June 26, 2024

AIN HOLDINGS INC.
Kiichi Otani, President and Representative Director(Stock code 9627: Tokyo Prime Market, Sapporo Securities Exchange)
Inquiries: Toshihide Mizushima, Representative Senior Managing Director
TEL: +81-11-814-1000

Notice of Opinion of the Board of Directors Regarding the Shareholder Proposals

As announced in the “Notice Regarding the Receipt of a Shareholder Proposal” dated June 4, 2024, AIN
HOLDINGS INC. (“We” or the “Company”) received a document (the “Shareholder Proposal”) statingthat the Company’s shareholders (collectively, the “Proposing Shareholder”) are making proposals for theagenda of the 55th Ordinary General Meeting of Shareholders (the “General Meeting of Shareholders”)
scheduled to be held on July 30, 2024.
The Board of Directors of the Company, at its meeting held today, has resolved its opinion on the agenda
items and proposals regarding the Shareholder Proposal and hereby announces the following.

I.

The Proposing Shareholder

OASIS INVESTMENTS II MASTER FUND LTD. and OASIS JAPAN STRATEGIC FUND LTD.
II.

Agenda items proposed in the Shareholder Proposal

Agenda 1: Dismissal of two (2) Directors
Agenda 2: Appointment of four (4) Directors
Agenda 3: Determination of the fixed remuneration amount paid to each Outside Director
Agenda 4: Determination of Remuneration for Granting Restricted Shares to Outside Directors
III.

Outline of the proposals stated in the Shareholder Proposal and reasons for the proposals

As described in the “Shareholder Proposal” attached hereto as Appendix.
The attached “Shareholder Proposal” is a transcription of the original statements contained in the
Shareholder Proposal submitted by the Proposing Shareholder, with some adjustments in the format.
IV.

Opinion of the Board of Directors of the Company Regarding the Shareholder Proposal

The Board of Directors of the Company opposes all agenda items and proposals of the Shareholder
Proposal.

1

V.

Reasons for opposition to the Shareholder Proposal

1． Introduction
As noted during the financial results briefing held on June 12, 2024, the group of the Company (the “OurGroup” or the “Group”) achieved the revised plan for the fiscal year ended April 30, 2024 and generated
record-high results, with net sales and operating profit respectively increasing by 11.5% and 27.7% year
on year on a consolidated basis. We would like to express our sincere gratitude to our customers, business
partners, shareholders, and employees for their support.
Our Group will continue to build on its dispensing pharmacy business, centered on the operation ofdispensing pharmacies, and cosmetic and drug store business, centered on the development of high-valueadded, distinctive stores, to become a company that makes people feel "glad to have AIN in this town,"
and to become the "No. 1" group, both in name and reality, for all stakeholders.
In the fiscal year ending April 30, 2025, We will continue to aggressively open new stores (increasingfrom 1,312 to 1,384 locations) as We strive to achieve steady growth in the future through investments,
including M&As. We would appreciate your continued support.
It’s against this backdrop of steady growth and development that the Proposing Shareholder has submitted
agenda items and proposals to dismiss the Company’s outside directors and nominate new outside director
candidates.
However, the Board of Directors of the Company has thus far achieved a steady track record of successand has responded appropriately to various problems that have arisen from time to time. The Board of
Directors of the Company wishes to continue to operate the Company with the management team it
believes best suit to lead the Company and therefore opposes all proposals set forth in the Shareholder
Proposal.
We respectfully request that you, our shareholders, have confidence in the Board of Directors of theCompany and vote “FOR” the Company's proposals and “AGAINST” the Shareholder Proposals.

2． Summary of the Board of Directors' opinion on each agenda item and proposal(1) In agenda item 1, the Proposing Shareholder argues that the Company's independent outside
directors, Mr. Junro Ito (“Director Ito”) and Mr. Shigeru Yamazoe (“Director Yamazoe”) “lackindependence” and should be “immediately dismissed” because these two directors keeping theirpositions as independent outside directors is “harmful to the Company.”
However, as described below, both Director Ito and Director Yamazoe are independent and have,with their respective expertise, surely contributed to improving the Company’s corporate value
and securing the common interests of the shareholders, so there is no reason to dismiss both
directors “immediately.”
In particular, the Proposing Shareholder states, “In view of the fact that the scandal occurred
while members from companies having capital and business alliances with the Company havelong been “independent” outside directors, there is an urgent need to appoint individuals who are
not from companies having capital and business alliances [original text] and who have no special
interests with the Company, and who have relevant expertise and experience and will contribute2

to enhancing the Company's corporate values.” However, the incident (the “Case”) where officers(now retired) of the Group were arrested on suspicion of obstructing an auction related to a public
contract and convicted in the first trial in connection with the proposal-based competitive bidding
conducted by KKR Sapporo Medical Center in November 2020 for on-site pharmacies cannot be
attributed to the fact that “members from companies having capital and business alliances with
the Company [original text]” serve as outside directors or to the independence of outside directors.
Therefore, the Proposing Shareholder’s claim cannot be grounds for dismissing both directors. It
is also not clear why the Proposing Shareholder demands that, out of all outside directors, only
Director Ito and Director Yamazoe be dismissed.
The occurrence of a compliance incident such as the Case is deeply regrettable to the Company,
and we sincerely apologize for it again. We will continue to review and implement what We needto do in order to prevent any similar incident from ever occurring again. To this end, as describedin II. 1 and II. 2 of Attachment 1 “Opinion on Each Agenda Item and Proposal (Details),” theCompany has conducted a third-party investigation and made every effort to prevent a recurrence.
Both directors have fulfilled their roles as board members in making decisions and supervisingsuch actions.
For the above reasons, the Board of Directors of the Company opposes the proposal to dismiss
Director Ito and Director Yamazoe (Agenda 1).
As described in I. 1 of Attachment 1 “Opinion on Each Agenda Item and Proposal (Details),”
Director Ito and Director Yamazoe are scheduled to retire from the director of the Company upon
expiration of their terms of office at the conclusion of the General Meeting of Shareholders.
Therefore, the dismissal of both directors at the General Meeting of Shareholders will have nopractical significance.
(2) In agenda item 2, the Proposing Shareholder expresses doubts about the objectivity, neutrality,and professionalism of the investigation into the Case (the “Investigation”) conducted by theinvestigation team (the “External Investigation Team”) comprised of outside attorneys. They
propose that four candidates of the Shareholder Proposal (“Shareholder-proposed Candidates”)
be appointed as outside directors of the Company, on the grounds that there is an urgent need toappoint individuals who have no special interest in the Company, have relevant expertise andexperience, and will contribute to enhancing the Company's corporate value.
However, the Investigation was conducted by a team that was composed solely of experienced,
expert outside attorneys at law and did not include any officers or employees of the Group. The
team determined the scope of the investigation without any limits and conducted the investigation
over a long period of time without any restrictions on their methods of investigation. Therefore,
there is no room for doubt concerning objectivity, neutrality, and professionalism. We have fully
cooperated with the investigation team, and there is no reason to doubt its objectivity, neutrality,and professionalism. The fact that the Proposing Shareholder presents an assessment of the caseas if a problematic investigation had been conducted is nothing less than a manifestation of theintention to present a one-sided and misguided assessment.
As noted above, neither the facts the Proposing Shareholder uses as a basis for their assessment
nor their assessment are true. In addition to that, the Company deems all four Shareholder-3

proposed Candidates unfit to serve as its outside directors in light of the one-on-one interviews
conducted by the Nomination and Remuneration Committees of the Company with all of them.
The Nomination and Remuneration Committees of the Company found that, although they should
be highly evaluated for their knowledge, all of the candidates lacked experience as outside
directors of listed companies and possessed little knowledge about the Company and the industry
in which it operates. If the Shareholder-proposed Candidates become outside directors of theCompany, there will be overlap in the candidates with the knowledge and experience that theBoard of Directors of the Company deems necessary. This is why the Board of Directors of theCompany deems that the outside director candidates it will propose at the General Meeting of
Shareholders to be the best candidates. In light of the Case, the Company will also propose toenhance the Board of Corporate Auditors at the General Meeting of Shareholders.
For the above reasons, the Board of Directors of the Company opposes the proposal to appoint
four outside directors (Agenda 2).
(3) In agenda items 3 and 4, the Proposing Shareholder proposes that the amount of remuneration to
be paid to each outside director be determined at a general meeting of shareholders and thatallowances be made to grant stock compensation to outside directors. However, the Board of
Directors of the Company and Nomination and Remuneration cCommittees, based on a resolution
passed at a general meeting of shareholders, discuss and draft the range of monthly remunerationfor each position, details of performance and other evaluations related to bonuses, and the amountof non-monetary compensation for each position, and the President and Representative Director,
who is delegated by the Board of Directors of the Company, then decides the specific amounts to
be paid. As a result of these considerations, the Company does not grant stock compensation tooutside directors.
As noted in the guidelines published by the Ministry of Economy, Trade and Industry, theCompany believes that the burdens and responsibilities of outside directors vary and that it isimportant that an appropriate level of remuneration be set accordingly. Therefore, the Company
does not think it is appropriate to uniformly determine a specific payment amount at a general
meeting of shareholders. In addition, the Company is aware that there is a lot of debate aroundthe world over whether to provide stock compensation for outside directors, and presently theCompany does not consider it appropriate to provide such compensation.
For the above reasons, the Board of Directors of the Company opposes both the proposal todetermine the amount of individual fixed compensation for each outside director at a general
meeting of shareholders (Agenda 3) and the proposal to determine remuneration for granting
restricted shares to outside directors (Agenda 4).

