[Translation]

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

Securities code: 1951
June 5, 2015
To our shareholders:Fuminori Kozono
President and Representative Director
KYOWA EXEO CORPORATION
29-20, Shibuya 3-chome, Shibuya-ku, TokyoNOTICE OF THE 61st ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 61st Ordinary General Meeting of Shareholders of
KYOWA EXEO CORPORATION (the “Company”) on June 23, 2015, which will be held as
described hereunder.
Meeting Details
1. Date and Time:

Tuesday, June 23, 2015 at 10:00 a.m. (Japan Standard Time)(The reception of participants in the meeting will begin at 9:00 a.m.)

2. Venue:

29-20, Shibuya 3-chome, Shibuya-ku, Tokyo
KYOWA EXEO CORPORATION 3F Conference Room

3. Purposes:
Matters to be reported:
1. Business Report and Consolidated Financial Statements for the 61st fiscal year
from April 1, 2014 to March 31, 2015 and Reports of Audit on the Consolidated
Financial Statements by Financial Auditor and Audit & Supervisory Board
2. Non-Consolidated Financial Statements for the 61st Fiscal Year (from April 1,2014 to March 31, 2015)
Matters to be resolved:
Appropriation of Surplus
Proposal 1:
Partial Amendments to Articles of Incorporation
Proposal 2:
Election of Eleven (11) Directors
Proposal 3:
Election of One (1) Audit & Supervisory Board Member
Proposal 4:
Election of One (1) Substitute Audit & Supervisory Board Member
Proposal 5:
Issuance of Subscription Rights to Shares as Stock Options
Proposal 6:* Where any circumstances necessitating amendments to the contents of the Referential Document for the General
Meeting of Shareholders, occur by the day immediately preceding the day of the General Meeting of Shareholders,those would be notified by mailing documents or posting them on the Company’s website (http://www.exeo.co.jp/)(in Japanese only).

-1-[Translation]

Reference Document for the General Meeting of Shareholders
Proposals and Reference Information
Proposal 1:

Appropriation of Surplus

The Company’s basic policy on the distribution of profits is to deliver stable and continuous
dividend payments to shareholders while, considering the Company’s business performance andthe business environment ahead, aiming to strengthen its financial condition, secure investment
for business expansion and retain the ability to flexibly acquire its stocks.
Based on this policy, we propose the following the year-end dividend for the fiscal year underreview:Matters concerning the year-end dividend
1.

Type of dividend assets
Cash

2.

Matters concerning allocation of dividend assets and the total amount
Dividend per common share of the Company:¥16
Total amount of dividends:¥1,578,351,392
Note: The annual dividend for the current fiscal year, being the total of the interim andyear-end dividends, is ¥32 per share.

3.

Effective date of dividend from surplus
June 24, 2015-2-

[Translation]

Proposal 2:
1.

Partial Amendments to Articles of Incorporation

Reasons for Proposal(1) The Company plans to make amendments to Article 32 and Article 33 of the present
Articles of Incorporation. The purpose of amendments is to stipulate the effective
period of the resolution for the election of the Substitute Audit & Supervisory Board
Member and clarify the term of office of the Substitute Audit & Supervisory Board
Member in the event that he or she assumes office as Audit & Supervisory Board
Member.
(2) The Company plans to make amendments to Article 39 of the present Articles ofIncorporation. This reflects changes to the law with respect to the scope of Directors
and Audit & Supervisory Board Members who may enter into agreements limiting
liability. These changes were introduced with the entry into force of the “Act for Partial
Revision of the Companies Act” (Act No. 90 of 2014). The proposal for amendment of
Article 39 of the Articles of Incorporation has been consented to by all of the Audit &Supervisory Board Members.

2. Details of Amendments
The details of the amendments are as follows.
(Underlined portions are amended)
Current Articles of Incorporation

Proposed Amendments

CHAPTER 5
AUDIT & SUPERVISORY BOARD MEMBERS
AND AUDIT & SUPERVISORY BOARD(Election)
Article 32
1.
(Omitted)
2.
(Omitted)(Newly established)

