These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, the originals
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translations.

NOTICE OF THE 198TH ANNUAL GENERAL MEETING OF SHAREHOLDERS

Date and Time:

Wednesday, June 27, 2018 at 10 a.m. Japan time

Place:

Fourth floor hall in the Chuo-ku NIHONBASHI KOUKAIDO, located at 1-31-1
Nihonbashikakigara-cho, Chuo-ku, Tokyo, Japan(Please see the map to the meeting at the hall at the end of this document for
directions.)

Proposals to be resolved:
Proposal No. 1: Reduction in Amount of Capital Stock, Legal Capital Surplus and Legal
Retained Earnings and Appropriation of Surplus
Proposal No. 2: Election of Four (4) Directors (Excluding Directors Serving as Audit andSupervisory Committee Members)
Proposal No. 3: Election of Four (4) Directors Serving as Audit and Supervisory Committee
Members
Proposal No. 4: Renewal of Measures to Respond to a Large-scale Purchaser of the Company’s
Share Certificates, etc. (Takeover Defense Measures)

Contents:
Convocation Notice ...................................................................................................................... 3
Reference Documents for the General Meeting of Shareholders ................................................. 5
Consolidated Financial Statements ............................................................................................. 35
Non-Consolidated Financial Statements ..................................................................................... 37

Daitobo Co., Ltd.
(Securities Code 3202)

1

Dear Shareholders,
We would like to give our utmost gratitude to our shareholders for their daily support.
We present this notice of convocation for our 198th Annual General Meeting of Shareholders for yourperusal.
In the fiscal year under review, the Japanese economy continued to expand moderately as the employment
and income environment improved, backed by ongoing accommodative monetary policy and the effects ofvarious government policies.
In this environment, the Company Group continued implementing the management strategy in accordancewith our mid-term management plan, “Bridge to the Future.”
Performance in the fiscal year under review was generally favorable, with profits trending in line with the
mid-term management plan, as profitability improved in the health business department of the health carebusiness and the textile and apparel business department. However, some one-time expenses occurred as aresult of the decision made on March 28, 2018 to engage in construction (Stage 4 Development) to expand
and renew the “SUN TO MOON Kakitagawa” commercial facility (in Shizuoka Prefecture), including an
increase in depreciation due to the dismantling of certain facilities and the payment of fees to raisedevelopment funds through a syndicated loan.
As a result, although profit before income taxes increased year-on-year, one-time expenses significantly
affected results, and operating income, ordinary income, and profit attributable to owners of parent after
income taxes each declined year-on-year and fell below targets.
Amid such conditions, during the fiscal year under review, the Company was also able to make progresswith initiatives aimed at new possibilities, including achieving of a capital and business alliance with First
Brothers Co., Ltd., a decision for Stage 4 Development at the “SUN TO MOON Kakitagawa” commercial
facility, and conclusion of a basic agreement related to the acquisition of certain businesses in the health carebusiness. We deeply appreciate our shareholders once again since these results are entirely due to yourunderstanding and support.
Moving forward, all officers and employees will make efforts as one to undertake the “Get Ahead of the
Future mid-term management policy” launched in the new fiscal year, and continue striving to improve ourcorporate value over the medium- to long-term.
We appreciate our shareholders’ continued encouragement and support.
Kazuhiro Yamauchi
President and Representative Director
Daitobo Co., Ltd.

2

(Securities Code 3202)
June 6, 2018
To Shareholders with Voting Rights:
Kazuhiro Yamauchi
President and Representative Director
Daitobo Co., Ltd.
1-6-1 Nihonbashihon-cho, Chuo-ku,
Tokyo, JapanNOTICE OF
THE 198TH ANNUAL GENERAL MEETING OF SHAREHOLDERS
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 198th Annual General Meeting of Shareholders of Daitobo Co., Ltd.
(the “Company”) and its subsidiaries (collectively, the “Group”). The meeting will be held for the purposes as
described below.
If you are unable to attend the meeting, you can exercise your voting rights in writing or via theInternet. Please review the Reference Documents for the General Meeting of Shareholders (describedhereinafter), indicate your vote for or against the proposal on the enclosed Voting Rights Exercise Form,and return it so that it is received by 5 p.m. on Tuesday, June 26, 2018 Japan time, or, please review the“Instructions for Exercising Voting Rights via the Internet” (on pages 3 to 4, in Japanese only) and votevia the Internet.
1. Date and Time:

Wednesday, June 27, 2018 at 10 a.m. Japan time

2. Place:

Fourth floor hall in the Chuo-ku NIHONBASHI KOUKAIDO, located at 1-31-1
Nihonbashikakigara-cho, Chuo-ku, Tokyo, Japan(Please see the map to the meeting at the hall at the end of this document for
directions.)

3. Meeting Agenda:
Matters to be reported: The Business Report, Non-Consolidated Financial Statements, and Consolidated
Financial Statements for the Company’s 198th Fiscal Year (April 1, 2017 March 31, 2018) and results of audits by the Accounting Auditor and the Audit
and Supervisory Committee of the Consolidated Financial Statements
Proposals to be resolved:
Proposal No. 1: Reduction in Amount of Capital Stock, Legal Capital Surplus and Legal
Retained Earnings and Appropriation of Surplus
Proposal No. 2: Election of Four (4) Directors (Excluding Directors Serving as Audit andSupervisory Committee Members)
Proposal No. 3: Election of Four (4) Directors Serving as Audit and Supervisory Committee
Members
Proposal No. 4: Renewal of Measures to Respond to a Large-scale Purchaser of the Company’s
Share Certificates, etc. (Takeover Defense Measures)End○ When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the receptiondesk.
○ Of the documents to be provided with this Convocation Notice, Systems to Ensure the Appropriateness ofCorporate Business Operations and the Status of Operation Thereof, Basic Policy Regarding Control of the3Company, Consolidated Statement of Changes in Equity, Non-Consolidated Statement of Changes in Equity,
Notes to the Consolidated Financial Statements and Notes to the Non-Consolidated Financial Statements
are posted on the Company’s website on the Internet (http://www.daitobo.co.jp/) pursuant to provisions of laws
and regulations as well as Article 16 of the Articles of Incorporation of the Company.
○ Any updates to the Reference Materials for the General Meeting of Shareholders, the Business Report, theConsolidated Financial Statements, and the Non-Consolidated Financial Statements will be posted on the
Company’s website on the Internet (http://www.daitobo.co.jp/).

4Reference Documents for the General Meeting of Shareholders
Proposal No. 1:

Reduction in Amount of Capital Stock, Legal Capital Surplus and Legal Retained
Earnings and Appropriation of Surplus

In non-consolidated accounts as of March 31, 2018, the Company recorded a deficit in retained earnings
brought forward of 2,911,919,505 yen, owing to recording a loss in the previous fiscal years.
The Company is continuing endeavors to make progress with improving business performance andestablishing a sounder financial position as soon as possible, but the elimination of the retained deficit
brought forward is expected to require considerable time.
Accordingly, the Company proposes reductions in the amount of capital stock, the amount of legal
capital surplus, and the amount of legal retained earnings, and the distribution of surplus, in order toestablish a sounder financial position and establish a target for resuming a dividend during the period of the
mid-term management policy.
Specifically, as described in items (1) through (4) below, the Company proposes compensating for the
deficit by reducing the amount of capital stock, the amount of legal capital surplus, and the amount of legal
retained earnings, and transferring capital stock and legal capital surplus to other capital surplus and legal
retained earnings to retained earnings brought forward, pursuant to the provisions of Article 447, Paragraph
1 and Article 448, Paragraph 1 of the Companies Act, in addition to reversing the total amount of othercapital surplus after the increase and transferring it to retained earnings brought forward, pursuant to theprovisions of Article 452 of the Companies Act.
Furthermore, under this Proposal, this reduction in the amount of capital stock, etc. will be conductedwithout changing the total number of issued shares, and therefore there will be no effect on the number ofshares held by shareholders.
In addition, this reduction in the amount of capital stock, etc. is based on a transfer between accounting
items under net assets on the balance sheet, and there will be no change in the amount of net assets of theCompany or the total number of issued shares, and therefore there will be no change in the amount of bookvalue per share.
(1) Amount of reduction in capital stock
The current amount of capital stock of 1,500,000,000 yen shall be reduced by 1,400,000,000 yen to
100,000,000 yen, and the total amount of the reduction in capital stock shall be transferred to othercapital surplus.
(2) Amount of reduction in legal capital surplus
The current amount of legal capital surplus of 503,270,649 yen shall be reduced in full to zero (0) yen,and the total amount of the reduction in legal capital surplus shall be transferred to other capital surplus.
(3) Amount of reduction in legal retained earnings
The current amount of legal retained earnings of 375,000,000 yen shall be reduced in full to zero (0)yen, and the total amount of the reduction in legal retained earnings shall be transferred to retained
earnings brought forward.
(4) Appropriation of surplus
Pursuant to the provisions of Article 452 of the Companies Act, the total amount of other capitalsurplus of 1,903,375,616 yen after the increase shall be reduced to zero (0) yen, and the total amount of
the reduction in other capital surplus shall be transferred to retained earnings brought forward, subject tothe reductions in the amounts of capital stock and legal capital surplus described in the above items (1)and (2) becoming effective.
Based on the above items (1) through (4), a total of 2,278,375,616 yen, including the balance of othercapital surplus prior to the transfer of 104,967 yen, will be transferred to retained earnings brought forward,
and as a result, the deficit in retained earnings brought forward will be reduced by 2,278,375,616 yen, to633,543,889 yen.
5

Furthermore, the Company expects the level of profit after considering the burden of income taxes, etc.
to trend toward improvement in future, as it promotes various measures based on the mid-term management
policy, and believes that it is possible to eliminate the deficit in retained earnings brought forward andestablish a target for resuming a dividend during the period of the mid-term management policy. We
appreciate our shareholders’ continued understanding and support.
(5) Effective date of the reduction in capital stock, legal capital surplus and legal retained earnings anddistribution of surplus
August 31, 2018

6

Proposal No. 2:

Election of Four (4) Directors (Excluding Directors Serving as Audit and Supervisory
Committee Members)

The terms of office of all four (4) incumbent Directors (excluding Directors serving as Audit andSupervisory Committee Members) will expire at the conclusion of this year’s General Meeting of
Shareholders. Accordingly, the election of four (4) Directors (excluding Directors serving as Audit andSupervisory Committee Members) is proposed.
The candidates for Directors (excluding Directors serving as Audit and Supervisory Committee
Members) are as follows.
Additionally, the nomination of candidates for Directors (excluding Directors serving as Audit andSupervisory Committee Members), is made via resolution of the Board of Directors with reference to theopinions on the selection of candidates contained in reports from the Advisory Committee, composed
primarily of Independent Outside Directors and the President and Vice President, which comprehensively
consider factors such as experience, insight, and abilities as managers.
Furthermore, the Audit and Supervisory Committee has judged that the election of each candidate for
Director is appropriate as they can be expected to contribute to improving corporate value when taking into
account each candidate’s possession of deep specialized knowledge, wealth of experience, and suitability as
Director, in addition to other factors such as the state of business execution and business results for the fiscal
year under review.
No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company
April 1979

Number ofshares of theCompany held

Joined Mitsui Trust and Banking Company, Limited(currently Sumitomo Mitsui Trust Bank, Limited)
February 2002 General Manager, Personnel Planning Dept. of Chuo
Mitsui Trust and Banking Company, Limited (currently
Sumitomo Mitsui Trust Bank, Limited)
January 2004 General Manager, Osaka Branch Business Dept. II
January 2007 General Manager, Shinjuku Nishiguchi Branch
June 2009
Director and General Manager, Corporate Planning
Division of the Company
August2010
Managing Director and General Manager, Business
Kazuhiro Yamauchi
Management Headquarters, General Manager, Corporate(January 5, 1957)
Planning Division
June
2012
Senior Managing Director and General Manager, Business
Reappointment
53,600Management Headquarters, Deputy General Manager, RealsharesAttendance at
Estate Headquarters, in charge of internal control
meetings of the Board July 2013
Director and Senior Managing Executive Officer, Generalof Directors
Manager, Business Management Headquarters, General
17 / 17
Manager, Personnel Division, in charge of business1
strategy and internal control
June 2015
President and Representative Director (current post)
Chairman of DAITOBOSHOKU (SHANGHAI)CORPORATION (current post)(to the present)
Significant concurrent positions
Chairman of DAITOBOSHOKU (SHANGHAI) CORPORATION* DAITOBOSHOKU (SHANGHAI) CORPORATION is a wholly owned
subsidiary of the Company.
Reasons for selecting the candidate for Director
As President and Representative Director of the Company, Mr. Kazuhiro Yamauchi has achievements in leading
the overall group with strong leadership for the past three fiscal years, and possesses advanced insights regarding
overall management based on many years of experience at a financial institution and abundant management
experience at the Company. The Company has determined that he will continue to be an essential person for the
management of the Company, to lead the mid-term management policy newly started this fiscal year to success,and to achieve sustainable growth for the Company and an improvement in mid- to long-term corporate value,
and thus proposes his continued appointment as Director of the Company.

