March 25, 2008
To Whom It May Concern
Name of Listed Company:
Taiyo Nippon Sanso Corporation
Name of Representative: Hirosuke Matsueda, President(Code No.: 4091 TSE/OSE/NSE)
Contact: Norikazu Ishikawa, General Manager, the Public Relations Dept.
(TEL: 03 5788 8015)
Important Notice Regarding Basic Policies for Control over the Company andCountermeasures Against Large-scale Acquisitions of the Company’s Shares(Takeover Defense)
We are writing to advise that, at the Board meeting held today, the Company resolved to
introduce a plan (hereinafter referred to as the “Plan”) as set out below as acountermeasure against any acquisition of the Company’s share certificates (*1) aimed atincreasing the percentage of voting rights (*2) held by any particular group ofshareholders (*3) up to or in excess of twenty percent (20%) or any acquisition of theCompany’s shares that results in an increase in the percentage of voting rights held by
any particular group of shareholders up to or in excess of twenty percent (20%) (in any(*1) Share certificates shall mean share certificates as defined in Article 27-23 Clause 1 or Article 27-2

Clause 1 of the Financial Instruments and Exchange Law.
(*2) The percentage of voting rights is determined as follows: 1) if the particular group of shareholders

is as provided in *1) of (1) above, the percentage of shares held by any such holder (the percentage ofshares held as defined in Article 27-23, Clause 4 of the Law; in such a case, the number of shares
held by such a shareholder’s joint shareholders [which hereinafter refers to the number of sharecertificates held as defined in the same clause] should be added); or 2) if the particular group ofshareholders is as provided in *2) of (1) above, the total percentage of share certificates held (thepercentage of share certificates held as defined in Article 27-2 Clause 8 of the Law) by the bidder andthe special interested person.
For the purpose of calculating the percentage of share certificates held, the latest financial statements,
interim statements or reports on purchases of treasury shares submitted may be referred to for the
total voting rights (as defined in Article 27-2 Clause 8 of the Law) and the total number ofoutstanding shares (as defined in Article 27 -23 Clause 4 of the Law).
(*3) A “particular group of shareholders” includes: (1) any holder of Company share certificates (sharecertificates as defined in Article 27-23 Clause 1 of the Financial Instruments and Exchange Law)
(hereinafter including any person deemed to be a holder pursuant to Article 27-23 Clause 3 of theLaw ) and any joint holder (as defined in Article 27-23, Clause 5 of the Law, hereinafter including
any person deemed to be a joint holder pursuant to Paragraph 6 of the same Article); or (2) any
person who engages in bidding (bidding as defined in Article 27-2 Clause 1 of the Law, including any
bidding on the securities market of an exchange) for the Company’s share certificates (sharecertificates as defined in Article 27-2 Clause 1 of the Law) and any special interested person (special
interested person as defined in Article 27-2 Clause 7 of the Law).
1case, other than any acquisition approved by the Board in advance, regardless of thespecific method used to make the acquisition, including market dealings and takeover
bids; any such acquisition shall hereinafter be referred to as a “large-scale acquisition”
and any person who makes such a large-scale acquisition as a “Large-scale Bidder”) as
the basic policy on the roles of persons who control the Company’s financial andbusiness policies and for the purpose of improving the Company’s corporate value andensuring that the common interests of our shareholders are upheld.
Please see Appendix 1 for the specific procedure under the Plan.
The Plan shall be adopted subject to the approval of shareholders at the Company’s
annual meeting scheduled for June 27, 2008, and shall remain effective until the end of
the Company’s annual meeting of shareholders scheduled for June 2011.
For the avoidance of doubt, as of today’s date, there has been no approach or offer madeto the Company regarding any large-scale acquisition of the Company’s shares. The
status of major shareholders as of September 30, 2007 is provided in Appendix 2.
I. Basic policies regarding the roles of persons who control decisions on the
Company’s financial and business policies
As the Company is listed on the securities exchange, the Company’s shares are to be
freely traded by its shareholders and other investors; therefore, even if any offer of alarge-scale acquisition or similar is made for the Company’s shares, the Company will
not reject such an offer indiscriminately and believes that ultimately, the decision mustbe left to the discretion of shareholders.
However, in recent times, activities designed to forcibly and unilaterally acquire shares
without obtaining the consent of the target company’s management have become moreprevalent in Japanese capital markets. As is often the case, such large-scaleacquisitions clearly damage corporate value and thus the common interests ofshareholders, and may in effect force shareholders to sell their shares, provide
insufficient time or information to enable the target company’s board and shareholders to
examine the terms and conditions of the acquisition, require the target company tonegotiate with the bidder in order to set more favorable terms and conditions than thoseoffered by the bidder, and in no way contribute to the target company’s corporate value /the common interests of shareholders, given the purpose of such bidders.

