Note: This document has been translated from a part of the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from the translation
Security code 6373
June 11, 2020

To Shareholders
I-197 Kumasaka-machi, Kaga City, Ishikawa

Daido Kogyo Co., Ltd.
President
Hirofumi Araya

Notice of Convocation of the 127th Ordinary General Meeting of
Shareholders
You are cordially invited to attend the 127th Annual General Meeting of Shareholders of DAIDO KOGYO CO., LTD.
(the "Company"). The meeting will be held as described below.
In holding this General Meeting, we have carefully examined the propriety of holding from the viewpoint ofpreventing the recent spread of the novel coronavirus infection and decided to take appropriate measures deemednecessary to hold the Meeting.
Accordingly, in order to prevent the spread of the novel coronavirus infection, shareholders are strongly recommended
to refrain from attending the Meeting and exercise voting rights prior to the Meeting in writing (mailing) orelectronically (Internet, etc.) by Thursday, June 25, 2020, at 5:00 p.m. Before voting, please take the time to examine
the Reference Documents for the General Meeting of Shareholders on the following pages.
Sincerely yours
1. Date and Time:
2. Place:

3. Agenda of the
Meeting:
Matter to bereported

Friday, June 26, 2020, at 10:00 a.m.
Main Hall, 1st floor of CHIENKAN Hall,
I-197 Kumasaka-machi, Kaga City, Ishikawa(Please refer to the hall map at the end of this document.)

1. The Business Report, the Consolidated Financial Statements, and the audit results of theConsolidated Financial Statements by the Accounting Auditor and the Board of Company
Auditors for the 127th Fiscal Term (from April 1, 2019 to March 31, 2020)
2. Non-Consolidated Financial Statements for the 127th Fiscal Term (from April 1, 2019 toMarch 31, 2020)
For treatment of the matters to be reported, please refer to "Holding of the Continued 127th
Ordinary General Meeting of Shareholders" at next page.

Proposals to beresolved:
Proposal No.
1:
Proposal No. 2:
Proposal No. 3:
Proposal No. 4:
Proposal No. 5:
Proposal No. 6:
Proposal No. 7:

Appropriation of surplus
Partial amendment to the Articles of Association
Election of seven Directors (except Directors serving the Audit and Supervisory Committee)
Election of four Directors serving the Audit and Supervisory Committee.
Amount of Directors' remuneration (except Directors serving the Audit and Supervisory
Committee)
Amount of Directors' remuneration (for the Directors serving the Audit and Supervisory
Committee)
Continuation of the Policy on the countermeasures against large-scale purchase of theCompany's shares etc. (Takeover Defense Measures)- 1-

Holding of the Continued 127th Ordinary General Meeting of Shareholders
Of the agenda of this General Meeting, the Company was going to report in this Meeting to shareholders,through the predetermined procedures, the contents of the Business Report, contents of the Consolidated
Financial Statements, and the results of the audit on the Consolidated Financial Statements by the Accounting
Auditor and the Board of Company Auditors for the 127th Fiscal Term (from April 1,2019 to March 31, 2020)
as well as the contents of Non-Consolidated Financial Statements for the Company's 127th Fiscal Term (from
April 1, 2019 to March 31, 2020) ("matters to be reported").
However, due to the impact of the novel coronavirus infection, there is delay in the financial closing andauditing in the Company and some of its overseas subsidiary companies and all the financial closing
procedures have not been completed at the time of preparation of this Notice. The Company is therefore unable
to provide some of the matters to be reported in this Notice of Convocation. (Note 1) Accordingly, for thosematters to be reported, we are going to hold the continued General Meeting of Shareholders separately("Continued General Meeting") and report them in the Meeting. (Note 2)
For the date and place of theContinued General Meeting, we are going to submit a proposal (the "Proposal") to the shareholders in this
General Meeting to the effect of leaving the decision to the Board of Directors. If the Proposal is approved inthis General Meeting, we will send a notice of convocation of the Continued General Meeting regarding thematters to be reported and report them to the shareholders in the Continued General Meeting. (Note 3)
Please note that shareholders entitled to attend the Continued General Meeting, which constitutes a part of this
General Meeting, are those entitled to exercise voting rights in this General Meeting.
Note 1. In accordance with the guidelines, opinions, etc. issued by the Ministries, Agencies, Stock _Exchange,
etc. in relation to the novel coronavirus of the matters of the business to be reported in the Continued
General Meeting, the Company has provided the matters that can be mentioned in this Notice ofConvocation.
Note 2: If the aforementioned financial closing procedures are completed during the period from preparationof the Notice of Convocation of this General Meeting to mailing thereof, the Company may report thematters to be reported to shareholders in the General Meeting of Shareholders to be held on June 26,
2020, not in the Continued General Meeting, and not hold the Continued General Meeting.
In such an event, the matters to be reported that cannot be attached to the Notice of this General
Meeting will be posted on the Company's Internet website (https://www.did-daido.co.jp) pursuant to
the provision of the applicable laws and regulations and the Articles of Association of the Company.
We are going to deliver a document on the day of the General Meeting describing the matters to bereported, which are to be posted on the Company's Internet website. If you request to receive thedocument by mail. Please contact the following.
Note 3. If the Continued General Meeting is held, the Company is going to shift to a company with Audit andSupervisory Committee at the end of the General Meeting of Shareholders to be held on June 26, 2020
according to the resolution for approval of Proposal No. 2 "Partial amendment to the Articles of
Association." As a result, the term "Board of Company Auditors" in "1. Matter to be reported" maychange to "Audit and Supervisory Committee" depending on the schedule of audit reporting.
Daido Kogyo Co., Ltd. Administration Section, Administration Dept.
Phone No.: 0761-72-1234
E-mail address soumu@did-daido.co.jp
We are deeply sorry for causing a lot of inconvenience and concern to shareholders.

- 2-Requests for Preventing Infection Spread of the Novel Coronavirus (COVID-19)
1. Prior exercise of voting rights
In order to prevent the spread of the novel coronavirus infection, shareholders are strongly recommended
to refrain from attending this General Meeting and exercise voting rights prior to the Meeting in writingor through the Internet, etc.
< Time limit for exercising voting rights: Arrived or sent by Thursday, June 25, 2020, 5:00 p.m. >2. The Company's responsive actions- No small gift is delivered to shareholders who attend the General Meeting.
- On the day of the General Meeting, the Company's directors and operation staff of the General
Meeting undergo health check including temperature and wear a face mask.
- Alcohol disinfectants are arranged for use by shareholders near the reception of the Hall.
- In order to reduce the risk of infection, seats in the Hall are arranged keeping a wide space between
seats, so that the number of seats available in the Hall is expected to greatly decrease as compared tothe average year. Please forgive us if there is no seat available for you.
- In this General Meeting, in order to reduce the time of meeting for preventing the infection spread,
we are going to omit detailed presentation of the matters to be reported and agenda items in the Hall.
Shareholders are cordially requested to read in advance the Notice of Convocation of this General
Meeting, etc.
- We may limit the number of directors who attend the General Meeting from the viewpoints of
preventing infection spread and continuation of the Company's business, regardless of their healthcondition on the day of Meeting.
3. Requests to shareholders attending the General Meeting- Shareholders who attend the General Meeting are requested to cooperate in the measures taken toprevent the infection spread, including spraying an alcohol disinfectant and wearing a face mask.
- Operation staff may approach and ask shareholders who are coughing or otherwise look sick. They
may be requested to check the temperature or move to another seat or leave the Hall. We appreciate
your understanding in advance.
- We will change the aforementioned actions as appropriate according to future situations. If you intend
to attend the General Meeting, please be sure to check with our website (https://www.diddaido.co.jp/) in advance.
We are very sorry for a lot of inconvenience and disruption we caused to shareholders and appreciate yourunderstanding and cooperation in consideration of the circumstances.

- 3-

Guidance for exercising voting rights
If attending in person

Not attend the General Meeting (recommended)

If exercising the voting
right at the shareholders
meeting site

If exercising by postal
mail (in writing):

If exercising over theInternet, etc.:

Time/Date of general meeting of shareholders

Time limit for exercise:Time limit for exercise:

10:00 a.m. (reception starts at 9:00 a.m.)

5:00 p.m. (must arrive)
Thursday, June 25, 2020

5:00 p.m. (to be closed)
Thursday, June 26, 2020

Return to us the enclosed
voting form representing yourapproval or disapproval of thebill. It must arrive by the time
limit shown above.

Visit the voting website(https://www.web54.net)
designated by the Company andenter your approval or disapprovalof the bill by the time limit.

Friday, June 26, 2020

Submit the enclosed voting
form at the reception desk.
Bring this booklet as material
for the proceedings. Please
note that nobody, including
proxies and companions, may
enter the site excluding
shareholders who are entitled
to exercise voting rights.

Please refer to the next pagefor the detail.

* In case the vote is exercised doubly in writing and by the Internet, etc., theone by the Internet, etc. will be deemed to have been exercised effectively.

■ As for the documents to be provided in this Notice, "System for ensuring the propriety in business reporting operation andsystem operation," "Basic policy on corporate control," and Policy on deciding surplus dividend, etc. (If the Continued
General Meeting is not held, in addition to the aforementioned documents, "Development and results of businesses in thebusiness reporting," "Assets, profits / losses, issues to address, non-consolidated financial statements, and consolidated
financial statements, for the last three business years (including audit reports of the Board of Company Auditors andAccounting Auditor) are posted on the Company's Internet website (as shown below) pursuant to the provision of theapplicable laws and regulations and Article 15 of Association of the Company.
■ Any change arising in the Reference Documents for the General Meeting of Shareholders or the Business Report, will be
posted on the Company's Internet website (as shown below).

https://www.did-daido.co.jp- 4-

Guide to voting right exercise over the Internet, etc.:
Time limit forexerciseAccessing procedure1.

2. Login
Click "Proceed"
Enter "Voting Rights
Exercise Code"

Click "Log-in"Enter the password

Click "Register"4.

If you exercise your voting rights over the Internet, etc.,
please confirm the following matters.
 To exercise your voting rights over the Internet, etc., accessthe voting website (https://www.web54.net) from a personal
computer, smartphone, or mobile phone using the Voting
Code and the Password shown in the enclosed voting form,and enter your approval or disapproval of the bill following
the guidance of the screen.

Access the voting
website[QR code for access]3.

To be accepted up to 5:00 p.m., Thursday, June 25, 2020

Enter "Initial
Password"
Set a new
password for
actual use.

Enter your approval ordisapproval following the guidanceof the screen.

Contact information
concerning the exercise of
the voting right over theInternet, etc.

 Your exercise of the voting right over the Internet, etc. will be
accepted up to 5:00 p.m., Thursday, June25, 2020.
(For convenience of the totalization of the result of the vote,please exercise as soon as possible).
 The connection fees to the providers and thetelecommunications fees to the carriers (including phonecharges) incurred in using the voting website will be borne by
the shareholders.
* In case the vote is exercised doubly in writing and by theInternet, etc., the one by the Internet, etc. will be deemed tohave been exercised effectively. In addition, in case thevote is exercised more than one time by the Internet, etc.,
the last one will be deemed to have been exercised
effectively.

