Note: This document has been translated from the Japanese original for reference purposes
only. In the event of any discrepancy between this translated document and theJapanese original, the. Japanese original shall prevail.

May 22, 2019
RIKEN CORPORATION

Contact(s):Corporate Planning Division
Phone: (+81)-3-3230-3911

Notice Concerning Continuation of Measures to Respond to a Large-Scale
Acquisition of Our Company’s StockOn June 28, 2007, Measures to Respond to a Large-Scale Acquisition of Our Company's Stock wereadopted by our shareholders at the Company’s 83rd Annual General Meeting of Shareholders and weremost recently reapproved by shareholders at the 92nd Annual General Meeting of Shareholders on June 24,2016 (hereinafter the continued measures are referred to as “the Existing Plan”). The effective term of thePlan lasts until the end of the 95th Annual General Meeting of Shareholders to be held on June 30, 2019
(hereinafter referred to as “the General Meeting of Shareholders”). In light of securing and improving themutual benefit of all shareholders, as well as the value of the Company, we have given ongoing
consideration to the ideal state of the measures to respond to a large-scale acquisition of the Company’s
stock including the succession and termination of the measures.
We would like to inform you that, as a result, assuming the approval of our shareholders is obtained at theGeneral Meeting of Shareholders, the Board of Directors of the Company held today decided to continue
the Existing Plan by changing part of it as “Measures to Respond to a Large-Scale Acquisition of Our
Company's Stock” (hereinafter referred to as “the Plan”).

With regard to the continuation of the Plan, all three of our corporate auditors have expressed their opinions
stating that they are in favor of continuing with the Plan as long as the detailed aspects of the Plan are
executed properly.
As of today, there are no specific proposals regarding any large-scale acquisition of the Company’s stock,etc.
Furthermore, the state of the Company’s shareholders as of March 31, 2019 is as shown in Attachment 1.
The major changes incorporated into the Plan compared with the Existing Plan are as follows:(i)

On the condition that the Annual General Meeting of Shareholders approves the progress of theMidterm Strategic Plan regarding the effort to realize the basic policy for the control of the Company
as well as the proposal for the partial amendment of the articles of association, we made some changes
to the description of the Existing Plan. These include deleting the precondition that the Company shallbe a company with an auditor along with the transition to a company with an audit and supervisorycommittee and adding various measures related to Corporate Governance.

(ii) Regarding the handling of recommendations from the Independent Committee, the Existing Plan
stipulates that the Board of Directors shall make a decision respecting such recommendations.
However, to eliminate the possibility of arbitrary operation by the management, it was changed to
mandate decision-making in accordance with the recommendations. In addition, the criteria whichallow the Board of Directors to establish countermeasures as an exceptional case were made stricter
than before.
(iii) Some changes have been made to words/phrases and the wording has been edited.

1

I.

Basic Policy Regarding Who Should Oversee Decisions Regarding the
Financial and Business Policies of the Company

As a publicly traded company, we believe that shareholders come to us thanks to a freedom to trade on theshare market. Therefore, we believe that ultimately decisions concerning whether or not to accept proposals
regarding acquisitions accompanying the transfer of control of the Company should be carried out based on
the will of the shareholders.
However, among the large-scale acquisition of shares, etc., there may be some that will damage thecorporate value of the Company or the mutual benefit of shareholders, including those that may practicallyforce shareholders to sell shares judging from the purpose, etc., and those that do not provide the necessary
time or information for the Board of Directors and shareholders of the Company to be able to consider thedetails of such an acquisition. As an exceptional case, the Company believes that a person who is engaged
in such inadequate large-scale acquisition, etc., is inappropriate to have as a person to oversee decisions
regarding the financial and business policies of the Company.

II. Efforts that Contribute to the Realization of the Basic Policy for the Controlof the Company
In order to encourage long-term continuous investment in the Company by you, our many investors, as partof efforts to increase the corporate value of the Company and the mutual benefit of shareholders, we arecarrying out the following measures.
We believe that these efforts will contribute to the realization of the Basic Policy described in I. above.

1.

Enhancement of the Corporate Value through the Mission Statement and thePromotion of the Midterm Strategic Plan
In 1927, RIKEN, the Institute of Physical and Chemical Research, was founded to commercialize themethod of producing the piston ring which is its own innovation. Since then, the Company has been
operating globally by providing a wide variety of products such as a camshaft and other internalcombustion engine parts, cast iron parts for automobiles and industrial machinery, piping material, products
for thermal engineering and EMC businesses having piston rings as its core.
The Company set the following Group Mission Statement and the Guiding Principles, “Be Customer
Driven. Be Compliant with the Law. Be focused on the Basics. Be Open. Be Proactive. Be Prompt.” In
addition, it developed the Midterm Strategic Plan and Annual Management Plan to cope with customers’
efforts to strengthen their competitiveness and to develop and sell products that satisfy the high level of thedemand for quality, technology and prices.
<Mission Statement> We will be a leading corporate citizen that always operates with respect for the laws, environment,
safety and the overall well being of the global communities where we conduct our business.
 We will provide superior long-term economic value for our shareholders through effective use of theirinvested capital.
 We will offer products and services that continually exceed our customers' increasing expectations
through constant innovation and continued advancements in knowledge and technology.
 We will continuously renew ourselves by encouraging initiative and entrepreneurism and by being
constantly committed to change.
Based on the policy of the above, to achieve the continuous growth of the Group Companies, the Company
established and has been promoting the Midterm Strategic Plan, PLAN 2020, which is a five-year planrunning from fiscal 2016 through fiscal 2020.
An outline of PLAN 2020 is shown below.
(1) Main Theme

2

Advanced Solutions for Tomorrow’s Challenges.
= Global top supplier of key components in the automotive and machinery industries(2) Basic Policy
With three pillars of measures, achieve continuous growth(i)Growth through Diversification• Penetrate into non-Japanese market• Broaden product portfolio(ii) Advancements in Monozukuri• Innovation in Monozukuri• Further increase in level of TPS activities(iii) Pioneering Technologies• Creation of new products/businesses• Reinforcement of R&D activities and improvement of their efficiency(3) Business performance target (consolidated basis)