For the reasons for the above objections, please see Attachment 1 “Opinion on Each Agenda Item and
Proposal (Details)," as well.

All of us in the Group will make every effort to meet the expectations of all stakeholders.
We hope that our shareholders will continue to place their confidence in our Board of Directors of theCompany and look forward to the sound and sustainable enhancement of our corporate value.
4

Attachment 1 “Opinion on Each Agenda Item and Proposal (Details)”(A) Opinion on Agenda 1: Dismissal of two (2) Directors

1.

Performance of the two directors and their contribution to improving the Company's corporate
value as well as securing the common interests of shareholders(1) Performance of Director Ito and his contribution to improving the Company's corporate
value as well as securing the common interests of shareholders
Director Ito brings extensive management experience after directing the company's
operations for many years as the representative director and chief sustainability officer ofSeven & i Holdings Co., Ltd., one of Japan's leading global retailers. In particular, he has
extensive knowledge about ESG, risk management, accounting and finance, social
marketing, and more. In fact, he has provided substantial advice and oversight onmanagement, such as measures to streamline the operation of each of the Group's stores,
thereby contributing significantly to improving the Company's corporate value.
In addition, Director Ito actively expresses his opinions at the Company’s board meetings
and fully contributes to the function of supervising and checking the Board of Directors’
performance of duties. To date, Director Ito, as a director of the Company, has never acted
in such a way that would prioritize the interests of our capital and business alliance partner,
Seven & i Holdings, over ours and has taken actions with due consideration to protecting
the interests of general shareholders.
Director Ito is scheduled to retire from the director of the Company upon expiration of his
terms of office at the conclusion of the General Meeting of Shareholders.
(2) Performance of Director Yamazoe and his contribution to improving of the Company's
corporate value as well as securing the common interests of shareholders
Director Yamazoe has been engaged in the management of a major trading company formany years and has extensive knowledge of global economic activities. In particular, he has
provided effective advice and supervision on the Company's management strategy as wellas finance and accounting, significantly contributing to the improvement of the Company's
corporate value. He has also fully served as the function of supervising and checking theexecution of business operations by freely expressing his opinions on decisions at theCompany’s board meetings.
Director Yamazoe is scheduled to retire from the director of the Company upon expirationof his terms of office at the conclusion of the General Meeting of Shareholders.

2.

Independence of the two directors
In appointing an independent outside director candidate, We place great importance on not only
the externality requirements of the Companies Act, but also whether the candidate will bring a
wealth of experience and deep insight into corporate management, etc. In addition, in order to5objectively assess the independence of outside directors, the Company has established the“independence criteria for outside directors and outside corporate auditors” (“Independence
Criteria”) and “immaterial criteria for the judgement that the relationship with the Company isunlikely to affect shareholder’s decision concerning the exercise of voting rights” (“Immaterial
Criteria”).
The Company's Independence Criteria and Immaterial Criteria provide more specific standards
than the independence criteria by Tokyo Stock Exchange (“TSE Criteria”) described in “Practical
Matters to Note on Securing Independent Directors/Auditors (Revised Version as of January2024).” The Board of Directors of the Company believes that assessing the independence ofoutside directors based on these criteria warrants sufficient rationality and objectivity.
Director Ito and Director Yamazoe do not violate the TSE Criteria, the Company's Independence
Criteria and Immaterial Criteria, and the Company has designated both directors as independent
officers specified by the Tokyo Stock Exchange. In fact, as stated in 1 above, both directors fully
perform the functions of supervising and checking the execution of the Company's business andact from a standpoint that is independent of management.

3.

Unreasonableness of the reasons for dismissal asserted by the Proposing Shareholder
The Proposing Shareholder cites the occurrence of the Case as one of the reasons for requesting
the dismissal of the two directors. However, Director Ito and Director Yamazoe fulfill their duties
adequately in accordance with their respective knowledge and skills, and it is not appropriate to
make claims suggesting that the independence of both Directors was the cause of the Case. The
Proposing Shareholder biasedly asserts that the independence of the Company's outside directors
is questionable and links the independence issue with the occurrence of the Case. This is a leapof logic that goes beyond any reasonable grounds for dismissing the two directors, and these are
not grounds for dismissing both directors.

4.

Conclusion
As noted above, both Director Ito and Director Yamazoe, as outside directors of the Company,
are fully independent and exercise their functions of supervision and check over the execution ofbusiness from a fully objective standpoint based on their backgrounds and skills. Furthermore,both directors are scheduled to retire from the director of the Company upon the expiration of
their terms of office at the conclusion of the General Meeting of Shareholders, and therefore, thedismissal of both directors will have no practical significance.
Therefore, the Board of Directors of the Company opposes Agenda 1, the proposal to dismiss
both directors.

(B) Opinion on Agenda 2: Appointment of four (4) Directors

With regard to the Investigation conducted by the External Investigation Team, the Proposing Shareholder
claims that “there is no guarantee that objectivity, neutrality, and expertise were actually ensured during
6the process for preparation of the investigation report.” The Proposing Shareholder then claims that “there
is an urgent need to appoint individuals who are not from companies having capital and business alliances[original text] and who have no special interests with the Company, and who have relevant expertise andexperience and will contribute to enhancing the Company's corporate values.”
However, in the first place, the Investigation requested by the Company was carried out by the External
Investigation Team. (i) This team consisting of professional experts did not include any officers or
employees of the Group. (ii) The team was led by a highly specialized and disciplined attorney who had
served as a former prosecutor for the Supreme Public Prosecutors Office and other relevant positions andhad no interest in the Group (such as signing an advisory contract) and was composed of attorneys at law
with extensive experience in multiple investigation committees. (iii) The External Investigation Team
investigated matters it deemed necessary, without any limitation or restriction on the scope of theinvestigation imposed by the Company. (iv) The External Investigation Team conducted an in-depth
investigation, including a digital forensic investigation, over a period of about seven months without any
limitation of means. Therefore, it goes without saying that objectivity, neutrality, and professionalism
were ensured. In the Investigation, the Company believes that the substance of the investigation isimportant, as described in 1 below, and that the label given to the investigation team, whether it be a“third-party committee” or “External Investigation Team,” has no real positive significance.
As described above, the Company believes that the Investigation was conducted properly and rigorously
while taking due consideration not to affect the progress of the investigation and trial related to theongoing criminal proceedings of the Case. In fact, the External Investigation Team has not pointed out
any lack of cooperation during the Investigation by the Group, and as a matter of fact, no officers or
employees of the Group were involved in the preparation of the contents of the investigation report on theCase (the “Investigation Report”).
On that basis, as described below, We believe that the candidates that the Board of Directors of theCompany will propose at the General Meeting of Shareholders are the best and most likely to “contributeto enhancing the Company's corporate value” as outside directors.
As noted in 3 below, the Board of Directors of the Company, after deliberation over the proposed
candidates by the Nomination and Remuneration cCommittees of the Company and discussion at theboard meeting of the Company based on the committees’ findings, concluded that the director candidates
proposed by the Company should bring new knowledge to the Board of Directors of the Company andcontribute to various measures to further improve the Company's performance, as well as bolster thecompliance system and governance structure. The Board of Directors of the Company also believes thatthese director candidates possess diverse and sufficient skills, including legal and compliance skills
relevant to the Case. In addition, each candidate not only has a solid track record in their respective fields
of expertise, but also has experience as an outside officer at other listed companies and valuableinternational experience.
As described above, a board of directors composed of director candidates proposed by the Board of
Directors of the Company will not only be well-balanced in light of the skills matrix, having members
equipped with the right skills and experience required for the Board of Directors of the Company, but also
appropriately sized to conduct substantive and active discussions.
On the other hand, although they might bring a wealth of knowledge to the table, the Board of Directors