CHAPTER 5
AUDIT & SUPERVISORY BOARD MEMBERS
AND AUDIT & SUPERVISORY BOARD(Election)
Article 32
1.
(Same as the present)
2.
(Same as the present)3.
To provide for a case in which the number ofAudit & Supervisory Board Members falls shortof the number stipulated by Article 329,
paragraph 3 of the Companies Act, the Company
may elect Substitute Audit & Supervisory Board
Members at the General Meeting of Shareholders.
4.
The period during which the resolution forelection pursuant to the preceding paragraphremains effective shall expire at thecommencement of the Ordinary General Meetingof Shareholders for the last fiscal year to end
within four (4) years after the resolution.
(Term)
Article 33
1.
(Same as the present)
2.
If an Audit & Supervisory Board Member leaves
office before the expiration of the term of office
thereof, the term of office of the Audit &Supervisory Board Member elected to fill thevacancy left thereby shall continue until the
expiration of the term of office of the Audit &Supervisory Board Member who left office.
However, if a Substitute Audit & Supervisory
Board Member fills the vacancy according to
Article 32, paragraph 3, the term of office of the
Substitute Audit & Supervisory Board Member
will expire at the conclusion of the Ordinary
General Meeting of Shareholders pertaining to
the last fiscal year ending within four (4) years
after the election of the Substitute Audit &Supervisory Board Member.

(Newly established)(Term)
Article 33
1.
(Omitted)2.
If an Audit & Supervisory Board Member leaves
office before the expiration of the term of office
thereof, the term of office of the Audit &Supervisory Board Member elected to fill thevacancy left thereby shall continue until the
expiration of the term of office of the Audit &Supervisory Board Member who left office.

-3-

[Translation]

Current Articles of Incorporation

Proposed Amendments

CHAPTER 6
AGREEMENTS LIMITING LIABILITY FOROUTSIDE DIRECTORS, OUTSIDE AUDIT &SUPERVISORY BOARD MEMBERS AND
FINANCIAL AUDITORS(Partial Exemption of Compensation for Damages)
Article 39
1.
(Omitted)
2.
The Company and each Outside Director, Outside
Audit & Supervisory Board Member and
Financial Auditor may execute an agreement
limiting the liability for damages for negligenceof his/her duties pursuant to the provisions ofArticle 427, paragraph 1 of the Companies Act.
However, the limit of the liability under suchagreements shall be the amount prescribed bylaws and regulations.

CHAPTER 6
AGREEMENTS LIMITING LIABILITY FOROUTSIDE DIRECTORS, OUTSIDE AUDIT &SUPERVISORY BOARD MEMBERS AND
FINANCIAL AUDITORS(Partial Exemption of Compensation for Damages)
Article 39
1.
(Same as the present)
2.
The Company and each Director (excluding
Executive Directors, etc.), Audit & Supervisory
Board Member and Financial Auditor may
execute an agreement limiting the liability fordamages for negligence of his/her duties pursuant
to the provisions of Article 427, paragraph 1 of
the Companies Act. However, the limit of theliability under such agreements shall be theamount prescribed by laws and regulations.

-4-[Translation]

Proposal 3:
Election of Eleven (11) Directors
The terms of office of all twelve (12) Directors will expire at the conclusion of this meeting. In
order to enhance the efficiency of the management system, the Company proposes to decrease
the total number of Directors by one (1) and elect eleven (11) Directors.
The candidates for these positions are as follows:
No.

1

2

Name
(Date of birth)

Kunio Ishikawa(Sep. 2, 1948)
Candidate forReelection

Fuminori Kozono(Nov. 21, 1952)
Candidate forReelection

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions
Jun. 2004

Senior Executive Vice President, NTT DoCoMo, Inc.

Jun. 2007

Vice President, General Manager of IT Solutions
Headquarters, KYOWA EXEO CORPORATION

Jun. 2008

President, KYOWA EXEO CORPORATION

Jun. 2013

Chairman, KYOWA EXEO CORPORATION (present
position)

Number of theCompany’s
shares held

69,100(Important concurrent positions)
Corporate Director, Tokyo Electron Device Ltd.
*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 8 years (at theconclusion of this Ordinary General Meeting of Shareholders)Jul. 2009

Senior Executive Vice President, Executive Manager ofCorporate Sales Promotion Headquarters,, NIPPONTELEGRAPH AND TELEPHONE EASTCORPORATION

Jun. 2012

Vice President, General Manager of Business Solutions
Headquarters, KYOWA EXEO CORPORATION

Jun. 2013

President, KYOWA EXEO CORPORATION (present
position)

19,100*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 3 years (at theconclusion of this Ordinary General Meeting of Shareholders)

3

Takayuki Watanabe(May 13, 1951)
Candidate forReelection

Jun. 2004

Senior Vice President, General Manager, Accounts andFinance Department, NIPPON TELEGRAPH AND
TELEPHONE WEST CORPORATION

Jun. 2007

Director, General Manager of Communication Network
Headquarters, KYOWA EXEO CORPORATION

Jul. 2010

Director and Managing Operating Officer, General
Manager of Communication & Business Network
Headquarters and Corporate Sales in the Headquarters
KYOWA EXEO CORPORATION

Jun. 2011

Director and Managing Operating Officer, General
Manager of Accounts & Finance Division, KYOWA
EXEO CORPORATION

Jun. 2013

Director and Executive Operating Officer, General
Manager of Accounts & Finance Division, KYOWA
EXEO CORPORATION (present position)*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 8 years (at theconclusion of this Ordinary General Meeting of Shareholders)-5-

23,000[Translation]

No.