If you have any questions concerning the exercise of the voting right over the Internet,
etc., please contact the following:

Securities agent web support dedicated number, Sumitomo Mitsui Trust
Bank, Limited (Shareholder Registry Administrator)(Inquiries accepted: 9:00 a.m. - 9:00 p.m.)

To institutional Institutional investors can exercise their voting rights electromagnetically using theinvestors Electronic Voting Platform operated by ICJ, Inc.

Reference Documents for the General Meeting of Shareholders
Proposal No.1: Appropriation of surplus
The Company would like to treat the appropriation of surplus as follows:
1. Matters regarding year-end dividend
The Company considers return of profits to shareholders as an important management policy and takesa policy on dividends to distribute dividends considering comprehensively full-year performance,
management environment, and medium- to long-term reinforcement of financial standing with focus on
maintenance of stable dividends.
Regrettably, however, we would like to determine the year-end dividend to be 15 yen per share since- 5-the performance of the 127th term is expected to be severe and tough management environment is
forecasted to continue in next term.
[1] Type of dividend property:

Cash[2] Matters regarding allocation of dividend ¥15 per common shareproperty and the amount thereof:
Total amount: ¥163,841,715.

June 29, 2020.

[3] Effective date of surplus dividend:

2. Matters regarding appropriation of other surplus
In order to distribute dividends stably to shareholders, the Company would like to appropriate internal
reserves as follows:i) Item and amount of increased surplus
Earned surplus carried forward¥2,200,000,000ii) Item and amount of decreased surplus
Special reserve fund

¥2,200,000,000- 6-

Proposal No. 2: Partial amendment to the Articles of Association(1)

Reasons for proposal
The Company is going to shift to a company with Audit and Supervisory Committee for the purposeof strengthening the supervisory function of the Board of Directors and further improving corporate
governance by adding members of the Audit and Supervisory Committee, who audit execution ofduties by Directors, to the Board of Directors.
Accordingly, new provisions for Directors who serve the Audit and Supervisory Committee and for
the Audit and Supervisory Committee are added as they are required for shift to a company with Audit
and Supervisory Committee and existing provisions concerning Company Auditors and Board ofCompany Auditors are deleted or otherwise treated. Please note that the amended Articles of

Association shall be enforced at the end of the General Meeting of Shareholders scheduled onJune 26, 2020 ("Initial General Meeting"), not at the end of the General Meeting of Shareholders
including the Continued General Meeting. (Note 1)(2) Details of amendment
Details of intended amendment are as follows.
(Underlined parts represent amendment.)

Articles 1-3

Before Amendment

After Amendment

Chapter 1 General Rules

Chapter 1 General Rules(Omitted)(Organization)
Article 4 The Company shall have the following
organizations in addition to the General Meeting of
Shareholders and Directors.

Articles 1-3 (Same)(Organization)
Article 4 The Company shall have the following
organizations in addition to the General Meeting of
Shareholders and Directors.

1. Board of Directors
2. Company Auditors
3. Board of Company Auditors
4. Accounting Auditors
Article 5(Omitted)

1. Board of Directors
2. Audit and Supervisory Committee(Deleted)
3. Accounting Auditors
Article 5 (Same)

Chapter 2 Shares
Articles 6-11 (Omitted)

Chapter 2 Shares
Articles 6-11 (Same)________________
Note 1. Amended Articles of Association shall be enforced at the end of this General Meeting of
Shareholders if the Continued General Meeting is not held.

- 7-

Before Amendment
Chapter 3 General Meeting of Shareholders

After Amendment
Chapter 3 General Meeting of Shareholders

Articles 12-17 (Omitted)

Articles 12-17 (Same)

Chapter 4 Directors and the Board of Directors

Chapter 4 Directors and the Board of Directors(Number of Directors)
Article 18 The number of Directors of the Company
shall not exceed 12.

(Number of Auditors)
Article 18 The number of Directors (except those who
belong to the Audit and Supervisory Committee) of theCompany shall not exceed nine (9).

(New)

2. The number of Directors who belong to the Audit
and Supervisory Committee of the Company shall not
exceed four (4).

(Method of Election)
Article 19 Directors shall be elected at the General Meetingof Shareholders.

(Method of Election)
Article 19 Directors of the Company shall be elected at
the General Meeting of Shareholders with distinction
between Directors who belong to the Audit and Supervisory
Committee and other Directors.

2. (Omitted)
3. (Omitted)

2. (Same)
3. (Same)(Terms of office)
Article 20 Directors' terms of office shall continue until
the closing of the annual General Meeting of Shareholders
for the last business year which ends within two (2) years
from the time of their election;(Term of office)
Article 20 The term of office of each Director (except
Directors who belong to the Audit and Supervisory
Committee) of the Company shall expire at the close of theOrdinary General Meeting of shareholders to be held withrespect to the last fiscal year that terminates within one (1)year after his/her election.

2. The term of office of a director elected to increase
the number of directors or to fill a vacancy shall expire
at the time when the term of office of the director in
office expires.

- 8-

2. The term of office of each Director of theCompany who belongs to the Audit and Supervisory
Committee shall expire at the close of the Ordinary
General Meeting of shareholders to be held withrespect to the last fiscal year that terminates within
two (2) years after his/her election.

Before Amendment(New)

After Amendment
3. The term of office of a Director who belongs to
the Audit and Supervisory Committee and is elected tofill a vacancy of another Director who belongs to the
Audit and Supervisory C committee and retired before
expiry of his/her term of office shall expire upon the
expiry of the term of office of that retired Director.

(New)

4. The effective period of the resolution of electionof a Director who belongs to the Audit andSupervisory Committee and is elected to fill a vacancy
under the Companies Act, Article 329, Paragraph 3
shall expire at the beginning of the Ordinary General
Meeting of shareholders to be held with respect to thelast fiscal year that terminates within two (2) years
after his/her election.

(Representative Directors and Directors with Specific Titles) (Representative Directors and Directors with Specific Titles)
Article 21 The Board of Directors shall appoint the Article 21 The Board of Directors may resolve to appoint
Representative Director by a resolution of the Board of Representative Directors from among the Directors who do
Directors.
not belong to the Audit and Supervisory Committee.
2. The Board of Directors may appoint a Chairperson,a President, a Vice President, a Senior Managing
Director, and a few Managing Directors by resolution of
the Board of Directors.

2. The Board of Directors may resolve to delegate toappoint a Chairperson, a President, a Vice Presidents,
Senior a Managing Director, and a few Managing
Directors from among the Directors who do not belong
to the Audit and Supervisory Committee.

Article 22 (Omitted)

Article 22 (Same)(Notice of Convocation of a Meeting of the Board of
Directors)
Article 23 Notice of convocation of meetings of theBoard of Directors shall be sent to each Director and each
Company Auditor no later than three (3) days prior to thedate of the meeting.
Provided, however, that such period may be
shortened in an emergency.

(Notice of Convocation of a Meeting of the Board of
Directors)
Article 23 A notice of convocation of a meeting of the Boardof Directors shall be sent to each Director no later than threedays prior to the date of meeting.
Provided, however, that such period may be
shortened in an emergency.

- 9-Before Amendment

After Amendment

2. Meetings of the Board of Directors may be held
without the procedures for convening meetings if theconsent of all Directors and Auditors has beenobtained.

2. A meeting of the Board of Directors may be held
without the procedure of convocation if so agreed by
all Directors.

(New)(Delegation of Decision on Execution of Important
Operations)
Article 24 As provided in the Companies Act, Article399-13, Paragraph 6, the Board of Directors may resolve todelegate all or part of the decision on the execution ofimportant operations (except the matters listed in each itemof Paragraph 5 of the same Article) to Directors.

Articles 24-26 (Omitted)

Articles 25-27 (Same)(Remuneration, etc.)
Article 27 Remuneration, bonuses, and other property
benefits to be received from the Company as consideration
for the execution of duties by Directors (hereinafter referred
to as "Remuneration, etc.") shall be determined by aresolution of the General Meeting of Shareholders.

(Remuneration, etc.)
Article 28 Remuneration, bonus, and other financial
benefits received by Directors from the Company asremuneration for their performance of duties shall be
determined by resolution of the General Meeting of
Shareholders with distinction between Directors who
belong to the Audit and Supervisory Committee and otherdirectors.

Article 28 (Omitted)

Article 29 (Same)

Chapter 5 Company Auditors and Board of Company
Auditors

Chapter 5 Audit and Supervisory Committee(Number of Auditors)
Article 29 The number of Auditors of the Company shallnot exceed four(4).

(Deleted)- 10-

Before Amendment(Method of Election)
Article 30 Company Auditors shall be elected at theGeneral Meeting of Shareholders.
2. Resolutions for the election of Auditors shall be
adopted by a majority vote of the shareholders present
who hold one-third or more of the voting rights of theshareholders entitled to exercise voting rights.

After Amendment(Deleted)(Term of office)
Article 31 Company Auditors' terms of office shallcontinue until the closing of the annual General Meeting of
Shareholders for the last business year which ends withinfour (4) years from the time of their election.
2. The term of office of an Auditor elected as a
substitute for an Auditor who resigned before theexpiration of his/her term of office shall expire at thetime when the term of office of the resigning Auditor
expires.

(Deleted)(Full-time Company Auditors and Standing Company
Auditors)
Article 32 The Board of Company Auditors shall appointfull-time Company Auditors by a resolution of the Board ofCompany Auditors.
Standing Company Auditor may also be
appointed from among full-time Company
Auditors.

(Deleted)(Notice of convocation of Board of Company Auditors
Meeting)
Article 33 A notice of convocation of a meeting of theBoard of Company Auditors shall be sent to each Auditor
no later than three (3) days prior to the date of suchmeeting.
Provided, however, that such period may be
shortened in an emergency.
2. Meetings of the Board of Company Auditors may beheld without the procedures for convocation if theconsent of all Company Auditors is obtained.

(Deleted)- 11-

Before Amendment(Rules of Board of Company Auditors)
Article 34 Matters concerning the Board of Company
Auditors shall be governed by laws, regulations, or these
Articles of Association as well as by the Rules of the Boardof Company Auditors established by the Board of Company
Auditors.

After Amendment(Deleted)(Remuneration, etc.)
Article 35 The Remuneration, etc. of Auditors shall be
determined by resolution of the General Meeting of
Shareholders.

(Deleted)(Exemption of Company Auditors from Liability)
Article 36 Pursuant to Article 426, Paragraph 1 of theCompanies Act, the Company may exempt the Company
Auditors (including former company auditors) who fails to
fulfill his or her duties from liability for damages by aresolution of the board of directors to the extent permitted
by laws and regulations.
2. Pursuant to the provisions of Article 427, Paragraph
1 of the Companies Act, the Company may enter into
an agreement with a Company Auditors to limit theliability for damages arising from their failure to
perform their duties.
Provided, however, that the maximum amountof liability under such agreement shall be theamount prescribed by laws and regulations.

(Deleted)(New)(Notice of Convocation of Meetings of the Audit andSupervisory Committee)
Article 30 A notice of convocation of a meeting of the
Audit and Supervisory Committee shall be sent to eachmember of the Audit and Supervisory Committee no later
than three (3) days prior to the date of meeting.
Provided, however, that such period may be
shortened in an emergency.

