocated by theCompany. The Company would like to leave the specifics of allocation and timing of payment toeach executive director, and other details up to the discretion of the Board of Directors.
Moreover, executive directors shall conclude a performance-based stock allocation agreement
having the general outline and content described below with the Company and agree to pay in theamount they have received in payment for the performance cash bonus deferral in restricted stock
for allocation of common shares in the Company that the Company has newly issued or allocated.
If, however, the Company cannot issue or allocate common shares to each executive director under
System II by law or as a result of a judgment by a judicial body, the Company shall pay cash only
as compensation for the performance cash bonus deferral in restricted stock. If the number ofcommon shares that should be issued or allocated under this system exceeds the maximum numberof shares that can be issued or the maximum number of shares that the person concerned may hold,the Company will pay the amount equivalent to the number of excess shares in cash ascompensation for the performance cash bonus deferral in restricted stock.
Moreover, the Company shall pay cash only as compensation for performance cash bonus deferral
in restricted stock to persons who have inherited the right to receive payment of the performance
cash bonus deferral in restricted stock from the executive director.
1)

The director in question shall not transfer, post as collateral, or otherwise dispose of commonshares of the Company (hereafter, “transfer restriction” in (2) of this section) allocated andreceived under the allocation agreement (hereafter, “the allocated shares” in (2) of thissection) for three years from the pay-in date (hereafter, “transfer restriction period in (2) ofthis section).

2)

The Company may rescind the restriction period on the allocated shares by resolution of theBoard of Directors if a proposal concerning a merger agreement that would render theCompany defunct, or a proposal concerning a share transfer agreement, a share transfer plan,
organizational restructuring or other such proposal that would make the Company a wholly
owned subsidiary is approved at a General Shareholders’ Meeting of the Company (theCompany’s Board of Directors for an organizational restructuring or other such proposal that
does not require approval of the General Shareholders’ Meeting), or if action is taken as aresult of a change in the Company’s majority shareholder during the transfer restriction period,
the provisions in 1), above, notwithstanding.

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The details of the proposed compensation for executive directors after amendment are as follows.

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* References(1) Maximum Stock Bonus Amount(2) Maximum Number of Shares Allocated for Stock Bonuses- 18 -

(3) Comparison of Old/New Stock Bonuses- 19 -

(4) Individual Compensation Schedule for Executive Directors Based on Profit Attributable to Owners of
Parent (from July 2017 to June 2018)(5) Actual and Forecast Individual Compensation for Executive Directors- 20 -