4

Name
(Date of birth)

Takashi Sakai(Nov. 10, 1951)
Candidate forReelection

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions
Jun. 2006

Director and General Manager, Business Integration
Division, NTT COMWARE CORPORATION

Jun. 2009

Senior Operating Officer, Manager of Nishi-Nippon
NTT Head Office, NTT Sales Head Office, KYOWA
EXEO CORPORATION

Jun. 2011

Managing Operating Officer, General Manager,
Corporate Planning Division, KYOWA EXEOCORPORATION

Jun. 2012

Number of theCompany’s
shares held

12,400

Director and Managing Operating Officer, General
Manager, Corporate Planning Division, KYOWA EXEOCORPORATION (present position)*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 3 years (at theconclusion of this Ordinary General Meeting of Shareholders)5

Yoshiaki Matsuzaka(Jan. 25, 1955)
Candidate forReelection

Jun. 2009Managing Director, General Manager, Network Service
Business Division, NTT-ME CORPORATION

Jun. 2010

Director and Executive Officer, General Manager ofEngineering Headquarters, Daiwa Densetsu Corporation

Jun. 2011

President and Representative Director, Daiwa Densetsu
Corporation (present position)

Jun. 2011

Director, KYOWA EXEO CORPORATION

Jun. 2013

Director and Managing Operating Officer, BranchManager of Tohoku Branch (present position)

5,600(Important concurrent positions)
President and Representative Director, Daiwa Densetsu Corporation*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 4 years (at theconclusion of this Ordinary General Meeting of Shareholders)

6

Noritsugu Totani(Apr. 15, 1955)
Candidate forReelection

Jun. 2008

Senior Vice President, Branch Manager of Osaka
Branch, NIPPON TELEGRAPH AND TELEPHONE
WEST CORPORATION

Jun. 2011

President and Representative Director, NTT NEOMEITCORPORATION

Jun. 2013

Director and Managing Operating Officer, General
Manager of Communication & Business Network
Headquarters (present position)*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 2 years (at theconclusion of this Ordinary General Meeting of Shareholders)

-6-

3,400

[Translation]

No.

7

Name
(Date of birth)

Tsutomu Ota(Aug. 26, 1953)
Candidate forReelecion

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions
Apr. 1976

Joined KYOWA EXEO CORPORATION

Jun. 2010

Operating Officer, Branch Manager of Tokai Branch,
KYOWA EXEO CORPORATION

Jun. 2011

Operating Officer, General Manager, Procurement
Division, KYOWA EXEO CORPORATION

Jun. 2012Managing Operating Officer, General Manager,
Procurement Division, KYOWA EXEOCORPORATION

Jun. 2014

Director and Managing Operating Officer, Carrier
Business Headquarters, KYOWA EXEOCORPORATION (present position)

Number of theCompany’s
shares held

12,600*Board of Directors meeting attendance during the year ended March 31,
2015: 11 of 11 times (100%)*Term of the office served as the Company’s Director: 1 year (at theconclusion of this Ordinary General Meeting of Shareholders)89Yasuo Otsubo(Feb. 9, 1959)
New Candidate

Yuki Sakuyama(Mar. 19, 1958)
Candidate forReelection

Jul. 2009

General Manager, Research and Development
Department of Network Business Headquarters,
NIPPON TELEGRAPH AND TELEPHONE EASTCORPORATION

Jun. 2012

Director, General Manager of IT Innovation Department,
NIPPON TELEGRAPH AND TELEPHONE EASTCORPORATION

Jun. 2014

Director and Managing Operating Officer, NTT
Business, and Network Engineering Department of NTT
Business, KYOWA EXEO CORPORATION (present
position)

Jun. 2010

Vice President, Head of NTT Access Network Service
Systems Laboratories, NTT Information Sharing
Laboratory Group, NIPPON TELEGRAPH AND
TELEPHONE CORPORATION

Jul. 2012

Vice President, Ikeno Tsuken Co., Ltd.