- 12-

Before Amendment

After Amendment
2. A meeting of the Audit and Supervisory Committee
may be held without the procedure of convocation if
so agreed by all the Audit and Supervisory Committee
members.

(New)(Audit and Supervisory Committee Regulations)
Article 31 Matters concerning the Audit and Supervisory
Committee shall be subject to relevant laws andregulations, these Articles of Association, and the audit andsupervisory committee regulations stipulated by the Audit
and Supervisory Committee.

Chapter 6 Calculation

Chapter 6 Calculation

Articles 37-40 (Omitted)

Articles 32-35 (Same)

Chapter 7 Takeover Defense Measures
Articles 41-42 (Omitted)

Chapter 7 Takeover Defense Measures
Articles 36-37 (Same)(New)

Supplementary Provisions(New)(Transitional Measures for Exemption of Company Auditors'
Liability)
Article 1 The Company may, under paragraph 1 of Article
423 of the Companies Act, exempt its Company
Auditors (including former Company Auditors)
from their liability to compensate for damages
resulting from their act conducted before theclosure of the 127th Ordinary General Meeting of
Shareholders to the extent prescribed by laws andregulations through resolution of the Board of
Directors.

- 13-

Proposal No. 3: Election of seven Directors (except Directors serving the Audit and Supervisory
Committee)
When Proposal No. 2 "Partial amendment to the Articles of Association" is approved as drafted, theCompany will shift to a company with Audit and Supervisory Committee, and the term of office of all theseven Directors will expire upon enforcement of the Amendment of the Articles of Association.
Accordingly, we would like you to elect seven Directors (except Directors serving the Audit andSupervisory Committee; hereinafter the same in this Proposal).
This Proposal takes effect on condition of the enforcement of amendment of the Articles of Association in
Proposal No. 2 "Partial amendment to the Articles of Association."
The candidates for Directors are as follows.
(References)

Candidate
No.

1

Name

Kozo

Araya

Responsibilities at theCompany

Reelected

President
PresidentInternal Control Audit
OfficeBusiness Strategy Div.
Research &Development
Div.
Senior Managing Director
Administration Div.
Safety & Quality Div.
Managing Director
Administration Div.
Automotive Parts Div.
Managing Director
Motorcycle Parts Div.
Industrial Products Div.

Attendance to Board of
Director’s Meetings
13/13(100%)

13/13(100%)

2

Hirofumi Araya

Reelected

3

Yasuyuki Tatsuta

Reelected

4

Katsuyuki Kikuchi

Reelected

5Toshihiro Shimizu

Reelected

6Masanori SanadaNew

Senior Executive Officer
Administration Div.

-

7

Toshio Ishimura

New

Senior Executive Officer
Industrial Machinery Dept.

-

- 14-

13/13
(100%)
13/13(100%)
13/13(100%)

Candidate
No.

1

Name
(Date of birth)
Sex(August 20, 1971)
Male
Reelected

Apri
April
June
Nov.

1973
1976
1977
1978

Apri
Sep.
June
June
April

2002
2004
2005
2007
2008

Number of sharesof the Company
held

Joined Daido Kogyo Co., Ltd.
Purchasing Manager of Daido Kogyo Co., Ltd
Kozo Araya
Director, Daido Kogyo Co., Ltd(October 25, 1950)
First Manufacturing Dept. Manager of Daido Kogyo Co.,Ltd.
69,225 shares
Male
Aug. 2002
Representative Director & President of Daido Kogyo Co.,Ltd.
Reelected
June 2006
Chairman, Kaga Chamber of Commerce and Industry
June 2019
Representative Director & Chairman of Daido Kogyo Co.,
Ltd. (to date)
The reasons why the Company elects him as a candidate for Director:
Mr. Kozo Araya has been involved in the management of the Company over a long time since assumed office as a director of theCompany in June 1977. Since August 2002, he has contributed to a great extent to the expansion of the Company’s global
operations as Representative Director of the Company, and considering that he has a great deal of work experience in the
Company and the Group and knowledge on global business operations, etc., we determined that he is continuously appropriate
as a candidate for a director.

Hirofumi Araya

2

Career summary

Joined Daido Kogyo Co., Ltd.
Sales Dept. Manager, Sales Div. of Daido Kogyo Co., Ltd.
Automotive Technology and Sales Dept., Automotive Div.
Executive Officer of Daido Kogyo Co., Ltd.
Representative Director & President of Daido Sittipol Co.,Ltd.
April 2010
Representative Director & President of D.I.D Asia Co.,
Ltd.
Sep.
2010
Representative Director & President of Daido India pvt.
Ltd.
June
2011
Director and Technical Development Div.
June
2013
Manager of Daido Kogyo Co., Ltd.
Managing Director, in charge of Motorcycle / Automotive
Div.
Director & Vice-Chairman of Daido Sittipol Co., Ltd
June
2015
Representative Director & Vice-President of Daido Kogyo
Co., Ltd.
In charge of Research & Development Div. of Daido
Kogyo Co., Ltd.
Director & Chairman of Daido Sittipol Co., Ltd. (to date)
June
2017
In charge of Business Strategy Div. and, Research &Development Div. of Daido Kogyo Co., Ltd. (to date)
June
2019
Representative Director & President of Daido Kogyo Co.,
Ltd. (to date)
In charge of Internal Control Audit Office (to date)(Important concurrent position)

11,830 shares

Director & Chairman of Daido Sittipol Co. Ltd
The reasons why the Company elects him as a candidate for Director:
Mr. Hirofumi Araya has assumed various important posts including President and Representative Director of the Company's
overseas subsidiaries in Asia, which is an important area for the Group. He has been engaging in the planning of businessstrategies at the Business Strategy Division, as well as actively leading the Development Division, toward development ofgrowth markets/ growth areas and expansion of business areas/ technology areas of the Company. Thus, he has a great deal ofwork experience in the Company and the Group and knowledge on global business operations, etc., so we determined that he iscontinuously appropriate as a candidate for a director.

- 15-

Candidate
No.

Name
(Date of birth)(Sex)

Yasuyuki Tatsuta

Career summary
April
Oct.

1974
1995

Joined Daido Kogyo Co., Ltd.
Accounting Dept. Manager, Administration Div. of
Daido Kogyo Co., Ltd.

April

1996

July

1998

June

2001

April

2002

Oct.

2002

June
June
June

2005
2007
2009

June

2011

July
June

2011
2013

June

2015

June

2017

June

2019

President's Office Manager and Accounting Dept.
Manager, Administration Div. of Daido Kogyo Co., Ltd
Accounting Dept. Manager, Administration Div. of
Daido Kogyo Co., Ltd.
Director, Accounting Dept. Manager, Administration Div.
and Corporate Planning Office Manager of Daido Kogyo
Co., Ltd.
Administration Dept. Manager, Administration Div. andCorporate Planning Office Manager of Daido Kogyo Co.,Ltd.
Rim & Wheel Manufacturing Dept. Manager, Production
Div. of Daido Kogyo Co., Ltd
Business Support Div. Manager of Daido Kogyo Co.,Ltd.
Managing Director of Daido Kogyo Co., Ltd.
In charge of Business Support Div. of Daido Kogyo Co.,Ltd.
Senior Managing Director of Daido Kogyo Co., Ltd.
(to date)
Chairman, D.I.D Vietnam Co., Ltd.
In charge of Safety and Quality Div. of Daido Kogyo
Co., Ltd.
In charge of Procurement Div. and Production Div. of
Daido Kogyo Co., Ltd.
In charge of Safety and Quality Div. of Daido Kogyo
Co., Ltd. (to date)
In charge of Production Engineering Div. of Daido
Kogyo Co., Ltd.
In charge of Administration Div. of Daido Kogyo Co.,
Ltd. (to date)(April 14, 1951)
Male
Reelected
3

Number ofshares of theCompany held

11,000 shares

The reasons why the Company elects him as a candidate for Director:
Mr. Tatsuta has profound knowledge in finance and accounting based on long-term work experience in the accounting function.
Since assuming office as a director of the Company, he has assumed important posts in the business planning and administrative
functions, and has been presently taking a central role in management of the Company while supervising several Divisions
cross-sectionally as Senior Managing Director. In view of the above, we determined that his experience and results will be
useful for management of the Company, and that therefore he is continuously appropriate as a candidate for a director.
April 1981
Dec. 2004

Katsuyuki Kikuchi

June
Jan.
June

2005
2011
2011

June

2015

June

2017

June

2019

(October 10, 1957)
Male
Reelected
4

Joined Daido Kogyo Co., Ltd.
Manager of Chain Manufacturing Dept., Production Div.
of Daido Kogyo Co., Ltd.
Manager of Automotive Manufacturing Dept.,
Automotive Div. of Daido Kogyo Co., Ltd.
Fukuda Plant Manager of Daido Kogyo Co., Ltd
Director, Production Div. Manager of Daido Kogyo Co.,Ltd.
Managing Director, Administration Div. Manager of
Daido
Kogyo CO., Ltd. (to date)
In charge of Safety & Quality Div. of Daido Kogyo Co.,Ltd.
In charge of Automotive Parts Div. of Daido Kogyo Co.,
Ltd. (to date)
Production Engineering Div. Manager (to date)

2,000 shares

The reasons why the Company elects him as a candidate for Director:
Mr. Kikuchi has a philosophy required of a manufacturing company and mature judgment on the way personnel resources
should be based on his long-term experience of leading the manufacturing of the Company. He presently serves as theGeneral Manager of Production Engineering Division and Managing Director, promoting IR activities and work style reform
while supervising the Four-wheeled Vehicle Business Division. Based on his profound knowledge and experience in bothmanufacturing and administration, we determined that his experience and results will be useful for management of theCompany, and that therefore he is continuously appropriate as a candidate for a director.

- 16-

Candidate
No.

Name
(Date of birth)(Sex)

Toshihiro Shimizu(February 21, 1959)
Male
Reelected
5Career summary

April
Sep.

1983
2004

June

2005

June

2007

Aug.

2007

April

2009

June
June

2010
2013

June

2017

Joined Daido Kogyo Co., Ltd.
Corporate Planning Dept. Manager, Administration Div. of
Daido Kogyo Co., Ltd.
Corporate Planning Office Manager of Daido Kogyo Co.,LtdManager, Corporate Planning Office, Daido Kogyo Co.,
Ltd.
Representative Director & President, Daido Industrial E
Comercial Ltda.
Representative Director & President, Daido Industria De
Correntesda Amazonia Ltda.
Executive Officer of Daido Kogyo Co., Ltd.
Director, Industrial Products Div. Manager of Daido Kogyo
Co., Ltd.
Managing Director of Daido Kogyo Co., Ltd.(to date)
In charge of Motorcycle Parts Div. and Industrial Parts Div.
(to date)
Representative Director & President of D.I.D Asia Co.,
Ltd. (to date)Representative Director & President of D.I.D Asia Co.,
Ltd.

Number ofshares of theCompany held

20,000 shares

The reasons why the Company elects him as a candidate for Director:
Mr. Shimizu, since having assumed important posts in business planning functions, has engaged in the management ofseveral overseas subsidiaries as Representative Director, and engages in management of those subsidiaries. He is presently
leading the two-wheeled vehicle business and industrial machinery business, which are core business of the Company, as aManaging Director. Based on his great deal of experience in business execution and profound knowledge, we determinedthat his experience and results will be useful for management of the Company, and that therefore he is continuously
appropriate as a candidate for a director.