7

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company
March 1974
April 2002
April 2004
May 2005
May 2007
October 2011

Number ofshares of theCompany held

Joined the Company
General Manager, Functional Textile Business Division
Deputy General Manager, Textile Business Headquarters
President and Director of Niigata Daitobo Co., Ltd.
President and Director of Daitobo Shinso Co., Ltd.
General Manager, Functional Textile Sales Division, Sales
Headquarters
June
2012
Director and General Manager, Functional Textile Sales
Toshiyasu Nomura
Division, Sales Headquarters(February 27, 1952)
June 2013
Vice President and Director
February 2014 Vice President and Director
Reappointment
44,200General Manager, Health Care Business Headquarters
sharesAttendance atJune 2014
Vice President and Representative Director
meetings of the Board
General Manager, Health Care Business Headquarters
of Directors
April 2015
Vice President and Representative Director
17 / 17
2
Supervising health care business, textile and apparelbusiness
June 2015
Vice President and Representative Director (current post)
November 2017 General Manager, Health Care Business Headquarters(current post)(to the present)
Significant concurrent positions
None
Reasons for selecting the candidate for Director
As Vice President and Representative Director of the Company, Mr. Toshiyasu Nomura has achievements inundertaking management as supervisor of overall sales and manufacturing divisions for the past four fiscal years,
in addition to a wealth of operational experience since joining the company and a wide network of contacts both
inside and outside of the Company. The Company has determined that he will continue to be an essential person
for the management of the Company, to lead the mid-term management policy newly started this fiscal year to
success, and to achieve sustainable growth for the Company and an improvement in mid- to long-term corporate
value, and thus proposes his continued appointment as Director of the Company.
April 1990
Joined the Company
Shogo Mieda
September 2010 Accounting Group Leader, Administration Division(February 12, 1969) June 2012
General Manager, Corporate Planning Division, Business
Management Headquarters
Reappointment
11,200June 2015
Director and Executive Officer, General Manager,
sharesBusiness
Management
Headquarters,inchargeofinternal
Attendance atcontrol(current
post)
meetings of the Board(to the present)of Directors
3
Significant
concurrent
positions
17 / 17None
Reasons for selecting the candidate for Director
As Director of the Company, Mr. Shogo Mieda has achievements in supervising overall administration divisions
such as business management and internal control for the past three fiscal years, and has deep knowledge
regarding accounting and corporate planning. The Company has determined that he will continue to be an
essential person for the management of the Company, to lead the mid-term management policy newly started thisfiscal year to success, and to achieve sustainable growth for the Company and an improvement in mid- tolong-term corporate value, and thus proposes his continued appointment as Director of the Company.

8

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company
April 1976

Number ofshares of theCompany held

Joined the Ministry of Labour (currently Ministry of
Health, Labour and Welfare)
January
1989
Joined A.T. Kearney, Inc. (currently A.T. Kearney K.K.),
Yasunobu Sawada
assigned to Tokyo Office(January 9, 1953)
October 1997 Director of Practice Management
April 2002
Executive Director of Enterprise IG Japan K.K. (currently
Reappointment
Brand Union/WPP Group)
Outside0
Independent Officer July 2003
Representative Director of VieBrand Consulting Inc.
shares(current post)
Attendance atJune 2015
Outside Director of the Company (current post)
meetings of the Board(to the present)of Directors
Significant concurrent positions
17 / 174
Representative Director of VieBrand Consulting Inc.
* No special interest exists between VieBrand Consulting Inc. and theCompany.
Reasons for selecting the candidate for Outside Director
Mr. Yasunobu Sawada possesses deep knowledge and advanced insights developed during his many years ofexperience in public administration and experience in management consulting, and utilizes these qualities tofulfill a central role in strengthening the supervisory functions on the Company’s management execution,
including serving as the chairperson of the Outside Executive Committee as the Company’s lead Outside
Director, and provides appropriate advice and supervision in regard to the Company’s management. His term ofoffice as an Outside Director will be three (3) years at the conclusion of this General Meeting of Shareholders. In
order to continue receiving his advice regarding the business activities of the Company as a whole from an
objective, broad, and advanced perspective, the Company proposes his continued appointment as Outside
Director.
(Notes) 1. No special interest exists between the Company and any of the candidates for Directors(excluding Directors serving as Audit and Supervisory Committee Members).
2. Furthermore, other matters related to the candidate for Outside Director are as follows:
1) Mr. Yasunobu Sawada is a candidate for Outside Director as stipulated in Article 2, Paragraph
3, Item 7 of the Ordinance for Enforcement of the Companies Act.
2) Mr. Yasunobu Sawada satisfies the Criteria for Independence of Outside Officers set forth by
the Company. The Company has designated him as an independent officer stipulated by the
Tokyo Stock Exchange and Nagoya Stock Exchange, and registered him with the Exchanges.
In the event he is elected and appointed as Director, the Company intends to continue toregister him as an Independent officer.
3) The Company has entered into an agreement with Mr. Yasunobu Sawada to limit his liability
for damages, as stipulated in Article 423, Paragraph 1 of the Companies Act, to the minimum
liability amount set forth in Article 425, Paragraph 1 of the same. In the event he is elected
and appointed as Director, the Company plans to continue a liability limitation agreementwith the same content with him.

9

Proposal No. 3:

Election of Four (4) Directors Serving as Audit and Supervisory Committee Members

The terms of office of all four (4) incumbent Directors Serving as Audit and Supervisory Committee
Members will expire at the conclusion of this year’s General Meeting of Shareholders. Accordingly, theelection of four (4) Directors serving as Audit and Supervisory Committee Members is proposed.
This Proposal has been consented by the Audit and Supervisory Committee.
The candidates for Directors serving as Audit and Supervisory Committee Members are as follows:
No.

Name
(Date of birth)
Yuji Kakuma(July 8, 1948)

Career summary, positions and responsibilities at the Company

Number ofshares of theCompany held

April 1967
July 2006
June 2007
June 2008
August 2010

Joined the Company
General Manager, Accounting Division
Director and General Manager, Accounting Division
Reappointment
Director and General Manager, Administration Division
Director and General Manager, Administration Division,
Attendance atBusiness Management Headquarters
meetings of the Board June 2012
Full-time Corporate Auditorof Directors
June 2016
Director serving as full-time Audit and Supervisory
17 / 17
Committee Member (current post)(to the present)
Attendance at
Significant concurrent positions
1 meetings of the Audit
None

73,000sharesand Supervisory
Committee
13 / 13

Reasons for selecting the candidate for Director
Mr. Yuji Kakuma has long presided over the Company’s Accounting Division and has sufficient specialized
knowledge, in addition to possessing a wealth of experience and advanced insight from many years of service asa Director and Corporate Auditor of the Company, and the Company thus proposes his continued appointment as
Director Serving as Audit and Supervisory Committee Member.
Furthermore, Mr. Yuji Kakuma is currently a Director serving as full-time Audit and Supervisory Committee
Member of the Company, and his term of office as a Director serving as full-time Audit and Supervisory
Committee Member will be two (2) years at the conclusion of this General Meeting of Shareholders.
Haruki Iinuma
April 1976
Registered as an attorney(April 19, 1948)
April 1978
Established IINUMA LAW OFFICE (current position)
June 2011
Outside Corporate Auditor of the Company
Reappointment
June 2016
Director serving as Audit and Supervisory Committee
OutsideMember (current post)
Independent Officer(to the present)
Significant concurrent positions
0
Attendance at
Director of IINUMA LAW OFFICE
sharesmeetings of the Board* No special interest exists between IINUMA LAW OFFICE and theof Directors
Company.
17 / 172

Attendance at Audit
and Supervisory
Committee
13 / 13

Reasons for selecting the candidate for Outside Director
Mr. Haruki Iinuma is well versed in corporate legal affairs from his many years of experience as an attorney, andutilizes his specialized knowledge and advanced insight concerning management to provide appropriate advice
and supervision in regard to the Company’s management. His term of office as an Outside Director serving as
Audit and Supervisory Committee Member will be two (2) years at the conclusion of this General Meeting of
Shareholders.
In order to continue receiving his advice regarding the business activities of the Company as a whole from an
objective, broad, and advanced perspective, the Company proposes his continued appointment as Outside
Director.

10

No.

Name
(Date of birth)

Career summary, positions and responsibilities at the Company

Number ofshares of theCompany held

September 2001 Joined Shin Nihon & Co. (currently Ernst & Young
ShinNihon LLC)
Takashi Kagami
July 2005
Registered as a certified public accountant(December 19, 1976) August 2006
Joined Certified Public Tax Accountants’ Co. Takano
Sogo Accounting Firm and Takano Sogo Consulting Co.
Reappointment(concurrent)
OutsideNovember 2013 Registered as a licensed tax accountant
Independent Officer
Partner of Certified Public Tax Accountants’ Co. Takano
Sogo Accounting Firm (current post)
700
Attendance atJune 2016
Director serving as Audit and Supervisory Committee
sharesmeetings of the Board
Member of the Company (current post)of Directors
December
2017
Representative Director of Takano Sogo Consulting Co.
17 / 17(current post)(to the present)
Attendance at Audit
3
Significant concurrent positions
and Supervisory
Partner of Certified Public Tax Accountants’ Co. Takano Sogo Accounting
Committee
Firm
13 / 13
Representative Director of Takano Sogo Consulting Co.
* No special interest exists between the above companies and the Company.
Reasons for selecting the candidate for Outside Director
Mr. Takashi Kagami is well versed in accounting and taxes, including gaining experience in a major auditing
firm, and serving as representative of a company as a specialist in taxation and management consulting, and heutilizes his specialist knowledge and insight regarding business management to provide appropriate advice andsupervision in regard to the Company’s management. His term of office as an Outside Director serving as Audit
and Supervisory Committee Member will be two (2) years at the conclusion of this General Meeting of
Shareholders.
In order to continue receiving his advice regarding the business activities of the Company as a whole from an
objective, broad, and advanced perspective, the Company proposes his continued appointment as Outside
Director.
April 1977
Joined Sumitomo Marine & Fire Insurance Co., Ltd.
(currently Mitsui Sumitomo Insurance Company, Limited)
Shusaku Okumura
April 2003
General Manager, Nursing Care & Service Office of Mitsui(June 16, 1952)
Sumitomo Insurance Company, Limited
April 2006
President and Representative Director of American
Reappointment
Appraisal Japan Co., Ltd.
OutsideGeneral Manager, Risk Management Division of Mitsui
Independent Officer April 2008
Sumitomo Insurance Company, Limited
October 2010 General Manager, Corporate Risk Management Dept. of
700
Attendance atsharesmeetings of the Board
MS&AD Insurance Group Holdings, Inc.
of Directors
April 2013
Fixed-term employee, Corporate Risk Management Dept.
17 / 17of MS&AD Insurance Group Holdings, Inc.
March 2016Retired from MS&AD Insurance Group Holdings, Inc.
4 Attendance at Audit June 2016
Director serving as Audit and Supervisory Committee
and Supervisory
Member of the Company (current post)
Committee(to the present)
13 / 13Significant concurrent positions
None
Reasons for selecting the candidate for Outside Director
Mr. Shusaku Okumura has experience as a manager in nursing care related business at a major domestic non-life
insurance company and as a manager of the Japanese arm of an American company, in addition to a wealth ofoperational experience relating to internal control, and provides appropriate advice and supervision in regard to
the Company’s management. His term of office as an Outside Director serving as Audit and Supervisory
Committee Member will be two (2) years at the conclusion of this General Meeting of Shareholders.
In order to continue receiving his advice regarding the business activities of the Company as a whole from an
objective, broad, and advanced perspective, the Company proposes his continued appointment as Outside
Director.
11

(Notes)

1. No special interest exists between the Company and any of the candidates for Directors serving
as Audit and Supervisory Committee Members.
2. Furthermore, other matters related to candidates for Outside Directors are as follows.
1) Messrs. Haruki Iinuma, Takashi Kagami, and Shusaku Okumura are candidates for Outside
Directors as stipulated in Article 2, Paragraph 3, Item 7 of the Ordinance for Enforcement of
the Companies Act.
2) Messrs. Haruki Iinuma, Takashi Kagami, and Shusaku Okumura satisfy the Criteria for
Independence of Outside Officers set forth by the Company. The Company has designatedthe above three (3) persons as independent officers stipulated by the Tokyo Stock Exchange
and Nagoya Stock Exchange, and registered them with the Exchanges. If the above three (3)persons are elected and appointed as Directors, the Company intends to continue to registerthem as independent officers.
3) The Company has entered into an agreement with Messrs. Haruki Iinuma, Takashi Kagami,
and Shusaku Okumura to limit their liability for damages, as stipulated in Article 423,
Paragraph 1 of the Companies Act, to the minimum liability amount set forth in Article 425,
Paragraph 1 of the same. In the event the above three (3) persons are elected and appointed as
Directors, the Company intends to continue liability limitation agreements with the samecontent with them.

[Opinion of the Audit and Supervisory Committee]
The Audit and Supervisory Committee has carefully considered the election of Directors of the Company,
including confirming the discussions of the Advisory Committee. The Audit and Supervisory Committee
has judged that the procedures for nomination when electing Directors are appropriate, and that eachcandidate is suitably qualified as a Director of the Company, as a result of comprehensively considering
each candidate’s experience, insight, and ability as a manager, taking into account the status of businessexecution and business performance this fiscal year, the status of discussions in the Board of Directors, thecandidates’ backgrounds thus far, and other factors.