Dec. 2012

President and Representative Director, Ikeno Tsuken
Co., Ltd. (present position)

June 2013

Director, KYOWA EXEO CORPORATION (present
position)(Important concurrent positions)
President and Representative Director, Ikeno Tsuken Co., Ltd.
To be appointed President and Representative Director, EXEO TECHCORPORATION*Board of Directors meeting attendance during the year ended March 31,
2015: 15 of 15 times (100%)*Term of the office served as the Company’s Director: 2 years (at theconclusion of this Ordinary General Meeting of Shareholders)

-7-

800

1,200

[Translation]

Name(Date of birth)

No.

10

Kumiko Kitai(Oct. 29, 1952)
Candidate forReelection
Outside Director
Independent Director

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions
Apr. 1976

Entered Ministry of Labor

Apr. 1996

Director of Women’s Policy Planning Division,
Women’s Bureau, Ministry of Labor

Jul. 1999

Vice Governor of Shizuoka Prefecture

Aug. 2003

Deputy Director-General, Ministry of Health, Labor andWelfare(in charge of Equal Employment, Children and Families
Bureau)Aug. 2005

Director-General, Equal Employment, Children andFamilies Bureau, Ministry of Health, Labor and Welfare

Sep. 2006

Director-General of the Secretariat of Central Labor
Relations Commission

Aug. 2007

Executive Director, Japan Industrial Safety & Health
Association

Jun. 2011

Audit & Supervisory Board Member, TAKARAHOLDINGS INC. (present position)

Apr. 2012

Registered as Attorney (Daini Tokyo Bar Association)

Apr. 2012

Advisor TMI Associates

Oct. 2012

Commissioner, Tokyo Metropolitan Public Safety
Commission (present position)

June 2014

Director, KYOWA EXEO CORPORATION (present
position)

June 2014

Director, Sumitomo Mitsui Construction Co., Ltd.
(present position)

July 2014

Attorney, Kachidoki Law Firm (present position)

Number of theCompany’s
shares held

0

(Important concurrent positions)
Attorney, Kachidoki Law Firm
Commissioner, Tokyo Metropolitan Public Safety Commission
Audit & Supervisory Board Member, TAKARA HOLDINGS INC.
Director, Sumitomo Mitsui Construction Co., Ltd.
*Board of Directors meeting attendance during the year ended March 31,
2015: 11 of 11 times (100%)*Term of the office served as the Company’s Director: 1 year (at theconclusion of this Ordinary General Meeting of Shareholders)11

Kazuteru Kanazawa(Oct. 10, 1944)
New Candidate
Outside Director
Independent Director

Notes:

1.
2.

Jun. 2001

Managing Executive Officer, Kawasaki SteelCorporation

Apr. 2003

Member of the Board and Executive Officer, General
Manager of Tsurumi Engineering & Manufacturing
Center, JFE Engineering Corporation

Sep. 2003

Member of the Board and Senior Executive Officer, JFE
Holdings, Inc.

Jun. 2006

Full-time Audit & Supervisory Board Member, JFE
Shoji Holdings Inc.

Apr. 2009

Visiting Professor, Dept. of Civil Engineering, Chubu
University (present position)

Jun. 2010

Audit & Supervisory Board Member, KYOWA EXEOCORPORATION (retired in Jun. 2013)

3,100

There are no conflicts of interest between any of the candidates and the Company.
Effective July 1, 2015, WAKO ENGINEERING CORP., and Ikeno Tsuken Co., Ltd., where Mr. Yuki
Sakuyama serves as President and Representative Director, will conduct an absorption-type merger
whereby Wako Engineering will be the surviving company and Ikeno Tsuken will be the extinguishedcompany. The surviving company will change its trade name to EXEO TECH CORPORATION on
the same date. Mr. Hiroki Sakuyama is expected to assume office as Director and President of the-8-[Translation]