Masanori Sanada(January 7, 1962)
Male
New
6

April
June

1984
2005

June

2007

June

2013

June

2015

June

2019

Joined Daido Kogyo Co., Ltd.
Administration Dept. Manager, Administration Div. of
Daido Kogyo Co., Ltd.
Corporate Planning Office Manager of Daido Kogyo Co.,
Ltd.
Executive Officer and Administration Div. Manager ofDaido Kogyo Co., Ltd.
Representative Director & President of Daido Sittipol Co.,Ltd.
Senior Executive Officer of Daido Kogyo Co., Ltd.
(to date)
Administration Div. Manager of Daido Kogyo Co., Ltd.

4,800 shares(to date)
The reasons why the Company elects him as a candidate for Director:
Mr. Sanada has profound knowledge on finance and accounting based on his long-term experience of leading theadministration and management planning departments and has assumed important posts in business planning functions andengaged in the management of an overseas subsidiary as Representative Director. Thus, he has plenty of experience inmanagement of the Company's Group. He presently serves the General Manager of Administration Division as Senior
Executive Officer and we determined that his experience and results will be useful for management of the Company, andthat therefore he is appropriate as a candidate for a director.

- 17-

Name
(Birth date)
Sex

Candidate
Number

Career summary and position and responsibilities at the Company(Important concurrent position)
April 1984
Dec. 2004
June 2005

Toshio Ishimura(October 15, 1961)
Male
New
7

June

2009

June
June

2011
2017

June

2019

Joined Daido Kogyo Co., Ltd.
AS Business Dept. Manager of Daido Kogyo Co., Ltd.
Manager, Corporate Planning Office of Daido Kogyo Co.,Ltd.
Manager, Industrial Machinery Sales Dept. of D.I.D
Industrial Machinery Sales Dept. Manager of D.I.D Co.,Ltd.
Director of D.I.D Co., Ltd.
Executive Officer and Industrial Machinery Sales Dept.
Manager of Daido Kogyo Co., Ltd. (to date)Senior Executive Officer of Daido Kogyo Co., Ltd.
(to date)

Number ofshares of theCompany held

2,000 shares

The reasons why the Company elects him as a candidate for Director:
Mr. Ishimura has a great deal of business experience and knowledge based on his long-term experience of leading theindustrial machinery business as well as excellent capability and knowledge on corporate management through theexperience of serving as a director of a domestic subsidiary, etc. He presently serves as the Manager of Industrial
Machinery Dept. as Senior Executive Officer and we determined that his experience and results will be useful for
management of the Company, and that therefore he is appropriate as a candidate for a director.

(Notes)1.

A director candidate Mr. Hirofumi Araya serves concurrently as Chairman and Director of Daido Sittipol Co., Ltd.,
which engages in the business falling under the same category as the Company's and has business (chains and otherproducts) with the Company. Additionally, the Company provides a guarantee for its loan of the funds.

2.

There are no special interests between the other director candidates and the Company.

3.

D.I.D Co., Ltd. was a consolidated subsidiary of the Company but merged into the Company as of April 1, 2018.

- 18-

Proposal No. 4: Election of Four Directors serving a member of the Audit and Supervisory Committee.
When Proposal No. 2 "Partial amendment to the Articles of Association" is approved as drafted, theCompany will shift to a company with Audit and Supervisory Committee.
Accordingly, we would like you to elect four Directors serving the Audit and Supervisory Committee.
This Proposal takes effect on condition of the enforcement of amendment of the Articles of Association in
Proposal No. 2 "Partial amendment to the Articles of Association."
The candidates for Directors serving the Audit and Supervisory Committee are as follows.

Note that this

Proposal has been approved by the Board of Auditors.
Name(Birth date)
Sex

Candidate
No.

Career summary and position and responsibilities
at the Company(Important concurrent position)

Kiyohiro Kajiya(February 4, 1961)
Male

June 2009
June 2011
June 2015
June 2017

1

New

Manager, Production System Dept., Business Support Div.
of Daido Kogyo Co., Ltd.
Manager, Industrial Machinery Business Dept. andIndustrial Machinery Dept.
Manager, Industrial Machinery Business Dept. andIndustrial Machinery Manufacturing Dept.
Senior Executive Officer of Daido Kogyo Co., Ltd. (todate)
Safety and Quality Div. Manager of Daido Kogyo Co., Ltd.
(to date)

Number of theCompany's
shares held

600 shares

The reasons why the Company elects him as a candidate for Director serving the Audit and Supervisory Committee:
Mr. Kajiya has various business experiences in the Company's engineering, manufacturing, and quality departments andplayed a leading role in manufacturing. We have determined that he is expected to contribute to reinforcement of theCompany's auditing and supervisory functions using his abundant experience and knowledge and is therefore appropriate as a
candidate.

Tamotsu Sawa
(August 15, 1947)
Male

2
New

OutsideIndepen-dent

April 1970
June 2002
June 2008
June 2012
June 2015
June 2018

Joined Araya Industrial Co., Ltd.
Director, Araya Industrial Co., Ltd.
Managing Director, Araya Industrial Co., Ltd.
Representative Director & President, Araya Industrial Co.,Ltd.
Director, Daido Kogyo Co., Ltd. (to date)Director and Senior Advisor, Araya Industrial Co., Ltd.
(to date)

0 shares(Important concurrent position)
Director and Senior Advisor of Araya Industrial Co., Ltd.

The reasons why the Company elects him as a candidate for Outside Director serving the Audit and Supervisory Committee:
Mr. Sawa served as the representative director of another company and has a great deal of experience in business management
over the years. Since the assumption of the post of outside director of the Company, he has given helpful opinions andindications for management of the Company, We have determined that reinforcement of the Company's corporate governanceis expected from utilization of his experience and performance for corporate management and that he is therefore appropriate
as a candidate.

- 19-

Candidate
No.

Name
(Birth date)
Sex

Career summary and position and responsibilities at the Company(Important concurrent position)
Oct.

3

Joined Inoue Tatsuo Accounting Office(present KPMG Azsa & Co.)March 1988 Registered as Certified Public Accountant.
May 2003 Asahi & Co. (present KPMG Azsa & Co.)May 2007 Representative Partner, KPMG Azsa & Co.
Seiji Sakashita(present KPMG Azsa & Co.)
(February 2, 1958)
Feb. 2014 Representative Partner, Hokuriku Auditing Office(to date)
Male
June 2016 Outside auditor, Komatsu Matere Co., Ltd. (to date)June 2019 Outside auditor, TAKAMAZ Machinery Co., Ltd.
(to date)
June 2019 Chairman of the Hokuriku Association of the JapaneseInstitute of Certified Public Accountants (to date)(Important concurrent position)
Representative Partner of Hokuriku Auditing Office
Indepen Outside auditor of Komatsu Matere Co., Ltd.
OutsideNew-dent
Outside auditor of TAKAMAZ Machinery Co., Ltd.
Chairman of the Hokuriku Association of the Japanese Instituteof Certified Public Accountants

Number of theCompany's
shares held

1984

0 shares

The reasons why the Company elects him as a candidate for Outside Director serving the Audit and Supervisory Committee:
Mr. Sakashita has never directly participated in business management but has a great deal of knowledge and experience infinance and accounting and is familiar with corporate accounting as CPA. In addition, we have determined that reinforcementof the Company's audit system is expected from utilization of his wide-range performance and experience as representative
director of auditing offices and outside director of other listed companies for management of the Company and that he isappropriate as a candidate.
Nov.

1996

Graduate School of Engineering, the University of Tokyo
Assistant specialized in Naval Architecture and Ocean
Engineering.
March 1997 Joined Sumitomo Heavy Industries, Ltd.
April 2000 Graduate School of Engineering, theUniversity of Tokyo. Assistant specialized in
Environment and Ocean Engineering.
Nov. 2003 Assistant Professor, same major and same school
Shoji Takechi
April 2006 Assistant Professor, specialized in Technology(February 14, 1967)
Management for Innovation.
April 2007 Associate Professor, same major and same school
Male
April 2009 Associate Professor, Academic Foundations Programs,
Kanazawa Institute of Technology.
April 2010 Associate Professor, Department of Management
Systems, Faculty of Information Science, Kanazawa
Institute of Technology.
April 2012 Professor, Department of Management Systems, Facultyof Information Frontier, Kanazawa Institute ofTechnology .(to date)(Important concurrent position)
Indepen Professor, Department of Management Systems, Faculty of Information
New
Outside-dent
Frontier, Kanazawa Institute of Technology

0 shares

The reasons why the Company elects him as a candidate for Outside Director serving the Audit and Supervisory Committee:
Mr. Takechi has never directly participated in business management but has high-level expertise in knowledge andengineering through his long-term service as a professor of the university's engineering department. In addition, the field of
his expertise has a high affinity for the Company's business field, so we have determined that he is expected to give
appropriate advice and conduct an audit on management of the Company based on his experience and performance and that heis appropriate as a candidate.
Outside: Candidates for outside director: Candidate for Director who meets the requirements for independent officers provided by the Tokyo
Stock Exchange
Notes: 1. Mr. Tamotsu Sawa serves as Director and Senior Advisor of Araya Industrial Co., Ltd., which
has no business relationship with the Company. There are also no special interests between
Indepen
-dent

- 20-

the other director candidates and the Company.
2. Mr. Tamotsu Sawa is going to retire from the post of Director and Senior Advisor of Araya
Industrial Co., Ltd. on June 25, 2020.
3. Mr. Seiji Sakashita is going to retire from the post of Outside Auditor of TAKAMAZ
Machinery Co., Ltd. on June 23, 2020. Note that he once belonged to Auditing Office

KPMG AZSA LLC, which serves as the accounting auditor for the Company, but
retired from the same Auditing Office in June 2013.
4. Mr. Tamotsu Sawa presently serves as an outside director of the Company, and the length ofservice will be five years at the time of conclusion of this General Meeting of Shareholders.
5. In accordance with the provision of paragraph 1, Article 427 of the Companies Act, theCompany has concluded a contract with Mr. Tamotsu Sawa for limitation of the liability ofcompensation for damages as set forth in paragraph 1, Article 423 of the Companies Act.
The limit of the liability for compensation under the contract is the amount limited by laws
and regulations. The Company plans to continue the contract with Mr. Tamotsu Sawa if his
re-election is approved. If Mr. Kiyohiro Kajiya and Mr. Seiji Sakashita and Mr. Shoji
Takechi are elected, the Company will conclude a similar contract on liability limitation
with them.
6. The Company has designated Mr. Tamotsu Sawa as an independent director under the Rules of
the Tokyo Stock Exchange.
The Company is also going to report Mr. Seiji Sakashita and Mr. Shoji Takechi to the Tokyo
Stock Exchange as independent directors since they meet the requirements of independent
director under the Rules of the same Exchange if election of the three directors is approved.

- 21-

Proposal No. 5: Amount of Directors' remuneration (except Directors serving the Audit and Supervisory
Committee)
When Proposal No. 2 "Partial amendment to the Articles of Association" is approved as drafted, theCompany will shift to a company with Audit and Supervisory Committee.
The amount of remuneration to the Company's Directors was approved to be not more than 300 million
yen per year in the 114th Ordinary General Meeting of Shareholders held on June 28, 2007.