12

(Reference)[Policy on the Election of Directors of the Company]
The Company selects candidates with the prerequisite that they possess a high level of expertise, andqualities and insight as a manager, taking into account business scale, business scope, and other factors, withthe requirement that the number of candidates is within the limits of the number of Directors stipulated in
the Articles of Incorporation. In addition, the Company elects candidates for Independent Outside Director
who possess a high level of insight and will supervise management, etc. from an objective standpoint andprovide views and advice that will contribute to enhancing corporate value. On the other hand, the Company
has introduced an Executive Officer System, thereby clarifying the responsibility of supervising
management and the responsibility of business execution. In addition, in June 2016, the Company
transitioned to a company with an Audit and Supervisory Committee. Through above initiatives, the basic
approach of the Board of Directors is to create a system that is capable of supervising management
efficiently and effectively. Furthermore, the Company shall elect at least one (1) Director Serving as Audit
and Supervisory Committee Member with a sufficient knowledge of finance and accounting.
[Procedures for the Election of Directors of the Company]
The nomination of candidates for Director (excluding Directors serving as Audit and Supervisory
Committee Members) and Directors serving as Audit and Supervisory Committee Members shall be
determined by resolution of the Board of Directors, with reference to views regarding the candidates
reported by the Advisory Committee, which mainly comprises Independent Outside Directors and includes
the President and Vice President, comprehensively considering candidates’ experience, insight, ability, etc.
as a manager.
[Criteria for Independence of Outside Directors of the Company]
If the Board of Directors of the Company judges that an Outside Director does not fall under any of thefollowing items, he or she shall be considered independent.
1) An executing person of the Company or its subsidiaries, either currently or in the past2) A major shareholder of the Company (refers to a shareholder with a voting rights ownership ratio of
10% or more) or an executing person thereof, either currently or in the past five (5) years
3) A party whose major business partner is/was the Company (refers to a party for whom sales to theGroup account for 2% or more of the consolidated net sales of the business partner in any of the past
three (3) fiscal years) or an executing person thereof, either currently or in the past five (5) years
4) A party who is/was a major business partner of the Company (refers to a party who accounts for 2%
or more of the Group’s consolidated net sales in any of the past three (3) fiscal years) or an
executing person thereof, either currently or in the past five (5) years5) An executing person of a major lender to the Company (refers to a financial institution that theGroup borrows from, and whose total outstanding lending to the Group exceeds 10% of the Group’s
total outstanding borrowing at the end of the most recent fiscal year), either currently or in the past
five (5) years
6) A consultant, an accounting professional, or a legal professional receiving a significant amount(refers to an amount exceeding 10 million yen in any of the past three (3) fiscal years) of money orother assets from the Company other than executive remuneration
7) An executing person of a body receiving (or making) a donation or aid of a significant amount(refers to an amount exceeding 10 million yen in any of the past three (3) fiscal years) from (to) the
Company8) An executing person of a party which has a mutual relationship with the Company through outside
officers9) A spouse, a relative within two degrees of kinship, or a cohabiting relative of an individual who has
fallen under any of criteria 1 through 810) A person whose total term of office as Outside Director exceeds eight (8) years.

13

Proposal No. 4:

Renewal of Measures to Respond to a Large-scale Purchaser of the Company’s Share
Certificates, etc. (Takeover Defense Measures)

Based on the provisions of Article 19 of the Company’s Articles of Incorporation established uponreceiving approval at the 195th Annual General Meeting of Shareholders of the Company held on June 25,
2015, the Company introduced measures to respond to a large-scale purchase of the Company’s sharecertificates, etc. judged to violate the realization of the corporate value of the Company, corporate interests,
and shareholders’ common interests (hereinafter, the “Former Plan”), after receiving shareholders’ approvalat the same Annual General Meeting of Shareholders. The effective period of the Former Plan is until theconclusion of the Annual General Meeting of Shareholders of the Company for the fiscal year ended March
31, 2018 (hereinafter, “this General Meeting of Shareholders”), and it will end at the conclusion of this
General Meeting of Shareholders.
After considering the matter from the perspective of further protecting and enhancing the corporate valueof the Company and shareholders’ common interests, while also taking into consideration amendments torelated laws and regulations, changes in social and economic trends, discussions regarding takeover defense
measures, and other factors, the Company has decided, by unanimous approval of all Directors of theCompany at a meeting of the Board of Directors held on May 11, 2018, to renew the Former Plan as
described in the below item III (hereinafter, referred to as the “Renewal,” and the takeover defense measuresof the Company after the Renewal are referred to as “this Plan” in this Proposal below), subject to receiving
shareholders’ approval at this General Meeting of Shareholders.
In this Proposal, the Company requests shareholders’ approval in regard to this Plan. The details of thisPlan are as follows.
Furthermore, all Directors serving as Audit and Supervisory Committee Members of the Company
attended the meeting of the Board of Directors where this Plan was determined, and all expressed views
approving of this Plan, subject to the specific implementation of this Plan being appropriately conducted.
The main changes accompanying the Renewal are as follows, and the Company has not made any
substantial changes to its contents.
Change 1. The content of the below item II “Special initiatives to contribute to the realization of the basic
policy” has been amended to reflect the Company’s mid-term management policy and various
measures related to corporate governance as a Company with Audit and Supervisory Committee,
following the Company’s transition to this structure in 2016.
Change 2. Necessary changes have been made in line with the Company’s transition to a Company with
Audit and Supervisory Committee.
Change 3. Formal changes have been made, including amendments to phrasing, such as replacing‘introduce’ with ‘renew,’ and amendments to dates in line with renewal.
I Basic policy regarding persons controlling decisions about the Company’s financial and business
policies
The Company believes that persons controlling decisions about the Company’s financial and business
policies must understand the sources of the Company’s corporate value, and be persons who are able toprotect and enhance the corporate value of the Company, corporate interests, and shareholders’ common
interests, on an ongoing and sustainable basis. As a public company, the free trade of the Company’s sharecertificates, etc. by shareholders and investors is recognized, and the Board of Directors of the Company
believes that the status of persons controlling decisions about the Company’s financial and business policies
should ultimately be determined by the will of shareholders as a whole, and that in the event of a large-scalepurchase (as defined in the below item III 2. (3) 1); hereinafter, the same applies) of the Company’s sharecertificates, etc., judgments regarding whether or not to accept the large-scale purchase should ultimately be
entrusted to the Company’s shareholders.
Recently, however, in capital markets in Japan, there is a trend toward one-sided large-scale purchases
being forced through without the approval of the management team of the target company. Among suchlarge-scale purchases, it may be expected that there are some that will not contribute to the corporate valueof the target company, corporate interests, and shareholders’ common interests, such as those that will clearlyharm corporate value, corporate interests, or shareholders’ common interests in view of the objectives, etc. ofthe large-scale purchase, those that may effectively force shareholders to sell share certificates, etc., thosethat do not provide sufficient time or information for the Board of Directors of the target company andshareholders to consider the content of the purchase proposal and any alternative proposal by the Board of
Directors of the target company, etc., and those that require consultation or negotiation by the Board of
Directors of the target company with the large-scale purchaser to secure more advantageous terms than those14

presented by the large-scale purchaser (as defined in the below item III 2. (3) 1); hereinafter, the same
applies).
The Company believes that persons conducting such large-scale purchases that will not contribute toenhancing the corporate value of the Company, corporate interests, and shareholders’ common interests are
not appropriate as persons controlling decisions about the Company’s financial and business policies, andbelieves that necessary and appropriate countermeasures must be taken in the event that such a person
appears.
II

Special initiatives to contribute to the realization of the basic policy
1. Sources of the Company’s corporate value
The Company was established as Japan’s first wool company in February 1896 with investment from
the Mitsui family and other influential figures in the financial world of Tokyo. Subsequently, the Company
contributed to economic and social development over many years as a leading company in the textile
industry, a driver of Japan’s economic growth from the Meiji period to the beginning of the Showa period.
By quickly establishing an integrated production structure for wool products, the Company also utilized its
strength in the uniform business for public and private demand, and had many achievements, including
supplying uniforms for the police, fire department, and other government departments, and uniforms
related to the previous Tokyo Olympics. In addition, in the 1960s, the Company also participated widely inthe development of the apparel industry, including creating a mass production structure for men’s suits andcollaborating with influential U.S. brands. Furthermore, going into the 1990s, the Company entered thetextile business in China, including establishing a men’s suit manufacturing factory in a joint venture with
the Shanshan Group, an influential Chinese conglomerate, and also in 2008 took over the proposal-based
OEM business of Cosmoei Co., Ltd., which was strong in the knitwear business, and began knitwear
planning consulting. In particular, the “uniform business” and “knitwear planning consulting,” which arewool-related businesses that are expected to support the future textile and apparel business, are a group ofbusinesses that was developed over the course of this history. Furthermore, amid the slump in the domestic
textile industry, the Company also implemented decisive restructuring measures as necessary, including
closing the Suzuka Plant, the Company’s largest domestic cotton mill, in 2002, dissolving a subsidiaryengaged in selling menswear owing to worsening business conditions and other factors in 2015, and thecomplete exit from the men’s suits manufacturing business at the joint venture factory in China in 2017.
On the other hand, amid the protracted slump in the domestic textile industry, the Company began
developing “SUN TO MOON Kakitagawa,” a large commercial facility with close regional ties, on the siteof the Company’s former Mishima Plant in Sunto, Shizuoka Prefecture in 1997, and at present, thecommercial facility business has developed into the Company’s main source of earnings. In 2018, theCompany began construction to expand and renew “SUN TO MOON Kakitagawa,” aimed at further
strengthening this business.
In addition, in regard to the bedding manufacturing business, the predecessor to the current health carebusiness, the Company launched this business in the Suzuka Plant in 1980, and focused on new businessdevelopment from 1990 to 1991, including establishing a bedding products sales subsidiary andestablishing a bedding products manufacturing subsidiary in Tokamachi, Niigata Prefecture, and engaged
in an integrated manufacturing and sales business over many years. Subsequently, in 2014, the Company
further developed the bedding business in anticipation of the aging society, and has established a new
Health Care Business Headquarters focused on the three areas of “health products, health and medical
devices, and health foods,” in which further growth may be expected. In 2017, the Company implemented
initiatives for the development of a society with a long and healthy lifespan, including conducting a capitaland business alliance with Ito Co., Ltd., a medical device manufacturer.
Furthermore, in 2017, the Company entered into a capital and business alliance with First Brothers Co.,
Ltd., which is listed on the First Section of the Tokyo Stock Exchange, and its subsidiaries, as it aims tofurther develop its businesses.
At present, the Company is implementing the following management strategy, based on the “Get Aheadof the Future Mid-term Management Policy” started in April 2018.
1) Priority initiatives aimed at investment for growth, and maintenance and renewal investment
The Company will continue to prioritize investment in the commercial facility business, its pillarof earnings. Specifically, the Company will begin construction to expand and renew “SUN TO
MOON Kakitagawa” during 2018.
2) Expansion of business scale and enhancement of profitability
The Group will focus management resources on the commercial facility business, the pillar of
earnings, thereby making the expansion of business scale and enhancement of profitability certain. As
15