surviving company on July 1, 2015.
Mr. Tsutomu Ota and Ms. Kumiko Kitai were both elected and appointed as Directors at the 60th
General Meeting of Shareholders held on June 24, 2014. The figures regarding their attendance atBoard of Directors meetings are for the period from on and after their appointment.
4. Ms. Kumiko Kitai and Mr. Kazuteru Kanazawa are both candidates for Outside Director. Also, eachhas been selected as a candidate for Independent Director pursuant to the regulations of the Tokyo
Stock Exchange, Inc.
5. Reasons for selecting the candidates for Outside Director:
1) Ms. Kumiko Kitai has specialized knowledge as an attorney and we expect that she can fulfil therole of Director, leveraging her extensive insight gained from performing important duties atvarious central government agencies and other organizations. Thus, we have selected her as a
candidate for Outside Director.
Though she has had no involvement in company management other than as an Outside Director,
we judge that, for the above reasons, she will be able to properly perform the duties required of an
Outside Director.
2) Mr. Kazuteru Kanazawa has been a Member of the Board and Senior Executive Officer of JFE
Holdings, Inc. for a number of years. As he has a wealth of experience in corporate management
and wide range of insight, we expect that he can fulfill the role of Director. Thus we have selected
him has a candidate for Outside Director.
6. Ms. Kumiko Kitai currently serves as an Outside Director of the Company, and she will have servedin this position for one year as at the conclusion of this Ordinary General Meeting of Shareholders.
7. Mr. Kazuteru Kanazawa resigned from the position of Audit & Supervisory Board Member of theCompany at the conclusion of 59th General Meeting of Shareholders held on June 21, 2013.
8. Liability Limitation Agreements with Outside Directors
In order for the Outside Directors to more effectively perform in their expected roles, Article 39 of
the current Articles of Incorporation of the Company provides that the Company may enter into
agreement with its Outside Directors limiting their liability for failure to properly perform theirrespective duties. Ms. Kumiko Kitai, a candidate for Outside Director, has entered into an agreementwith the Company that limits her liability for damages under by Article 423(1) of the Companies Act
to the minimum amount prescribed by laws and regulations. If her reelection is approved, theCompany intends to have this liability limitation agreement continue. Also, the Company intends toenter into a liability limitation agreement with Mr. Kazuteru Kanazawa, after his election as an
Outside Director, which will limit his liability under Article 423(1) of the Companies Act to theminimum amount prescribed by laws and regulations.
3.

-9-[Translation]

Proposal 4:
Election of One (1) Audit & Supervisory Board Member
The term of office of Audit & Supervisory Board Member Mr. Shigeru Tanaka will expire at theconclusion of this Ordinary General Meeting of Shareholders. Accordingly, the Company
proposes the election of one (1) Audit & Supervisory Board Member.
The Company has obtained the consent of the Audit & Supervisory Board to this proposal.
The candidate for Audit & Supervisory Board Member is as follows:
Name(Date of birth)Haruhiko Watanabe(Sep. 16, 1953)
New Candidate

Career summary, positions in the Company,
and important concurrent positions
Apr. 2003

Deputy Manager of ALC Solution Department, Mizuho
Bank, Ltd.

Apr. 2005

Manager of Operational Auditing Department, Mizuho
Bank, Ltd.

Jan. 2006

Joined KYOWA EXEO CORPORATION
General Manager, Credit Management, Corporate
Planning Division, KYOWA EXEO CORPORATION

Jun. 2010

Operating Officer, General Manager, Group Business
Promotion Division, and General Manager, Credit
Management, Corporate Planning Division, KYOWA
EXEO CORPORATION

Jun. 2013

Managing Operating Officer, General Manager, Group
Business Promotion Division, and General Manager,
Credit Management, Corporate Planning Division,
KYOWA EXEO CORPORATION

Jun. 2014

Managing Operating Officer, General Manager, Group
Business Promotion Division, KYOWA EXEOCORPORATION (present position)

Note: There are no conflicts of interest between the candidate and the Company.

- 10 -

Number of theCompany’s
shares held

17,700[Translation]

Proposal 5:
Election of One (1) Substitute Audit & Supervisory Board Member
The effective period for which Mr. Kazuteru Kanazawa has been elected Substitute Audit &Supervisory Board Member, a position to which he was elected at the 60th Ordinary General
Meeting of Shareholders held on June 24, 2014, will expire as of commencement of the Meeting.
Accordingly, in order to prepare for a possible situation in which the number of Audit &Supervisory Board Member falls below the number required by laws and regulations, theCompany again proposes the election of one (1) Substitute Audit & Supervisory Board Member.
If the Proposal 2 is resolved and approved as originally proposed, the period during which theresolution for election remains effective shall expire at the commencement of the General
Meeting of Shareholders for the last business year to end within four (4) years after the election.
Note that we may cancel this election by a resolution of the Board of Directors after obtaining
the consent to the cancellation of the Audit & Supervisory Board, provided that the resolution
for cancellation is approved before he takes office.
The Company has obtained the consent of the Audit & Supervisory Board to Proposal 5.
The candidate for Substitute Audit & Supervisory Board Member is as follows:
Name(Date of birth)
Toshikazu Funo
(Dec. 4, 1945)
New Candidate
Substitute Outside
Audit & Supervisory
Board Member
Independent Auditor

Notes:

1.
2.
3.