2

We believe that persons who control decisions on the Company’s financial and business
policies must have a full understanding of the Company’s management philosophy, its
sources of corporate value and thus the confidential relationships with stakeholders who
support the Company, and can ensure and improve the Company’s corporate value andthus the common interests of shareholders over the long term.
II. Measures to Implement Basic Policies
To allow a number of investors to continue investing in the Company over the
medium-to-long term, the Company has introduced the following measures to improve
the Company’s corporate value and thus advance the common interests of shareholders.
We believe that these measures will contribute to the implementation of the Basic
Policies described in I above.
１． Commitment to improve corporate value under the “medium-term businessplan”
In the previous medium-term business plan, “Global 5000” which ended in FY2007, theCompany promoted global business deployment on a par with major overseas companies,
positioned the medium-term target sales of JPY500 billion as the “First Step” to beachieved (with target sales of JPY450 billion for FY2008), and actively pursued 1)
M&As in Japan and abroad, 2) strategic capital investment based on the predicted
demand from the electronics industry, which is the growth market, 3) strengthening /expansion of business in growth regions including the US, China and Southeast Asia,and 4) horizontal integration of the carbon dioxide business as well as consolidation /reorganization of the cryogenic equipment / semiconductor engineering subsidiaries
under the basic policies of “development of new businesses through effective use of cashflow” and “pursuit of effective business management”. As a result, the Company wasable to achieve the profit target two years earlier than planned partly due to a favorable
external environment.
Based on these results, the Company will set higher targets and take on challenges tobecome a “global” company. For this purpose, the Company has drawn up a new
medium-term business plan, " Stage 10”: – challenges in becoming a global company[II]”, which starts in the current fiscal year (FY 2008). Through its commitment toattaining the goals outlined in “Stage 10”, the Company will dedicate itself to improving
the Company’s corporate value on an ongoing basis and thus contribute to the common

3interests of shareholders.
The outline of “Stage 10: challenges in becoming a global company [II]” is as follows:[What are the three “10s” pursued by the Taiyo Nippon Sanso Group?]● To gain a “global market share of 10%” as a growth indicator;● To achieve “operating margins of at least 10%” as a profitability indicator; and● To maintain an “ROCE of at least 10%” as an efficiency indicator.
[Target indicators for FY2010]● Sales: JPY600 billion +α● Operating profit of at least JPY54 billion (at least JPY56 billion before amortizationof goodwill under the US GAAP due to changes in the accounting system)● ROCE of at least 10%[Key themes]● Accelerated growth potential accompanied by increase in profits● Promotion of globalization● Implementation of cost cutting measures● Strengthening of group management[Continuation of strategic investment]● The Company will make strategic investment of JPY200 billion over three years;
JPY140 billion (70%) of this investment will be targeted at the growth markets /regions.
□ Amount invested in the electronics business: JPY85 billion□ Amount invested in overseas businesses: JPY68 billion (including JPY13 billion
invested in the electronics business)[Promotion of CSR management]□ Thoroughgoing efforts to ensure safety, security and quality assurance
In accordance with the firm brief that specifies product safety, security and quality
assurance as the basis of the Taiyo Nippon Sanso Group’s business activities, theCompany will seek to carry out intensive safety reviews, enhance its safety
guidance through security audits and achieve total quality management based on
the ISO9001 management systems in order to win trust from customers / society
and establish a strong business platform.

4□ Total compliance
The Taiyo Nippon Sanso Group will make efforts to win the trust of society as a“good corporate citizen” based on the awareness that “companies should foster
creativity while delivering fair and appropriate management in harmony withsociety through activities carried out in good faith in accordance with the set ofvalues / sense of ethics aspired to by members of society.”□ Commitment to the prevention of global warming
In order to reduce the volume of electricity in gas production which is responsible
for approx. 98% of CO2 emissions of the Taiyo Nippon Sanso Group, the Company
will remain committed to promoting energy saving at the gas production plants.
In addition, to reduce CO2 emissions which occur during transportation in tanks,
the Company will make efforts to reduce the volume of fuels used by the
distribution company in the Group and contracted carriers.
2. Efforts to improve corporate value through the enhancement of corporate
governanceIn order to increase the Company’s corporate value and thus advance the common
interests of shareholders on an ongoing basis through effective and sound management,
the Company has ranked the development of management structures / systems and theappropriate implementation of necessary measures as its key business challenges.
In accordance with these policies, we have introduced the following measures: 1)
monitoring of important decision-making and functions by the Board, 2) the accelerationof decision-making through the business administrative structure from the perspective of
the group as a whole; 3) auditing of directors’ performance of their duties by corporate
auditors, 4) internal auditing conducted by the Corporate Audit Office, which reports
directly to the President.
In addition, in order to keep pace with changes in the management environment andinstitute an ideal management framework in a flexible manner, as well as to further
clarify management responsibilities during the fiscal year and increase the opportunities
to gain the confidence of its shareholders, the Company plans to submit a proposal toamend the articles of incorporation by reducing the term of office of directors from thecurrent two (2) years to one (1) year to the shareholders’ meeting scheduled for June thisyear.
Concurrently with such measures, the Company will make efforts to further strengthen