it focuses on expanding business scale, the Company will maintain a firm awareness of ESG(environmental, social, and governance) and other concepts, and of creating economic and social
value. Furthermore, when promoting its businesses, the Company will utilize its unique qualities tofurther strengthen collaborative initiatives with capital and business alliance partners that it hasentered into agreements with, and take full advantage of the business opportunities ahead. At the sametime, the Company will focus on creating new businesses that maintain an awareness of synergies
with the commercial facility business and the Group’s other businesses, as foundations for the future.
3) Strengthening financial management and resuming a dividend
Securing a sound financial position is a major precondition for sustainable growth and anenhancement in corporate value over the mid- to long-term. In future, the Company will focus on
strengthening financial management, with an emphasis on securing free cash flow and reducing
interest-bearing debt. Through these measures, the Company aims to resume dividend payments
during the period covered by its mid-term management policy.
4) Securing and developing human resources
The Company will focus on reforming the way people work and promote the creation of anenvironment where women can actively participate, as it focuses on securing and developing humanresources.
5) Thorough implementation of management consistent with Japan’s Corporate Governance CodeIn order to make sustainable growth and the enhancement of corporate value over the mid- tolong-term certain, the Company will take steps to maintain and strengthen governance systems, while
also promoting responses to social issues through its business activities.
Against the backdrop of the history and traditions of the Company covering more than 120 years, theGroup will utilize the above measures and build on its management philosophy, “enterprising spirit” and“mindset of benefitting ourselves and others,” to leverage its creative force and engage with unlimited
possibilities. In this way, the Group intends to achieve sustainable growth and enhance corporate value overthe mid- to long-term, while also becoming a company that serves a purpose in society, that is conscious of
the environment, and that values people’s happiness, and thereby contributing to creating a better future forJapan.
The source of the Company’s corporate value lies in the Group’s business partners, with whom theCompany has built relationships of trust over many years, and its employees, who have abundant experienceand expert skills, coming together to develop the Company’s businesses based on this history and theseachievements, and the Company believes that it is possible to protect and enhance corporate interests andshareholders’ common interests on an ongoing and sustainable basis by understanding these sources ofcorporate value when engaging in operations.
2. Status of corporate governance(1) Corporate governance systems
With the approach of prioritizing corporate value in management, the Company considers corporate
governance as one of the most important management issues, and its basic policy is to secure thetransparency, soundness, and legality of management in order to respond to the rapidly changing
management environment, while also prioritizing accountability toward all stakeholders, endeavoring toensure timely and appropriate information disclosure, making management more efficient anddecision-making more prompt, and enhancing management monitoring functions, and it has thus createdthe following corporate governance systems.
The Board of Directors is positioned as a body for management decision-making and supervision of
the execution of duties by Directors, and comprises a total of eight (8) Directors, including four (4)Directors (excluding Directors serving as Audit and Supervisory Committee Members) (including one(1) Independent Outside Director) and four (4) Directors serving as Audit and Supervisory Committee
Members (including three (3) Independent Outside Directors). Meetings of the Board of Directors areheld once per month, in principle, with extraordinary meetings of the Board of Directors also held asnecessary, and in addition to deliberating, reporting on, and determining important management matters,
the Board of Directors is also a system for appropriately supervising the execution of business
operations by Directors, including receiving reports on the status of the execution of business operations.
The Audit and Supervisory Committee comprises four (4) Directors serving as Audit and Supervisory
Committee Member (including three (3) Independent Outside Directors). The Audit and Supervisory
Committee has one (1) full-time Audit and Supervisory Committee Member, and meetings of the Audit
and Supervisory Committee are held once per month, in principle, to audit the execution of business
operations by Directors, and create audit reports. In principle, Directors serving as Audit and16Supervisory Committee Members conduct audits related to legality and validity through internal control
systems, and audits of the execution of duties by Directors, by attending meetings of the Board of
Directors and meetings of the Audit and Supervisory Committee, and the Director serving as full-time
Audit and Supervisory Committee Member attending meetings of the General Manager Committee andother important internal meetings. Additionally, Directors serving as Audit and Supervisory Committee
Members appropriately exchange views with the Internal Audit Office and hold an Internal Audit
Liaison Meeting once per month on a regular basis, while also maintaining close cooperation with the
Accounting Auditor by ensuring opportunities for consultation and analysis of important accounting
issues, in addition to regular accounting audits.
The Outside Officer Committee is a forum for active debate on effective advice for ensuring thesustainable growth of the Company and enhancing corporate value and suggestions regarding thesupervision of management, from a new, external perspective, and comprises only Independent Outside
Directors, with one (1) of the four (4) Independent Outside Directors as the lead Outside Director.
The Advisory Committee is a forum for obtaining appropriate advice from Independent Outside
Directors when considering important matters, such as matters related to the nomination andremuneration of Directors and other senior executives, and is established under the Board of Directors,
with Independent Outside Directors as its main members, and also including the President and Vice
President.
The Internal Controls Committee meets once per month, in principle, and is chaired by the President
with the General Manager of the Internal Audit Office as Secretariat. It is attended by Directors(excluding Directors serving as Audit and Supervisory Committee Members), the Director serving as
full-time Audit and Supervisory Committee Member, and officers and employees of the rank of General
Manager and above, and broadly consults and reports on the status of matters related to risk management,
matters related to internal controls, and related issues.
In addition, the General Manager Committee comprises Directors (excluding Directors serving as
Audit and Supervisory Committee Member), Executive Officers, the Director serving as full-time Audit
and Supervisory Committee Member, and officers and employees of the rank of General Manager andabove, and meets once per month to consider important issues related to management policies andimportant matters related to the execution of business operations. For Group companies, meetings areheld once per month, in principle, to receive reports on the progress of business operations.
(2) Status of creation of internal control systems
The Company has formulated a basic policy regarding the creation of internal control systems, andtakes steps to establish systems to ensure the appropriateness of corporate business operations, andstrengthen internal control functions. In addition, the General Manager of the Business Management
Headquarters leads efforts by the Group as a whole to promote the creation of internal controls related tofinancial reporting in accordance with the Financial Instruments and Exchange Act, and other measures.
(3) Status of creation of risk management systems
The Company discusses important legal issues and matters related to compliance with its legal
advisers, etc., and utilizes external experts as necessary to prevent violations of laws and regulations andthe Articles of Incorporation in advance. In addition, the Company has strengthened its corporate
governance systems, including making it such that in the event a Director discovers a violation of laws
and regulations or the Articles of Incorporation by another Director, he or she shall immediately report itto the Audit and Supervisory Committee and the Board of Directors. Regarding information
management, the Company has formulated a basic policy on information security and regulations on
information security and management, and stores and manages it in an appropriate, secure manner. In
addition, in the event of a large earthquake or other disaster, the Company shall respond in an organized,
planned manner in accordance with basic rules on disaster prevention and crisis management, in order tominimize harm.
III Initiatives to prevent decisions about the Company’s financial and business policies being
controlled by inappropriate persons in light of the basic policy
1. Enhancement of corporate value and the realization of corporate interests and shareholders’ common
interests(1) Existence of a large-scale purchase of share certificates, etc. that violates the enhancement ofcorporate value and the realization of corporate interests and shareholders’ common interests
As described above, the Group intends to focus all its efforts on enhancing corporate value andrealizing corporate interests and shareholders’ common interests, but in capital markets in recent years, it17cannot be denied that there has been a trend toward sudden large-scale purchases of share certificates,etc. being forced through without giving sufficient time to shareholders for consideration, or going
through processes such as sufficient consultation and agreement with the management team of the target
company.
Essentially, even if it does not have the approval of the management team of the target company, alarge-scale purchase of share certificates, etc. should not be rejected on the occasion that it leads to theefficient utilization of corporate assets and enhances corporate value and realizes corporate interests andshareholders’ common interests.
However, among these large-scale purchases, it cannot be denied that there may be some that are
so-called “abusive purchases,” whereby it is clear that corporate value, corporate interests, andshareholders’ common interests will be considerably harmed, such as those that are not intended toproperly participate in corporate management and whose objective is solely to cause the stock price ofthe company to increase and force parties related to the target company, etc. to repurchase sharecertificates, etc. at a high price.
In addition, as mentioned above, the Company firmly believes that maintaining good relationships
with various stakeholders, including maintaining and developing relationships of trust built withcustomers over many years, will lead to enhancement in the corporate value of the Company over themid- to long-term, and the realization of shareholders’ interests. If a large-scale purchaser of theCompany’s share certificates, etc. does not fully understand this and will not protect and enhance thesefactors over the mid- to long-term, then the corporate value of the Company, and corporate interests andshareholders’ common interests will be considerably harmed.
(2) Necessity of renewal of this Plan
Freedom of transfer is a basic principle of the Company’s share certificates, etc., and they are freely
traded by many investors on stock exchanges. Accordingly, whether or not to accept a proposal
regarding a large-scale purchase of the Company’s share certificates, etc. should ultimately be entrusted
to the judgment of shareholders.
In the event of a large-scale purchase being conducted in conditions such as those described in theabove item (1), the Company believes it is essential that appropriate and sufficient information isprovided by both the large-scale purchaser and the Board of Directors of the Company, and thatsufficient time is ensured for consideration, in order for shareholders to appropriately assess whether or
not the large-scale purchase will contribute to enhancing the corporate value of the Company andrealizing corporate interests and shareholders’ common interests, and to decide whether or not to accept
the proposal regarding the large-scale purchase of the Company’s share certificates, etc. In addition, inthe event that the Board of Directors of the Company judges that it is necessary to change or improve theterms or method of the large-scale purchase from the perspective of protecting or enhancing thecorporate value of the Company and corporate interests and shareholders’ common interests, theCompany believes it will be necessary to negotiate with the large-scale purchaser and present analternative proposal to shareholders, etc., and so the necessary time should be sufficiently ensured forthat purpose.
Based on this approach, the Company has decided to renew this Plan as follows, with necessary
amendments to the Former Plan. This Plan requires compliance with this Plan from the large-scalepurchaser, and also sets forth countermeasures if the large-scale purchaser does not comply with thisPlan, and if it is judged that the large-scale purchase will considerably harm the corporate value of theCompany or corporate interests and shareholders’ common interests.
At present, the Company has not received any proposal relating to a large-scale purchase. In addition,
the status of the Company’s major shareholders as of March 31, 2018 is shown on “Status of
Shareholders (as of March 31, 2018)” on page 60 (in Japanese) of this Notice.
2. Content of this Plan
(1) Overview of this Plan
Under this Plan, large-scale purchasers shall be required to follow prescribed procedures when
conducting a large-scale purchase, and, in principle, a gratis allotment of subscription rights to sharesshall be made to shareholders as a countermeasure against a large-scale purchase if the large-scalepurchaser does not comply with these procedures, and even in the event that these procedures arefollowed, if it is judged that the large-scale purchase will considerably harm the corporate value of theCompany, and corporate interests and shareholders’ common interests. In addition, othercountermeasures may be used if it is judged that it is appropriate to activate other countermeasurespermitted by the Companies Act and other laws and regulations, and the Articles of Incorporation of the18Company.
For the subscription rights to shares to be allotted in accordance with this Plan (hereinafter, the“Subscription Rights to Shares”), the Company intends to attach provisions including: 1) exercise terms
prohibiting their exercise by the large-scale purchaser and his or her related parties; and 2) acquisition
clauses whereby the Company may deliver shares in the Company to shareholders who are not thelarge-scale purchaser or his or her related parties in exchange for the acquisition of the Subscription
Rights to Shares by the Company.
If a gratis allotment of Subscription Rights to Shares is conducted, there is a possibility that the
proportion of voting rights held by the large-scale purchaser and his or her related parties against the
total voting rights of the Company may be greatly diluted as a result of these exercise terms andacquisition clauses.
(2) Procedures for renewal of this Plan ― approval at this General Meeting of Shareholders
The Former Plan was approved at the 195th Annual General Meeting of Shareholders of theCompany held on June 25, 2015, based on the provisions of Article 19 of the Company’s Articles ofIncorporation established upon receiving approval at the same Annual General Meeting of Shareholders,
but in order to appropriately reflect the will of shareholders in the renewal of this Plan also, theCompany proposes the renewal of this Plan at this General Meeting of Shareholders, based on the same
Article of the Articles of Incorporation.
(3) Procedures related to the activation of this Plan
1) Applicable large-scale purchases
This Plan shall apply to purchases of the Company’s share certificates, etc., other transfers withconsideration, and other similar actions, and their proposals by persons (hereinafter, “specified
shareholders”) for whom, as a result of the purchase, other transfer with consideration, or othersimilar action pertaining to more than a certain number of the Company’s share certificates, etc.,
either:i. the total ownership ratio 1 of share certificates, etc. 2 pertaining to the Company’s sharecertificates, etc. held3 by a holder4 of the Company’s share certificates, etc.; orii. the total ownership ratio 5 of share certificates, etc. pertaining to the Company’s sharecertificates, etc. that are held6 by or that will be held by the person conducting a purchase of
the Company’s share certificates, etc.7, other transfer with consideration, or other similaraction, and the Company’s share certificates, etc. held by his or her specially related parties8
will be 20% or more (however, this excludes those previously approved by the Board of Directors of
the Company; hereinafter, a purchase, etc. to which this Plan applies shall be referred to as a“large-scale purchase,” and a person conducting or attempting to conduct a large-scale purchase shallbe referred to as a “large-scale purchaser”).
2) Disclosure under this Plan and requests for information from the large-scale purchaser
The Company shall make timely disclosure regarding this Plan in accordance with all theregulations set forth by Tokyo Stock Exchange, Inc. and Nagoya Stock Exchange, Inc., and shall also
post this Plan on the Company’s website (http://www.daitobo.co.jp/).
Excluding cases otherwise provided for by the Board of Directors of the Company, the large-scalepurchaser shall provide a purchase proposal with the information necessary for consideration of thedetails of the large-scale purchase set forth in each of the items below (hereinafter, referred to as the1 Refers to the ownership ratio of share certificates, etc. as provided for in Article 27-23, Paragraph 4 of the Financial Instruments and ExchangeAct. The same shall apply hereinafter.
2 Refers to the ownership ratio of share certificates, etc. as provided for in Article 27-23, Paragraph 4 of the Financial Instruments and ExchangeAct. The same shall apply hereinafter.
3 Refers to holding as provided for in Article 27-23, Paragraph 4 of the Financial Instruments and Exchange Act. The same shall apply
hereinafter.
4 Refers to a holder as provided for in Article 27-23, Paragraph 1 of the Financial Instruments and Exchange Act, including persons deemedholders pursuant to Paragraph 3 of the same. The same shall apply hereinafter.
5 Refers to share certificates, etc. as provided for in Article 27-23, Paragraph 1 of the Financial Instruments and Exchange Act. The same applies
hereinafter unless otherwise provided for.
6 Refers to holding as provided for in Article 27-2, Paragraph 1 of the Financial Instruments and Exchange Act. The same shall apply
hereinafter.
7 Refers to share certificates, etc. as provided for in Article 27-2, Paragraph 1 of the Financial Instruments and Exchange Act. The same applies
in item ii below.
8 Refers to a specially related party as provided for in Article 27-2, Paragraph 7 of the Financial Instruments and Exchange Act. However, inregard to persons set forth in item 1 of the same, this shall exclude persons provided for in Article 3, Paragraph 2 of the Cabinet Office Orderon Disclosure Required for Tender Offer for Share Certificates, etc. by Person Other than Issuer. The same shall apply hereinafter.