Group Sales *Fiscal 2015
Actual result111.1 billion
yen

Fiscal 2018
Actual result
128.9 billion
yen

Fiscal 2020
TargetOver 140.0
billion yen

Consolidated Operating
7.6%
7.7%
Over 10%
Profit Ratio* Set the group sales including those of affiliated companies
At Stage 1 (from fiscal 2016 to fiscal 2018), partially due to the success of the overseas sales expansion, theCompany enhanced the customer base, and achieved a significant increase in sales.
During Stage 2, which is a completion phase (from fiscal 2019 to fiscal 2020), in addition to the ongoing
efforts initiated during Stage 1, the Company is working on the focused points of “Enhancement ofcompetitiveness by reducing costs,” “Optimization of new product developing system and its acceleration,”“Shift from the principle of self-sufficiency to open innovation” and “Realization of technology partnershipand new M&A.” The Company would like to ensure PLAN 2020 produces results and improve thecorporate value.

2.

Improvement in Corporate Value through the Enhancement of Corporate
Governance
The Company aims for a continuous improvement in corporate value by fulfilling its responsibilities in avariety of areas such as the economy, the environment and society. It positions the establishment ofcorporate governance as a top-priority management issue.
The Company has introduced an executive officer system to separate the business execution function fromthe management decision-making and supervision function.
Furthermore, on the condition that the Annual General Meeting of Shareholders will grant approval, theCompany has a plan to shift to a company with an audit and supervisory committee. By including amember of the audit and supervisory committee who supervises directors’ execution of duties in the Boardof Directors, it intends to strengthen the audit and supervision functions of the Board of Directors, andenhance corporate governance further. Moreover, by commissioning directors to make a decision on
important business execution issues at the Board of Directors, the Company will make swift decision3

making possible, and improve the efficiency of management.
Along with the shift, the Company has a plan to have a Board of Directors which consists of eight (8)directors (excluding a member of the audit and supervisory committee, including two (2) outside directors)
and three (3) directors (including two (2) outside directors) who are the members of the audit andsupervisory committee, and expects to improve the effectiveness of the objective supervision of the
management.
Furthermore, in May 2019, the Company voluntarily established the Nomination and Remuneration
Committee, the majority of whose members consist of independent outside officers as an advisory body.
The aim was to reinforce the supervision function of the Board of Directors by assuring the transparency
and objectivity of the procedure related to the nomination and the decision on remuneration of directors,
etc., and further enhance corporate governance.
As for specific efforts, in addition to the ongoing proper operation of the management organs (the Board of
Directors and the Management Meeting), the Company is working on ensuring the transparency, efficiency
and soundness of the Company through the reinforcement of compliance and the enhancement of risk
management. It is doing this based on the basic policy for arranging an internal control system (arranging asystem to ensure that the directors are executing duties by observing laws, regulations and the Articles ofIncorporation and other systems which are stipulated as requisites in the ordinance of the Ministry ofJustice to ensure that public companies appropriately execute businesses).
In addition, the Company established the CSR Committee and the Compliance Committee to reinforce
internal control and manage activities related to matters such as the environment, social contribution,accurate and adequate information disclosure and customer satisfaction at a group level to raise the level ofsuch activities.

III. Description of the Plan (Measures to prevent the control of decisionmaking regarding the financial and business policies of the Company bysomeone inappropriate in light of our Basic Policy.)
1. Purpose of Continuing the Plan
The Plan, which is the Existing Plan that is continuously implemented, was introduced to prevent decisionmaking regarding the financial and business policies of the Company being controlled by someone who isinappropriate in light of the Basic Policy for the Control of the Company as described in I. above.
When a large-scale acquisition of the Company’s stock, etc., was conducted, for the shareholders to make aproper decision, the Board of Directors of the Company believes that the assurance of necessary
information and time and a negotiation with a buyer, etc., based on reasonable rules help ensure thecorporate value of the Company and mutual benefit for shareholders. Therefore, it established certain rules
regarding the provision of the submission of information and the assurance of time to consider, etc., at thetime of a large-scale acquisition (hereinafter, referred to as “Rules for a Large-Scale Acquisition”) as statedbelow. In order to deal with cases in which a large-scale acquisition has occurred by an entity that is
inappropriate in light of the Basic Policy, conditional on the approval of the shareholders of the Company
at the Annual General Meeting of Shareholders, the Company decided to continue implementing the Plan.
Please refer to Attachment 2 for an overview (flow) of the Plan.

2. Acquisition of the Shares of the Company that Are the Subject of The Plan
The acquisition of the shares of the Company that are the subject of the Plan is deemed to be an attempt toacquire the share certificates, etc., of the Company (Note 3) for the purpose of making the voting rights
ratio (Note 2) of a special shareholder group (Note 1) 20% or more, or an attempt to acquire the shares, etc.,of the Company where as a result of such acquisition the voting rights ratio of such special shareholder
group becomes 20% or more (irrespective of the method of acquisition, whether it be a market trade or atakeover bid, acquisitions that have the prior consent of the Board of Directors of the Company are
excluded; such large-scale acquisition is hereafter referred to as “a large-scale acquisition” and the entitythat is engaged in the large-scale acquisition is hereafter referred to as a “large-scale purchaser”).