5the relationship of mutual trust with its shareholders, business partners, employees andother stakeholders and steadily improve corporate value from a medium- and long-term
perspective.
III．Contents of the Plan (measures to prevent any inappropriate person fromcontrolling decisions on the Company’s financial and business policies
pursuant to the Basic Policies)
1. Purpose of Introducing the Plan
This Plan is introduced as a means to prevent any inappropriate person fromcontrolling decisions on the Company’s financial and business policies pursuant to thebasic policies as described in I above.
In relation to any large-scale acquisition attempt, the Plan aims to 1) require alarge-scale bidder to provide necessary and sufficient information, 2) secure sufficient
time for the Company to collect information on / consider an attempted large-scaleacquisition; and 3) provide necessary and sufficient information and time toshareholders by providing the Company’s management plans and alternatives toshareholders and through negotiations with a large-scale bidder as appropriate so thatshareholders can make an appropriate decision on the acceptance or rejection of any
such large-scale acquisition attempt.
Accordingly, the Board has decided to establish certain rules regarding the provision of
information at the time of any large-scale acquisition attempt (hereinafter referred toas the “Large-scale Acquisition Rules”) and introduce the Plan as a takeover defense
including countermeasures against any large-scale acquisition attempt made by aninappropriate person in accordance with the basic policies described above.
2. Summary of the Large-scale Acquisition Rules
In order to ensure / improve the Company’s corporate value and thus shareholder
value, the Plan establishes the procedures for (i) requiring any large-scale bidder toprovide necessary and sufficient information about its large-scale acquisition attemptin advance; (ii) enabling the Company to secure sufficient time to gather information
on / review any such large-scale acquisition attempt; (iii) having the Board provide
the Company’s management plans or alternatives to shareholders and/or conduct
negotiations with the large-scale bidder; (iv) holding a shareholders’ meeting to6confirm the wishes of shareholders on the exercise of countermeasures against any
such large-scale acquisition attempt, and request that the large-scale bidder wait until
the procedures described in (i) through (iv) above have been completed before
commencing any large-scale acquisition attempt in order to ensure an opportunity isgiven to shareholders to confirm their wishes where any large-scale acquisition
attempt is made for the Company’s share certificates.
(1) Prior submission of a statement of intention to the Company
If any large-scale bidder desires to engage in a large-scale acquisition, the bidder shallfirst be required to provide the Board with its name, address, the governing law underwhich the bidder was established, the name and contact details of its Japanese
representative and a summary of the proposed large-scale acquisition together with astatement of intention including its agreement to comply with the procedures specified
in the Plan. The Board shall, within ten (10) business days of receiving any suchstatement of intention, deliver to the large-scale bidder a list of required informationthat must be initially submitted by said large-scale bidder.
(2) Provision of Necessary Information
Unless the Board considers it unnecessary, a large-scale bidder shall be required toprovide the Company with any information that is necessary and sufficient to enable
shareholders to make a decision and enable the Board to form an opinion (hereinafterreferred to as the “Required Information”) based on the list of necessary information
as provided in (1) above. The specific details of the Required Information will varydepending on the attributes of the large-scale bidder and the nature of the large-scaleacquisition attempt; however, the following items will generally be required:
1) the identity of the large-scale bidder and any group of which it is a member(including the identity of any joint holder, special interested person or [in the caseof a fund] partners and other members) (including information on the exact name,business activities, capital composition and financial standing of the large-scalebidder and its experience in any business similar to that of the Company or Group,etc.);
2) all securities issued by the Company held by the large-scale bidder, the details of alltransactions involving the Company’s securities conducted by the large-scale bidder
during the previous sixty (60) day period (including the nature of the transaction,
pricing, place, method and the counterparty to the transaction) and all contracts,

7

arrangements and agreements executed by the large-scale bidder in relation to theCompany’s securities (including oral agreements and regardless of the ability toperform any such contract, arrangement or agreement);3) the purpose, method and details of the large-scale acquisition attempt (including thevalue / type of compensation, timing, the structures of related transactions, thelegality of the large-scale acquisition attempt and the feasibility of the large-scaleacquisition attempt and related transactions, and the facts supporting and reasons forany possible delisting of the Company’s shares if any such delisting is expected
after the completion of the acquisition);4) the existence or non-existence of communications with any third party in the courseof the large-scale acquisition attempt (hereinafter including any communication
relating to the making of a material proposal to the Company as defined in Article
27-26 Clause 1 of the Financial Instruments and Exchange Law) and the specificformat and contents of any such communication;5) the basis for calculating the cost of acquiring the Company’s share certificates(calculation assumptions, method of calculation, numerical information used in thecalculation, the nature of synergies expected to arise from a series of transactions
relating to the large-scale acquisition attempt, etc.) and supporting evidence for theacquisition funds (including the exact name of the person providing the funds[including any substantial provider], the fundraising method and the details of
related transactions);
6) the Manager expected to be appointed to participate in the management of theCompany and the Group (including information about his/her experience in any
business similar to that of the Company and the Group, etc.), management policies,
business and financial plans, capital and dividend policies and asset utilizationplans;
7) whether or not the relationship between the Company and the Group’s business
partners, customers, employees and other stakeholders and between the Company
and the Group will be changed after completing the large-scale acquisition attempt,
and the details, if any;8) specific steps taken to avoid any conflict of interest between the large-scale bidder8and other shareholders in the Company; and9) such other information as is reasonably deemed necessary by the Board.
We will carefully examine the information initially provided and, after consulting withany third party independent of the Board (including financial advisors, certified public
accountants, attorneys, consultants or other experts; hereinafter referred to as “External
Experts”) as appropriate, if such information as is initially provided is found to be
insufficient, the Board will request that the large-scale bidder provide additional
information until such required information is fully obtained.
Except for any information which is deemed inappropriate by the Board before
disclosure, the Company may, as deemed necessary by the Board, disclose toshareholders the fact that a large-scale acquisition proposal has been made, the required
information provided to the Board and any other information as is deemed appropriateby the Board at any time.
(3) Review of the details of a large-scale acquisition attempt, negotiations with alarge-scale bidder and disclosure of information by the Board
If the Board accepts and acknowledges that sufficient information has been provided bya large-scale bidder, the Board shall set a period of sixty (60) days (in the case of an
acquisition of the Company’s shares through a takeover bid for cash [Japanese yen]only) or ninety (90) days (for any other large-scale acquisition attempt) for review(hereinafter referred to as the “Board Evaluation Period”) and shall disclose informationaccordingly.
The Board may, during the Board Evaluation Period, consider an opinion on the bid forthe proposed large-scale acquisition from an internationally recognized investment bankor other institution as to whether the purchase price is adequate from a financial
perspective (referred to as an “Inadequacy Opinion”), and if the Company receives anopinion that the purchase price is inadequate, the Company shall extend the initial Board
Evaluation Period by up to 40 days and disclose information accordingly.
In addition, for security registration statements, financial statements, interim andextraordinary reports prepared in Japanese under the Financial Instruments andExchange Law (including any notice of adjustment required therefor or if there is any