19

“Required Information”) to the Board of Directors of the Company ahead of the implementation of
the large-scale purchase, written in Japanese and including a statement of intent to the effect that heor she shall comply with the procedures set forth in this Plan.
Furthermore, a certified copy of the commercial register, a copy of the Articles of Incorporation,and other documents proving the existence of the large-scale purchaser shall be attached to thepurchase proposal.
If the Board of Directors of the Company receives the above purchase proposal, it shall promptly
provide it to the Independent Committee set forth in the below item 4). In the event that the Board of
Directors of the Company reasonably judges that the information provided by the large-scalepurchaser is insufficient for the assessment of shareholders and the evaluation and consideration of
the Board of Directors of the Company, etc., in light of the content or format, etc. of the large-scalepurchase, the large-scale purchaser shall provide additional information separately requested by the
Board of Directors of the Company, in Japanese (however, the Board of Directors of the Company
shall not request the provision of additional information that exceeds a level necessary forshareholders to appropriately judge the appropriateness of the purchase, and for the evaluation andconsideration of the Board of Directors of the Company, etc., taking into consideration such factors
as the characteristics of the large-scale purchaser, the details of the large-scale purchase proposed by
the large-scale purchaser, and the content and nature of the Required Information).
Such requests for the provision of additional information shall be made within ten business daysof receiving the purchase proposal as described above or subsequently receiving any additional
information, after determining an appropriate deadline for a reply (of up to 30 days, in principle).
i. Details of the large-scale purchaser and his or her group (including joint holders, speciallyrelated parties, and (in the case of funds) members and other constituents) (including specificname, capital structure, business content, financial details, and experience in businesses of thesame type as the Company’s businesses)
ii. Number of the Company’s share certificates, etc. actually held by the large-scale purchaser
and his or her group, and the status of transactions in the Company’s share certificates, etc. by
the large-scale purchaser during the 60 days prior to the submission of the purchase proposaliii. The large-scale purchase objective (if the objective is to acquire control or participate inmanagement, portfolio investment or strategic investment, transfer the Company’s sharecertificates, etc. to a third party after the large-scale purchase, etc., make a material proposal,
etc. (refers to a material proposal, etc. as provided for in Article 27-26, Paragraph 1 of the
Financial Instruments and Exchange Act, Article 14-8-2, Paragraph 1 of the Order for
Enforcement of the same, and Article 16 of the Cabinet Office Order on Disclosure of the
Status of Large-Volume Holdings in Share Certificates) or any other objective, notice to that
effect and an overview thereof; furthermore, if there are multiple objectives, details of all
objectives shall be provided), method, and details (including the type and number of theCompany’s share certificates, etc. intended for acquisition in the large-scale purchase, theamount and type of consideration for the large-scale purchase, the timing of the large-scalepurchase, the structure of any related transactions, the legality of the method of large-scalepurchase, and the possibility of implementation of the large-scale purchase)iv. An overview of the calculation basis for the large-scale purchase price (including the facts
and assumptions used as the basis for calculation, the method of calculation, numerical data
used in the calculation, and the amount and basis for calculation of any synergies expected toarise as a result of related transactions)v. Backing for the large-scale purchase funds (including the specific name of any providers offunds (including de facto providers), method of raising funds, and details of any relatedtransactions)vi. Management policies pertaining to the Group after the large-scale purchase, management
candidates (including information regarding experience in businesses of the same type as thebusinesses of the Company and the Group), business plans, financial plans, capital policy,
dividend policy, and measures to utilize assets (however, in the event that the purchaseproposal by the large-scale purchaser is a cash purchase for 100% of the Company in which
no minority shareholders shall remain, a summary shall be sufficient for the provision of theinformation in this item)vii. Policies pertaining to the treatment of the Group’s employees, business partners, clients, andother stakeholders of the Group after the large-scale purchaseviii. Policies pertaining to the return of capital invested for the large-scale purchaseix. Whether there are any relationships with antisocial forces or terrorist organizations (regardless20

of whether they are direct or indirect), and if there are any relationships, the details thereof
Any other information that the Board of Directors of the Company reasonably judges
necessary.
Furthermore, if the Board of Directors of the Company recognizes that a large-scale purchaser has
appeared, or if it receives a purchase proposal or additional information, the Board of Directors of theCompany shall promptly disclose information pertaining to those facts to shareholders. Information
pertaining to all or part of the content of the information provided to the Board of Directors of theCompany by the large-scale purchaser, etc. shall be disclosed to shareholders at the point that it isjudged necessary for the assessment of shareholders by the Board of Directors of the Company.
x.

3) Procedures related to consideration by the Board of Directors of the Company
If the Board of Directors of the Company judges that the Required Information in the purchaseproposal submitted by the large-scale purchaser fulfills the standard necessary for shareholders toappropriately judge the appropriateness of the purchase, and for the evaluation and consideration of
the Board of Directors of the Company, etc. (including cases when the Board of Directors of theCompany judges that it has received information that is sufficient as the Required Information
together with the purchase proposal, owing to the submission of Required Information additionally
requested by the Board of Directors of the Company for the reason that the information submitted by
the large-scale purchaser was insufficient), then it shall promptly notify the large-scale purchaser andthe Independent Committee of that fact, together with the start and end of the Board of Directors
Evaluation Period described below, and shall disclose related information to shareholders in a timely
and appropriate manner. Within 60 days (for purchases of all of the Company’s share certificates, etc.
by tender offer where the consideration is cash (Japanese yen) only) or 90 days (for other large-scalepurchases) of the day following the dispatch of this notification to the large-scale purchaser(hereinafter, this period of within 60 or 90 days shall be referred to as the “Board of Directors
Evaluation Period”), the Board of Directors of the Company shall carefully compile its opinion withregard to the large-scale purchase after sufficiently evaluating and considering the Required
Information provided, while obtaining the advice of third parties in an independent position from theCompany as necessary (including investment banks, securities firms, financial advisers, attorneys,
certified public attorneys, and other experts), and respecting the recommendation of the Independent
Committee set forth in the below item 4) to the maximum extent possible, and shall notify thelarge-scale purchaser, and disclose related information to shareholders in a timely and appropriatemanner. As necessary, the Board of Directors of the Company may also negotiate the terms andmethod of the large-scale purchase with the large-scale purchaser, and furthermore, present analternative proposal to shareholders as the Board of Directors of the Company.
Furthermore, if there are unavoidable circumstances regarding the Board of Directors of theCompany not reaching a resolution on whether to activate or not activate countermeasures within the
Board of Directors Evaluation Period, such as the Independent Committee not making a
recommendation on whether to activate or not activate countermeasures within the Board of
Directors Evaluation Period, then the Board of Directors may extend the Board of Directors
Evaluation Period within a necessary range of up to 30 days (calculated from the day after the final
day of the initial Board of Directors Evaluation Period), based on the recommendation of the
Independent Committee. If the Board of Directors of the Company resolves to extend the Board of
Directors Evaluation Period, it shall notify the large-scale purchaser and the Independent Committeeof the specific period of this extension and the reasons the extension is necessary, and shall also
disclose this information to shareholders in a timely and appropriate manner.
The large-scale purchaser may only commence the large-scale purchase after the Board of
Directors Evaluation Period has passed. However, if notification is received of a decision not toactivate countermeasures as set forth in the below item 7), then the large-scale purchaser may
conduct the large-scale purchase from the business day after the notification is received.
4) Independent Committee establishment
The Board of Directors of the Company will ultimately judge whether the procedures have been
followed in accordance with the rules set forth in this Plan, and, in the event that the rules set forth in
this Plan have been complied with, whether to implement certain countermeasures considerednecessary to protect and enhance the corporate value of the Company, and corporate interests andshareholders’ common interests, but in order to guarantee the reasonableness and fairness of that
judgment, the Company shall establish an Independent Committee as a body that is independent fromthe Board of Directors of the Company. The Independent Committee shall comprise three (3) to five21

(5) members, who shall be elected by the Board of Directors of the Company from among Outside
Directors, attorneys, licensed tax accountants, certified public accountants, academics, persons
familiar with investment banking operations, Directors of other companies, external parties withexperience as executives, etc.
Furthermore, the names and career summaries of the planned members of the Independent
Committee at the renewal of this Plan are as described in Attachment 1, “Names and Career
Summaries of Independent Committee Members.” An overview of the Independent Committee
regulations are described in Attachment 2, “Overview of the Independent Committee Regulations.”
In addition, information related to an overview of the judgment of the Independent Committee shallbe disclosed to shareholders in a timely and appropriate manner.
5) Procedures for the activation of countermeasures
When assessing the activation of countermeasures, the Board of Directors of the Company shallfollow the procedures below, in order to guarantee the reasonableness and fairness of the assessment.
First, ahead of the activation of countermeasures, the Board of Directors of the Company shallconsult the Independent Committee regarding the appropriateness of activating countermeasures, and,based on this consultation, the Independent Committee shall make a recommendation to the Board of
Directors of the Company regarding the appropriateness of activating countermeasures, after
obtaining the advice of third parties in an independent position from the Company, at the Company’s
expense, as necessary (including investment banks, securities firms, financial advisers, attorneys,
certified public accountants, and other experts). When judging whether or not to activate
countermeasures, the Board of Directors of the Company shall respect the recommendation of the
Independent Committee to the maximum extent possible.
In addition, when the Board of Directors of the Company activates countermeasures, it shall do sowith a resolution to activate with the unanimous approval of all members, after obtaining theapproval of all Directors serving as Audit and Supervisory Committee Members. If the Board of
Directors of the Company makes such a resolution, it shall promptly disclose information related toan overview of the resolution and any other matters judged appropriate by the Board of Directors of
the Company to shareholders.
Furthermore, in addition to the above consultation with the Independent Committee, the Board of
Directors of the Company shall assess the appropriateness of activating countermeasures after
evaluating and considering, etc. the large-scale purchaser and the specific details of the large-scalepurchase, and the effect of the large-scale purchase on the corporate value of the Company andcorporate interests and shareholders’ common interests, etc., while obtaining the advice of third
parties in an independent position from the Company, as necessary (including investment banks,
securities firms, financial advisers, attorneys, certified public accountants, and other experts), basedon the Required Information submitted by the large-scale purchaser.
6) Conditions for the activation of countermeasuresi. If the large-scale purchaser conducts or attempts to conduct a large-scale purchase without
following the procedures set forth in this Plan
If the large-scale purchaser conducts or attempts to conduct a large-scale purchase without
following the procedures set forth in this Plan, then regardless of the specific terms or method, etc. ofthe large-scale purchase, the Board of Directors of the Company shall view the large-scale purchaseas considerably harming the corporate value of the Company and corporate interests andshareholders’ common interests, and shall implement the necessary and appropriate countermeasures
to protect and enhance the corporate value of the Company, and corporate interests and shareholders’common interests, while respecting the recommendation of the Independent Committee to the
maximum extent possible.
ii. If the large-scale purchaser conducts or attempts to conduct a large-scale purchase while following
the procedures set forth in this Plan
If the large-scale purchaser conducts or attempts to conduct a large-scale purchase while
following the procedures set forth in this Plan, then, in principle, the Board of Directors of theCompany shall not implement countermeasures against the large-scale purchase, even in cases when
it is opposed to the large-scale purchase and expresses its opposing opinion, presents an alternative
proposal, and provides an explanation to shareholders, etc. Shareholders shall judge whether or not to
accept the large-scale purchase proposal for the Company’s share certificates, etc. by the large-scalepurchaser, after considering the Required Information regarding the large-scale purchase, the opinion22