4Note 1: Special Shareholder Group means(i) holders of the Company’s share certificates, etc., (meaning share certificates, etc., as determined in Article
27-23 Section 1 of the Financial Instruments and Exchange Act) (including entities included in the holders
in accordance with Article 27-23 Section 3 of said Act, and hereinafter the same) and their joint-holders(meaning joint-holders as determined in Article 27-23 Section 5 of said Act, including entities regarded as
joint-holders in accordance with Section 6 of the same Article, and hereinafter the same) or(ii) entities engaged in the acquisition, etc., (meaning the acquisition, etc., determined in Article 27-2 Section 1of said Act, including acquisition that is carried out in the financial market of a stock exchange) of theshare certificates, etc., of the Company (meaning share certificates, etc., as determined in Article 27-2
Section 1 of said Act), and special parties involved in such (meaning special parties involved asdetermined in Article 27-2 Section 7 of said Act, and hereinafter the same).
Note 2: Voting Right Ratio means(i) in the case of the special shareholder group mentioned in (i) of Note 1, the total of (1) the ratio of sharecertificates, etc., held by said holders (meaning the ratio of share certificates held as determined in Article
27-23 Section 4 of the Financial Instruments and Exchange Act. In such cases, the number of sharecertificates, etc., held by said holders’ joint-holders (meaning the number of share certificates, etc., held asdetermined in the same Section, and hereinafter the same) shall be included in the calculation); or(ii) in the case of the special shareholder group mentioned in (ii) of Note 1, the total of the ratio of sharecertificates, etc., held by said large-scale purchaser and said special parties involved (meaning the ratio ofshare certificates, etc., held as determined in Article 27-2 Section 8 of said Act).
When calculating each voting rights ratio, in terms of the number of total voting rights (meaning the number as
determined in Article 27-2 Section 8 of said Act) and the total number of issued shares (meaning the total
number as determined in Article 27-23 Section 4 of said Act), reference can be made to the most recently
submitted document from among Annual Securities Reports, Quarterly Securities Reports and Share Buyback
Reports.
Note 3: Share certificates, etc., means share certificates, etc., as determined in Article 27-23 Section 1 or Article 27-2
Section 1 of the Financial Instruments and Exchange Act.

3. Establishment of the Independent Committee
Regardless of whether or not a large-scale purchaser adheres to the rules for a large-scale acquisition, oreven in cases where such rules have been adhered to, the Board of Directors of the Company shall make thefinal decision on whether or not to take countermeasures when it is deemed that said large-scale acquisition
will seriously damage the corporate value of the Company and the mutual benefit of shareholders. To
properly execute the Plan, prevent the Board of Directors of the Company from making arbitrary decisions,and maintain the rationality and fairness of the decision, the Company will establish the Independent
Committee based on the Plan and the Rules for the Independent Committee (please refer to Attachment 3
for an overview). The Independent Committee shall be comprised of three (3) or more people appointed
from among external directors or external experts (Note) who are independent of the management that
executes the business of the Company to enable them to make a fair and neutral judgement. Please refer toAttachment 4 for the profile of three candidates for members of the Independent Committee, Shuji
Iwamura, Hidemi Hiroi and Koji Tanabe.
Prior to the execution of countermeasures, the Board of Directors of the Company shall consult with the
Independent Committee on whether or not the Company shall take countermeasures. The Independent
Committee shall carefully evaluate and consider matters regarding a large-scale acquisition from theperspective of improving the corporate value of the Company and the mutual benefit of shareholders, andmake recommendations regarding whether the Board of Directors is in the state to execute countermeasures
to the Board of Directors of the Company. The Board of Directors of the Company shall make a decisionon the execution of countermeasures based on the recommendations by the Independent Committee(however, excluding the case where it evaluates that it would breach the duty of care if it follows therecommendations). An outline regarding the content of such recommendations of the Independent
Committee shall be announced as required.
To assure that the evaluation of the Independent Committee contributes to the corporate value of theCompany and the mutual benefit of shareholders, the Independent Committee may obtain the advice ofindependent external specialists (financial advisers, certified accountants, attorneys, consultants and otherspecialists) at the cost of the Company as required.
Note: External specialists means experienced corporate managers, persons familiar with investment
5

banking, attorneys, certified accountants, persons with academic experience mainly studying theCompanies Act, etc., or similar entities.

4.

Overview of the Large-Scale Acquisition Rules(1) Submission of statement of intention by purchaser making a large-scale acquisition to theCompany
When a prospective large-scale purchaser seeks to carry out a large-scale acquisition, prior to the largescale acquisition or proposing the large-scale acquisition, we first request the submission of a letter ofintent in Japanese addressed to the Board of Directors of the Company in a format the Company specifies
containing a written covenant stating the intent to adhere to our rules for a large-scale acquisition and thefollowing:(i)Name and address of large-scale purchaser(ii) Governing law for the incorporation(iii) Name of representative(iv) Contact in Japan(v) An outline of the proposed large-scale acquisition(vi) Covenant stating the intent to adhere to our rules for a large-scale acquisition
When the Board of Directors of the Company has received such a letter of intent from a prospective largescale purchaser, the matter, and where necessary the details, shall be promptly announced.
(2) Submission of the information required for evaluation by a prospective large-scale purchaser
to the Company
Within ten (10) business days of the day following the day on which the letter of intent mentioned all theinformation from (a) to (f) of (1) above was received, the Company shall issue to a prospective large-scalepurchaser a document containing a list of the large-scale acquisition information whose submission to theBoard of Directors of the Company is required. The prospective large-scale purchaser shall submit thelarge-scale acquisition information (hereinafter referred to as the “information required for evaluation”) in
writing based on the description of the document to the Board of Directors of the Company.
General items included in the list of the information required for evaluation are shown below. Although thespecific content will differ according to the attributes of the large-scale purchaser and the purpose andcontent of the large-scale acquisition, in either case, the scope of the list will be restricted to the necessary
and adequate information required for our shareholders to make a decision and form opinions for the Boardof Directors of the Company.
(i)

Outline of the large-scale purchaser and its group (including joint-holders, special parties involved, cooperative members (in the case of a fund), and other constituent members) (including names, businessdetails, background or history, capital composition, and information regarding experience in fields
similar to the business of the Company and the Group companies of the Company)(ii) The purpose, method and details regarding the large-scale acquisition (including price/type of
remuneration for the large-scale acquisition, timing of such large-scale acquisition, transaction
mechanism involved, legality of the method of such large-scale acquisition, feasibility of such largescale acquisition and related transactions).
(iii) The basis of determining the cost of acquiring the shares of the Company in the large-scale acquisition(including the facts on which the cost is determined, the method of calculation, information regarding
figures used in the calculation, and details regarding the synergy that is expected to occur as a result ofa series of transactions in relation to such large-scale acquisition).
(iv) The substantiation of acquisition funds for the large-scale acquisition (the specific name of theprovider of the funds (including the real provider), the method of acquiring the funds and details
regarding related transactions).
(v) Candidates for the management team that will be installed in the Company and the Group companies