9amendment report, the relevant notice of adjustment and the amendment report)(hereinafter collectively referred to as “Security Registration Statements”) or Japaneseversions of such documents prepared by a large-scale bidder (not including the Japanesesummary of any document prepared in a foreign language; however, for financial
statements and interim reports [including any amendment report therefore], English
language statements or interim statements for a foreign company corresponding to thefinancial statements and interim reports prepared under the Financial Instruments andExchange Law [including any amendment report therefor] [hereinafter collectively
referred to as “foreign company statements”] and supplementary documents required
under the Financial Instruments and Exchange Law and the Japanese version of thesummary of such reports and statements shall be acceptable) have not been submitted ordisclosed for the last five (5) years (or if the period from the date on which thelarge-scale bidder was required to submit the financial statements, foreign company
statements or any other similar documents in accordance with the Financial Instruments
and Exchange Law until the starting date of the Board Evaluation Period is less than five(5) years, that period), the Company shall further extend the initial Board Evaluation
Period by up to twenty (20) days and disclose information accordingly in order to allow
for a careful examination of the contents of the documents submitted by the large-scalebidder (which are not required by the Financial Instruments an Exchange Law).
For the purpose of ensuring / improving the Company’s corporate value and shareholder
value, the Board shall evaluate / review the nature of any large-scale acquisition attempt
by a large-scale bidder based on the information / materials provided by the large-scalebidder within the Board Evaluation Period. In addition, the Board shall make efforts tounderstand the wishes of shareholders, ask for the opinions of customers, business
partners, employees and relevant local parties as appropriate and obtain advice from
External Experts to improve the reasonableness / objectivity of the decision made.
On that basis, the Board shall review the nature of any large-scale acquisition attemptand hold consultations / negotiations with the large-scale bidder to encourage thelarge-scale bidder to improve the terms of its large-scale acquisition attempt as
appropriate. The large-scale bidder must respond to any Board request relating to theprovision of materials or other information for review, or for consultations or
negotiations.
In order to improve the transparency of its decision, other than any information forwhich the Board deems disclosure to be inappropriate, such as trade secrets, ｔhe Board

10

shall disclose to shareholders, at such time as is deemed appropriate by the Board, theRequired Information provided by a large-scale bidder, the Board’s opinion on the natureof the large-scale acquisition attempt by the large-scale bidder, a summary of any
alternatives developed by the Board and any other information which is deemed
appropriate by the Board.
(4) Procedures to confirm the wishes of shareholders
If the Board resolves to hold a shareholders’ meeting and fixes a reference date, theBoard Evaluation Period shall end on that day and the Board shall promptly startarranging the shareholders’ meeting.
In such a case, a prompt announcement shall be made about the termination of the Board
Evaluation Period and the holding of a shareholders’ meeting.
After the termination of the Board Evaluation Period, (i) unless the Board decides thelarge-scale acquisition attempt will result in a significant deterioration of the Company’s
corporate value and shareholder value, as provided in 3. (１) a) or b).; and (ii) unless theBoard decides that the large-scale acquisition attempt will make a significant
contribution to the maximization of the Company’s corporate value and shareholder
value, the Board shall ask shareholders to decide whether any countermeasures should
be taken against the large-scale acquisition attempt. In addition, (i) even if the Board
determines that the large-scale bidder is not in compliance with the procedures provided
in the Plan, or (ii) even if the large-scale acquisition attempt is deemed to be likely tohave a significant detrimental effect on the Company’s corporate value or shareholder
value, as provided in 3. a) or b), the Board shall ask shareholders to decide whether any
countermeasures should be taken against the large-scale acquisition attempt in order toensure that shareholders’ wishes are taken into account.
Shareholders’ wishes shall be confirmed through resolutions made at a shareholders’meeting (hereinafter referred to as the “Shareholders’ Meeting”) pursuant to the
Corporate Law. The Company shall act in accordance with resolutions made at theshareholders’ meeting held pursuant to the guidelines set out in 1) through 5) below andshall or shall not take any countermeasures against a proposed large-scale acquisition
attempt:
1) to fix a reference date to determine those shareholders entitled to exercise theirvoting rights at the shareholders’ meeting (hereinafter referred to as the “Reference