7

of the Company deems all four Shareholder-proposed Candidates unfit to serve as its outside directors
since they have no experience as outside directors of listed companies and little knowledge about theCompany and the industry in which it operates. These Shareholder-proposed Candidates also did not seemto have any strong desire to serve as outside directors of the Company. In addition to that, as detailed
below, if these candidates become outside directors of the Company, there would be an overlap in thecandidates with the knowledge and experience that the Board of Directors of the Company deems
necessary. If the Shareholder-proposed Candidates were elected as outside directors, the size of the boardof directors would deviate significantly from the size the Board of Directors of the Company considers
to be appropriate. Considering all these factors as well as the individual circumstances of each candidate,
the Company has determined that their election as outside directors would not be desirable for theCompany.
Therefore, the Board of Directors of the Company opposes Agenda 2, the proposal to elect four
Shareholder-proposed Candidates.
Below is additional information on the reason for the proposal made by the Proposing Shareholder inagenda item 2.

1.

Occurrence of the Case and investigation(1) We announced the occurrence of the Case in its May 10, 2024 press release entitled “NoticeRegarding the Establishment of Special Website for Recommendations on Measures toPrevent Recurrence and Voluntary Return of Officer Remuneration” and in the notice on the
Company website released on the same date, entitled “Report on the investigation by theExternal Investigation Team comprised of external experts, and initiatives based on theirrecommendations on measures to prevent reoccurrence.”
First of all, the Board of Directors of the Company would like to once again apologize to allconcerned that the Case occurred.
(2) Following the arrest of the officers on August 31, 2023, We commenced an external
investigation on the same day. On October 5 of the same year, We as noted above, establishedthe External Investigation Team, consisting of five outside attorneys at law with a high levelof expertise and professional discipline with no interest in the Company, to investigate thefacts, including the existence of similar cases, determine the cause, and formulate measures
to prevent any recurrence. On May 9, 2024, We received the Investigation Report from theExternal Investigation Team.
(3) The Investigation Report points out that the cause of the Case lies in a lack of awareness on
the part of the executives and managers about the risks involved in the sales activities for
opening new pharmacies in the On-site Pharmacy business (awareness-related cause), as
well as deficiencies in the internal control and risk management system for the risks involvedin the sales activities for opening new pharmacies in the On-site Pharmacy business (systemrelated cause). At the same time, the Investigation Report points out that the Group's internal
control and internal audit functions are concentrated on risk management, efficiency,
compliance, etc. related to operations at each store and audits of those operations, but does
not indicate any deficiencies in the supervision of the establishment and operation of the8Group's overall internal control system. It rather recognizes a high level of awareness about
the importance of compliance with anti-bribery and anti-corruption measures as well as selfcontrol imposed by the Group whose business involves frequent contact with doctors andother personnel of national hospitals and the like, public officials, etc.
(4) The Proposing Shareholder claims that, with regard to the investigation of the Case by theExternal Investigation Team, “the Company did not disclose this fact for more than six
months” and that “governance by the outside directors ... has been inadequate” on the
grounds that the External Investigation Team is not a “third-party committee” and that “there
is no guarantee that objectivity, neutrality, and expertise were actually ensured during theprocess for preparation of the investigation report.” However, according to the following
facts, all these arguments are used to set up the issue in an external and abstract manner andare clearly misdirective.
The reason why We refrained from disclosing information on the Case was that We
were concerned that the content of the Investigation and its report could affect the trials
of individuals in criminal cases and was following the advice of its general counsel. In
fact, on April 18, 2024, the day the first ruling on the criminal case was issued, We
disclosed the background of the Case, the fact that We had established the External
Investigation Team to investigate the facts of the Case, including the existence ofsimilar cases, the investigation of the cause, the formulation of measures to prevent
any recurrence, and future policies. Upon receiving the Investigation Report from theExternal Investigation Team on May 9 of the same year, We disclosed the said reportand published its recommendations for measures to prevent a recurrence on thefollowing day. In this way, We have disclosed information in accordance with laws andregulations every time there has been an event that should be made known to the public,
with due consideration not to disclose erroneous or inaccurate information.



The Japan Federation of Bar Associations’ guidelines for third-party committees incorporate misconduct cases (“Third-party Committee Guidelines”) require a
corporation that has established an external investigation team to disclose information,such as the scheduled date of publishing investigation results with respect to theinvestigation by the external investigation team. In the case of the Investigation
conducted by the External Investigation Team, however, since We were unable toschedule such date in consideration of the possibility that the content of its
investigation report might affect individual criminal trials, We simply did not adopt the“formality” of following the Third-party Committee Guidelines, but otherwise, theCompany’s investigation team complied with the Third-party Committee Guidelines,
and the Investigation and the contents of Investigation Report are sufficiently objective,
neutral, and professional.

2.

Our approach to the Case
(1) Our Group is dedicated to improving the health and happiness of our customers bysupporting their health and beauty through its business activities. To attain this goal, which9is enshrined in the Group Statement, Our Group is primarily engaged in the dispensing
pharmacy business (business related to the operation of dispensing pharmacies andconsulting related to the establishment of dispensing pharmacies) and the cosmetic and drug
store business (business related to the management of cosmetics and drug stores). As eachof these businesses is responsible for the health of people, Our Group recognizes that it isessential to continue sound and transparent business activities that place the utmost
importance on compliance. The Internal Audit Office, which is under the direct control of
the President and is independent from business management, conducts on-the-spot audits toensure thorough compliance with relevant laws and regulations as well as internal rules andregulations. In addition, Our Group has established the Compliance Committee consistingof all Directors and Corporate Auditors to widely spread and establish corporate ethics andlegal compliance systems not only among the management but also all employees, and theSustainability Committee (chairperson: President and Representative Director) to further
strengthen CSR and ESG activities, and We have been working to enhance corporate
governance.
(2) Under such circumstances, the occurrence of a compliance incident such as the Case isdeeply regrettable to the Company, and we sincerely apologize for it. We will continue toreview and implement what Our Group needs to do in order not to cause a similar situation
again. Specifically, We disclosed that it would steadily implement the measures to prevent
recurrence, which was formulated on May 10, 2024, based on the findings of the External
Investigation Team and recommendations for measures to prevent recurrence. As measures
to prevent recurrence, the following measures have been implemented up to the date of thisPress Release disclosure (For details of other measures to prevent recurrence, please visit
our website “Report on the investigation by the external investigation team comprised ofexternal experts, and initiatives based on their recommendations on measures to prevent
reoccurrence.”).


Under the direction of President and Representative Director, Kiichi Otani, We strictly
and concretely implemented improvements for the executives and employees involvedin the on-site pharmacy business to prevent similar events from occurring again (reviewof the flow and establishment of prohibitions when making a proposal under the public
solicitation proposal method).



Revision of regulations and development of audit systems necessary to fulfill the roles
and responsibilities of the Compliance Committee more appropriately for the purposeof developing, disseminating, and establishing a compliance promotion system (inparticular, establishment of direct reporting lines from the Internal Audit Division to
the Board of Corporate Auditors, etc.).