In responseto the shift of the Company to a company with Audit and Supervisory Committee, we would like toabolish this rule and newly determine the amount of remuneration for Directors (except Directors serving
the Audit and Supervisory), which we consider to be within 300 million yen per year in light of thepresent amount of remuneration to Directors and the recent circumstances including economic situation,and expect the specific amount to each Director, timing of payment, etc. to be decided by resolution of theBoard of Directors.
We would like to exclude the pay for the portion of employee from the remuneration to Directors who
concurrently serve as an employee.
The present number of Directors is seven and the number of Directors (except Directors serving the Audit
and Supervisory Committee) relevant to this Agenda item will be seven if Proposals Nos. 2 and 3 areapproved as drafted.
This Proposal takes effect on condition of the enforcement of amendment of the Articles of Association in
Proposal No. 2, "Partial amendment to the Articles of Association."

Proposal No. 6: Amount of Directors' remuneration (for the Directors serving the Audit and Supervisory
Committee)
When Proposal No. 2 "Partial amendment to the Articles of Association" is approved as drafted, theCompany will shift to a company with Audit and Supervisory Committee.
Accordingly, we would like to determine the amount of remuneration for Directors serving the Audit andSupervisory Committee to be within 100 million yen per year in light of the recent circumstances
including economic situation, and expect the specific amount to each Director serving the Audit andSupervisory Committee, timing of payment, etc. to be decided through the discussion by Directors
serving the Audit and Supervisory Committee.
The number of Directors serving the Audit and Supervisory Committee relevant to this Agenda item will
be four if Proposals Nos. 2 and 4 are approved as drafted.
This Proposal takes effect on condition of the enforcement of amendment of the Articles of Association in
Proposal No. 2, "Partial amendment to the Articles of Association."- 22-

Proposal No. 7:Continuance of response policy against large-scale purchase of the Company Share
Certificates, etc. (takeover defense measures)
The Company, with the approval of shareholders, introduced the Policy on Response to a LargeScale Purchase of the Company Shares, etc. in the 124th Ordinary General Meeting of Shareholders
held on June 27, 2017 (hereinafter called "Existing Response Policy"), which is to expire upon the
conclusion of this General Meeting.
After this introduction, the Company has continued to examine what the Existing Response Policy
should be like, including whether to maintain it or not, based on changes in the social and economic
situation as well as the trends and discussions concerning takeover defense measures as one of theefforts to secure and improve the corporate value and the interests common to all shareholders of theCompany.
As a result, the Company resolved in the Board of Directors Meeting held on May 21, 2020 andannounced that the Existing Response Policy will be maintained with partial changes (hereinafter
the response policy after change will be called "this Response Policy"), subject to the approval ofshareholders in this General Meeting, as an effort to prevent the decision of the Company's financial
and operational policies from being controlled by any person inappropriate in light of the Basic
Policy for the Modality of the Person Controlling Decisions on the Company's Financial And
Operational Policies as set forth in Item 3, Article 118 of the Ordinance for Enforcement of theCompanies Act (hereinafter called "Basic Policy regarding Control of the Company").
This Bill is to ask our shareholders to for approval of the maintenance of this Response Policy
pursuant to the provision of Paragraph 1, Article 41 of the Articles of Incorporation of the Company.
In addition, as mentioned, the present Policy is going to expire at the end of this General Meeting,i.e., at the end of continued General Meeting(see "Notice Concerning the one hundred twenty
seventh Ordinary General Meeting of Shareholders and the Ordinary General Meeting of
Shareholders" published on May 21, 2020). However, we would like to notice that application of
the present Policy be terminated on the day (*1) of approval by shareholders for this Proposal (June26, 2020) and application of the new Policy be started. (*2) The substance of this Response Policy
will be as shown in "I. Basic Policy for the Modality of the Person Controlling Decisions on the
Company's Financial And Operational Policies."
In this Response Policy, necessary revisions and other rearrangements in wording were made but
there is no substantial change from the contents of the current Response Policy.
I. Basic Policy for the Modality of the Person Controlling Decisions on the Company's
Financial And Operational Policies
The Company's Board of Directors considers that, since it is a listed company allowing opentransactions of its shares, it should finally be left to the discretion of the shareholders whether tosell their shares in the Company responding to a large-scale purchase by a specific person.
However, the Company also considers that, in order to improve the corporate value and theinterests common to all shareholders by providing highly functional and high quality products asa result of its thorough pursuit of technologies that will satisfy customer needs, it is essential toenforce policies developed from medium- and long-term perspectives for the purpose of
securing: (a) technological capabilities to meet customer needs; (b) global supply systems; (c)strong relationships of trust with business partners; (d) the worldwide brand power of "D.I.D";(e) contribution to local economies and communities; and (f) complementary relationships
between the business segments, which all are the sources of the Company's corporate value. In
the event that the person controlling decisions on financial and operational policies fails to
enforce policies from such medium- and long-term perspectives, the corporate value of theCompany Group as well as the interests common to all shareholders and those of stakeholders of
the Company may be damaged.

- 23-

Though the Company is working on investors relations activities to make the fair value of theCompany shares understood by its shareholders and investors, it will be essential that appropriate
and sufficient information be provided by both the purchaser and the Company's Board of
Directors, for shareholders to make an adequate judgment within a short period of time on theappropriateness of such large-scale purchase including whether the acquisition value of theCompany shares presented by the purchaser is reasonable when a sudden large-scale purchase by
the purchaser is made. Further, it is also considered that information such as the effects of such
purchase on the Company Group, the substance of management policies and business plans
expected to be adopted by the purchaser when it takes part in the management of the Company
Group, and opinions of the Company's Board of Directors on such purchase will be critical forshareholders intending to continue holding the Company shares to examine whether to continued
holding them.
Taking the above into consideration, the Company considers that a purchaser intending to make alarge-scale purchase will be required to start an act of such purchase only after: (a) the purchasefurnishes the Company with necessary and sufficient information on such purchase in advance;(b) a given length of an assessment period set for the Company's Board of Directors has elapsed;and (c) the Company's Board of Directors or the General Meeting of Shareholders resolves onwhether to implement gratis allotment of equity warrants, in accordance with given rules
established and disclosed in advance by the Company for the shareholders' judgment (hereinafter
called " Large-Scale Purchase Rules"; please refer to II for the details).
In addition, there is a possibility of a large-scale purchase which may be considered to causesignificant damage to the Company's corporate value and the interests common to allshareholders (for the details please refer to (a) - (g) under 4 (1) of II hereof). The Company
considers that, in order to protect the Company's corporate value and the interests common to allshareholders, it is necessary for the Company's Board of Directors to take measures against suchlarge-scale purchases considered appropriate in accordance with this Basic Policy.
II. Effort to prevent the decision of the Company's financial and operational policies frombeing controlled by any person inappropriate in light of the Basic Policy regarding Controlof the Company
As an effort to prevent the decision of the Company's financial and operational policies frombeing controlled by any person inappropriate in light of the Basic Policy regarding Control of theCompany, in case of (i) a purchase of the Company Share Certificates, etc. (*5) for the purposeof making the ratio of the voting rights (*4) of a specific shareholders' Group (*3) 20% or more;(ii) a purchase of the Company Share Certificates, etc. resulting in making the ratio of the voting
rights of a specific shareholders' Group 20% or more (regardless of the method of purchase,including a market transaction or a takeover bid, and purchases by a person agreed on by theCompany's Board of Directors in advance will be excluded); or (iii) an agreement, etc. withanother shareholder of the Company resulting in making the ratio of the voting rights of a
specific shareholders' Group 20% or more (*6) (hereinafter such purchase or agreement, etc. will
be called "Large-Scale Purchase," and a person conducting such purchase or making suchagreement, etc. will be called "Large-Scale Purchaser"), the Company will establish a given
response policy for cases where the Large-Scale Purchaser are or are not in compliance withgiven reasonable rules as shown below ("Large-Scale Purchase Rules") which the Company will
request the Large-Scale Purchaser to comply with.
1. Need to maintain this Response Policy
As stated in I above, the Company considers that a Large-Scale Purchaser should start a
Large-Scale Purchase only after: (a) the Purchaser furnishes the Company's Board of
Directors with necessary and sufficient information on such Large-Scale Purchase inadvance; (b) a given length of an assessment period set for the Company's Board of Directors
has elapsed; and (c) the Company's Board of Directors or the General Meeting of
Shareholders resolves on whether to implement gratis allotment of equity warrants, inaccordance with the Large-Scale Purchase Rules established and disclosed in advance by theCompany for the shareholders' judgment prior to a Large-Scale Purchase.
The Company's Board of Directors and Independent Committee will, after such information- 24-

is furnished, respectively start to examine its opinion carefully on the Large-Scale Purchaseas soon as possible, and form based on advice from experts such as financial advisors,certified public accountants, lawyers, and consultants (hereinafter called "Outside Experts,etc."), and disclose as necessary, their opinions. Further, the Company's Board of Directors
will negotiate on improvements in the proposal from the Large-Scale Purchaser or present analternative proposal as the Company's Board of Directors to the Company's shareholders,
where considered necessary. Following such process will make it possible for the Company’s
shareholders to compare the proposal from the Large-Scale Purchaser and the alternative
proposal (if presented) by reference to the opinion of the Company's Board of Directors, andbe provided with an opportunity to appropriately decide on final approval or denial.
In addition, the Company decided to certain response policies for cases where the LargeScale Purchaser is or is not in compliance with the Large-Scale Purchase Rules, and maintainthis Response Policy as a measure against a Large-Scale Purchase by any person
inappropriate in light of the Basic Policy regarding Control of the Company.
2. Establishment of Independent Committee
The Company will establish the Independent Committee as a consultative body for operating
this Response Policy properly and preventing arbitrary decision-making by the Company's
Board of Directors. The Independent Committee will consist of three or more members
selected from among the Company's Outside Directors, the Company's Outside Auditors, andOutside Intellectuals (*7) who are independent of the management performing theCompany's business operations to allow fair and neutral judgments. The names and careersummaries of the Independent Committee members in case this Response Policy ismaintained are as shown in Exhibit 3. The outline of the Independent Committee is as shownin Exhibit 2.
This Response Policy sets forth the objective requirements pertaining to the implementationof gratis allotment of equity warrants as a countermeasure against the relevant Large-Scale
Purchase: where the Large-Scale Purchaser is in compliance with the Large-Scale Purchase
Rules, gratis allotment of equity warrants as a countermeasure against the relevant LargeScale Purchase will not be implemented, in principle, as stated in 4.(1) of II below, and where
the Large-Scale Purchaser is not in compliance with the Large-Scale Purchase Rules, gratis
allotment of equity warrants may be implemented as a countermeasure against the relevant
Large-Scale Purchase, as stated in 4.(2) of II below. In addition, any important judgment
pertaining to this Response Policy such as a judgment whether the relevant Large-Scale
Purchase will fall into a category of a Large-Scale Purchase which may cause significant
damage to the Company's corporate value and the interests common to all shareholders(please refer to 4.(1) of II below), whether the Large-Scale Purchaser is in compliance with
the Large-Scale Purchase Rules (please refer to 4.(2) of II below), and whether to implement
or not to implement, or to change or stop gratis allotment of equity warrants (please refer to 4
of II below) must be referred to the Independent Committee, and the Company's Board of
Directors will respect such recommendation to the maximum extent.
The Independent Committee may obtain advice from Outside Experts, etc. who are
independent of the Company's Board of Directors or the Independent Committee, as
necessary. Any and all costs incurred for obtaining such advice will be borne by the Company,
excluding exceptional cases considered especially unreasonable.
Resolutions of the Independent Committee will be made by a majority of all the Independent
Committee members in office in a meeting attended by all such members, in principle;
provided, however, that in case there is an unavoidable reason that not all the members areable to attend the meeting, the resolution of the Independent Committee will be made by amajority of the members attending a meeting attended by a majority of all the Independent
Committee members.
3. Substance of Large-Scale Purchase Rules(1) Furnishing of Information
The Large-Scale Purchase Rules set forth by the Company is: a Large-Scale Purchaseshould be started after (a) the Large-Scale Purchaser furnishes the Company's Board of
Directors with necessary and sufficient information on the Large-Scale Purchase in- 25-