11Date”), the Board shall make an announcement by such means as are provided in
the Company’s articles of incorporation no less than two (2) weeks prior to theReference Date.
2) Shareholders listed or registered in the latest shareholders’ or beneficial
shareholders’ register as of the Reference Date may exercise their voting rights.
3) Shareholders’ resolutions shall be approved by a majority of shareholders inattendance in accordance with laws and regulations, and if an amendment of part of
the articles of incorporation is approved at the next annual meeting of shareholders,in accordance with Article 14 thereof.
4) No particular group of shareholders may commence making bids for the Company’s
share certificates until the end of the shareholders' meeting.
5) If any material change or amendment is made to the information provided to enable
shareholders to make decisions at the shareholders’ meeting, even if the Reference
Date is already fixed, the Board may change the Reference Date or postpone or call
off the shareholders’ meeting.
3. Measures to be taken when any large-scale acquisition attempt is made(1) If a large-scale bidder fully complies with the procedures stipulated in the Plan
If a large-scale bidder fully complies with the procedures stipulated in the Plan, as
provided in 2. (4) above, the Board shall ask shareholders to decide at the shareholders’meeting whether the Company should take any countermeasures against the large-scaleacquisition attempt.
If a large-scale bidder fully complies with the procedures stipulated in the Plan and theBoard finds that the proposed acquisition is likely to contribute to the maximization of
the Company's corporate value and thus of its shareholder value, the Board shall beentitled to refrain from taking any countermeasures without going through the process ofconfirming shareholders’ wishes as provided in 2. (4) above. Provided, however, thateven if the procedures stipulated in the Plan are fully complied with, if the Board findsthat the large-scale acquisition attempt is likely to have a significant detrimental effecton the Company’s corporate value and shareholder value, in order to protect corporate
value and thus shareholder value, the Board may take any countermeasure to the extent

12necessary and appropriate, subject to a Board resolution. More specifically, if any
large-scale acquisition attempt is found to fall within any of the following circumstances,the large-scale acquisition attempt shall be deemed to be likely to have a significant
detrimental effect on the Company’s corporate value and thus on its shareholder value:a) any large-scale acquisition attempt which is likely to lead to a clear reduction in the
Company’s corporate value and shareholder value, including the activities described in1) through 4) below:
1) purchasing shares with the intention of requiring the Company to buy back theshares at a higher price;2) managing the Company in a manner designed to realize the interests of the acquirer
and sacrifice those of the Company, for example, by controlling the Company
temporarily and acquiring the material assets of the Company at a discount;3) misappropriating the Company’s assets to use them as a pledge or to redeem theliabilities of the acquirer or any of its group companies; or4) controlling the management of the Company temporarily to dispose of high-value
assets which are not being used in the Company’s businesses for the time being andusing the proceeds to pay large special dividends or to sell the shares at a high pricewhen the price surges as a result of such large extraordinary dividends.
b) Any large-scale acquisition attempt which in effect may force shareholders to sell
their shares including coercive two-step acquisitions (offers to acquire shares such as intakeover bids where the acquisition terms are less favorable in the second step than in
the first or where the acquisition terms in the second step are not revealed).
In each case, in order to increase the reasonableness / objectivity of the decision as towhether such a large-scale acquisition attempt is likely to have a significant detrimental
effect on the Company’s corporate value or shareholder value, the Board shall make adecision on whether or not to take any countermeasure pursuant to advice obtained from
External Experts.
However, as provided in 2. (4) above, even if the Board finds that such a large-scale13acquisition attempt is likely to have a detrimental effect on the Company’s corporate
value or shareholder value as provided in a) or b) above or otherwise, and if
countermeasures may be taken subject only to the approval of the Board under the Plan,
the Board may, with a view to taking shareholders’ wishes into account, also institute theprocedure to confirm shareholders’ wishes as provided in 2. (4).
Even if the Board accepts that a large-scale bidder has fully complied with theprocedures stipulated in the Plan and initiates the process to hold a shareholders’meeting, if the Board determines that the large-scale bidder has, before the end of theshareholders’ meeting, started a large-scale acquisition attempt which is likely to have asignificant detrimental effect on the Company’s corporate value and thus on its
shareholder value, the Board may call off the shareholders’ meeting and takecountermeasures, subject only to a requirement to obtain a Board resolution.
(2) Situations where a large-scale bidder does not comply with the procedures
stipulated in the Plan
If a large-scale bidder does not comply with the procedures stipulated in the Plan, unlessexceptional circumstances make it necessary to continue consultations / negotiations
with the large-scale bidder for the provision of the Required Information, or the Board
determines that it should proceed to initiate the process to confirm shareholders’ wishes
as provided in 2. (4) above, in principle, the Board shall be entitled to takecountermeasures to the extent necessary and appropriate in order to protect corporate
value and thus shareholder value, subject only to a requirement to obtain a Board
resolution. A summary of the specific countermeasure of a gratis issue of stock options
is provided in Appendix 3.
(3) Suspension of countermeasures taken
Even if a resolution to carry out a gratis issue of stock options is subject only to Board
approval as provided in 3. (2) above, if (i) the bidder cancels the acquisition attempt or
the acquisition attempt is discontinued for any other reason, or (ii) any changes occur tothe facts constituting the assumptions made for the Board’s decision and as a result, thebidder’s acquisition attempt no longer meets any of the requirements specified in 3. (1)above, or even if it does, it would not be reasonable to carry out or permit a gratis issueof stock options, the gratis issue of stock options may be cancelled up to the day before
the effective date of the stock options, or, at any time during the period from the day
following the effective date of any such gratis issue until the day before the first day of