of the Board of Directors of the Company in regard to the Required Information, any alternative
proposal, etc.
However, even if the large-scale purchaser conducts or attempts to conduct a large-scale purchasewhile following the procedures set forth in this Plan, in the event that the Board of Directors of theCompany recognizes that the large-scale purchase based on the purchase proposal by the large-scalepurchaser will considerably harm the corporate value of the Company, and corporate interests andshareholders’ common interests, as a result of considering the content of the large-scale purchase by
the large-scale purchaser, consulting and negotiating with the large-scale purchaser, etc., then the
Board of Directors of the Company shall implement the necessary and appropriate countermeasures
to protect and enhance the corporate value of the Company and corporate interests and shareholders’common interests, while respecting the recommendation of the Independent Committee to the
maximum extent possible, regardless of the start or end of the Board of Directors Evaluation Period.
Specifically, if it is judged that it falls under any of the categories listed below, then, in principle, thelarge-scale purchase based on the purchase proposal shall be viewed as considerably harming thecorporate value of the Company, and corporate interests and shareholders’ common interests.
(i) If the aim of the purchase is to demand that shares are bought back at a high price;(ii) If the aim of the purchase is to realize the interests of the large-scale purchaser based on thesacrifice of the Company, such as acquiring important assets and technical information, etc. ata low cost;(iii) If the purchase is such that there will be clear harm to the corporate value of the Company andcorporate interests and shareholders’ common interests, owing to the appropriation of
corporate assets as collateral for debt or repayment funds;(iv) If the purchase is such that there will be clear harm to the corporate value of the Company andcorporate interests and shareholders’ common interests, owing to the disposal of high-value
corporate assets and use of gains from the disposal to pay a temporarily high dividend, or takeadvantage of the increase in share price caused by the temporarily high dividend to sell sharesat a high price;(v) If the purchase is one where the purchase terms for the Company’s share certificates, etc. areconsiderably insufficient or inappropriate in light of the corporate value of the Company;(vi) If the purchase is one where shareholders may effectively be forced to sell share certificates,
etc., such as a tender offer whereby applications for the purchase of all share certificates, etc.
are not solicited in the initial purchase, and purchase terms for the second stage areunfavorable or not made clear;(vii) If the corporate value of the Company in the event that the large-scale purchaser acquires
control will be considerably diminished compared with the corporate value of the Company inthe event that the large-scale purchaser does not acquire control, in a comparison of mid- tolong-term future corporate value;(viii) If the large-scale purchaser is considerably inappropriate as a controlling shareholder of theCompany from the perspective of public order and good morals;(ix) If the purchase fulfills any of the following criteria, other than the above items:
a. If it is presumed in an objective and reasonable manner that there is a risk of considerable
harm to the corporate value of the Company, and corporate interests and shareholders’common interests;b. If it is presumed in an objective and reasonable manner that, if countermeasures are notactivated, considerable harm to the corporate value of the Company, and corporate interestsand shareholders’ common interests will be unavoidable, or that there is a risk thereof.
7) Decisions to activate or not activate countermeasures by the Board of Directors of the Company
In either case described in the above items 6) i. and ii., the Board of Directors of the Company
shall decide to activate or not activate countermeasures, while respecting the recommendation of the
Independent Committee to the maximum extent possible.
If the Board of Directors of the Company makes a decision to activate or not activate
countermeasures, it shall promptly notify the large-scale purchaser of an overview of the decision
and any other matters recognized as appropriate by the Board of Directors of the Company(hereinafter, a notification pertaining to a decision not to activate countermeasures shall be referred toas a “Non-activation Decision Notification”), and shall disclose related information to shareholders.
The large-scale purchaser may conduct the large-scale purchase after the Board of Directors
Evaluation Period has passed, or from the business day after the day a Non-activation Decision
Notification is received from the Board of Directors of the Company.
238) Reconsideration by the Board of Directors of the Company
Even after Board of Directors of the Company has made a decision regarding whether or notcountermeasures should be activated, if there are changes to the facts, etc. that formed the basis forthe decision, such as the large-scale purchaser changing the terms pertaining to the large-scalepurchase or canceling the large-scale purchase, then the Board of Directors of the Company may
deliberate the issue again after consulting with the Independent Committee, and make a decision
regarding the activation or cancellation of countermeasures, while respecting the recommendation of
the Independent Committee to the maximum extent possible.
If the Board of Directors of the Company makes such a decision, it shall promptly notify thelarge-scale purchaser of an overview of the decision and any other matters recognized as appropriateby the Board of Directors of the Company, and disclose related information to shareholders.
(4) Overview of countermeasures
In principle, the Board of Directors of the Company shall conduct a gratis allotment of Subscription
Rights to Shares in accordance with Attachment 3 “Important Information Regarding the Subscription
Rights to Shares,” as a countermeasure under this Plan. Subscription Rights to Shares shall be allotted toshareholders (however, this excludes the Company) listed or recorded in the final shareholder register ona certain day (hereinafter, the “Allotment Date”) determined by the Board of Directors of the Company
when resolving to conduct a gratis allotment of Subscription Rights to Shares, in a ratio determined by
the Board of Directors of the Company of one or more subscription right to shares per share held.
The amount of property (cash) to be contributed when exercising a Subscription Right to Shares(exercise price) shall be one (1) yen, and through the exercise of one (1) Subscription Right to Shares, anumber of common shares in the Company determined by the Board of Directors of the Company of one(1) share or less (if adjusted, it shall be the number of shares after adjustment) shall be delivered toholders of the Subscription Rights to Shares (hereinafter, “Subscription Rights to Shares Holders”).
Furthermore, if the Subscription Rights to Shares are exercised and there are fractions amounting to lessthan one share in the number of shares to be delivered to the Subscription Rights to Shares Holders, theCompany shall treat fractions in accordance with applicable laws and regulations.
However, the specified shareholder and his or her related parties shall not be able to exercise theSubscription Rights to Shares. In addition to cases when the Subscription Rights to Shares are exercised,
the Company may also acquire the Subscription Rights to Shares in exchange for common shares in the
Company, from Subscription Rights to Shares Holders who are not the specified shareholder or his or
her related parties, based on certain conditions, in accordance with the acquisition clause attached to the
Subscription Rights to Shares. Furthermore, the Company may also acquire all of the Subscription
Rights to Shares without consideration, based on certain conditions.
Furthermore, the approval of the Board of Directors of the Company shall be required for theacquisition of the Subscription Rights to Shares by transfer.
As described in the above item (1), in addition to a gratis allotment of Subscription Rights to Shares,
if it is judged that the activation of other countermeasures permitted by the Companies Act, other laws
and regulations, and the Articles of Incorporation of the Company is appropriate, then those othercountermeasures may be used.
If the Board of Directors of the Company activates countermeasures under this Plan, the Board of
Directors of the Company shall disclose information related to matters recognized as appropriate by the
Board of Directors of the Company to shareholders in a timely, appropriate manner.
(5) Effective period of this Plan, discontinuation, and changes
The effective period of this Plan shall be from the conclusion of this General Meeting of
Shareholders until the conclusion of the Annual General Meeting of Shareholders of the Company forthe final fiscal year ending within three (3) years from that time. However, even prior to the end of theeffective period, if 1) a resolution is made at a General Meeting of Shareholders of the Company todiscontinue this Plan, or 2) a resolution is made by the Board of Directors of the Company todiscontinue this Plan, then this Plan shall be discontinued at that point.
In addition, even during the effective period of this Plan, the Board of Directors of the Company may
make technical amendments or changes to this Plan within the scope delegated in the resolution at this
General Meeting of Shareholders, taking into consideration the opinion of the Independent Committee,
as necessary. Furthermore, the provisions of laws and regulations in effect as of May 11, 2018 form thebasis for this Plan, so in the event that it is necessary to make amendments to the provisions of this Planowing to the new establishment or abolition of laws and regulations, etc. on or after this date, the24appropriate words and phrases in this Plan shall be deemed to be replaced within a range that does not
violate the basic approach of this Plan, in accordance with the intent of the laws and regulations.
If this Plan is discontinued, amended, or changed, information related to the fact of the
discontinuation, amendment, or change, and any other matters recognized as appropriate by the Board of
Directors of the Company shall be promptly disclosed.
In addition, regarding the content of this Plan after the conclusion of the Annual General Meeting of
Shareholders of the Company for the final fiscal year ending with three (3) years of the conclusion ofthis General Meeting of Shareholders, the Company intends to confirm the will of shareholders
concerning approval or rejection for the continuation and renewal of this Plan, or the introduction of aplan with new content, etc., after making the necessary amendments.
3. Effect on shareholders and investors(1) Effect on shareholders and investors when this Plan is renewed
Countermeasures will not actually be activated when this Plan is renewed, so there will be no direct,
specific impact on the statutory rights and economic interests of shareholders and investors.
(2) Effect on shareholders and investors from the gratis allotment of Subscription Rights to Shares
Subscription Rights to Shares shall be allotted gratis to shareholders on the Allotment Date in a ratio
determined by the Board of Directors of the Company of one (1) or more per share held, and therefore,
assuming the Subscription Rights to Shares are exercised, no dilution shall occur in the value of shares
held by a shareholder in the Company as a whole.
Essentially, if a shareholder does not exercise the Subscription Rights to Shares during the exercise
period of the Subscription Rights to Shares, then the value of his or her shares held in the Company shallbe diluted owing to the exercise of Subscription Rights to Shares by other shareholders. However, basedon a decision of the Board of Directors of the Company, the Company may acquire Subscription Rights
to Shares from shareholders who are not forbidden to exercise the Subscription Rights to Shares inaccordance with the important information regarding the Subscription Rights to Shares and delivercommon shares in the Company in exchange, through the procedures described below in item (4) 2). If
the Company performs these acquisition procedures, shareholders who are not forbidden to exercise theSubscription Rights to Shares in accordance with the important information regarding the Subscription
Rights to Shares shall receive common shares in the Company without exercising the Subscription
Rights to Shares or making payment of cash equivalent to the exercise price, and dilution in the value
per share held will occur, but no dilution shall occur in the value of shares held by a shareholder in the
Company as a whole.
Furthermore, if, after the shareholders who should receive the gratis allotment of Subscription Rights
to Shares have been confirmed, the Company cancels the gratis allotment of Subscription Rights toShares or acquires the Subscription Rights to Shares that were allotted gratis without consideration, no
dilution in the per-share value of the Company’s shares shall occur, and therefore investors who haveconducted a transaction based on the assumption that a dilution in the per-share value of the Company’s
shares would occur may suffer a commensurate loss caused by fluctuations in the share price.
(3) Effect on shareholders and investors when the Subscription Rights to Shares are exercised or acquired
after the gratis allotment of Subscription Rights to Shares is conducted
The attachment of discriminatory terms regarding the exercise and acquisition of the Subscription
Rights to Shares is planned, and therefore it is expected that when exercising or acquiring the
Subscription Rights to Shares the statutory rights and economic interests of the specified shareholder
and his or her related parties shall be diluted, but even in this case, no direct, specific effect is expectedon the statutory rights and economic interests pertaining to shares in the Company held by shareholders
and investors who are not the specified shareholder or his or her related parties. Please note that thetransfer of the Subscription Rights to Shares shall be restricted and therefore, if common shares in the
Company are delivered to shareholders as a result of the exercise of the Subscription Rights to Shares ortheir acquisition by the Company on or after the Allotment Date, the return of invested capital bytransfer in regard to the portion of the value of shares held in the Company by shareholders attributable
to the Subscription Rights to Shares may be restricted during the period until the Company’s commonshares are recorded in shareholders’ book-entry accounts.
(4) Procedures required of shareholders accompanying the gratis allotment of Subscription Rights toShares, etc.
1) Procedures for the exercise of the Subscription Rights to Shares
25

The Company shall, in principle, send to shareholders listed or recorded in the final shareholder
register on the Allotment Date the exercise request form for the Subscription Rights to Shares (in aform prescribed by the Company that includes the details and number of Subscription Rights toShares to be exercised, necessary matters such as the date of exercise of the Subscription Rights toShares and the book-entry account for recording the Company’s shares (excluding special accounts),
representations and warranties regarding matters such as the fact that the shareholder fulfills theconditions for exercising the Subscription Rights to Shares, indemnity clauses, and other covenants),
and other documents necessary for the exercise of the Subscription Rights to Shares. After thegratis allotment of Subscription Rights to Shares, a number of common shares in the Company
determined by the Board of Directors of the Company of one (1) share or less per Subscription Rightto Shares (if adjusted, it shall be the number of shares after adjustment) shall be delivered toshareholders who submit the necessary documents during the exercise period and make payment ofone (1) yen per Subscription Right to Shares to the payment handling location.
Furthermore, please note that common shares in the Company delivered as a result of the exerciseof Subscription Rights to Shares may not be recorded in special accounts owing to the provisions of
the Act on Book Entry of Corporate Bonds and Shares, so when exercising the Subscription Rights toShares, shareholders must open a securities account or other book-entry account.
2) Procedures for the acquisition of the Subscription Rights to Shares by the Company
If the Board of Directors of the Company decides to acquire the Subscription Rights to Shares, theCompany shall acquire the Subscription Rights to Shares after the Board of Directors passes a
resolution and a public announcement is made to subscription rights to shares holders, for eachacquisition clause if there are multiple acquisition clauses, in accordance with the procedures set
forth in laws and regulations. In addition, if the Company decides to deliver common shares in the
Company to shareholders in exchange for acquiring the Subscription Rights to Shares, it shallpromptly deliver the shares.
Furthermore, in this case, these shareholders may be required to separately submit a document in
a form prescribed by the Company that includes representations and warranties regarding matterssuch as the fact that he or she is not the specified shareholder or a related party, indemnity clauses,
and other covenants.
In addition to the above, the Company shall disclose or notify shareholders of the details of themethod of allotment, method of exercise, and the method of acquisition of the Subscription Rights toShares after the Board of Directors of the Company has made a decision to implement the gratis
allotment of Subscription Rights to Shares.
IV Reasonableness of this Plan (the fact that this Plan is consistent with the basic policy, will notharm the common interests of the Company’s shareholders, and does not have the objective of
maintaining the positions of the Company’s officers, and the reasons thereof)
For the reasons below, the Board of Directors of the Company believes that this Plan is consistent withthe basic policy described in the above item I, will not harm the common interests of the Company’s
shareholders, and does not have the objective of maintaining the positions of the Company’s officers.
1. Fully satisfies the requirements of the Guidelines Regarding Takeover Defense, etc.
This Plan fully satisfies the three principles set forth in the “Guidelines Regarding Takeover Defense
for the Purpose of Protection and Enhancement of Corporate Value and Shareholders’ Common Interests”
announced by the Ministry of Economy, Trade and Industry and the Ministry of Justice on May 27, 2005(“the principle of protecting and enhancing corporate value and the interests of shareholders as a whole,”“the principle of prior disclosure and shareholder’ will,” and “the principle of ensuring the necessity andreasonableness”), and is also consistent with the intent of all regulations pertaining to the introduction of
takeover defense measures set forth by Tokyo Stock Exchange, Inc.
Furthermore, this Plan also takes into consideration the content of the “Takeover Defense Measures inLight of Recent Environmental Changes” report by the Corporate Value Study Group established in the
Ministry of Economy, Trade and Industry, announced on June 30, 2008.
2. Renewed with the objective of protecting and enhancing corporate value and corporate interests andshareholders’ common interests
This Plan shall be renewed with the objective of protecting and enhancing the corporate value of theCompany and corporate interests and shareholders’ common interests by securing the necessary
information and time to allow shareholders to make a judgment of whether or not to accept a proposal
26