6

of the Company after the large-scale purchaser joins the management of the Company (including
information regarding experience, etc., in businesses similar to the Company and the Group
companies of the Company), suggested management policies, business plan, financial plan, capital
measures, dividend policy and asset utilization measures, etc.
(vi) The expected stakeholders of the Company and the Group companies of the Company, such as
business partners, customers and employees, after the large-scale purchaser joins the management of
the Company and the Group companies of the Company, as well as whether or not there will be anychanges in the relationship between the aforementioned parties and the Company and the Group
companies of the Company, including details of such changes.
In the interest of ensuring the timely implementation of the large-scale acquisition rules, the Board of
Directors of the Company may, as required, give the large-scale purchaser a time limit for the submissionof information. However, when the large-scale purchaser requests an extension for the submission of theinformation on reasonable grounds, such time limit may be extended.
Furthermore, in cases where as a result of a close examination by the Board of Directors of the Company of
the information required for evaluation that was submitted it is determined to be insufficient, after setting areasonable time frame for receiving a reply (up to 60 days from the day on which the initial information
was received) they may request the submission of additional information from the large-scale purchaser
until the provision of such information required for evaluation is complete.
When it is determined by the Board of Directors of the Company that sufficient information required forthe evaluation and consideration of the large-scale acquisition has been provided by the large-scalepurchaser, it should issue such notice to the large-scale purchaser, and announce it publicly.
Furthermore, regardless of the fact that the submission of additional information required for evaluation has
been requested by the Board of Directors of the Company, when part of such information is not provided
by the large-scale purchaser, if a reasonable explanation is offered with regard to why such information has
not been provided, in some cases negotiations with the large-scale purchaser regarding the submission of
information may be terminated even if the information required for evaluation requested by the Board of
Directors of the Company is not complete, and the evaluation and consideration process mentioned in (3)below that is carried out by the Board of Directors of the Company may be commenced.
In addition to submitting the information required for evaluation provided to the Board of Directors of theCompany to the Independent Committee, when it is determined to be necessary for our shareholders in theirdecision-making process, at a time deemed appropriate by the Board of Directors of the Company, all or apart of such information will be announced.
(3) Evaluation and Consideration of the information required for evaluation by the Board of
Directors of the Company
Depending on the degree of difficulty in evaluating, etc., the large-scale acquisition, after the submission of
information required for evaluation to the Board of Directors of the Company by the large-scale purchaser
has been completed, the Board of Directors of the Company shall establish a period for evaluation,
consideration, negotiation and to form opinions and alternate proposals (hereinafter referred to as the“Board of Directors’ evaluation period”), which is a maximum of 60 days in cases where all of the sharesof the Company are acquired through a takeover bid using cash only (Japanese yen) for remuneration, and amaximum of 90 days in cases of any other large-scale acquisition.
During the Board of Directors’ evaluation period, the Board of Directors of the Company shall, whennecessary, with the advice of independent external specialists (financial advisers, certified accountants,
attorneys, consultants and other specialists), thoroughly evaluate and consider the information required forevaluation submitted, based on the recommendations by the Independent Committee, form an opinion as acollective body and announce the outcome (however, excluding the case where it evaluates that it would
breach the duty of care if it follows the recommendations). In some cases as required they may also conduct
negotiations with the large-scale purchaser regarding improving the condition of the large-scale acquisition,or, as the Board of Directors of the Company, they may present alternate proposals to our shareholders.

75.

Policy for Handling Large-Scale Acquisition(1) Cases Where a Large-Scale Purchaser Has Not Adhered to the Large-Scale Acquisition
Rules
In cases where a large-scale purchaser has not adhered to the large-scale acquisition rules, regardless of thespecific acquisition method, the Board of Directors of the Company may, in some cases, as permitted by
the Companies Act, other laws and the Articles of Incorporation of the Company, take countermeasures inorder to protect the corporate value of the Company and the mutual benefit of shareholders, including theallotment of stock acquisition rights without contribution. When a large-scale purchaser is assessed to see if
it has adhered to the large-scale acquisition rules or not, the circumstances of a large-scale purchaser shallbe fully considered within a reasonable scope. At least, the Company shall not assess that a large-scalepurchaser has not adhered to the large-scale acquisition rules only because part of the information required
for evaluation was not submitted.
(2) Cases Where a Large-Scale Purchaser Has Adhered to the Large-Scale Acquisition Rules
When a large-scale purchaser adheres to the rules for a large-scale acquisition, even though it is against
such large-scale acquisition, the Board of Directors of the Company shall, as a rule, not takecountermeasures against such large-scale acquisition, but only give explanations to our shareholders,
including expressing dissenting opinions regarding said acquisition proposal and presenting alternate
proposals. Whether or not to accept the offer by the large-scale purchaser will be left to the discretion ofyou, the shareholders of the Company, to decide after considering said acquisition proposal, the opinions of
the Company regarding such acquisition proposal, and alternate proposals.
However, even in cases where the large-scale acquisition rules were adhered to, when the Board of
Directors of the Company has determined that such large-scale acquisition has clearly abusive purposes, thecorporate value of the Company and the mutual benefit of shareholders will be greatly harmed in cases ofsuch large-scale acquisition as described in (a) to (e) below where it is clearly foreseeable that damage to
the Company that is difficult to reverse may occur as a consequence, the Board of Directors of theCompany may take exceptional countermeasures stated in (1) above within the scope of what is necessary
and reasonable to protect the corporate value of the Company and mutual benefits of our shareholders.
(a) Although it has no intention to participate in the management of the Group companies of theCompany, a buyer intends to acquire the shares of the Company and demand that a concerned partyof the Company purchase such shares at a much higher price (so-called “greenmailing”).
(b) A buyer intends to acquire the shares of the Company for the purpose of so-called “scorchedmanagement”, that is to gain temporary control of the management of the Group companies of theCompany to transfer intellectual property rights, know-how, confidential information, major
business partners and customers required with respect to the business of the Group companies of theCompany to the buyer or its group company.
(c) A buyer intends to acquire the shares of the Company and use the assets of the Group companies of
the Company as surety for the obligations of the purchaser or its group companies, or as a source offunds to make the settlement after gaining the control of the management of the Group companies of
the Company.
(d) A buyer intends to acquire the shares of the Company and take temporary control of the managementof the Group companies of the Company in order to dispose of high-value assets (such as real estateand securities) of the Company that are not directly related to the business of the Group companiesof the Company at the time, and use such proceeds to produce temporarily high dividends, or to sellout shares after such a temporarily high dividend has caused a steep rise in the share price.
(e) In cases where the Company assesses that a method to acquire the shares of the Company proposedby a large-scale purchaser will in reality force shareholders to sell shares and restrict theopportunities or freedom of the shareholders’ decision, such as a so-called “high-handed, two-stage
buyout” (meaning the execution of a takeover bid after soliciting a partial acquisition of shares whilesetting disadvantageous or unclear conditions for the second-stage acquisition).