advance; and (b) a given length of an assessment period set for the Company's Board of
Directors has elapsed; and (c) the Company's Board of Directors or the General Meetingof Shareholders resolves on whether to implement gratis allotment of equity
warrants.More concretely, the Large-Scale Purchaser will be requested to first submit to
President of the Company a Letter of Intent to show its commitment to observe theLarge-Scale Purchase Rules expressly stating the Purchaser's name, address, laws
governing incorporation, name of representative, domestic contact information, and theoutline of the proposed Large-Scale Purchase, and then furnish the Company's Board of
Directors with necessary and sufficient information for the Company's shareholders
judgment and the Company's Board of Directors and the Independent Committee
forming their opinions (hereinafter called "Necessary Information").
The Company's Board of Directors will issue to the Large-Scale Purchaser the list of
Necessary Information to be furnished initially by the relevant Large-Scale Purchaser
within ten business days after the receipt of the Letter of Intent. With a view to seeking
prompt operation of the Large-Scale Purchase Rules, the Company's Board of Directors
may set a deadline for such furnishing of information, as necessary. In case theinformation furnished initially is judged insufficient by itself as a result of close
examination, the Company's Board of Directors may request the Large-Scale Purchaser
to submit additional information no later than the deadline set from time to time, to thedegree as considered sufficient. The Company's Board of Directors will provide theIndependent Committee with the Necessary Information furnished by the Large-Scale
Purchaser as soon as possible.
The specific substance of the Necessary Information will differ dependent on theattribute of the Large-Scale Purchaser and the purpose and content of the Large-Scale
Purchase; part of the common items is shown below:i)Outline of the Large-Scale Purchaser and its Group (including joint holder, quasijoint holder, and specific interested parties, and in case of a fund, the fundmembers and other members); this "outline" will include information on the
Large-Scale Purchaser's line of business, capital structure, and experience inrelation to a business of the same type as the Daido Kogyo Group's;ii) Any and all securities issued by the Company and held by the Large-Scale
Purchaser, the status of any and all transactions pertaining to the Company
securities made by the Large-Scale Purchaser within the past 60 days (including
the natures, values, places, methods, and the other parties of such transactions),
and any and all contracts, arrangements, and agreements (including oral ones, andregardless of their performabilities) made by the Large-Scale Purchaser pertaining
to the Company securities;iii) Purpose and content of the Large-Scale Purchase (including the value and type ofthe consideration of the purchase, etc., timing of the purchase, etc., mechanism ofrelated transactions, legality of the method of the purchase, etc., and feasibility ofthe purchase, etc. and related transactions,);iv) Presence or absence of communications of intentions with third parties for theLarge-Scale Purchase (including communications of intentions regarding an act ofimportant proposal, etc. to the Company as defined in Article 27-26, Paragraph 1of the Financial Instruments and Exchange Act; hereinafter the same will apply),and in case there exist such communications of intentions, the specific manners
and contents thereof;v) Grounds of calculation of the acquisition value of the Company shares, and thebackground of the acquisition fund, including specific names of the funders andsubstantial funders, procurement method, and contents of related transactions;vi) Management candidate (including information on experience, etc. regarding
business of the same type as the Daido Kogyo Group's), management policy,
business plan, financial plan, capital policy, dividend policy, and asset utilization
measures as supposed to be taken after participating in the Group's management(hereinafter called "Management Policy, etc. after Purchase");vii) Presence or absence of any change planned to be made after completion of theLarge-Scale Purchase concerning the relations between the Group and its- 26-

stakeholders such as suppliers, customers, and employees, as well as the contents
thereof;viii) Specific measures to avoid any conflict of interest with other shareholders of theCompany; andix) Any other information reasonably judged to be necessary by the Company's Boardof Directors.
The Company's Board of Directors will disclose the fact of having received the Letter ofIntent as soon as possible, and the whole or part of the Necessary Information furnishedto the Company's Board of Directors at the timing judged appropriate by the Company's
Board of Directors to the extent as considered necessary for the shareholders' judgments.
(2) Assessment period by the Company's Board of Directors
The Company's Board of Directors considers that the Company should then be given 60
days (in case of a purchase of the whole of the Company shares by tender offer whose
consideration is exclusively in yen in cash) or 90 days (in case of any other large-scalepurchase), according to the difficulty of the assessment, etc, of the Large-Scale Purchase,after the Large-Scale Purchaser completes the furnishing of Necessary Information to
the Company's Board of Directors as the period for assessment, examination,negotiation, opinion formation, and development of alternative proposal by theCompany's Board of Directors (hereinafter called "the Board of Directors Assessment
Period"). The Company's Board of Directors will disclose the fact of the completionof the furnishing of Necessary Information, when it is completed, as well as the
expiration date of the Board of Directors Assessment Period.
During the Board of Directors Assessment Period, the Company's Board of Directors
will assess and examine furnished Necessary Information sufficiently based on therecommendation of the Independent Committee and advice from Outside Experts, etc.,
as necessary, carefully form an opinion as the Company's Board of Directors respecting
the recommendation of the Independent Committee to the maximum extent, anddisclose it. The Company's Board of Directors may further negotiate with the LargeScale Purchaser on improvements in the conditions of the Large-Scale Purchase orpresent an alternative proposal as the Company's Board of Directors to the Company's
shareholders, as necessary.
In case there is an unavoidable reason that the Company's Board of Directors is unable
to resolve to implement or not to implement gratis allotment of equity warrants orresolve to call the General Meeting of Shareholders during the Board of Directors
Assessment Period such as the Independent Committee having not been able to make a
recommendation to implement or not to implement gratis allotment of equity warrants
or a recommendation to refer to the General Meeting of Shareholders as to whether toimplement or not to implement gratis allotment of equity warrants, the Company's
Board of Directors may extend the Board of Directors Assessment Period to a necessary
extent up to 30 days based on the recommendation of the Independent Committee. Incase of resolving to extend the Board of Directors Assessment Period, the Company's
Board of Directors will immediately disclose the specific period as resolved above andthe reason of the need of such specific period in accordance with applicable laws andregulations and the rules of any relevant financial instruments exchange.
(3) Resolution by the Company's Board of Directors, and holding the General Meeting of
Shareholders
The Company's Board of Directors will make a resolution to implement or not to
implement gratis allotment of equity warrants as a countermeasure or to call the General
Meeting of Shareholders, or any other necessary resolution during the Board of
Directors Assessment Period, respecting the recommendation of the Independent
Committee to the maximum extent.
In case of receiving a recommendation from the Independent Committee to refer to theGeneral Meeting of Shareholders as to whether to implement or not to implement gratis
allotment of equity warrants, or judging based on a recommendation of the Independent- 27-

Committee to implement gratis allotment of equity warrants that the Company's Boardof Directors should reflect the shareholders' opinion, the Company's Board of Directors
will resolve to call the General Meeting of Shareholders, in principle, to refer to theshareholders as to whether to implement gratis allotment of equity warrants, and willhold the General Meeting of Shareholders within 60 days at the longest from the date ofsuch resolution.
4. Response Policy to be taken when Large-Scale Purchase is implemented(1) In case the Large-Scale Purchaser is in compliance with the Large-Scale Purchase Rules
In case the Large-Scale Purchaser is in compliance with the Large-Scale Purchase Rules,
the Company's Board of Directors will not take a countermeasure against such LargeScale Purchase, in principle, even when it objects to such Large-Scale Purchase,
thinking that it will be able to achieve accountability to the Company's shareholders byexpressing its objection to such Purchase proposal or presenting an alternative proposal.
It will be the Company's shareholders that will judge whether to agree to the Purchaseproposal by the Large-Scale Purchaser, taking into consideration the relevant LargeScale Purchase proposal as well as the opinions on such Purchase proposal andalternative proposals presented by the Company.
However, even in case the Large-Scale Purchaser is in compliance with the Large-Scale
Purchase Rules, where it is considered that such Large-Scale Purchase will causesignificant damage to the Company's corporate value and the interests common to allshareholders, the Company's Board of Directors may implement gratis allotment ofequity warrants such Large-Scale Purchase in order to protect the Company's corporate
value and the interests common to all shareholders. Specifically, Large-Scale Purchases
considered to fall into any of the categories shown below will be considered to causesignificant damage to the Company's corporate value and the interests common to allshareholders, in principle. In order to guarantee the objectivity and reasonableness ofthe judgment in making the above exceptional response, the Company's Board of
Directors will make a judgment after examining the details of the relevant Large-Scale
Purchaser and Large-Scale Purchase as well as the effects that may have on such LargeScale Purchase on the Company's corporate value and the interests common to allshareholders asking for advice from Outside Experts, etc. and based on the Necessary
Information furnished by the Large-Scale Purchaser including the Management Policy,
etc. after Purchase, respecting the recommendation of the Independent Committee to the
maximum extent.
In case of receiving a recommendation from the Independent Committee to refer to theGeneral Meeting of Shareholders as to whether to implement or not to implement gratis
allotment of equity warrants, or in case of judging after receiving the recommendationof the Independent Committee to implement gratis allotment of equity warrants that theCompany's Board of Directors should reflect the shareholders' opinion, the Company's
Board of Directors will resolve to call the General Meeting of Shareholders, in principle,
and may implement gratis allotment of equity warrants in accordance with such
resolution (for the procedures in case of holding the General Meeting of Shareholders,please refer to 3.(3) above).
a. Case of a Large-Scale Purchase which may cause clear damage to the Company's
corporate value and the interests common to all shareholders including acts as listed
in the following (i) to (iv):(i) Cornering shares and demanding that the Company buy them up at a highprice;(ii) Managing it in a manner of realizing the purchaser's interests at the sacrifice of
the Company by such means as controlling the Company temporarily andacquiring its important assets, etc. at low prices;(iii) Diverting the Company's assets to payment funds or security for debts of thepurchaser or its group companies, etc.; and(iv) Controlling the Company management temporarily and cause the Company todispose of high-priced assets, etc. not related with its business for the time
being, and with the benefit of such disposal cause it to pay temporary high- 28-