4.

Career summary, positions in the Company,
and important concurrent positions
Jun. 2002

Director, General Manager of Accounting & Treasury
Department of Tokyo Electric Power Company,
Incorporated

Jun. 2004

Full-time Audit & Supervisory Board Member of Tokyo
Electric Power Company, Incorporated

Jun. 2007

Representative Director, President of TOKO ELECTRICCORPORATION

Jun. 2012

Adviser of TOKO ELECTRIC CORPORATION

Number of theCompany’s
shares held

There are no conflicts of interest between the candidate and the Company.
Mr. Toshikazu Funo is the candidate for Substitute Outside Audit & Supervisory Board Member. He
satisfies the requirements for Independent Auditor as provided for in the regulations of the Tokyo
Stock Exchange.
Reasons for selecting Mr. Toshikazu Funo as the candidate for Substitute Outside Audit &Supervisory Board Member:
Since he has extensive experience, having been involved in matters such a corporate management as
an Officer at several companies such as Tokyo Electric Power Company, Incorporated, as well as the
specialized financial and accounting knowledge that he has cultivated through his experience, we can
expect that he can fulfil the role of Audit & Supervisory Board Member. Thus, we have chosen him
as the candidate for Substitute Outside Audit & Supervisory Board Member.
Liability Limitation Agreements with Outside Audit & Supervisory Board Member
In order for our Outside Audit & Statutory Board Members to more effectively perform in their
expected roles, Article 39 of the current Articles of Incorporation of the Company provides that theCompany may enter into agreement with its Outside Audit & Supervisory Board Members limiting
their liability for failure to properly perform their respective duties. If Mr. Toshikazu Funo assumes
office as an Outside Audit & Supervisory Board Member, it is intended that he will enter into anagreement with the Company that limits his liability for damages under Article 423(1) of theCompanies Act to the minimum amount prescribed by laws and regulations.

- 11 -

0[Translation]

Proposal 6:
Issuance of Subscription Rights to Shares as Stock Options
The shareholders are asked to approve entrusting the Board of Directors of the Company withthe task of determining the terms of the Issuance of Subscription Rights to Shares as Stock
Options to Directors (excluding Outside Directors), Executive Officers and employees of theCompany, and Directors of the Company’s subsidiaries under the provisions of Articles 236,
238 and 239 of the Companies Act.
The issuance of Subscription Rights to Shares to the Directors is within the annual limit of
20,000,000 Yen approved as Subscription Rights to Shares that may be offered as remuneration
for the Directors at the Ordinary General Meeting of Shareholders held on June 21, 2013.
If Proposal No. 3 is approved and adopted as proposed, the number of Directors of theCompany subject to this Proposal will be eight (8).
1.

Reasons for Issuing the Subscription Rights to Shares on particularly favorable conditions
The reason for issuing Subscription Rights to Shares as stock options free of charge to the
Directors, Executive Officers and employees of the Company, and Directors of theCompany’s subsidiaries is to provide an incentive to improve business performance,increase corporate value and enhance a management focus on shareholder interests.

2.

Persons to whom Subscription Rights to Shares will be allotted
Directors, Executive Officers and employees of the Company, and Directors of theCompany’s subsidiaries will be allotted Subscription Rights to Shares.

3.

Details and maximum number of Subscription Rights to Shares (etc.) for which offeringterms may be determined based on the matters resolved at the Meeting(1) Class and Number of Shares to be issued upon exercise of Subscription Rights toShares
The total number of shares subject to Subscription Rights to Shares shall not exceed
300,000 shares of common stock of the Company. Of which, the number of the
Subscription Rights to Shares to be allotted to Directors of the Company shall not
exceed 70,000 shares of common stock of the Company.
If the Company makes any share split or share consolidation, the number of sharessubject to Subscription Rights to Shares shall be adjusted using the following formula,provided that, such adjustment shall be made with regard to the number of the sharessubject to Subscription Rights to Shares that have not been exercised at such time, andthat if any fraction less than one (1) share arises as a result of such adjustment, such
fraction shall be discarded:
Number ofshares after
adjustment

Number of= shares prior toadjustment

X

Ratio ofsplit/consolidation

Furthermore, if any unavoidable event other than those set forth above arises after the
Allotment Date of the Subscription Rights to Shares that makes it necessary to adjust
the number of shares, the Company shall make the necessary adjustment to the extent
reasonable.
(2)