14

the exercise period for such stock options, the Company may acquire the stock options
without compensation.
4. Impact on shareholders / investors(1) Impact on shareholders / investors of the introduction of the Plan
The Plan is intended to provide the Company’s shareholders with information necessary
for the Company’s shareholders to decide whether they should accept any offer to makea large-scale acquisition attempt and with the opinion of the Board then in charge of theCompany’s management and, in addition, to ensure that the Company’s shareholders are
given an opportunity at the time of any such attempt to be presented with any
alternatives to enable them to make a final decision. In this way, the Company’s
shareholders will be able to make proper decisions on whether to accept or reject any
such attempted large-scale acquisition on the basis of sufficient information, whichshould result in the Company’s corporate value, and thus its shareholder value, being
maintained or improved. Therefore, the establishment of the Plan should contribute to
the interests of the Company’s shareholders and investors.
In addition, as already described in 3. above, the Company’s policy for handling suchmatters will vary, depending on the large-scale bidder’s compliance or non-compliancewith the procedures stipulated in the Plan; therefore, the Company’s shareholders andinvestors shall be required to pay attention to action taken by any such large-scalebidder.
(2) Impact on shareholders / investors of taking countermeasures
For the purpose of protecting corporate value and thus shareholder value, the Board may
carry out a gratis issue of stock options to the extent necessary and appropriate.
Although the value of each Company share will be diluted as a result of any such gratis
issue of stock options, since the number of shares held by each shareholder will increase
through the granting of new shares upon the exercise of such stock options or the
granting of new shares in exchange for the Company acquiring such stock options, as aconsequence, the total value of stock held by each shareholder will not change; therefore,
the Company does not foresee any situation whereby any shareholder in the Company(not including any large-scale bidder that fails to comply with the procedures stipulated
in the Plan and engages in any large-scale acquisition attempt that is likely to have asignificant detrimental effect on the Company’s corporate value and thus its shareholder
value) will have its interests unduly damaged, either in terms of its legal rights or its

15

financial position.
However, if the Company cancels a gratis issue of stock options as provided in 3. (3)above or acquires stock options granted through any such gratis issue withoutcompensation, since this will not result in the value of each share being diluted, any
investor who trades in the Company’s shares assuming that the price per share will be
diluted after the Board has resolved to carry out a gratis issue of stock options asprovided in 3. (2) may suffer certain consequences due to fluctuations in the stock price.
If the Board determines to take any specific countermeasures, the Board shall makeproper disclosure in a timely manner in accordance with laws and regulations and withthe rules of the relevant securities exchange.
(3) Procedures shareholders are required to follow when any countermeasure istakena) Name transfer
If the Board or the shareholders’ meeting resolves to carry out a gratis issue of stock
options as a countermeasure, the Company shall publicly announce the date of allocationof the stock options. Stock options shall be issued to the shareholders listed orregistered in the latest shareholders’ or beneficial shareholders’ register withoutcompensation. Therefore, shareholders shall be required to follow the procedures
required to transfer their shares promptly. (Name transfers will not be required forshare certificates deposited with the Japan Securities Depository Center.)b) Exercise of stock options
If the Board or the shareholders’ meeting resolves to carry out a gratis issue of stock
options as a countermeasure, in principle, the Company shall send a request form for the
exercise of the stock options (in the Company’s designated form containing theinformation necessary for exercising the stock options, including the nature and quantityof options being exercised and confirmation of the fact that the shareholder is not amember of the particular group of shareholders) and other documents necessary forexercising the stock options to the shareholders listed or registered in the latest
shareholders’ or beneficial shareholders’ register on the date of allocation of such stock
options. After the gratis issue of stock options, the Company’s shares shall be issued in
the number equal to the number of target stocks (the number to be separately determinedby the Board) per stock option issued to each shareholder provided the shareholder
submits the required documents within the exercise period and forwards payment to the16designated settlement facility in the amount determined by the Board, which in principle
shall be no less than JPY1 per option.
c) Procedures for the acquisition of stock options by the Company
If the Board makes a decision to acquire stock options, the Company shall acquire stock
options as of the date separately determined by the Board pursuant to statutory
procedures. If the Company is to grant shares to shareholders in exchange foracquiring stock options, the Company shall grant such shares promptly. In any suchcase, the Company may request that shareholders separately submit a document in aform designated by the Company certifying that the shareholder is not a member of theparticular group of shareholders.
Details of allocation methods, name transfers, and exercises and acquisitions of shareoptions by the Company shall be disclosed or notified to shareholders after the Board’s
resolution regarding countermeasures; please read the relevant information or notice.
5. Procedures for the introduction of the Plan; effective period, etc.
(1) Procedures for the introduction of the Plan
The Plan shall be introduced subject to shareholder approval at the next annual meetingas follows:
1) Pursuant to the proviso to Article 278 Clause 3 of the Corporate Law, any proposal
to change the Company’s articles of incorporation is to be submitted to the next
annual meeting of shareholders to add the following provision:“The Company shall determine any matter relating to a gratis issue of stock options
subject to a Board resolution, a resolution of the shareholders’ meeting or a Board
resolution authorized by a resolution of the shareholders’ meeting.”
to the Company’s articles of incorporation as Article 14, and increase the total
number of issuable shares from 800 million to 1,600 million. Details of the
proposed partial amendment of the articles of incorporation for the purpose of
introducing the Plan have been separately disclosed as of today’s date. Please see
the “Notice of Partial Amendment of the Articles of Incorporation”.
2) Subject to shareholder approval at the next annual meeting of shareholders for 1)
above, shareholders shall be required to delegate the authority to make decisions