regarding a large-scale purchase if a large-scale purchase for the Company’s share certificates, etc. isconducted, and for the Board of Directors of the Company to present an alternative proposal toshareholders and conduct negotiations with the large-scale purchaser, etc., as described in item III above.
3. Prioritizes the will of shareholders
In order to ensure an opportunity to appropriately reflect the will of shareholders in its renewal, therenewal of this Plan shall be subject to receiving the approval of shareholders at this General Meeting of
Shareholders. As described in the above item III 2. (2), this Plan is hereby submitted in this Proposal atthis General Meeting of Shareholders, and in the event that this Proposal is not approved, this Plan shallnot be renewed. Furthermore, if a resolution is passed to discontinue this Plan at a General Meeting of
Shareholders of the Company, even prior to the end of the effective period of this Plan, then this Plan shallbe discontinued at that point, so in that sense, the will of shareholders shall be reflected not just in the
renewal of this Plan, but also in its continuation.
In addition, the activation conditions of countermeasures based on this Plan shall be specificallyestablished depending on the individual case and presented to shareholders, based on the assumption thatshareholders shall entrust the judgment of whether to activate or not activate the countermeasures to theBoard of Directors. Accordingly, the will of shareholders shall be reflected in the activation ofcountermeasures in accordance with these activation conditions.
4. Prioritizes the judgment of highly independent external parties
As described in the above item III 2. (3) 4), when renewing this Plan, the Company has established an
Independent Committee as a body that is independent from the Board of Directors, in order to guarantee
the reasonableness and fairness of judgments of the Board of Directors of the Company.
In this way, a mechanism is ensured whereby this Plan shall be implemented in a manner that is
consistent with the corporate value of the Company and corporate interests and shareholders’ common
interests, as the arbitrary activation of countermeasures based on this Plan by the Board of Directors of theCompany shall be prevented by their making a decision while respecting the recommendation of the
Independent Committee to the maximum extent possible, and information regarding an overview of thejudgment of the Independent Committee shall be disclosed to shareholders in a timely and appropriatemanner.
5. Establishes reasonable and objective requirements
As described in the above item III 2. (3), a mechanism is ensured whereby arbitrary activation by the
Board of Directors of the Company will be prevented, as this Plan is designed such that countermeasures
will not be activated unless reasonable and objective requirements set forth in advance are fulfilled.
6. Has a capability to obtain advice from third party experts in an independent position
As described in the above items III 2. (3) 3) and 5), if a large-scale purchaser appears, the Board of
Directors and the Independent Committee may obtain the advice of third parties in a position that is
independent from the Company, at the Company’s expense (including investment banks, securities firms,
financial advisers, attorneys, certified public accountants, and other experts). Therefore, a mechanism isensured whereby the fairness and reasonableness of judgments by the Board of Directors and theIndependent Committee are more firmly guaranteed.
7. Not dead-hand or slow-hand type takeover defense measures
As described in the above item III 2. (5), this Plan may be discontinued at any time by resolution of theBoard of Directors, which comprises Directors elected at the General Meeting of Shareholders of theCompany, and therefore does not constitute dead-hand type takeover defense measures, whose activation
may not be prevented, even if a majority of the members of the Board of Directors are replaced.
In addition, in accordance with regulations on the term of office of Directors in the Companies Act inrelation to a Company with Audit and Supervisory Committee, the term of office of Directors (excluding
Directors serving as Audit and Supervisory Committee Members) is one (1) year, and that of Directors
serving as Audit and Supervisory Committee Members is two (2) years, and the Company does not use astaggered term system, and therefore this Plan does not constitute slow-hand type takeover defense
measures, whose activation requires time to prevent, as all members of the Board of Directors cannot be
replaced at one time.

27

(Attachment 1)
Names and Career Summaries of Independent Committee Members
The Company intends to appoint the following three persons as Independent Committee Members at theinitial introduction of this Plan.
Name:
Date of birth:
Career summary:

Yasunobu Sawada
January 9, 1953
April 1976
Joined the Ministry of Labour (currently Ministry of Health, Labourand Welfare)
January 1989
Joined A.T. Kearney, Inc. (currently A.T. Kearney K.K.)
assigned to Tokyo Office
October 1997
Director of Practice Management
April 2002
Executive Director of Enterprise IG Japan K.K. (currently Brand
Union/WPP Group)
July 2003
Representative Director of VieBrand Consulting Inc. (current post)
June 2015
Outside Director of Daito Woolen Spinning & Weaving Company,
Limited (currently Daitobo Co., Ltd.) (current post)(to the present)(Note)

No special interest exists between Mr. Yasunobu Sawada and the Company.
Furthermore, Mr. Yasunobu Sawada is an Outside Director of the Company, and theCompany has designated him as an independent officer stipulated by the Tokyo Stock
Exchange and Nagoya Stock Exchange, and registered him with the Exchanges.

Name:
Date of birth:
Career summary:

Haruki Iinuma
April 19, 1948
April 1976
April 1978
June 2011
June 2016(Note)

Registered as an attorney
Established IINUMA LAW OFFICE (current position)
Part-time Corporate Auditor of Daito Woolen Spinning & Weaving
Company, Limited (currently Daitobo Co., Ltd.)
Director serving as Audit and Supervisory Committee Member ofDaito Woolen Spinning & Weaving Company, Limited (currently
Daitobo Co., Ltd.) (current post)(to the present)

No special interest exists between Mr. Haruki Iinuma and the Company.
Furthermore, Mr. Haruki Iinuma is an Outside Director of the Company, and theCompany has designated him as an independent officer stipulated by the Tokyo Stock
Exchange and Nagoya Stock Exchange, and registered him with the Exchanges.

28

Name:
Date of birth:
Career summary:

Kakuji Takano
April 7, 1940
April 1963
May 1968
May 1981
December 1996
June 2001
April 2007
June 2007
October 2008
July 2010

June 2014
June 2016

Joined Kohkoku Chemical Industry Co., Ltd. (currently ACHILLESCORPORATION)
Joined Shoichi Ikeda Audit Corporation (currently Ernst & Young
ShinNihon LLC)
Established Takano Sogo Accounting Firm
Representative Partner of Century Audit Corporation (currently
Ernst & Young ShinNihon LLC)
Left Century Audit Corporation
Outside Corporate Auditor of MARUZEN CO., LTD.
Outside Corporate Auditor of NIPPON SHUPPAN HANBAI INC.
Councilor of Kanagawa Institute of Technology, Ikutoku Gakuen,
Incorporated Educational Institution (current post)
Managing Partner of Certified Public Tax Accountant’s Co. Takano
Sogo Accounting Firm and Takano Sogo Group in line withorganizational changes (current post)
Outside Auditor of SOURCENEXT Corporation (current post)
Outside Audit & Supervisory Board Member of KDDI
CORPORATION (current post)(to the present)

29

(Attachment 2)
Overview of the Independent Committee Regulations
Article 1

Along with the introduction and renewal of measures to respond to a large-scale purchase of theCompany’s share certificates, etc. (takeover defense measures; hereinafter, “this Plan”), theCompany shall establish an Independent Committee. The objective of the Independent
Committee is to make a recommendation regarding activating or not activating countermeasures
based on this Plan, following consultation with the Board of Directors, and thereby contribute toensuring the fairness and neutrality of the judgment of the Board of Directors.

Article 2

The Independent Committee shall comprise three (3) to five (5) members, who shall be electedfrom among persons who fulfill the following conditions. Elected members shall enter into acontract with the Company when appointed that includes a duty of due care clause, etc. toward
the Company, etc., in principle.
1) Persons who are not currently, and have not previously been a Director (excluding Outside
Directors; the same shall apply hereinafter) or Corporate Auditor (excluding Outside
Corporate Auditors; the same shall apply hereinafter), etc. of the Company, or a subsidiary oraffiliate of the Company (hereinafter, collectively referred to as “the Company, etc.”);2) Persons who are not a relative within a certain range of someone who is currently or has
previously been a Director or Corporate Auditor, etc. of the Company, etc.;
3) Persons who have not been a Director or Corporate Auditor, etc. within the past three (3)years at a financial institution that has actual transactions with the Company, etc.;
4) Persons who have not been a Director or Corporate Auditor, etc. within the past three (3)years at a business partner that has more than a certain level of transactions with theCompany, etc.;
5) Persons who are not business partners of the Company, etc., and who do not have any special
interests with the Company, etc.;
6) Persons with more than a certain level of experience regarding corporate management,
experts, etc. (corporate managers with a record of achievement, persons familiar withinvestment banking operations, attorneys, certified public accountants, researchers mainly
researching the Companies Act, etc., and other equivalent persons).
2 Members shall be elected and dismissed by resolution of the Board of Directors. However,resolutions to dismiss members shall be made by approval of two thirds or more of the Directors
in attendance.
3 Unless otherwise provided for in the contract set forth in Paragraph 1, Clause 2, the term ofoffice of members shall be from the conclusion of the Annual General Meeting of Shareholders
for the fiscal year ended March 31, 2018 (however, for members elected during the period of thisPlan, it shall be from the time of election), until the conclusion of the Annual General Meeting of
Shareholders for the final fiscal year ending within three (3) years of the conclusion of the same
Annual General Meeting of Shareholders.

Article 3

In principle, the Independent Committee shall deliberate and make resolutions regarding thematters described in each of the following items, and shall make recommendations to the Boardof Directors of the content of those resolutions, together with the reasons thereof. The Board of
Directors must respect the recommendation of the Independent Committee to the maximum
extent possible.
1) Whether the large-scale purchaser has complied with the procedures set forth in this Plan;
2) Determination of whether the content of the purchase proposal will considerably harm thecorporate value of the Company or corporate interests and shareholders’ common interests,
and whether to activate or not activate countermeasures;3) Suspension of countermeasures;
4) Matters for which authority has been granted to the Independent Committee under this Plan,in addition to items 1) through 3);5) Matters about which the Board of Directors has consulted the Independent Committee inregard to this Plan;
6) Matters the Board of Directors has determined that the Independent Committee may
separately perform.

30Article 4

In principle, resolutions of the Independent Committee shall be made by a majority of members
when all members are in attendance. However, in case of an accident occurring to the members
or if there are other special circumstances, resolutions shall be made a majority of members
when all members excluding these members are in attendance.

Article 5

The Independent Committee may obtain the advice of third parties in a position that is
independent from the Company, at the Company’s expense (including investment banks,
securities firms, financial advisers, attorneys, certified public accountants, and other experts).

Article 6

The Board of Directors may convene the Independent Committee by resolution.

Article 7

If the Board of Directors recognizes that it is necessary when the Independent Committee
conducts deliberations, it may appoint one (1) Director to attend meetings of the Independent
Committee, and request that the Independent Committee provides opportunities to explain
necessary matters.

Article 8

The Independent Committee must respond to the requests of the Board of Directors and explain
the reasons for making the recommendation and the basis thereof.