Number of Subscription Rights to Shares
The number of the Subscription Rights to Shares to be issued shall not exceed 3,000- 12 -

[Translation]

units (of which, the number to be allotted to Directors of the Company shall not exceed
700 units).
The number of shares for each Subscription Right to Shares (hereinafter referred to as
the “Number of Granted Shares”) shall be 100 shares; provided, however, if a sharenumber adjustment set forth in “1) Class and Number of Shares to be issued upon
exercise of Subscription Rights to Shares” above is conducted, similar adjustment shallbe applied to the Number of Granted Shares.
(3)

Amount to be paid in exchange for the Subscription Rights to Shares
There shall be no requirement for payment in exchange for the Subscription Rights toShares.

(4)

Value of property to be contributed when Subscription Rights to Shares are exercised
Amount to be paid when Subscription Rights to shares are exercised shall be the paid
amount per share that can be delivered by exercising the Subscription Rights to Shares(hereinafter referred to as the “Exercise Price”), multiplied by the Number of Granted
Shares concerning the relevant Subscription Rights to Shares.
The Exercise Price will be the average value of closing price in regular trading of theCompany’s common stock on the Tokyo Stock Exchange (hereinafter referred to as the“Closing Price”) on each day of the previous month of the date when the Subscription
Rights to Shares are allotted, multiplied by 1.05. Note that the date when the trade was
not effective is not included. Fractions of less than 1 Yen will be rounded up. However,in the case the amount is lower than the Closing Price of the Allotment Date (when no
Closing Price is published on that day, Closing Price of the nearest previous date shallbe applied), it will be the Closing Price on the Allotment Date.
After the Allotment Date, in an event of a share split or share consolidation of theCompany’s common stock, or other event where it is necessary to adjust the Exercise
Price, it will be adjusted by the following formula, with fractions of less than 1 Yenrounded up.
Exercise Price
Exercise Price=after adjustment
before adjustment

1
X

Ratio of share split
or consolidation

In addition, after the Allotment Date of the Subscription Rights to Shares, in an event
where the Company issues new shares of common stock or disposes of treasury sharesof common stock at a price lower than market price, the Exercise Price will be adjusted
by the following formula, with fractions of less than 1 Yen rounded up.

Exercise Priceafter adjustment=

Exercise Price
before adjustment

X

Number ofoutstanding
shares+Number of shares
Paid-in amountX
newly issued
per share
Current market priceper share

Number of outstanding shares + Number of shares newly issued

The “Number of outstanding shares” in the above formula shall be the total number ofthe shares of common stock issued less treasury shares of common stock owned by theCompany, and in the case of disposition of treasury shares, the “Number of shares- 13 -

[Translation]

newly issued” shall read as “Number of treasury shares to be disposed of.”
In addition to the above, if any unavoidable event such as a merger, a company split orcapital reduction of the Company arises after the Allotment Date where the Exercise
Price must be adjusted, the Company may adjust the Exercise Price to a reasonable
extent, subject to a resolution of the Board of Directors.
(5)

Period during which Subscription Rights to Shares can be exercised
From July 3, 2017 to June 30, 2021.

(6) Conditions for exercise of Subscription Rights to Shares
1) Any person who has been allotted Subscription Rights to Shares (hereinafter referred
to as a “Holder of Subscription Rights to Shares”) must at the time of exercising suchrights have a position in the Company as a Director, Executive Officer, or employee,
or a Director of a subsidiary of the Company.
However this requirement does not apply in the case where the person concerned nolonger has this position due to, in the case of Directors of the Company or Directors of
the Company’s subsidiaries, expiry of his/her term of office, in the case of employeesof the Company, retirement at mandatory retirement age, or other circumstanceswhere it is justifiable that this requirement not apply.
2)

Other terms and conditions shall be as specified in the “Subscription Rights to Shares
Allotment Agreement” to be entered into between the Company and holders of the
Subscription Rights to Shares based on a resolution of the Board of Directors.

(7)

Restriction on a Transfer of Subscription Rights to Shares
The acquisition of Subscription Rights to shares by transfer shall require approval bya resolution of the Board of Directors.