8

(3) Resolutions of the Board of Directors and the Convocation of a General Meeting of
Shareholders
In the cases described in (1) and (2) above, when a decision has to be made regarding whether or not totake countermeasures following the recommendations of the Independent Committee (however, excluding
the case where it evaluates that it would breach the duty of care if it follows the recommendations), after
giving adequate consideration to the necessity and appropriateness of the countermeasures, as anorganization that is in charge of making decisions regarding whether or not to take countermeasures as
determined under the Companies Act, the Board of Directors of the Company shall pass a resolution.
With regard to what kind of specific measures will be taken, the Board of Directors of the Company shallselect the method that they deem to be the most appropriate at the time. In terms of specificcountermeasures that can be taken by the Board of Directors of the Company, for example, although anoutline of an allotment of stock acquisition rights without contribution is shown in Attachment 5 as a
general rule, in reality, in cases where such action is taken, in some cases, other conditions such as a period
will be added in light of their effectiveness as an countermeasure, including placing the restriction that one
should not belong to a special shareholder group with over a certain ratio of voting rights to be able toexecute the stock acquisition rights. However, there is no suggestion that money should be offered for thevalue of stock acquisition rights that are held by a large-scale purchaser.
Furthermore, in cases where the Independent Committee has recommended that countermeasures should betaken, and a request has been made to hold a General Meeting of Shareholders to obtain the resolution, theBoard of Directors of the Company shall set a period with a maximum of 60 days as a period during whichshareholders can give adequate consideration to whether or not to take countermeasures under the Plan
(hereinafter, referred to as the “consideration period for shareholders”), and during the consideration period
for shareholders, in some cases a General Meeting of Shareholders may be held.
When the Board of Directors of the Company has passed a resolution regarding the convocation of aGeneral Meeting of Shareholders and the relevant date, the Board of Directors’ evaluation period will end
on such date and the consideration period for shareholders will commence.
Prior to holding said General Meeting of Shareholders, the Board of Directors of the Company will preparea document containing the necessary information provided by the large-scale purchaser, the opinions of theBoard of Directors of the Company concerning such necessary information, alternate proposals presented
by the Board of Directors of the Company, and other matters deemed appropriate by the Board of Directorsof the Company, and send it to our shareholders together with the convocation notice for the General
Meeting of Shareholders, while disclosing such matters in a timely and appropriate manner.
When a resolution is passed at a General Meeting of Shareholders regarding whether or not to executecountermeasures, the Board of Directors of the Company shall comply with such resolution. Therefore, if
the execution of countermeasures is voted down in the General Meeting of Shareholders, the Board of
Directors of the Company will not take countermeasures. Moreover, the consideration period forshareholders will be terminated on the conclusion of such General Meeting of Shareholders and the resultsof such General Meeting of Shareholders shall be disclosed as required in a timely and appropriate manner
after the passing of the resolution.
(4) Standby Period for a Large-Scale Acquisition
The standby period prior to the execution of a large-scale acquisition shall be, in cases where theconsideration period for shareholders is not given, the period up until the end of the Board of Directors’
evaluation period,
while it shall be the combined period of the Board of Directors’ evaluation period and the consideration
period for shareholders in cases where such period for shareholders is given.
Therefore, a large-scale acquisition can only be commenced after the standby period for the large-scaleacquisition has passed.

9(5) Suspension, etc., of Countermeasures
After it has been decided in the meeting of the Board of Directors of the Company, or the General Meetingof Shareholders, that specific countermeasures should be executed in accordance with (3) above, in casessuch as when the large-scale purchaser in question has cancelled or changed the acquisition, or the Board of
Directors of the Company has decided that it is inappropriate to take countermeasures, in some cases,
following the comments or recommendations of the Independent Committee (however, excluding the casewhere it evaluates that it would breach the duty of care if it follows the recommendations), the execution ofcountermeasures may be suspended.
For example, in cases where an allotment of stock acquisition rights without contribution has beenscheduled, or even after it has been executed after a resolution regarding such allotment was passed at a
meeting of the Board of Directors of the Company, when the Board of Directors of the Company has
determined that it is not appropriate to execute the countermeasures due to cancellation or changes in thelarge-scale acquisition, following the recommendations of the Independent Committee (however, excluding
the case where it evaluates that it would breach the duty of care if it follows the recommendations), theBoard of Directors may cancel said allotment up to the day one day prior to the effective date of suchallotted acquisition rights, and after the allotment of such rights, the Board of Directors may suspend thecountermeasure by way of stock acquisition by the Company without contribution prior to the execution of
the rights.
When such suspension is carried out, the decision regarding such will be disclosed as required in a timely
and appropriate manner in accordance with the matters that are considered as necessary by the Independent
Committee, laws, ordinances and the regulations of the stock exchange where the stock of the Company islisted.