dividends or sell at a profit taking advantage of an opportunity of a sudden riseof the stock price due to the temporary high dividends.;
b. Case of a Large-Scale Purchase where shareholders may be virtually forced to sell
their shares such as coercive two-tier takeover (meaning a purchase of shares
including a takeover bid made setting the purchase terms at the second stage lessfavorable than the initial ones, or not clearly presenting the purchase terms at thesecond stage);c. Cases where the acquisition of control by the Large-Scale Purchaser may damage
the interests of the stakeholders such as employees, customers, and suppliers and bythat cause significant damage to the Group's corporate value and the interests
common to all shareholders
d. Case of a Large-Scale Purchase whose terms (such as the type and value of theconsideration, timing of the Large-Scale Purchase, legality of the purchase method,
and response policy toward the Group's stakeholders such as employees, customers,
and suppliers) are significantly insufficient or inappropriate in light of the Group's
intrinsic value;e. Case of a Large-Scale Purchase which may cause material damage to the Group's
corporate value and the interests common to all shareholders by destroying such
relationships with the Group's employees, customers, and suppliers or its corporate
culture as are indispensable to the production of the Group's corporate value;f. Cases where the Large-Scale Purchaser is considered inappropriate as thecontrolling shareholder of the Company from a viewpoint of public order and morals
on reasonable grounds including cases where the management or major shareholders
or investors of the Large-Scale Purchaser contain persons who are involved with anantisocial group; andg. Any other case similar to any of the (a) to (f) above where the Group's corporate
value and the interests common to all shareholders may be significantly damaged.
In case the relevant Large-Scale Purchase is considered to fall into any of the categories
shown above, the Company's Board of Directors may confirm the intention of theshareholders in the General Meeting of Shareholders as to whether to object to andrequest the cessation of such Large-Scale Purchase. In such case, the Company's Boardof Directors will consult the Independent Committee and obtain its recommendation
without fail before implementing the above. The Independent Committee may make a
recommendation to refer to the General Meeting of Shareholders as to whether to object
to and request the cessation of the Large-Scale Purchase, not only in case of being
consulted by the Company's Board of Directors as to whether to object to and request
the cessation of such Large-Scale Purchase, but also in case of being consulted as towhether to implement gratis allotment of equity warrants.
(2) In case the Large-Scale Purchaser is not in compliance with the Large-Scale Purchase
Rules
In case the Large-Scale Purchaser is not in compliance with the Large-Scale Purchase
Rules, the Company's Board of Directors may, regardless of the specific purchasemethod, implement gratis allotment of equity warrants to counter the Large-Scale
Purchase for the purpose of protecting the Company's corporate value and the interests
common to all shareholders. It will be decided by the Company's Board of Directors byreference to the advice from Outside Experts, etc. and respecting the recommendation of
the Independent Committee to the maximum extent whether the Large-Scale Purchaser
is in compliance with the Large-Scale Purchase Rules and whether to implement gratis
allotment of equity warrants.
The outline of gratis allotment of equity warrants will be as stated in Exhibit 1. In caseof issuing equity warrants actually, the Company may establish the exercise period andexercise conditions, etc. with the effects as a countermeasure taken into considerationsuch as that to exercise the equity warrants the Large-Scale Purchaser may not belong toa specific shareholders' Group whose voting right ratio is at or above a given percentage.

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(3) Cessation, etc. of implementation of gratis allotment of equity warrants
In case of judging that it is not appropriate to implement gratis allotment of equity
warrants, including cases where the Large-Scale Purchaser revokes the intention of or
makes a change in a Large-Scale Purchase after it is determined to implement gratis
allotment of equity warrants, the Company's Board of Directors may cease or make achange in the implementation of gratis allotment of equity warrants, respecting therecommendation of the Independent Committee to the maximum extent.
For example, in case of judging that it is not appropriate to implement gratis allotmentof equity warrants, including cases where the Large-Scale Purchaser revokes theintention of or makes a change in a Large-Scale Purchase after the shareholders subject
to the gratis allotment of equity warrants are fixed, the Company's Board of Directors
may cease the implementation of gratis allotment of equity warrants as follows:i)
Until the effective date of the relevant gratis allotment of equity warrants, gratis
allotment of equity warrants will be ceased, with the recommendation of the
Independent Committee respected to the maximum extent.
ii) During the period between the effective date of the relevant gratis allotment ofequity warrants and the commencement of the exercise period, gratis allotment ofequity warrants will be acquired without compensation, with the recommendationof the Independent Committee respected to the maximum extent.
In case of ceasing the implementation of gratis allotment of equity warrants as above,
the Company will disclose the information as soon as possible, together with mattersconsidered necessary by the Independent Committee.
5. Effects on shareholders and investors, etc.
(1) Effects, etc. on shareholders and investors at continuing this Response Policy
Since gratis allotment of equity warrants will not be implemented at the time ofcontinuing this Response Policy, there will be no direct and concrete effect onshareholders and investors.
(2) Effects, etc. on shareholders and investors at implementing gratis allotment of equity
warrants
In case the Large-Scale Purchaser is not in compliance with the Large-Scale Purchase
Rules, the Company's Board of Directors may, based on the resolution of the Company's
Board of Directors or the General Meeting of Shareholders, implement gratis allotmentof equity warrants for the purpose of protecting the Company's corporate value and theinterests common to all shareholders. In such case, equity warrants will be allotted tothe shareholders recorded in the shareholder registry at the allotment date fixed by the
resolution of the Company's Board of Directors or the General Meeting of Shareholders
according to the number of shares held by the respective shareholders. As suchshareholders will naturally become the holders of the equity warrants on the effective
date of the relevant gratis allotment of equity warrants, no procedure for application will
be required. Judging from the mechanism of gratis allotment of equity warrants, it is notassumed that the Company's shareholders (excluding the Large-Scale Purchaser
performing the Large-Scale Purchase subject to the implementation of gratis allotmentof equity warrants) may suffer any special damage in their legal rights or economic
aspects. In case of deciding to implement gratis allotment of equity warrants, theCompany's Board of Directors will make a disclosure in a timely and appropriatemanner in accordance with applicable laws and regulations and the rules of any relevant
financial instruments exchange.
In case gratis allotment of equity warrants is implemented, shareholders will be required
to pay in a given amount of money within the prescribed period to acquire new sharesby exercising equity warrants. In case of deciding to acquire equity warrants, theCompany's Board of Directors may issue new shares to shareholders without paying in
the amount equivalent to the exercise price, in compensation for the Company’s
acquisition of equity warrants. The details of such procedures will be announced
separately in accordance with applicable laws and regulations when it is decided that
equity warrants be actually issued.

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Since there will arise no dilution in stock value per share in case the Company's Boardof Directors ceases to issue the relevant equity warrants or acquires issued equity
warrants without compensation based on the recommendation of the Independent
Committee, shareholders or investors who transact shares on the assumption of dilutionof the Company shares on or after the ex-right date pertaining to the relevant gratis
allotment of equity warrants may suffer unexpected damage due to stock pricemovements.
6. Start of application and effective term of this Response Policy
This Response Policy will apply as from the date of approval of the shareholders subject tosuch approval in the General Meeting of Shareholders as the stopping condition. This Policy
will continue effective until the conclusion of the Ordinary General Meeting of Shareholders
pertaining to the last fiscal year ending within three years from the date of such approval, andthereafter any continuance thereof, including cases of continuance with partial revisions, will
be subject to the approval of the Company's General Meeting of Shareholders; provided,
however, that in case the Company's General Meeting of Shareholders resolves to abolish thisResponse Policy or the Company's Board of Directors resolves to abolish the same respecting
the recommendation of the Independent Committee to the maximum extent, this Response
Policy will be abolished at the time of such resolution even during the effective term of thisResponse Policy. In such case, the Company will disclose the fact of such abolishment assoon as possible.
In addition, with a view to improving the Company's corporate value and the interests
common to all shareholders, this Response Policy may be reviewed and changed from time totime, based on any revisions or improvements in, or newly establishment of, relevant laws
and regulations and the listing system as prescribed by any relevant financial instruments
exchange and respecting the recommendation of the Independent Committee to the maximum
extent, even during the effective term of this Response Policy. In such case as well, theCompany will disclose the contents of such change as soon as possible.
7. Revision by laws and regulations, etc.
Any provisions of the laws and regulations quoted in this Response Policy are based on thosein effect at May 21, 2020. In case there arises a need to make any revision of any of theprovisions or the meanings of any terms as set forth in the above paragraphs due to newly
establishment, revision, or abolishment of relevant laws and regulations on or after such date,such provision or the meaning of such term may from time to time be deemed to be replaced
within a reasonable extent, with the purport of such newly establishment, revision, or
abolishment taken into consideration.

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Notes *1: If this continued general meeting is not held, it will be the end of this general meeting.
Notes *2: If this continued general meeting is not held, it will be the date of this general meeting.
Notes *3: The term "specific shareholders group" as used herein refers to:(i) holders (including those included in holders under Article 27-23, paragraph 3 of the
Financial Instruments and Exchange Act; this will apply hereinafter) and joint holders (asdefined in Article 27-23, paragraph 5 of the Act, including those deemed to be joint holders
under Article 27-23, paragraph 6 of the Act; this will apply hereinafter) of the Company's
share certificates, etc. (as defined in Article 27-23, paragraph 1 of the Act), and those whoare in certain relationships with the relevant holders or joint holders of the relevant holders
similar to those between a holder and a joint holder (hereinafter called "quasi-joint
holders"); or(ii) those who conduct a purchase, etc. (meaning "Purchase, etc." as defined in Article 27-2,
paragraph 1 of the Act, including those conducted in exchange financial markets, regardlessof whether it is by auction or other means) of the Company's share certificates, etc.
(meaning "Share Certificates, etc." as defined in Article 27-2, paragraph 1 of the Act) andspecific interested parties (meaning "Specific Interested Parties" as defined in Article 27-2,
paragraph 7 of the Act).
Notes *4: The term "ratio of the voting rights" as used herein refers to:(i) in case the specific shareholders group corresponds to the one stated in (i) in Note 3 hereof,
the ratio obtained by totaling: (a) the holding ratio of share certificates, etc. (referring to"Holding Ratio of Share Certificates, etc." as defined in Article 27-23, paragraph 4 of the
Financial Instruments and Exchange Act; in this case the number of the share certificates,etc. held (referring to "Number of Share Certificates, etc. Held," as defined in the same
paragraph, which will apply hereinafter) by joint holders of the relevant holders will also betaken into consideration in calculation) of the relevant holders; and (b) the holding ratio ofshare certificates, etc. of quasi-joint holders of the relevant holders; provided, however, thatthe number of the share certificates, etc. held overlappingly in both (a) and (b) will be
deducted from the total number of (a) and (b); or(ii) in case the specific shareholders group corresponds to the one stated in (ii) in Note 3 hereof,
the total of the ownership rate of share certificates, etc. ("Share Certificates, etc. Holding
Rate" as defined in Article 27-2, paragraph 8 of the Financial Instruments and ExchangeAct) of the relevant Large-Scale Purchaser and the relevant specific interested parties.
In calculation of the holding ratio and the ownership ratio for share certificates, etc., thereport most recently submitted out of the securities report, the quarterly report, and theshare buyback report may be referred to for the total number of voting rights (as defined in
Article 27-2, paragraph 8 of the Act) and that of outstanding shares (as defined in Article
27-23, paragraph 4 of the Act).
Notes *5: The term "share certificates, etc." as used herein refers to Share Certificates, etc. as defined in
Article 27-23, paragraph 1 of the Financial Instruments and Exchange Act.
Notes *6: Refers to an agreement to jointly acquire or transfer of the Company share certificates, etc. or
exercise their voting rights or any other right as a shareholder of the Company, or any act
falling into the category of a joint holder as defined in Article 27-23, paragraphs 5 and 6 of the
Financial Instruments and Exchange Act.
Notes *7: “Outside Intellectuals" will be selected and appointed from among business managers having agreat deal of administrative experience, persons familiar with investment banking business,lawyers, certified public accountants, academics mainly researching the Companies Act, etc.,
or other persons similar thereto.