Development of risk management rules necessary for strengthening risk management

Preparation and distribution of practical manuals for sales representatives (pocket
manuals describing responses to public medical institutions in sales activities)Conducting internal study sessions including legal considerations in sales activities
for executives and employees of the Group10

(3) The Board of Directors of the Company recognizes that promptly identifying and evaluating
situations such as the Case, and formulating, implementing and verifying measures toprevent recurrence are required responses to scenes where compliance issues and corporate
governance issues intersect. And We believe that it is a scene where We should show that its
corporate governance is fully functioning while ensuring that all stakeholders, including ourshareholders as well as customers, business partners and employees, are aware of the statusof the Group through fair and transparent disclosure.
From this perspective, the Board of Directors of the Company has already begun to further
strengthen the compliance promotion system promptly with the advice of experts. In
addition, the Board of Directors of the Company is implementing measures such as theanalysis of the cause of the Case in order to establish a further effective governance system.
However, there is no goal in the process of seeking better governance, and it is necessary tocontinuously examine and improve the system, and, once again recognizing these facts, We
will continue to work to strengthen the system. As part of this, We have decided to submit a
proposal for the election of candidates for outside corporate auditors, including Ms. Ayako
Sano, who is attorney at law and has expertise and experience in legal affairs and compliance,such as experience in the risk case review team as an outside director of another company,
to this General Meeting of Shareholders as a company proposal (For details, please refer to"Notice Concerning Election of Candidates for Directors and Corporate Auditors" dated
June 26, 2024), thus We also plan to renew the outside corporate auditors whose terms ofoffice expire at the conclusion of this General Meeting of Shareholders, and to expand thecorporate auditors’ audit to implement measures to prevent the recurrence of the Case, which
is a compliance case.
(4) The Proposing Shareholder has also claimed that the Case has already had a material adverse
effect on the Company's business, but please note that this is a factual error or speculation.
As of the date of this Press Release disclosure, there has been no substantial adverse effecton the Company's business. In fact, as of December 1, 2023, We were suspended frombidding for 55 cases by government agencies and local governments following the Case andwere unable to participate in public solicitation conducted by such organizations for a certain
period of time. However, 54 cases of nomination suspension have ended by the date of thisPress Release disclosure, and no auctions were conducted during this period, so, there wasno substantial impact on the Company's business. In addition, even after the Case wasreported, no particular change has occurred in customers or business partners who use Our
Group. We will continue to strive to repay our customers and business partners.

3.

From the viewpoint of improving the Company's corporate value, the Board of Directors of theCompany that is composed of candidates proposed by the Company is appropriate and best(1) In light of the Case, etc., the Board of Directors of the Company discussed candidates for
director after the Nomination and Remuneration Committees of the Company deliberated
on the candidate proposals, and took into consideration the findings from the Nomination
and Remuneration Committees of the Company, in order to further strengthen thecompliance promotion system and governance system, and in turn, improve the corporate
11

value of the Company.
As a result, at this General Meeting of Shareholders, the Board of Directors of the Company
decided to make a proposal relating to the election of director candidates who are listed in
the Attachment 2 “Summary of Director Candidates Related to Company Proposal” (the“Company Proposal”), as these candidates are expected to bring new expertise to the Boardof Directors of the Company and contribute to various measures for further improvement ofbusiness performance and strengthening of the compliance promotion and governancesystems.
If the director candidates related to the Company Proposal are approved as proposed at theGeneral Meeting of Shareholders, the skill matrix of the Board of Directors of the Company
will be as described in Attachment 2 “Summary of Director Candidates Related to Company
Proposal.”(2) The policy and process of the Board of Directors of the Company for selecting candidates
for director at the General Meeting of Shareholders are as follows.
Appointments, dismissals and nominations of senior management and director
candidates are comprehensively judged on the basis that they are capable of making
accurate and prompt decisions while taking into consideration the balance of expertise,
experience and abilities of the management and the Board of Directors of the Company
as a whole, and that each individual is popular and has insight into compliance withlaws and regulations and corporate ethics. In addition, the Board of Directors of theCompany will comprehensively consider the balance that can cover each function anddivision of the Company, the perspective of the right person for accurate and prompt
decision-making, and other factors in the election of Directors, and will also endeavor
to give consideration of diversity.



As mentioned in (A)1. and (A)2. above, in selecting candidates for independent outside
directors, the Company selects candidates who are independent and are specifically
expected to contribute to the enhancement of the corporate value of the Company. In
accordance with this policy, We have gone through a careful decision process from theviewpoint of improving the corporate value of the Company and securing common
interest of shareholders regarding the director candidates related to the Company
Proposal to be submitted to the General Meeting of Shareholders: after deliberation by
the Nomination and Remuneration Committees of the Company, with conducting thenecessary research including interviews with the candidates for director over a periodof approximately 10 months from September 2023 to June 2024, and reviewing thecomposition of the Board of Directors of the Company and the necessary talent.



The Nomination and Remuneration Committees of the Company were established asadvisory committees chaired by President and Representative Director Kiichi Otani
and composed of independent outside director Ms. Noriko Endo and Director Yamazoefor the purpose of enhancing the fairness, transparency, and objectivity of theprocedures pertaining to appointments, dismissals and nominations of directors. The
Nomination and Remuneration Committees of the Company have a system in which a12

majority of their members are independent outside directors to ensure their
independence and to enable them to provide accurate advice and recommendations.


In the process of considering the Company's proposals, the Nomination andRemuneration Committees of the Company interviewed each of the candidates
proposed by the Proposing Shareholder and conducted a face-to-face interview
regarding their expertise, understanding of the Company and the Company's businessand industry, relationship with the Proposing Shareholder, and views on being elected
as a director of the Company, etc. Based on the interview results, the Nomination andRemuneration Committees of the Company evaluated each candidate.

(3) Based on the above basic policy and process as well as the findings from the Nomination
and Remuneration Committees of the Company, the Board of Directors of the Company has
carefully discussed the proposal and determined that the candidates listed in the Attachment
2 “Summary of Director Candidates Related to Company Proposal” are the best candidates
for Director of the Company.
At the Board of Directors of the Company composed of the director candidates related
to the Company Proposal, five(5) out of the total number of 11 Directors are
independent outside directors (the ratio of independent outside directors rose from 36%
to 45%.); the supervisory functions are further strengthened compared to the past; andthe Board of Directors of the Company have an appropriate size and sufficient
supervisory functions for fulfilling discussions at the Board of Directors of theCompany. In addition, four(4) of the 11 directors will be female. In such a case, notonly will the ratio of female directors on the Board of Directors of the Company be
36%, which is much higher than the average of companies listed on the Prime Marketof the Tokyo Stock Exchange as of the end of July 2023 (approximately 13.6%), butalso the ratio of female directors will be 43% of the total number of executives of theCompany (14) including corporate auditors, which will enable the Company's
executives to get closer to being a management team where many women are active
and fulfill their talents.



The Board of Directors of the Company that will be composed of the director
candidates related to the Company Proposal continues to have management experiencein listed companies, broad expertise in finance, governance and human resource
development in organizations, and abundant skills and experience in the pharmacy andretail businesses. As described in the reasons for the election of the director candidates
related to the Company Proposal in the Attachment 2 “Summary of Director
Candidates Related to Company Proposal”, the Board of Directors of the Company
will continue to have the necessary and sufficient skills and experience to exercise thesupervisory function for the improvement of the Company's corporate value over the
medium to long term.

Moreover, in order to strengthen the Company's management structure, the following
competencies are required with high priority: (i) further enhancement of legal function
and compliance in light of this Case, etc., (ii) strengthening of skills in financial
strategies such as investment decision-making, including M&As, which has important13

significance for improving medium- to long-term corporate value of the Company,
which places the dispensing pharmacy business and cosmetic and drug store businessas its core business, and (iii) strengthening of skills in providing substantial advice andsupervision in store opening strategies and building sales floors for further growth andexpansion of the steadily growing cosmetic and drug store business, which is growing
steadily, with a focus on AINZ & TULPE, which is expanding its business by making
its product mixes and building sales floors unique from other stores. In accordance withthese requirements, the Company proposes the following three candidates for new
independent outside directors: (i) Ms. Mariko Watahiki (“Ms. Watahiki”), who has
served as a judge for long years and been involved in a large number of civil cases
including corporate legal affairs and labor issues. Through her experience in judicial
administration, she also has a record of accomplishment in organizational management
such as thorough establishment of compliance/governance, human resource
management/human resource development, and crisis management; (ii) Mr.
Nobumichi Hattori (“Mr. Hattori”), who, after experiencing supervising M&A
advisory services, is currently teaching at a graduate school on M&As and corporate
value assessment, etc. He has substantive expertise in corporate value assessment incapital markets and, from his experience as an outside director of another listedcompany, possesses a great insight into corporate management such as retail; and (iii)
Mr. Shigeki Kimura (“Mr. Kimura”), who has extensive management experience as adirector of a major retail business and possesses expertise related to the Company's
cosmetic and drug store business, as well as broad expertise and experience inaccounting management, legal affairs and compliance, risk management, etc.
In order to improve the corporate value of the Company over the medium to long term,in the dispensing pharmacy business and the cosmetic and drug store business, theCompany will expand the scale through the use of organic store openings and M&As,
promote its pharmacy and store management strategies such as improving its
specialization and expanding product selection, and strengthen its managementfoundation through human capital strategies, DX and capital finance strategies, andsustainability management. In addition, in consideration of the interests of shareholders,the Company has set a medium-term target of 13% ROE and a long-term target of 15%
ROE. In order to achieve these targets, it is necessary to improve profits through higher
business efficiency, implement measures to reduce SG&A expense ratios through scale
expansion, pursue further shareholder returns and capital efficiency through acquisitionof own shares and other measures, and grow business through strategic investments.
The Board of Directors of the Company believes that the Board of Directors of theCompany that is composed of the director candidates related to the Company Proposal
has sufficient skills and experience necessary for the realization of these measures andis the best structure from the viewpoint of achieving sound and sustainable growth,
improving corporate value over the medium to long term, and ultimately improving
common interests of shareholders.