17

concerning any gratis issue of stock options to the Board in accordance with theterms and conditions provided in the Plan by a resolution to be made at the next
annual meeting of shareholders pursuant to Article 14 of the Company's articles ofincorporation as amended as described in 1) above.
(2) Effective period of the Plan, etc.
The Plan shall be effective from the close of the next annual meeting of shareholders
until the close of the annual meeting of shareholders for the last fiscal year ending within
three (3) years; provided, however, including prior to the expiry of the effective period,
where (i) a resolution is made to abolish the Plan at the Company’s shareholders’meeting, or (ii) the Board resolves to abolish the Plan, the Plan shall be abolished
immediately at that time. In addition, including during the effective period of the Plan,
provided it is not contrary to the intent of any resolution made at the next annual meetingof shareholders (including any case in which a new law, regulation or securities
exchange rule is formulated or an existing law, regulation or rule relating to the Plan isamended or abolished and it is appropriate to reflect the new law, regulation or rule, oramendment or abolition, or where it is appropriate to make corrections for typographic
errors and omissions or where it has no adverse effect on the Company’s shareholders),
the Board may modify or amend the Plan as appropriate.
If the Plan is abolished, changed, amended or modified, the Company shall promptly
disclose information about the fact of the abolition, change, amendment or modification,and in the case of any change, amendment or modification, the details of the relevantchange, amendment or modification and other relevant matters.
IV．The fact that the Plan complies with basic policies, is in line with themaintenance of the Company’s corporate value and thus the common interestsof shareholders, and is not intended to safeguard the positions of theCompany’s officers
The Company believes that in designing the Plan, the following matters were taken into
consideration to ensure that the Plan conforms to the basic policies referred to in I
above, is in line with the maintenance of the Company’s corporate value and thus thecommon interests of shareholders, and is not intended to safeguard the positions of theCompany’s officers.
1. Satisfying the requirements of the Guidelines Concerning Defensive Measures

18

The Plan satisfies the requirements of the three principles of the “Guidelines concerning
Defensive Measures against Takeovers to Secure or Enhance Corporate Value and theCommon Interests of Shareholders” jointly published by the Ministry of Economy, Tradeand Industry and the Ministry of Justice on May 27, 2005 (the principles of: 1) securing /enhancing corporate value / the common interests of shareholders, 2) prior disclosure /shareholders’ wishes, and 3) ensuring necessity / appropriateness).
2. Introduction of the Plan for the purpose of ensuring / enhancing the common
interests of shareholders
As described in III 1. “Purpose of Introducing the Plan” above, the Plan enables theCompany to provide shareholders with the time and information necessary to allow themto make decisions on the acceptance or rejection of large-scale acquisition attempts andto secure opportunities for shareholders to be provided with any alternatives where any
such large-scale acquisition attempt is made, and is introduced for the purpose of
securing / enhancing the Company’s corporate value and the common interests ofshareholders.
3. Reflection of shareholders’ wishes
As described in III 5. “Effective period of the Plan, etc.” above, the Company plans tosubmit the Plan as a proposal to be discussed at the next annual meeting to be held on
June 27, 2008 to confirm shareholders’ views on the introduction of the Plan, thus
enabling shareholders’ views to be taken into account.
Even if any proposal for a large-scale acquisition is made pursuant to the Plan,
shareholders’ wishes shall be reflected in the decision on whether or not to takecountermeasures against the large-scale acquisition attempt.
In addition, if the Company’s Board of Directors, consisting of Board members
appointed by the Company’s shareholders’ meeting, resolves to abolish the Plan,
including before the expiry of the effective period of the Plan, the Plan shall beabolished immediately at that time, thus reflecting shareholders’ wishes.
4. The setting of reasonable, objective requirements for the implementation of thePlan
As described in III.3 “Measures to be taken when any large-scale acquisition
attempt is made” above, no countermeasure provided for in the Plan may be effected19unless the requirement of reasonable objectivity is satisfied, thus ensuring that
arrangements are in place to prevent the Board from implementing the countermeasuresin an arbitrary manner.
5. No dead-hand / slow-hand takeover defense
As described in III 5. “Effective period of the Plan, etc.” above, the Plan may beabolished by the Board of Directors, consisting of directors appointed by the Company’s
shareholders’ meeting. Accordingly, the Plan is not a dead-hand takeover defense (atakeover defense which cannot be withdrawn even after a majority of the Board
members have been replaced).
In addition, the Company plans to propose a reduction in the directors’ term of officefrom two (2) years to one (1) year at the next annual meeting of shareholders. If thisamendment is approved by shareholders, the term of office of the Company’s directors
shall be reduced by one (1) year; therefore, the Plan is not a slow-hand takeover defense(a takeover defense which requires more time to withdraw as Board members cannot be
replaced at once).
The Company has not added any additional conditions to resolution requirements byrequiring an extraordinary resolution for the removal of directors.