(8)
1)

Reasons and conditions for acquisition of Subscription Rights to Shares
If a proposal for the approval of a merger agreement under which the Company ceases
to exist, a proposal for the approval of a company split agreement or a plan underwhich the Company is split, a proposal for the approval of a share exchange
agreement or a share-transfer plan under which the Company becomes a wholly
owned subsidiary is approved at the General Meeting of Shareholders (or at the Boardof Directors if approval at the General Meeting of Shareholders is unnecessary), theCompany may acquire the Subscription Rights to Shares without compensation

2)

In the event that a Holder of Subscription Rights to Shares becomes no longer eligible
to exercise his/her Subscription Rights to Shares, the Company may acquire theSubscription Rights to Shares without compensation.

(9)

Matters regarding capital and capital reserves that will be increased in cases where
shares will be issued as a result of the exercise of subscription rights to shares
The amount of the capital to be increased by issuance of shares at the time of exerciseof the Subscription Rights to Shares shall be half of the maximum amount of increaseof the capital, etc. which is calculated in accordance with Article 17, paragraph 1 of
the Corporate Accounting Rules, and any fraction less than one (1) Yen as a result of
the said calculation shall be rounded up.

1)

2)

The amount of capital reserves to be increased by issuance of shares at the time of- 14 -

[Translation]

exercise of Subscription Rights to Shares shall be obtained by subtracting the capitalbeing increased in 1) above from the maximum amount of increase of capital, etc. in1) above.
(10)1)

Handling of Subscription Rights to Shares at the time of restructuring action
If the Company is to engage in a merger (limited to cases where the Company ceases
to exist as a result of such merger), absorption-type company split, incorporation-typecompany split, or subject to a share exchange or share transfer (all of which arecollectively referred to as a “Restructuring Action”), Subscription Rights to shares in
the company as listed under Article 236, paragraph 1, item 8 (a) through (e) of theCompanies Act (such company limited hereafter referred to as the “Restructured
Company”) shall in each case be issued in accordance with applicable conditions
below to holders of the Subscription Rights to shares that remain in effect as of theeffective date of the Restructuring Action (hereinafter referred to as the “Remaining
Subscription Rights to Shares”). In this case, the Remaining Subscription Rights toShares shall cease to exist, and the Restructured Company shall issue new
Subscription Rights to Shares. However, such issuance shall be limited to the cases
where issuance of the Subscription Rights to shares of the Restructured Company
under the following conditions is prescribed in the merger agreement, the absorptiontype company split agreement, the incorporation-type company split plan, the shareexchange agreement or the plan of the share transfer.
Number of Subscription Rights to Shares to be issued by the Restructured Company
The holders of the Remaining Subscription Rights to Shares shall be granted the
Subscription Rights to Shares of which the number is equivalent to the number ofsuch Rights held at the Restructured Company.

2)

Class and Number of Shares to be issued by the Restructured Company upon exerciseof Subscription Rights to Shares
The class of shares to be delivered upon exercise of the Subscription Rights to sharesshall be the common shares of the Restructured Company, and the number of theshares to be delivered upon exercise of subscription rights to Shares shall be
determined in accordance with (1) above, taking into consideration the conditions, etc.
of the Restructuring Action.

3)

Value of property to be contributed when Subscription Rights to Shares are exercised
The value of property to be contributed upon exercise of each Subscription Right toShares to be delivered shall be the amount obtained by multiplying the amount per
share to be paid in after reorganization obtained by adjusting the Exercise Price set
forth in (4) above by the number of shares to be delivered upon exercise of relevant
stock acquisition rights as determined in accordance with 2) above, taking into
consideration the conditions, etc. of the Restructuring Action.

4)

Period during which Subscription Rights to Shares can be exercised
The exercise period shall begin on either the first date of the exercise period for the
Subscription Rights to Shares stipulated in (5) above, or on the date that the
Restructuring Actions take effect, whichever comes later, and shall continue to thefinal date of the exercise period stipulated in (5) above.

5)

Matters concerning acquisition of Subscription Rights to Shares
To be determined in accordance with (8) above.

6)

Restrictions on Assignment of Subscription Rights to Shares- 15 -

[Translation]

Any acquisition of the Subscription Rights to shares by assignment requires approval
by a resolution of the Board of Directors of the Restructured Company.
7)

Matters regarding capital and capital reserves that will be increased in cases where
shares will be issued as a result of the exercise of Subscription Rights to shares
To be determined in accordance with (9) above.

(11)

Method of calculating the fair value of Subscription Rights to Shares
The Black-Scholes model, etc. shall be used to calculate the fair value of thesubscription rights to Shares based on the various conditions applicable on Allotment
Date.

(12) Other requirements concerning Subscription Rights to Shares may be decided byresolution at separately held meetings of the Board of Directors.

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