(4) On the other hand, as outlined below, there are concerns regarding the election of thecandidates proposed by the Proposing Shareholder for outside director of the Company.
14

None of the candidates proposed by the Proposing Shareholder has experience as an
outside director of a listed company. In addition, it must be said that they do not havean active awareness of the characteristics of the Company's cosmetic and drug store
business as well as the dispensing pharmacy business, which is the core business of theGroup.
The Board of Directors of the Company does not necessarily consider executive
experience at other listed companies or expertise of the Company and the industry to
be a necessary condition for a new candidate for outside director. However, in light ofthe current status of the Company, which operates stores nationwide and has the largest
dispensing pharmacy business in the industry, and where AINZ & TULPE business is
rapidly expanding and is positioned as one of the Company's future focus areas,
candidates without such experience and expertise should have clear and specificreasons and grounds for the Company to believe that, without such experience andexpertise, they will be able to conduct substantial and sufficient activities during their
one-year term. However, the Company was not able to find such reasons and grounds
for each candidate and had to conclude that they do not meet preconditions to act as
outside director of the Company.
If the candidates proposed by the Proposing Shareholder become outside directors of
the Company, there will be overlap with the candidates for Director with expertise andexperience deemed necessary by the Board of Directors of the Company. In addition,
if the candidates proposed by the Proposing Shareholder become outside directors of
the Company, the skills matrix would be less balanced compared to that obtained when
only candidates proposed by the Board of Directors of the Company become outside
directors. There is also a concern that the size of the Board of Directors of the Company
would be deviated from that considered to be appropriate by the Board of Directors of
the Company.

In fact, as a result of interviews conducted by the Nomination and Compensation
Committees of the Company with each candidate proposed in the Shareholder Proposal,
we could not confirm that they are capable of demonstrating their abilities to enhance
the corporate value of the Company, as described below.
①

Mr. Hajime Yoshitake
Mr. Hajime Yoshitake is described as having expertise in compliance and internal
audit. In fact, the content of the explanation in the interview indicates his expertise,
which are highly respectful. However, for the roles when the Board of Directorsof the Company wants to get advice only on his field of expertise such as
consulting on internal audits and related matters from a specialized perspective,
he cannot be considered to be the most suitable candidate for outside director,
which is expected to provide a wide range of advice including management. As
described in 1. and 2. above, the Board of Director of the Company is already
implementing various measures in light of the Case to enhance compliancepromotion system and build more effective governance system. And as describedin (3) above, among the director candidates related to the Company Proposal, there
15

are the most suitable candidates from the viewpoint of strengthening complianceand internal audit of the Company, including Ms. Watahiki and Mr. Kimura. In
addition, if Mr.Hajime Yoshitake becomes an outside director of the Company,
there could be duplication of candidates for director with expertise and experience
deemed necessary by the Board of Directors of the Company.
②

Mr. Shogo Maeda
The Shareholder Proposal indicates that Mr. Shogo Maeda has expertise in financein general. However, according to his background and responses to interviews, his
experience is mainly related to asset management within the financial industry,and he did not provide specific explanations that he has abundant specificexperience and expertise in finance in general such as M&As.
We believe that an urgent priority for the Company, whose core business is thepharmacy business centered on dispensaries and the cosmetic and drug store
business centered on store development characterized by high added value, is toenhance skills in specific financial strategies, such as investment decision-making
including M&As, which are important measures to improve the medium- to longterm corporate value of the Company. Based on this view, the Board of Directorof the Company proposes to newly appoint Mr. Hattori, who clearly possesses
such skills and has a solid record of accomplishment in M&As, as a candidate
proposed by the Company. Mr. Hattori is evaluated as possessing sufficientknowledge of capital markets as well as expertise in investments such as M&As,
and has extensive experience as an outside director of a listed company. Therefore,
he is considered to be a candidate who can contribute to the improvement of theCompany's corporate value. In addition, if Mr. Shogo Maeda becomes an outside
director of the Company, there could be duplication of candidates for director withexpertise and experience deemed necessary by the Board of Directors of theCompany.

③

Mr. Alexander Dmitrenko
Mr. Alexander Dmitrenko is considered to be a legal expert and not in a position
to directly engage in business experience or corporate business execution. If We
want to acquire a legal expert related to compliance as an outside director rather
than as a legal advisor, etc. (for global expansion of the business), it should, with
the Case in mind, seek an individual with expertise and experience based onJapanese law. Therefore, as an outside director candidate, the Board of Directorsof the Company has proposed Ms. Watahiki. The Board of Directors of theCompany believes that it is optimal to utilize her skills in legal affairs andcompliance from an independent standpoint. In addition, if Mr. Alexander
Dmitrenko becomes an outside director of the Company, there could be
duplication of candidates for director with expertise and experience deemednecessary by the Board of Directors of the Company.

④

Mr. Kenji Shinmori

16

Mr. Kenji Shinmori is described as having experience and expertise in various
types of consumer business both in Japan and overseas. However, the drugstore
business he was in charge of and the dispensing pharmacy business and cosmetic
and drug store business that the Company operates are two completely different
business types in terms of their strategic positioning from the perspective of theirbrand image, product mixes, and building store floors. Individuals who can fully
demonstrate their roles as supervisors and checkers on the back of their familiarity
with the business are required to have experience and expertise different fromthose in the drugstore business. In addition, his experience and expertise do not
relate to a business that operates stores throughout Japan as the Group does. The
Board of Directors of the Company has proposed Mr. Kimura as a candidate withexpertise of the business conducted by the Company. He not only has extensive
management experience as a director of a listed company engaged in a major retailbusiness operating nationwide, but also has deep understanding in the Company's
cosmetic and drug store business, which is characterized by its unique productmixes and building sales floors. Mr. Kimura is considered to be a candidate who
can more contribute to the enhancement of the corporate value of the Company.
In addition, if Mr. Kenji Shinmori becomes an outside director of the Company,
there could be duplication of candidates for director with expertise and experience
deemed necessary by the Board of Directors of the Company.

4.

Conclusion
Based on the above basic policy and process, the Board of Directors of the Company has carefully
discussed each candidate. As a result, the Board of Directors of the Company has determined thatthe Board of Directors of the Company that is composed of the director candidates related to theCompany Proposal described in the Attachment 2 “Summary of Director Candidates Related toCompany Proposal” is appropriate and best for the Company to realize sound and sustainable growth,and to achieve improvement in corporate value over the medium to long term, as well as
improvement in common interests of shareholders.
Therefore, the Board of Directors of the Company opposes the proposal for Appointment of four(4) Directors (Agenda 2), which proposes the four candidates mentioned above.

(C) Opinion on Agenda 3 “Determination of the fixed remuneration amount paid to each
Outside Director”

1.