31

(Attachment 3)
Important Information Regarding the Subscription Rights to Shares
1. Shareholders eligible for the allotment
Subscription rights to shares shall be allotted to shareholders (however, this excludes the Company)
listed or recorded in the final shareholder register on a certain day (hereinafter, the “Allotment Date”)
determined by the Board of Directors of the Company when resolving to conduct the gratis allotment ofsubscription rights to shares described in this important information (hereinafter, the “Resolution for theGratis Allotment of Subscription Rights to Shares”), in a ratio determined by the Board of Directors of
the Company of one (1) or more subscription right to shares per share held.
2. Total number of subscription rights to shares to be issued
The total number of subscription rights to shares to be issued shall be a number determined by the Boardof Directors of the Company that is the same as or greater than the final total number of common sharesin the Company outstanding on the Allotment Date (excluding the number of common shares in the
Company held by the Company).
3. Effective date of the gratis allotment of subscription rights to shares
The effective date shall be determined in the Resolution for the Gratis Allotment of Subscription Rights
to Shares.
4. Type and number of shares underlying the subscription rights to shares
1) Type of shares underlying the subscription rights to shares
The type of shares underlying the subscription rights to shares shall be common shares in the
Company.
2) Number of shares underlying the subscription rights to shares
The number of shares underlying each subscription right to shares (hereinafter, the “applicable
number of shares”) shall be a number determined by the Board of Directors of the Company that is
one share or less.
However, if the applicable number of shares is adjusted based on Paragraph 5, the total number ofshares underlying the subscription rights to shares shall be adjusted in accordance with the applicable
number of shares after adjustment.
5. Adjustment to the number of shares underlying the subscription rights to shares
1) If, after the Allotment Date, the Company conducts a split or consolidation of the Company’s shares,
or a merger or corporate split, etc., the applicable number of shares shall be appropriately adjusted,taking into consideration the terms of the share split, consolidation, merger, or corporate split, etc.
2) When adjusting the applicable number of shares, the Company shall notify each subscription right toshares holder in advance in writing, or publicly announce by a method set forth in the Articles ofIncorporation, the fact of the adjustment and the reasons thereof, the applicable number of shares
before adjustment, the applicable number of shares after adjustment, the date the adjustment isapplied, and any other necessary matters. However, if the Company is unable to notify shareholders
or make a public announcement as described above by the day before the adjustment is applied, it
shall promptly do so on or after the day the adjustment is applied.
6. Amount to be paid for the subscription rights to shares
The subscription rights to shares shall be allotted gratis.
7. Amount of property to be contributed when exercising the subscription rights to shares
The amount of property (cash) to be contributed when exercising each subscription right to shares shallbe one (1) yen (hereinafter, the “exercise price”).
8. Exercise period of the subscription rights to shares
The exercise period of the subscription rights to shares shall be a period determined in the Resolution for
the Gratis Allotment of Subscription Rights to Shares, with the first day of the exercise period(hereinafter, the “Start Date of the Exercise Period”) also determined in the resolution. However, if theCompany acquires the subscription rights to shares based on Paragraph 10, the subscription rights toshares may not be exercised during the period from the date the Company makes a notification or public
32

announcement of the acquisition to the date of acquisition. If the final day of the exercise period is not abanking business day, the final day shall be the following banking business day.
9. Exercise conditions of the subscription rights to shares
1) Unless otherwise provided for, the following terms shall have the meanings set forth below in thisimportant information.
a. A “specified shareholder” refers to a person for whom, as a result of conducting a purchase of theCompany’s share certificates, etc., other transfer with consideration, or other similar actions, eitherof the following will be 20% or more:i. the total ownership ratio of share certificates, etc. pertaining to the Company’s sharecertificates, etc. held by a holder of the Company’s share certificates, etc.; orii. the total ownership ratio of share certificates, etc. pertaining to the Company’s sharecertificates, etc. that are owned by or that will be owned by the person conducting a purchaseof the Company’s share certificates, etc., other transfer with consideration, or other similaraction, and the Company’s share certificates, etc. held by his or her specially related parties.
b. “Share certificates, etc.” in item a. i refers to share certificates, etc. as provided for in Article
27-23, Paragraph 1 of the Financial Instruments and Exchange Act. The same applies hereinafter
unless otherwise provided for. “Share certificates, etc.” in item a. ii refers to share certificates, etc.
as provided for in Article 27-2, Paragraph 1 of the Financial Instruments and Exchange Act.
c. A “holder” refers to a holder as provided for in Article 27-23, Paragraph 1 of the Financial
Instruments and Exchange Act, including persons deemed holders pursuant to Paragraph 3 of thesame.
d. To “hold” refers to holding as provided for in Article 27-23, Paragraph 4 of the Financial
Instruments and Exchange Act.
e. “Ownership ratio of share certificates, etc.” refers to the ownership ratio of share certificates, etc.
as provided for in Article 27-23, Paragraph 4 of the Financial Instruments and Exchange Act.
f. To “own” refers to ownership as provided for in Article 27-2, Paragraph 1 of the Financial
Instruments and Exchange Act.
g. A “specially related party” refers to a specially related party as provided for in Article 27-2,
Paragraph 7 of the Financial Instruments and Exchange Act. However, in regard to persons set
forth in Item 1 of the said paragraph, this shall exclude persons provided for in Article 3,
Paragraph 2 of the Cabinet Office Order on Disclosure Required for Tender Offer for Share
Certificates, etc. by Person Other than Issuer.
h. “Ownership ratio of share certificates, etc.” refers to the ownership ratio of share certificates, etc.
as provided for in Article 27-2, Paragraph 8 of the Financial Instruments and Exchange Act.
2) The persons set forth below may not exercise the subscription rights to shares:
The specified shareholder, his or her joint holders (refers to joint holders as provided for in Article
27-23, Paragraph 5 of the Financial Instruments and Exchange Act, and including persons deemedjoint holders pursuant to Paragraph 6 of the same), specially related parties, and persons judged by
the Board of Directors of the Company to be effectively controlled by such persons, to effectively
control such persons, to be under joint control by such persons, or to act in concert with such persons(however, this shall not apply to persons for whom the Board of Directors of the Company recognizes
that their acquiring or holding of the Company’s share certificates, etc. will not considerably harm thecorporate value of the Company, and corporate interests and shareholders’ common interests).
3) In accordance with the provisions of the above item 2), even if the holders of subscription rights toshares are unable to exercise the subscription rights to shares, the Company shall not bear any
liability for compensation or any other liability.
4) Partial exercise of any subscription right to shares is not permitted.
10. Acquisition of subscription rights to shares by the Company
1) If the Board of Directors of the Company judges that the acquisition of the subscription rights toshares is appropriate during the period from the day after the effective date of the gratis allotment of
the subscription rights to shares (however, if the Board of Directors of the Company determines a day
to replace this, it shall be the relevant day) until the day before the Start Date of the Exercise Period,
then the Company may acquire all subscription rights to shares without consideration on a day
determined by the Board of Directors of the Company.
2) On a day determined by the Board of Directors of the Company, during the period until the end of theexercise period of the subscription rights to shares described in Paragraph 8, the Company may
acquire the subscription rights to shares of persons who can exercise the subscription rights to shares33

in accordance with Paragraph 9, in exchange for the applicable number of common shares in the
Company per subscription right to shares.
11. Exercise of voting rights at the General Meeting of Shareholders by shareholders in the event that theseshareholders have newly acquired shares in the Company through the exercise of subscription rights toshares or the acquisition of subscription rights to shares by the Company
After the record date determined by the Company, shareholders who have newly acquired shares in the
Company through the exercise of subscription rights to shares or the acquisition of subscription rights toshares by the Company may exercise voting rights at the General Meeting of Shareholders.
12. Matters related to the transfer of the subscription rights to shares
The acquisition of the subscription rights to shares by transfer shall require the approval of the Board of
Directors of the Company.
13. Delivery of the subscription rights to shares and the terms thereof in the event of a merger, corporate
split, share exchange, or share transfer
The Board of Directors of the Company shall determine the above in the Subscription Rights to Shares
gratis allotment resolution.
14. Non-issuance of certificates for the subscription rights to shares
Certificates for the subscription rights to shares shall not be issued.
15. Increase in capital stock and legal capital surplus in the event new shares are issued owing to theexercise of subscription rights to shares
The amount by which capital stock and legal capital surplus will increase in the event that commonshares in the Company are issued owing to the exercise of subscription rights to shares shall be an
amount that is determined in the Subscription Rights to Shares gratis allotment resolution.
16. Subscription rights to shares exercise request and payment method
The subscription rights to shares shall be exercised through the submission of the prescribed exercise
request form (in a form prescribed by the Company that includes the details and number of subscription
rights to shares to be exercised, necessary matters such as the date of exercise of the subscription rights
to shares and the book-entry account for recording the Company’s shares (excluding special accounts),
representations and warranties regarding matters such as the fact that the shareholder fulfills theconditions for exercising the subscription rights to shares, indemnity clauses, and other covenants), after
filing out the necessary matters and completing sign and stamp, to the payment handling location during
the period set forth in Paragraph 8, together with any other documents separately required for the
exercise of the subscription rights to shares, as necessary, and other documents required at that time
under the Companies Act, the Financial Instruments and Exchange Act, and related laws and regulations(including the regulations, etc. set forth by the Japan Securities Dealers Association and Japanesefinancial instruments exchanges) (hereinafter, the “attached documents”), and payment of money
equivalent to the total exercise price of the subscription rights to shares to be exercised to the payment
handling location.
17. Timing of the effectiveness of the exercise of subscription rights to shares, etc.
The exercise of the subscription rights to shares shall become effective when the exercise request form
and the attached documents described in Paragraph 16 arrive at the payment handling location, andmoney equivalent to the total exercise price of the subscription rights to shares to be exercised is paid tothe payment handling location.
18. Amendments to laws and regulations, etc.
If, after the gratis allotment of subscription rights to shares, amendments to the provisions of thisimportant information are necessary owing to the establishment, amendment, or discontinuation of laws
and regulations, then the provisions of this important information shall be reasonably deemed to be
replaced, taking into consideration the intent and phrasing of the relevant establishment, amendment, ordiscontinuation of laws and regulations.

34

Consolidated Balance Sheet(As of March 31, 2018)
Description

Amount(Assets)
Current assets
Cash and deposits
Notes and accounts
receivable-trade
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts

Description(Thousands of yen)Amount(Liabilities)
3,011,089

Current liabilities

1,787,501
543,261
410,797
51,700218,777(950)

1,646,688

Notes and accounts payable-trade504,597

Short-term loans payable
Income taxes payable
Provision for bonuses
Provision for shareholder benefit
program399,400
47,57435,412

Other638,704

Non-current liabilities

21,000Non-current assets

15,877,766

Property, plant and equipment

15,497,544

Long-term loans payable

Buildings and structures

5,924,700

Lease obligations

Land

9,331,375

Guarantee deposits received

1,663,472

Leased assets
Other

144,967
96,500

Deferred tax liabilities for land
revaluation

2,211,637

Intangible assets

8,181

Net defined benefit liability

266,374

Investments and other assets

372,040

Asset retirement obligations

53,689Investment securities

296,287

Total liabilities

12,791,231
8,469,400
126,657

14,437,919(Net assets)

Claims provable in bankruptcy,
claims provable in rehabilitationand other

88,518Deferred tax assets

Shareholders’ equity(558,177)

Capital stock

1,500,000

13,674

Capital surplus

503,375

Other

58,659Retained earnings

Allowance for doubtful accounts(85,100)

Treasury shares
Accumulated other comprehensive
incomeValuation difference on
available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Subscription rights to shares

Total assets

18,888,855(2,554,346)(7,206)
5,004,849
5,081
(82)
4,993,002
6,847
4,264

Total net assets

4,450,935

Total liabilities and net assets

18,888,855

35

Consolidated Statement of Income(April 1, 2017 - March 31, 2018)(Thousands of yen)
Description

AmountNet sales

4,427,778

Cost of sales

3,267,704

Gross profit

1,160,074

Selling, general and administrative expenses

834,424

Operating income

325,650

Non-operating income
Interest income

45

Dividend income

6,084

Other

29,55435,683Non-operating expenses
Interest expenses

113,874

Other

93,512

207,387

Ordinary income

153,946

Profit before income taxes

153,946

Income taxes-current

57,035

Income taxes-deferred(6,876)50,158

Profit103,788

Profit attributable to owners of parent

103,78836

Non-Consolidated Balance Sheet(As of March 31, 2018)
Description(Assets)
Current assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Non-current assets
Property, plant and equipment
Buildings and structures
Land
Leased assets
Other
Intangible assets
Investments and other assets
Investment securities
Shares and investments in capitalof subsidiaries and associates
Long-term loans receivable
Claims provable in bankruptcy,
claims provable inrehabilitation and other
Deferred tax assets
Other
Allowance for doubtful accounts

Total assets

AmountDescription

2,343,285
1,247,416
99,098350,684
397,065
49,067200,903(950)
16,137,541
15,694,887
5,926,304
9,533,876
145,985
88,721
7,952
434,700
258,735
104,629
184,200
88,518
12,95854,959(269,300)

18,480,826

37(Thousands of yen)Amount(Liabilities)
Current liabilities
Notes payable-trade
Accounts payable-trade
Short-term loans payable
Income taxes payable
Provision for bonuses
Provision for shareholder
benefit program
Other
Non-current liabilities
Long-term loans payable
Lease obligations
Guarantee deposits received
Deferred tax liabilities for land
revaluation
Provision for retirement benefits
Asset retirement obligations
Total liabilities(Net assets)
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought
forwardTreasury shares
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities
Deferred gains or losses onhedges
Revaluation reserve for land
Subscription rights to shares
Total net assets
Total liabilities and net assets

1,234,269
169,818
318,489
399,400
42,58527,62021,000255,355
12,785,040
8,469,400
126,657
1,679,770
2,211,637
251,12246,45314,019,310(540,750)
1,500,000
503,375
503,270104(2,536,919)
375,000(2,911,919)(2,911,919)(7,206)
4,998,001
5,081
(82)
4,993,002
4,264
4,461,515
18,480,826

Non-Consolidated Statement of Income(April 1, 2017 - March 31, 2018)(Thousands of yen)
Description

AmountNet sales

3,453,186

Cost of sales

2,353,968

Gross profit

1,099,217

Selling, general and administrative expenses

791,592

Operating income

307,625

Non-operating income
Interest income

1,141

Dividend income

6,084

Reversal of allowance for doubtful accounts

5,300

Other

15,581

28,106

Non-operating expenses
Interest expenses

113,874

Other

93,219207,094

Ordinary income

128,637

Profit before income taxes

128,637

Income taxes-current

52,019

Income taxes-deferred(6,998)

Profit45,02083,61638