20Appendix 1
Overview of the Plan: Flow upon the Commencement of a Large-Scale Acquisition
Attempt

Large-scale Bidder
Compliance with large-scale acquisition rules

Non-compliance with large-scaleacquisition rules

Large-scale acquisition rules

Statement of intention

Statement of intention received fromnot submitted

List of required information deliveredby the Board
Provision of required information bylarge-scale bidder

Required information
not provided

Board Evaluation Period
60 or 90 days ※・Evaluation/ review of the proposed
acquisition
・Development of alternatives
・ Negotiations with large-scalebidder2) The proposal
contributes tocorporate value andthus the maximizationof shareholders’interests

Evaluation Period notsecured1) The proposal has
a significant
detrimental effect on
corporate value andthus on shareholders’common interests

In case of 1)

In case of 2)
22)※ As described in Ⅲ 2.(3), the Directors’ evaluation period may be
extended

Decision on
nonimplementationOther than 1) / 2)

Board's

Board's

decision on

decision on

implementation

implementation

Confirmation of shareholders’ wishes on
the implementation of a countermeasure(shareholders’ meeting)

Rejected

Countermeasure not
implemented

Approved

Countermeasure implemented

Note: this chart is provided for reference only.

21

Refer to the text for details.

Appendix 2
Status of Major Shareholders as of September 30, 2007
Number ofsharesheld(inthousands)

Sharesheld/total
number ofoutstanding
shares (%)

Mitsubishi Chemical Corporation

40,947

10.16

JFE Steel Corporation
Taiyo Nippon Sanso Corporation Share Ownership
SchemeMeiji Yasuda Life Insurance Company

20,617

5.11

17,295

4.29

16,491

4.09

Mizuho Corporate Bank

14,484

3.59

The Master Trust Bank of Japan, Ltd.(Trust Account)
State Street Bank and Trust Company 505103(Standing agent: Mizuho Corporate Bank, Ltd.,
Kabuto-cho Settlement & Clearing Services Division)
The Chase Manhattan Bank N.A., London SL
Omnibus Account (Standing agent: Mizuho Corporate
Bank, Ltd., Kabuto-cho Settlement & Clearing
Services Division)
The Dai-ichi Mutual Life Insurance Company

12,695

3.15

12,4103.08

10,1102.51

10,037

2.49

The Norinchukin Bank

10,000

2.48

Total

165,091

40.96

Name

Note:
1．Numbers of shares have been rounded down to the nearest thousand.
2．In addition to those shares listed above, the Company owns 376,000 treasury
shares (0.09% of the total number of outstanding shares).

22

Appendix 3
Summary of Gratis Issue of Stock Options
1. Shareholders eligible for a gratis issue of stock options
One stock option for each share of the Company held by the shareholders listed orregistered in the latest registers’ or beneficial shareholders’ register as of the reference
date determined by the Board (not including common shares held by the Company) shallbe granted without additional payment.
2. Type and quantity of shares subject to stock options
The type of shares subject to the stock option grant is the Company’s common sharesand the total number of such shares shall be up to the number equal to: the total number
of issuable shares as of the reference date determined by the Board less the total numberof outstanding shares in the Company (not including common shares held by theCompany). The number of target shares per stock option shall be separately
determined by the Board; provided, however, that in the event that the Company’s stockis split or combined, an adjustment should be made as necessary.
3. Total number of stock options issued
The total number of stock options to be issued shall be separately determined by the
Board.
4. Value of assets to be contributed upon the exercise of each stock option (amountpayable)The value of assets to be contributed upon the exercise of each stock option (the amountpayable) shall be determined by the Board, but in any event shall be no less than JPY1.
5. Restriction on transfer of stock options
Any transfer of stock options which results in the acquisition of such stock options shallbe subject to the Board’s approval.
6. Terms and conditions for the exercise of stock options
Options may be exercised only by any person who is not a member of a particular groupof shareholders with voting rights of at least twenty percent (20%) (not including those
approved by the Board in advance) . The details of any such condition shall be
determined by the Board.
7. Exercise period of stock options
The effective date of stock options allocated, the exercise period, the acquisition
conditions and other information shall be separately determined by the Board. For theacquisition conditions, the Company may incorporate a provision stipulating that theCompany shall acquire the stock options of those who cannot exercise such options dueto the condition provided in 6 above and may grant shares in such number as separately
determined by the Company in exchange for each stock option.
23