Reason for opposition(1) After discussion by the Nomination and Remuneration Committees of the Company and theBoard of Directors of the Company, the Company adopted a system in which the remunerationof the Company's directors consists of three combinations: (i) monthly remuneration, which
is fixed remuneration in accordance with the roles and responsibilities of the directors; (ii)bonuses, which are performance-linked remuneration that enhance the transparency and17

objectivity of the remuneration determination process and serve as performance incentives;and (iii) non-monetary remuneration, which aims to raise awareness of sustainable growthfrom the same perspective as shareholders. However, the remuneration for outside directors
shall be based on a remuneration structure appropriate to the roles and responsibilities ofsupervising the management of the Company from an independent and objective standpoint.
Specifically, only (i) monthly remuneration shall be paid.
(2) With respect to the amount of remuneration for each individual director, the Nomination andRemuneration Committees of the Company prepare drafts on the range of monthly
remuneration for each position, the content of evaluation of performance, etc. related tobonuses, and the amount of non-monetary remuneration for each position within the range ofthe maximum amount of remuneration determined by the General Meeting of Shareholders inadvance. After resolution by the Board of Directors of the Company on the drafts, thePresident and Representative Director is delegated to make decisions on specific content
within the scope of the resolution. As described above, the amount of remuneration for eachindividual outside director is also determined with the involvement of the Nomination andRemuneration Advisory Committees of the Company, whose independence is ensured, andby a process that ensures independence from the Board of Directors of the Company, whichis the decision-making body for business execution.
(3) On the other hand, if the amount payable to each outside director is decided in advance at ashareholders meeting, as the Shareholder Proposal argues, it will be difficult to design flexible
remuneration in light of changes in the external environment and the market environment,
which, in turn, will hinder flexibility in accordance with the role and responsibility requiredof outside directors, disable the Company from determining the appropriate amount of
remuneration, and make it difficult to acquire excellent individuals. For example, the Practical
Guidelines for Corporate Governance Systems (CGS Guidelines) released by the Ministry of
Economy, Trade and Industry on July 19, 2022 also point out the importance of an appropriate
level of remuneration for outside directors in accordance with their burdens andresponsibilities. We believe that, in principle, remuneration for outside directors should also
be determined for each individual outside director in light of the fact that each of them is
responsible for a different role.
(4) The Proposing Shareholder claims that the current remuneration for outside directors “cannot
secure competent individuals,” but there is no doubt that the outside directors of the Company
at present are extremely capable individuals. The candidates for outside directors proposed by
the Company are also competent individuals. The Company has nominated them with the
expectation that they will contribute to the improvement of the Company's corporate value
based on their backgrounds and skills if they are elected as outside directors at the General
Meeting of Shareholders. Thus, the assumption that the Company cannot secure competent
individuals as outside director is incorrect.
(5) Note that there are some cases where the Proposing Shareholder submits a shareholder
proposal related to the determination of the amount of remuneration to each outside director(although the specific amount differs from the amount of the Shareholder Proposal) when the
Proposing Shareholder submits to other companies a shareholder proposal for the election of18

outside directors. It cannot be ruled out that this is one of the manifestations of a case where
the Proposing Shareholder, while aiming at the election of the outside directors it proposes,
offers certain conditions and assurances, at the stage of sounding out candidates, regarding
remuneration to be paid to its candidates if they are successfully elected as outside directors,
with an aim to motivate them to conform to the wishes of the Proposing Shareholder.

2.

Conclusion
Based on the above, the Board of Directors of the Company opposes the Remuneration Proposal(Agenda 3).

(D) Opinion on Agenda 4: Determination of Remuneration for Granting Restricted Shares to
Outside Directors

1.

Reason for opposition(1) At the 53rd Ordinary General Meeting of Shareholders held on July 28, 2022, the Company
passed a resolution to introduce a restricted stock compensation plan for directors excluding
outside directors, with the aim of providing incentives for continuously improving theCompany’s corporate value and promoting further value sharing with shareholders. This plan(the restricted stock compensation plan) excludes outside directors from the scope of
eligibility. As described in (D) 1 above, the Company presently uses a compensation systemfor outside directors consisting of only a basic remuneration paid in a fixed amount.
(2) We are aware that there is a lot of debate going on across the globe on the pros and cons ofproviding restricted stock compensation to outside directors, as stated in the Shareholder
Proposal, and believe that due consideration should be given to whether such compensation
is appropriate in the first place. In fact, voting against such a proposal to introduce a stockcompensation plan is currently the general practice of many institutional investors in Japan.
(3) Note that there are some cases, similar to(D) 1. (5) above, where the Proposing Shareholder
has submitted a shareholder proposal concerning the determination of the amount of
remuneration to each outside directors in order to grant them restricted shares (although thespecific amount differs from the amount stated in the Shareholder Proposal) when the
Proposing Shareholder submits to other companies a shareholder proposal for the election ofoutside directors. It cannot be ruled out that this is one of the manifestations of a case where
the Proposing Shareholder, while aiming at the election of the outside directors it proposes,
offers certain conditions and assurances, at the stage of sounding out candidates, regarding
remuneration to be paid to its candidates if they are successfully elected as outside directors,
with an aim to motivate them to conform to the wishes of the Proposing Shareholder.
(4) Based on the above, at least at the present stage, a consensus has not been formed to actively
introduce restricted stock compensation for outside directors, and it is appropriate for theCompany to closely monitor future discussions on compensation design, mainly by the
Nomination and Remuneration cCommittees, and the Company does not see any need to19

implement it.
(5) The Company has confirmed with the outside director candidates proposed by the Company
that they do not intend to accept restricted stock compensation if the proposal to elect them aswell as agenda item 4 is approved. Therefore, if agenda item 4 is passed, restricted stockcompensation will be granted only to outside director candidates proposed by the Proposing
Shareholder.

2.

Conclusion
Based on the above, the Board of Directors of the Company opposes the Remuneration Proposal(Agenda 4).

(E) Conclusion
Based on the above considerations, the Board of Directors of the Company opposes all agenda items
and proposals stated in the Shareholder Proposal.

20

Attachment 2 “Summary of Director Candidates Related to Company Proposal”

CandidaName

GenderKiichi Otani

Malete No.

1

Current positions and responsibilities in the Company

President and Representative Director

Representative Senior Managing Director
Male in charge of Store Development and Dispensing Pharmacy
Operationgs Management
Representative Senior Managing Director
Male in charge of Cosmetic and Drug Store Operations
Management, Operational Support and Digital Promotion
Representative Senior Managing Director
Femalein charge of External Affairs
DirectorFemaleDivision Manager of Personnel
DirectorMalein charge of Risk Management

2

Shoichi Shudo

3

Toshihide
Mizushima

4

Miya Oishi

5

Rieko Kimei

6

Nobuyuki Takakura

7

Noriko Endo

Female Outside Director

8

Hideki Kuriyama

Male

9

Mariko Watahiki

Female –10

Nobumichi Hattori

Male

–

11

Shigeki Kimura

Male

–

Reelection
New election
OutsideIndependent

Candidate
attributes

Reelection
Reelection

12/12(100%)

Reelection

12/12(100%)

Reelection
Reelection
Reelection
Reelection
OutsideIndependent
Reelection
OutsideIndependent
New election
OutsideIndependent
New election
OutsideIndependent
New election
OutsideIndependent

Outside Director

Candidate for Director to be reelected
Candidate for Director to be newly elected
Candidate for outside Director
Independent officer as stipulated by the Tokyo Stock Exchange

21

Attendance atBoard ofDirectors
meetings forthe fiscal year
2023
12/12
(100%)

12/12(100%)
12/12(100%)
10/10(100%)
11/12
(92%)
10/12
(83%)
–

–

–

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
July 1980

President and Representative Director of Otani
Corporation (now AIN HOLDINGS INC.)
Founder and Director of Daiichi Medical Testing
Laboratories Co., Ltd., Asahikawa (now AINHOLDINGS INC.)
President and Representative Director
Managing Director of the Company
President and Representative Director (current
post)

Nov. 1981

July 1983
May 1985
May 1988

1

Number of theCompany’s shares
owned

3,239,704 shares
Kiichi Otani(July 19, 1951)
Reelection
Number of years in office at theconclusion of this general
meeting of shareholders: 44
years
Attendance at Board of Directors
meetings: 12/12 (100%)[Reasons for nomination]
Mr. Otani has always demonstrated excellent leadership and decisiveness in leading the Company, and has grown thedispensing pharmacy business of the Group into one of the largest in Japan. His proactive approach to the expansion of thebusiness has resulted in 24 consecutive years of growth as of the fiscal year ended April 30, 2024. As chairman of the
Sustainability Committee he has also promoted sustainable management and made significant contributions to increases incorporate value.
The Company proposes Mr. Otani as a candidate for Director because of his management experience and knowledge infinancial affairs, sustainable management and both businesses, and because the Company believes that he is qualified forthe position of Director to continue to make decisions on management policy and corporate strategy and to supervise theexecution of business operations.