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Exhibit 1
Outline of Equity Warrants
1.

Shareholders subject to equity warrants and issuance condition
To each shareholder recorded in the final shareholder registry at the record date fixed by theCompany's Board of Directors, one equity warrant per common share of the Company (excluding
the Company's common shares held by the Company) held by such shareholder will be allotted
without requiring any new payment.

2.

Class and number of shares subject to equity warrants
The class of shares subject to equity warrants will be common stock of the Company, and the total
number of shares subject to equity warrants will not exceed the number obtained by subtracting thetotal number of the Company's outstanding common shares (excluding the Company's commonshares held by the Company) from the total number of the Company's authorized shares at therecord date fixed by the Company's Board of Directors. The number of shares subject to one equity
warrant (hereinafter called "Subject Number") will be decided separately by the Company's Boardof Directors; provided, however, that in case the Company carries out share split or consolidation ofshares, necessary adjustments will be made.

3.

Total number of equity warrants to be issued
The total number of equity warrants to be issued will be decided separately by the Company's Boardof Directors.

4.

Value of assets invested in exercising equity warrants (Value to be paid in)
The value of assets invested in exercising equity warrants (value to be paid in) will be one yen or
more, which will be decided by the Company's Board of Directors.

5.

Restriction on transfer of equity warrants
The acquisition of equity warrants by transfer of the relevant equity warrants will require approvalof the Company's Board of Directors.

6.

Conditions for exercise of equity warrants
Those belonging to a specific shareholders group whose ratio of voting rights is 20% or more will
not be entitled to exercise equity warrants, in principle. In addition, those located in the jurisdictionof applicable foreign laws and regulations and required by such laws and regulations to follow given
procedures for exercising equity warrants will also not be entitled to exercise equity warrants, inprinciple; provided, however, that certain persons such as those who can use an exemption provision
under applicable laws and regulations of the relevant foreign country may exercise equity warrants,
and the equity warrants held by such persons will be subject to the acquisition carried out by theCompany in consideration for the Company shares as set forth in 8. below. Further, those who havefailed to submit a note to confirm that they do not belong to a specific shareholders group in a form
designated by the Company (excluding those who were not required by the Company to submit thesame) will also not be entitled to exercise equity warrants. The details will be decided separately by
the Company's Board of Directors.

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7.

Exercise period for equity warrants
The exercise period for equity warrants will commence on the date fixed separately by theCompany's Board of Directors' resolution for gratis allotment of equity warrants (hereinafter called"Exercise Period Commencement Date") and continue for a period fixed separately by theCompany's Board of Directors' resolution for gratis allotment of equity warrants between one monthand three months. In case the final day of the exercise period falls on a holiday of the place toreceive the payments to be made in exercising such warrants, the previous business day will be thefinal day of the exercise period.

8.

Acquisition of equity warrants by the Companyi)
In case the Company's Board of Directors judges it appropriate for the Company to acquire
equity warrants, the Company may acquire all equity warrants without compensation as of thedate fixed separately by the Company's Board of Directors at any time up to the previous dayof the Exercise Period Commencement Date.
ii) The Company may, as of the date fixed separately by the Company's Board of Directors,
acquire all equity warrants not exercised by the previous day of the date fixed separately by theCompany's Board of Directors which are held by persons other than those who belong to a
specific shareholders group and those who have failed to submit a note to confirm that they do
not belong to a specific shareholders group by the date of acquisition in a form designated by
the Company (excluding those who were not requested to submit the same by the Company),
and in return for this, issue the Company shares in the Subject Number per such equity warrant.
In case the Company's Board of Directors considers on or after the date of such acquisition that
there is any person holding equity warrants who does not belong to a specific shareholders
group (provided, however, that for such recognition by the Company's Board of Directors, theCompany may request a document to be submitted in a form designated by the Company as set
forth in the preceding Paragraph in (ii) of this 8), the Company may acquire all equity warrants
not exercised by the previous day of the date fixed separately by such Company's Board of
Directors which are held by such person as of the date fixed separately by such Company's
Board of Directors after the date on which the above acquisition was made, and in return for
this, issue the Company shares in the Subject Number per such equity warrant, and this will
apply thereafter.
iii) In addition to the above (i) and (ii), any matter regarding the acquisition of equity warrants by
the Company will be decided by the resolution for gratis allotment of equity warrants, asnecessary.

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Exhibit 2
Outline of Independent Committee
1.

Establishment
The Independent Committee will be established by the resolution of the Company's Board of
Directors.

2.

MemberThe Independent Committee will consist of three or more persons independent of the management
performing the Company's business operations and requested by the Company's Board of Directors
from among the Company's outside directors, outside auditors, business managers having a great
deal of administrative experience, persons familiar with investment banking business, lawyers,certified public accountants, academics mainly researching the Companies Act, etc., and otherpersons similar thereto. The members when the Response Policy is continued will be Mr. Tetsuo
Nishi, Mr. Tamotsu Sawa and Mr. Seiji Sakashita.

3.

Term of office
The term of office of the Independent Committee members will continue until the conclusion of theOrdinary General Meeting of Shareholders pertaining to the last fiscal year ending within three years
after the conclusion of this General Meeting; provided, however, that, this will not apply in cases
where it is otherwise provided by the resolution of the Company's Board of Directors. In case any
Independent Committee member who was an outside director or outside auditor of the Company
ceases to serve as outside director or outside auditor (except where such outside director or outside
auditor is reappointed), his/her term of office as an Independent Committee member will also
terminate at the same time.
In case a vacancy has occurred in the office of any Independent Committee member, a new member
will be appointed by the resolution of the Company's Board of Directors from among those whosatisfy the requirements stated in above 2. The term of office of such newly appointed member willbe the same as the remaining term of office of his/her predecessor.

4.

Requirement for resolution
Resolutions of the Independent Committee will be made by a majority of all the Independent
Committee members in office in a meeting attended by all such members, in principle; provided,
however, that in case there is an unavoidable reason that not all the members are able to attend themeeting, the resolution of the Independent Committee will be made by a majority of the members
attending the meeting attended by a majority of all the Independent Committee members. In caseany resolution of the Independent Committee failed to be made with a tie vote, the Committee willreport to the Company's Board of Directors that the resolution failed to be made.

5.

Resolution matter, etc.
The Independent Committee will, when requested by the Company's Board of Directors, make adecision regarding the following matters, in principle, and provide such decision as arecommendation to the Board of Directors together with the reason thereof. Each member of the
Independent Committee will be required to make such decisions from a viewpoint of whether it willcontribute to the corporate value and the interests common to all the shareholders, not for the
purpose of seeking personal interests of his/her own or any of the Company's directors:
i)
ii)

Decision of a Large-Scale Purchase subject to the Large-Scale Purchase Rules;
Decision of Necessary Information for a Large-Scale Purchaser to provide for the Company's
Board of Directors;iii) Close inspection and examination of the details of a Large-Scale Purchase by a Large-Scale
Purchaser;

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iv)

Decision of whether the Large-Scale Purchase may seriously damage the corporate value andthe interests common to all the shareholders;v) Decision of whether the Large-Scale Purchaser is in compliance with the Large-Scale Purchase
Rules;
vi) Decision of whether the Board of Directors' assessment period should be extended;vii) Decision that it should be referred to the General Meeting of Shareholders whether toimplement gratis allotment of equity warrants;viii) Decision that it should be referred to the General Meeting of Shareholders whether to object to
the Large-Scale Purchase and seek to stop it;ix) Decision of whether to implement or not to implement, change or stop gratis allotment ofequity warrants;x) Examination of continuing, changing, or abolishing the Large-Scale Purchase Rules; andxi) Any other matter requested by the Company's Board of Directors which is to be decided by theCompany's Board of Directors.
To secure an appropriate judgment in above decisions, the Independent Committee will seek tocollect necessary and sufficient information and may ask for advice at the Company's cost fromoutside experts such as a financial advisor, certified public accountant, lawyer, and consultant.

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Exhibit 3
Independent Committee Member Career Summary
The Independent Committee will consist of the three persons shown below when the Response Policy is
continued.
Name

Tetsuo Nishi

Sawa Tamotsu

Seiji Sakashita

Career summary
Born in Jun 1947
Oct 1977 Passed national bar exam
Apr 1980 Practiced the law
Aug 2006 Chairperson, Ishikawa Pref. Personnel Committee (in service)
Apr 2008 President, Kanazawa Bar Association
Governor, Japan Federation of Bar Associations; Governor, Chubu
Federation of Bar Association
Ishikawa Pref. Information Disclosure Screening Commission (in service)
Ishikawa Pref. Personal Information Protection Review Board (in service)【Note】
There are no special interests between him and the Company.
Born in August 1947
April 1970 Joined Araya Industrial Co., Ltd.
June 2002 Director, Araya Industrial Co., Ltd.
June 2008 Managing Director, Araya Industrial Co., Ltd.
June 2012 Representative Director & President, Araya Industrial Co., Ltd.
June 2015 Director, Daido Kogyo Co., Ltd. (to date)June 2018 Director and Senior Advisor, Araya Industrial Co., Ltd. (to date)【Note】The Company has designated him as an independent director under the Rules of theTokyo Stock Exchange.
The Company is also going to report him to the Tokyo Stock Exchange as
independent directors since they meet the requirements of independent director under
the Rules of the same Exchange if election of the three directors is approved.
Born in February 1958
Oct. 1984 Joined Inoue Tatsuo Accounting Office(present KPMG Azsa & Co.)March 1988 Registered as Certified Public Accountant.
May 2003 Asahi & Co.
(present KPMG Azsa & Co.)May 2007 Representative Partner, KPMG Azsa & Co.
(present KPMG Azsa & Co.)
Feb. 2014 Representative Partner, Hokuriku Auditing Office (to date)June 2016 Outside auditor, Komatsu Matere Co., Ltd. (to date)June 2019 Outside auditor, TAKAMAZ Machinery Co., Ltd. (to date)June 2019 Chairman of the Hokuriku Association of the Japanese Institute of Certified Public
Accountants (to date)(Important concurrent position)
Representative Partner of Hokuriku Auditing OfficeOutside auditor of Komatsu Matere Co., Ltd.
Outside auditor of TAKAMAZ Machinery Co., Ltd.
Chairman of the Hokuriku Association of the Japanese Institute of Certified Public Accountants【Note】The Company is also going to report him to the Tokyo Stock Exchange as
independent directors since they meet the requirements of independent director under
the Rules of the same Exchange if election of the three directors is approved.

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