6.

Impact on Our Shareholders and Investors(1) Impact of the Large-Scale Acquisition Rules on Our Shareholders and Investors
The purpose of the large-scale acquisition rules is to provide the necessary information to enable
shareholders to make decisions regarding whether or not to accept a large-scale acquisition and to present
the opinions of the Board of Directors of the Company, which is actually in charge of managing theCompany, and to secure an opportunity for our shareholders to be able to be presented with alternate
proposals. We believe that this will enable our shareholders, on the basis of adequate information, to makethe right decisions regarding whether or not to accept such offers, which will lead to the protection of thecorporate value of the Company and the mutual benefit of shareholders. Therefore, the setting of the largescale acquisition rules is a prerequisite for making appropriate decisions for shareholders, and we believe it
will also contribute to your benefit.
However, as stated in 5. above, since there is a difference in terms of the way in which the Company
handles a large-scale acquisition, depending on whether or not the large-scale purchaser adheres to thelarge-scale acquisition rules, etc., we would like to advise our shareholders to please pay close attention to
the movements of large-scale purchasers.
(2) Impact of the Execution of Countermeasures on Our Shareholders and Investors
In cases where a large-scale purchaser did not adhere to the large-scale acquisition rules, or even in cases
where the large-scale acquisition rules were adhered to, when the Board of Directors of the Company has
determined that the corporate value of the Company and the mutual benefit of shareholders will be greatly
harmed by such large-scale acquisition, and it is foreseeable that damage that is difficult to reverse may
occur, the Board of Directors of the Company may take exceptional countermeasures, as permitted by theCompanies Act, other laws and the Articles of Incorporation of the Company, within the scope of what isnecessary and reasonable to protect the corporate value of the Company and mutual benefits of ourshareholders. Due to the mechanism of these countermeasures, we do not envisage a situation where ourshareholders (excluding the large-scale purchaser who does not adhere to the large-scale acquisition rules
or the purchaser who will harm the benefit of all shareholders of the Company causing the damage that isdifficult to reverse) will incur substantial losses in terms of legal rights or financial aspects. In cases where
the Board of Directors of the Company has decided to take specific countermeasures, such decisions will be
10

disclosed as required in a timely and appropriate manner in accordance with the regulations of the stock
exchange where the stock of the Company is listed.
For example, in cases where the allotment of stock acquisition rights without contribution is to be executed aspart of countermeasures, our shareholders who are listed on the Shareholder Register as of the date of suchallotment will receive stock acquisition rights. Our shareholders will be allotted stock acquisition rights
without them needing to make a request, and when the Company carries out the allotment procedure, theshares of the Company will be issued in exchange for the stock acquisition rights without payment of anamount equivalent to the exercise price, meaning that our shareholders will not need to carry out procedures,such as application requests or payment in association with said stock acquisition rights. However, in suchcases, the Company may request the shareholders who will be allotted stock acquisition rights to submit acovenant to state that they are not a large-scale buyer in the form that is designated by the Company.
Even on the date of the allotment of stock acquisition rights or after the effective date of such allotment,
due to a situation such as the cancellation of the large-scale purchase by a large-scale purchaser, theCompany may cancel the allotment of stock acquisition rights up to the day one day prior to the effective
date of such allotted acquisition right, or obtain stock acquisition rights without contribution without
issuing the shares of the Company in exchange for the stock acquisition rights. In this case, for shareholders
who have carried out sales, etc., with expectation for diluting the value per share of the shares of theCompany, due to fluctuations in the share price, there is a possibility that losses which are commensuratewith the degree of the fluctuations may be incurred by those shareholders.

7. Commencement, Duration and Cancellation of the Plan
On condition that it is approved by our shareholders in the General Meeting of Shareholders, the Plan shallcome into effect on the same day and the effective term shall be until the end of the Annual General
Meeting of Shareholders which is scheduled to be held in June 2022. However, even after the continuationof the Plan was approved in the General Meeting of Shareholders and it has come into effect, (1) if aresolution is passed in a General Meeting of Shareholders of the Company regarding the cancellation of thePlan, or (2) such resolution is passed by the Board of Directors of the Company, when such resolutions are
passed, the Plan shall be cancelled.
Even during the effective term of the Plan, the Board of Directors of the Company may review the Planfrom the prospect of the improvement in the corporate value and the mutual interest of shareholders at any
time and make a revision to the Plan upon the approval at the General Meeting of Shareholders of theCompany. In cases where the Board of Directors makes a decision on the Plan including its continuation,
revision and cancellation, it shall immediately disclose the content.
Furthermore, even during the effective term of the Plan, when the need arises to make adjustments to theclauses determined in the Plan, including making corrections to the wording for reasons such as
typographical errors and omissions, due to the establishment of new rules or the revision or repeal of
related laws and ordinances, or the regulations of the stock exchange, the Board of Directors may correct orchange the Plan after obtaining the approval of the Independent Committee as required as long as suchmodification does not cause a disadvantage to our shareholders.

IV. Rationality of the Plan (the Fact that the Plan Complies with our Basic
Policies and Supports the Corporate Value of the Company and the Mutual
Benefit of Shareholders, but is not Intended to Maintain the Position of theBoard Members of the Company)
1. Satisfy the Requirements of Policies regarding Takeover Defense Measures
The Plan satisfies the three rules determined in Guidelines regarding Takeover Defense Measures for
Securing and Improving the Corporate Value and Mutual Benefit of Shareholders, which were announced
by the Ministry of Economy, Trade and Industry and Ministry of Justice on May 27, 2005 (the principle ofprotecting and enhancing corporate value and the mutual interests of shareholders; the principle of priordisclosure and respect for the intent of shareholders; and the principle of confirming necessity andlegitimacy).