22

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Mar. 1982

Joined Daiichi Medical Testing Laboratories Co.,
Ltd. (Asahikawa, now AIN HOLDINGS INC.)
Division Manager of Corporate Planning of theCompany
Director and Division Manager of
Administration of AIN MEDICAL SYSTEMS
Inc. (now AIN HOLDINGS INC.)
Department Manager of Kansai Sales,
Dispensing Pharmacy Business of the Company
Director
Managing Director
Division Manager of Dispensing Pharmacy
Business
Senior Managing Director
Representative Senior Managing Director(current post) in charge of Store Development
Chairman of Nippon Pharmacy Association(NPhA)
President and Representative Director of AIN
PHARMACIEZ INC. (current post)
In charge of Store Development and Division
Manager of Dispensing Pharmacy Operations
Management of the Company
In charge of Store Development and Dispensing
Pharmacy Operations Management (current
post)

May 1991
June 1994

Feb. 2000
July 2000
May 2003
May 2004

2

Shoichi Shudo
May 2012(November 16, 1959)
Nov. 2015
Reelection
Number of years in office at the May 2020conclusion of this general
meeting of shareholders: 24
Nov. 2023
years
Attendance at Board of Directors Dec. 2023
meetings: 12/12 (100%)
May 2024

Number of theCompany’s shares
owned

10,089 shares[Reasons for nomination]
Having previously served as the Division Manager of Corporate Planning of the Company, Mr. Shudo has taken
responsibility for investment decisions as the head of the Dispensing Pharmacy Business and of store development,
including M&A, he has contributed significantly to the expansion of the Group’s business through his wide-ranging
personal connections and his high-level coordination abilities.
The Company proposes Mr. Shudo as a candidate for Director because of his management experience and knowledge infinancial affairs and the Dispensing Pharmacy Business, and because the Company believes that he is qualified for the
position of Director to continue to make decisions on management policy and corporate strategy and to supervise theexecution of business operations.

23

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Apr. 1986

Joined Otani Corporation (now AINHOLDINGS INC.)
Department Manager of Drug Store, Cosmetic
and Drug Store Business of the Company
Director
Division Manager of Cosmetic and Drug StoreBusiness
Managing Director
Senior Managing Director and Division
Manager of Administration
President and Representative Director of
WHOLESALE STARS Co., Ltd. (current post)
Representative Senior Managing Director of theCompany (current post)in charge of Operating Management andOperational Support
In charge of Operating Management,
Operational Support and Information
Technology Management
In charge of Operating Management,
Operational Support and Digital Promotion
In charge of Cosmetic and Drug StoreOperations Management, Operational Supportand Digital Promotion (current post)

May 2000
July 2000
Feb. 2001
May 2003
May 2012
Nov. 20123

Toshihide Mizushima
Nov. 2015(March 10, 1960)
Reelection
Number of years in office at theconclusion of this general
July 2018
meeting of shareholders: 24
years
Attendance at Board of Directors
May 2020
meetings: 12/12 (100%)
Dec. 2023

Number of theCompany’s shares
owned

28,089 shares[Reasons for nomination]
Utilizing his strong leadership and decisiveness in charge of the management of the Dispensing Pharmacy Business,
Cosmetic and Drug Store Business, and Operational Support of the Company, Mr. Mizushima has appropriately promoted
business process improvement projects and the digital field, and contributed significantly to the improvement of
productivity in both businesses. As deputy chairman of the Sustainability Committee he has also promoted sustainable
management and made contributions to increases in corporate value.
The Company proposes Mr. Mizushima as a candidate for Director because of his management experience and knowledge
in financial affairs, sustainable management and both businesses, and because the Company believes that he is qualified forthe position of Director to continue to make decisions on management policy and corporate strategy and to supervise theexecution of business operations.

24

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
July 1993
May 2007
July 2008
Apr. 2011

Director of DAICHIKU Co., Ltd. (current post)
Managing Director
President and Representative Director
Vice President and Representative Director of
AIN MEDICAL SYSTEMS Inc. (now AINHOLDINGS INC.)
President and Representative Director
Director and Deputy Department Manager of
Dispensing Pharmacy Business of the Company
Managing Director
Division Manager of Operating Management
President and Representative Director of AIN
PHARMACIEZ INC.
In charge of Dispensing Pharmacy Operations
Management of the Company
Division Manager of Dispensing Pharmacy
Operations Management
Director of AIN PHARMACIEZ INC. (current
post)
Representative Senior Managing Director, incharge of External Affairs of the Company(current post)

Feb. 2012
July 2012
July 2014
Nov. 2015

4

Miya Oishi(August 7, 1960)
Reelection
Number of years in office at the May 2019conclusion of this general
July 2021
meeting of shareholders: 12
years
Attendance at Board of Directors May 2023
meetings: 12/12 (100%)
July 2023

Number of theCompany’s shares
owned

7,456 shares[Reasons for nomination]
As the President and Representative Director of a major subsidiary of the Company and the head of the Dispensing
Pharmacy Business, Ms. Oishi has contributed significantly to the expansion of the Group’s business scale through her
excellent leadership skills and strong sense of responsibility from a practical and multilateral perspective. As the person in
charge of materiality for the Dispensing Pharmacy Business, she has also contributed to increases in corporate value.
The Company proposes Ms. Oishi as a candidate for Director because of her management experience and knowledge insustainable management and both businesses, and because the Company believes that she is qualified for the position of
Director to continue to make decisions on management policy and corporate strategy and to supervise the execution ofbusiness operations.

25

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Dec. 1995

Joined Daiichi Medical Testing Laboratories Co.,
Ltd. (Sapporo, now AIN HOLDINGS INC.)
Department Manager of Merchandise, Cosmetic
and Drug Store Business of the Company
Department Manager of Personnel,
Administration Division
Division Manager of Cosmetic and Drug StoreBusiness and Department Manager ofMerchandise
Executive Officer
In charge of Personnel
Director (current post)
Vice President and Representative Director of
AYURA LABORATORIES Inc.
President and Representative Director
Director of AIN PHARMACIEZ INC. (current
post)
In charge of Personnel of the Company
Division Manager of Personnel (current post)

May 2003
May 2004
May 2009

5

Aug. 2009
Rieko Kimei
May 2013(February 26, 1962)
Reelection
July 2014
Number of years in office at the Sept. 2015conclusion of this general
meeting of shareholders: 10
July 2016
years
Feb. 2018
Attendance at Board of Directors
meetings: 12/12 (100%)
July 2018
May 2022

Number of theCompany’s shares
owned

6,325 shares[Reasons for nomination]
Having previously served as the person in charge of the Cosmetic and Drugstore Business, in her role as Division Manager
of Personnel she has demonstrated outstanding planning abilities and leadership by building an organization for investingin human capital and improving employee engagement, and reforming the personnel system, making significant
contributions to increases in corporate value. She has also worked to promote opportunities for women in the workplace,leading to major subsidiaries receiving Eruboshi certification and Platinum Kurumin certification.
The Company proposes Ms. Kimei as a candidate for Director because of her management experience and knowledge insustainable management and the Cosmetic and Drug Store Business, and because the Company believes that she isqualified for the position of Director to continue to make decisions on management policy and corporate strategy and tosupervise the execution of business operations.

26

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Apr. 1981

Joined Ministry of Health and Welfare (nowMinistry of Health, Labour and Welfare)
Director, Economic Affairs Division of Health
Policy Bureau, Ministry of Health, Labour andWelfareDirector, Pension Division of Pension Bureau,
Ministry of Health, Labour and Welfare
Director, General Affairs Division of Equal
Employment, Children and Families Bureau,
Ministry of Health, Labour and Welfare
Deputy Assistant Minister for International
Affairs, Minister’s Secretariat, Ministry of
Health, Labour and Welfare
Deputy Director General, Minister’s Secretariat,
Ministry of Internal Affairs and Communications(In charge of Public Enterprise)
Assistant Commissioner of the Fire and Disaster
Management Agency, Ministry of Internal
Affairs and Communications
Councilor for Pension Service, Minister’s
Secretariat, Ministry of Health, Labour andWelfareRetired from Ministry of Health, Labour andWelfareSenior Adviser of TEIJIN LIMITED
Teijin Group Corporate Officer, Deputy Chief
Social Responsibility Officer
Teijin Group Corporate Officer, Chief Social
Responsibility Officer, in charge of corporate
auditing department, and in charge of utilizationof factory sites
Teijin Group Corporate Officer, Chief Social
Responsibility Officer, and in charge of corporate
auditing department
Senior Adviser (part-time)
Adviser of the Company
Senior Managing Director of AIN
PHARMACIEZ INC. (current post)
Director in charge of Risk Management of theCompany (current post)