11

It also takes into consideration the content of a report presented by the Corporate Value Study Group of the
Ministry of Economy, Trade and Industry on June 30, 2008, titled, “Ideal Takeover Defense Measures inLight of Various Recent Environmental Changes” and “Principle 1-5. So-called Takeover Defense
Measures” in the “Corporate Governance Code,” which was announced by the Tokyo Stock Exchange onJune 1, 2015 and revised on June 1, 2018.

2.

Continue with the Aim of Securing and Improving the Mutual Benefit ofShareholders
As stated in III. 1. Purpose of Continuing the Plan above, the Plan intends to provide the time andnecessary information for our shareholders to consider whether or not to accept a large-scale acquisition of
the shares of the Company when such an attempt is made, or for the Board of Directors to present alternate
proposals or negotiate with buyers on behalf of our shareholders in order to secure and improve thecorporate value of the Company and the mutual benefit of shareholders.
3. Reflect the Intent of Shareholders
The Plan shall come into effect on the condition that it is approved at the General Meeting of Shareholders.
The intent of our shareholder regarding the Plan is confirmed at the General Meeting of Shareholders.
Therefore, the succession of the Plan reflects the intent of our shareholders.
Even after the continuation of the Plan before the maturity of the effective period, if a resolution is passed
in a General Meeting of Shareholders regarding the cancellation of the Plan, the Plan will be cancelledwhen such resolution is passed, reflecting the intent of our shareholders.
4. Respect for the Evaluation of Highly Independent External Entities
As stated in III. 5. Policy for Handling Large-Scale Acquisition above, under the Plan, the decision to
execute countermeasures should be made after consulting with the Independent Committee that consists ofmembers who are independent of the management that executes the business of the Company andfollowing the recommendations of the Committee(however, except the case where it evaluates that it would
breach the duty of care if it follows the recommendations). The procedure is ensured for the transparent
operation of the Plan to support the corporate value of the Company and thus the mutual benefit ofshareholders.
5. No Dead-Hand or Slow-Hand Takeover Defense Measures
The Plan can be cancelled by the Board of Directors, which consists of directors who were appointed solely
at the General Meeting of Shareholders of the Company. Therefore, this Plan is not a “dead-hand” measure(in which the execution of takeover defense measures cannot be cancelled even when the majority of board
members are replaced).
And since the Company does not adopt staggered terms, neither is the Plan a “slow-hand” measure (inwhich it is impossible to change board members all at once and it takes a long time to stop the execution ofcountermeasures).

12(Attachment 1)

Status of the Stocks of the Company (as of March 31, 2019)1.

Total number of authorized shares

20,000,000

2.

Total number of outstanding shares

10,648,466 (including 782,151 treasury shares)3.

Number of shareholders

7,714 (number of share units 5,144)

4.

Major shareholders (Top 10)
Number ofshares held
1,000 stocks

Ratio of capital
contribution %Mizuho Bank, Ltd.

486

4.93

Nippon Life Insurance Company

428

4.35

The Master Trust Bank of Japan, Ltd. (Trust Account)

422

4.28

Hitachi Metals Trading, Ltd.

356

3.61

NORTHERN TRUST CO. (AVFC) RE NVI01

323

3.28

The Daishi Bank, Ltd.

320

3.25

Japan Trustee Services Bank, Ltd. (Trust Account)

306

3.11

STATE STREET LONDON CARE OF STATE STREETBANK AND TRUST, BOSTON SSBTC A/C UK LONDONBRANCH CLIENTS- UNITED KINGDOM

300

3.04

STATE STREET BANK AND TRUST COMPANY 505019

270

2.74

Sumitomo Mitsui Trust Bank, Limited

261

2.65

Name of shareholder(Note)1. The ratio of capital contribution is calculated based on the number of shares outstanding not including
treasury shares.
2. The number of shares held is rounded down to the nearest 1,000 shares.

13

(Attachment 2)

An outline of the plan

Flow of a large-scale acquisition

Purchaser making
large-scale acquisition

If the large-scale acquisition rules
are not followed

If large-scale acquisition rules arefollowed

The rules stipulated in the Plan are not followed
Start of a large-scale acquisition

Large-scale acquisition rules
Submission of statement of intention by

Statement of intention is not
submitted

purchaser making a large-scale acquisition

Submission of list of necessary
Information by the Board of Directors(Within 10 business days of the day following the dayon which the statement of intention was received)
Submission of necessary information bypurchaser making a large-scale acquisition

Necessary information is not
submitted

The Board of Directors’
evaluation period

If a reasonable explanation isprovided for not being able toprovide all necessary information.

Maximum 60 days or
maximum 90 days

Acquisition before the end of theevaluation period• Evaluation/review of an acquisition
proposal• Formulation of an alternate proposal• Negotiation with purchaser making alarge-scale acquisition
When there isconspicuous harm tothe corporate value of
the Company and themutual benefit ofshareholders

Consult
Recommend

Independent
committee

Consult
Recommend

The Boardof
Directors

Decision to execute

Decision not toWhen the general meeting ofshareholders is held

Consideration period forshareholders 60 days

Shareholder decision by theGeneral Meeting of
Shareholders
Rejected

No execution ofcountermeasures↓
Evaluation by shareholders

Decision to execute by the Board of
Directors

Accepted

Execution of countermeasures(Note) The aim of this diagram is to help you to understand the Plan. As such, although it depicts an outline of typical procedures, it
should by no means be considered as showing all procedures that can be taken. For further details, please refer to the main text of
this document.

14

(Attachment 3)

Outline of the Rules for the Independent Committee•

The Independent Committee shall be established by means of a resolution of the Board of Directors.

•

The Independent Committee shall be comprised of three (3) or more people appointed by the Board of
Directors of the Company from among external directors or external experts who are independent of the
management that executes the business of the Company to enable them to make a fair and neutral
judgement. External specialists shall be experienced corporate managers, persons familiar withinvestment banking, attorneys, certified accountants, persons with academic experience mainly studying
the Companies Act, etc., or similar entities.

•

As a general rule, the Independent Committee shall give recommendations to the Board of Directors of
the Company together with an attached explanation regarding the reasons and basis for such decision in
response to an inquiry from the Board of Directors of the Company. Each member of the Independent
Committee shall make recommendations from the perspective of whether or not the decision in question
will contribute to the corporate value of the Company and the mutual benefit of shareholders.

•

The Independent Committee may obtain the advice of independent external specialists (financial
advisers, certified accountants, attorneys, consultants and other specialists) at the cost of the Company
as required.

•A resolution of the Independent Committee shall be passed by means of a majority vote of thecommittee members.

15

(Attachment 4)

The profile of candidates for members of the Independent Committee
Shuji Iwamura
April 1976
ProfileJune 2010
August 2011
July 2012
October 2012
June 2013
March 2015
June 2015
October 2017
June 2018
Hidemi Hiroi
ProfileApril 1979
April 2007
April 2009
June 2012
June 2013
June 2015
April 2017
June 2017

Koji Tanabe
ProfileApril 1975
July 2002
April 2005
February 2012
April 2017

Appointed as public prosecutor
Superintending Prosecutor, Sendai High Public Prosecutors Office
Superintending Prosecutor, Nagoya High Public Prosecutors Office
Resigned from office
Registered as Attorney-at-Law
Advisor of Nagashima Ohno & Tsunematsu (present position)
Outside Audit and Supervisory Board Member of the Company(present position)
Outside Auditor of CANON ELECTRONICS INC. (present position)
Outside Corporate Auditor of Hokkaido Bank, Ltd. (present position)
Governor and Auditor of the Board of Governors of Government
Pension Investment Fund (present position)
Outside Director of Hayashikane Sangyo Co., Ltd. (present position)

Joined the Industrial Bank of Japan, Limited
Executive Officer, General Manager of Group Strategy of Mizuho
Financial Group, Inc.
Corporate Auditor of Mizuho Corporate Bank, Ltd.
Director, President of Mizuho Human Service Co., Ltd.
Corporate Auditor of IBJ Leasing Company, Limited
Director, President of IBJL-TOSHIBA Leasing Company, Limited
Advisor of IBJL-TOSHIBA Leasing Company, Limited
Audit and Supervisory Board Member of the Company (present
position)

Joined the Ministry of International Trade and Industry (currently the
Ministry of Economy, Trade and Industry)
Director-General of Research and Statistics Department of the Ministryof Economy, Trade and Industry
Professor of Graduate School of Innovation Management of Tokyo
Institute of Technology
Director of the Japan Asia Group Limited (present position)
Professor Emeritus of Tokyo Institute of Technology
Specially-Appointed Professor of School of Environment and Society ofTokyo Institute of Technology (present position)
Corporate Auditor of Shimazaki Denki Corporation (present position)

1. There is no special interest between any of candidates and the company.
2. The Company appointed Shuji Iwamura as an independent officer, and registered him as such with theTokyo Stock Exchange per the regulations of the Exchange. If Mr. Iwamura is re-elected at the General
Meeting of Shareholders, the Company will again register him as an independent officer. If Hidemi
Hiroi and Koji Tanabe are elected at the General Meeting of Shareholders, the Company will registerthem as new independent officers.
16

(Attachment 5)

Outline of Allotment of Stock Acquisition Rights Without Contribution
1.

Shareholders Eligible for an Allotment of Stock Acquisition Rights without Contribution andAllotment Method
Shareholders that are recorded in the final Shareholder Register on the allotment date determined by
the Board of Directors of the Company shall be allotted stock acquisition rights without newcontribution at a ratio of one (1) stock acquisition right for one (1) share of common stock of theCompany held (excluding common stock held by the Company).

2.

Type and Number of Shares to Be Acquired upon Execution of Stock Acquisition Rights
The type of shares to be acquired upon the execution of stock acquisition rights shall be common
stock of the Company, and the number of shares to be acquired upon exercise of each of the stockacquisition rights shall be determined elsewhere by the Board of Directors of the Company. However,in cases where a stock split or a reverse stock split is carried out by the Company, the required
adjustment shall be carried out.

3.

Total Number of Stock Acquisition Rights Allotted to the Shareholders
The upper limit for the total number of shares that can be acquired through the exercise of such stockacquisition rights shall be the difference between the total number of authorized shares of theCompany as of the allotment date set by the Board of Directors of the Company and the total number
of issued shares of common stock of the Company (excluding the shares of common stock theCompany that are held by the Company). The Board of Directors of the Company may allot stockacquisition rights multiple times.

4.

Value of Property to be Invested upon Exercise of Stock Acquisition Rights and the Price
The property to be invested upon exercise of each stock acquisition right shall be money, and an
amount of one (1) yen or more as determined by the Board of Directors of the Company. When the
Board of Directors of the Company determines to obtain stock acquisition rights, the Company may
grant new shares to shareholders for the value of stock acquisition rights of the Company without
paying the amount equivalent to the exercise price.

5.

Restrictions on the Transfer of Stock Acquisition Rights
Acquisition of stock acquisition rights by means of transfer of such rights requires the approval of theBoard of Directors of the Company.

6.

Conditions for the Execution of Stock Acquisition Rights
Conditions applying to the execution of stock acquisition rights include that the eligible person should
not belong to a special shareholder group that has 20% or more of voting rights (however, this shallexclude persons that have already obtained the prior approval of the Board of Directors of theCompany).

7.

Stock Acquisition Rights Execution Period
The first day on which stock acquisition rights can be executed, execution period, conditions for an
acquisition and other necessary matters shall be determined by the Board of Directors of the Company
elsewhere. With regard to conditions for acquisition, the Company may set rules, such that theCompany may acquire stock acquisition rights held by persons other than those whose exercise of thestock acquisition rights is not approved based on the conditions described in 6. above, and issue sharesof common stock of the Company at a ratio of a number determined by the Board of Directors of theCompany elsewhere for one (1) unit of stock acquisition rights. However, there is no suggestion thatcash will be issued for the value of stock acquisition rights held by persons whose exercise of stockacquisition rights is not approved.

17