Aug. 2002

July 2004
Aug. 2007

July 2009

July 2010

July 20116

Sept. 2012
Nobuyuki Takakura(January 14, 1957)
July 2013
Reelection
Number of years in office at theconclusion of this general
Oct. 2013
meeting of shareholders: 1 year Apr. 2014
Attendance at Board of Directors
meetings: 10/10 (100%)
Apr. 2016

Apr. 2017

Apr. 2019
Apr. 2020
July 2020
July 2023

Number of theCompany’s shares
owned

1,198 shares[Reasons for nomination]
Helped by his abundant knowledge of CSR issues, Mr. Takakura has played a central role in the systematization ofsustainability management, including identifying material issues (materiality) for the Company. As the person in charge of
Risk Management at the Company he has also promoted the strengthening of risk management and compliance, and madesignificant contributions to increases in corporate value. The Company proposes Mr. Takakura as a candidate for Director
because of his knowledge in legal and compliance and sustainable management, and because the Company believes that
he is qualified for the position of Director to continue to make decisions on management policy and corporate strategy andto supervise the execution of business operations.

27

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
June 1994
Mar. 2006

7

Number of theCompany’s shares
ownedJoined DIAMOND, Inc.
Deputy Editor of Diamond Weekly,
DIAMOND, Inc.
Sept. 2013
Visiting Researcher at Policy Alternatives
Research Institute, University of Tokyo
Apr. 2015
Project Professor, Graduate School of Media andGovernance, Keio University
July 2018
Outside Director of the Company (current post)
June 2019
Outside Director of Hankyu Hanshin Holdings,
Inc. (current post)
Noriko Endo
200 shares
Apr. 2020
Specially Appointed Professor of Keio(May 6, 1968)
University Global Research Institute (current
Reelection
post)
OutsideMar. 2021
Outside Director of Techpoint, Inc.
Independent
Outside Director of Japan Elevator Service
Number of years in office at the June 2021
Holdings Co., Ltd. (current post)
conclusion of this general
Outside Members of the Board of NIPPON
meeting of shareholders: 6 years June 2022
TELEGRAPH AND TELEPHONE
Attendance at Board of Directors
CORPORATION (current post)
meetings: 11/12 (92%)
Apr. 2024
Professor of the Research Council, Waseda
University (current post)[Reasons for nomination and overview of expected roles]
Ms. Endo has a wealth knowledge through her journalistic activities as the editor of an economic magazine withresponsibility for numerous sectors, including retail and distribution. She is also well-versed in energy and environmental
problems as a result of her research into public policy as it pertains to energy, in which area she possesses a wide range of
insights. In addition, through her experience as an outside Director of other listed companies she has developed a deep
knowledge of corporate management in the IT, telecommunications, railroad, real estate, and other businesses. Since being
appointed outside Director of the Company, at meetings of the Board of Directors and at other times she has offered advice
mainly on business strategy and compliance.
The Company proposes Ms. Endo as a candidate for outside Director because of her knowledge in financial affairs, legal
and compliance, and sustainable management, and because the Company believes that she is qualified for the position of
Director to continue to make decisions on management policy and corporate strategy and to supervise the execution ofbusiness operations.
Reason for concluding that the candidate is independent
The candidate fulfills the requirements for an independent officer as provided for by Tokyo Stock Exchange, Inc., theindependence criteria for outside Directors and outside Corporate Auditors set out by the Company, and also the immaterial
criteria for the judgement that the relationship with the Company is unlikely to affect shareholder’s decision concerning theexercise of voting rights, and is thus deemed to have a high degree of independence. Until May 2018, Ms. Endo had anadvisory contract with the Company, but the advisory fees in question were less than 10 million yen per annum, and she
fulfills the above requirements.

28

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Apr. 2004
Apr. 2008
Nov. 2011
Nov. 2021
Jan. 2022
Apr. 2022

Assistant Professor of Hakuoh University
Professor (current post)
Manager of Hokkaido Nipponham Fighters
Manager of Japan National Baseball Team
Professor of Hokkaido Nipponham Fighters
Specially Appointed Professor of HokkaiGakuen University (current post)
Outside Director of the Company (current post)
Chief Baseball Officer of Hokkaido Nipponham
Fighters (current post)

July 2022
Jan. 2024

8

Number of theCompany’s shares
owned

Hideki Kuriyama– shares(April 26, 1961)
Reelection
OutsideIndependent
Number of years in office at theconclusion of this general
meeting of shareholders: 2 years
Attendance at Board of Directors
meetings: 10/12 (83%)[Reasons for nomination and overview of expected roles]
Mr. Kuriyama has a wide range of knowledge and experience regarding governance and human resource development inorganizations, having served as a manager of a professional baseball team and of the Japan national baseball team, and as aprofessor of faculty of business administration at universities, among other roles. Since being appointed outside Director of
the Company, at meetings of the Board of Directors and at other times he has offered advice mainly from the perspective ofinvesting in human capital management.
The Company proposes Mr. Kuriyama as a candidate for outside Director because of his knowledge in sustainable
management such as organizational governance and human capital management, and because the Company believes that
he is qualified for the position of Director to continue to make decisions on management policy and corporate strategy andto supervise the execution of business operations.
Reason for concluding that the candidate is independent
The candidate fulfills the requirements for an independent officer as provided for by Tokyo Stock Exchange, Inc., theindependence criteria for outside Directors and outside Corporate Auditors set out by the Company, and also the immaterial
criteria for the judgement that the relationship with the Company is unlikely to affect shareholder’s decision concerning theexercise of voting rights, and is thus deemed to have a high degree of independence.

29

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Apr. 1980
Mar. 20099

Number of theCompany’s shares
owned

Assistant Judge of the Tokyo District Court
Senior Judicial Research Official, the Supreme
Court of Japan (civil affairs)Mar. 2012
Chief Judge of the Utsunomiya District Court
July 2014
Chief Judge of the Yokohama Family Court
June 2015
Judge of the Tokyo High Court (Presiding
Judge)
Apr. 2016
President of the Sapporo High Court
Sept. 2018
President of the Nagoya High Court
Aug. 2020
Registered as an attorney at law
Aug. 2020
Joined Okamura Law Office (current post)
June 2021
Outside Director of Toshiba Corporation
June 2021
Outside Director, Member of Nomination
Committee and Member of GovernanceCommittee of LIXIL Corporation
Mariko Watahiki
June 2022
Outside Director, Member of Nomination– shares(May 2, 1955)
Committee, Member of Governance Committee
New election
and Member of Compensation Committee
OutsideOct. 2022
Chair of Expert Committee of Daiko Advertising
Independent
Inc.
Number of years in office at the June 2023
Outside Director, Chairperson of Compensation
conclusion of this general
Committee, Member of Nomination Committee
meeting of shareholders: - years
and Member of Governance Committee ofAttendance at Board of Directors
LIXIL Corporation
meetings: -/Aug. 2023
Chairperson of Third-party Investigation
Committee of Nihon University
June 2024
Outside Director, Chairperson of Nomination
Committee, Member of Compensation
Committee and Member of GovernanceCommittee of LIXIL Corporation (current post)
June 2024
President of Family Problems Information
Center(current post)[Reasons for nomination and overview of expected roles]
Ms. Watahiki has many years of experience as a judge, and in addition to having resolved numerous civil cases, including
some related to corporate legal and labor issues, she has served as the president of multiple high courts. She has a thoroughunderstanding of compliance and governance, and a long track record of involvement in organizational management insuch areas as personnel management, human resources development and crisis management. She has also experience as
Chairperson of Third-party Investigation Committee. The Company proposes Ms. Watahiki as a candidate for outside
Director because of her knowledge in legal affairs and compliance, and because the Company believes that she is qualified
for the position of Director to make decisions on management policy and corporate strategy and to supervise the executionof business operations.
Reason for concluding that the candidate is independent
The candidate fulfills the requirements for an independent officer as provided for by Tokyo Stock Exchange, Inc., theindependence criteria for outside Directors and outside Corporate Auditors set out by the Company, and also the immaterial
criteria for the judgement that the relationship with the Company is unlikely to affect shareholder’s decision concerning theexercise of voting rights, and is thus deemed to have a high degree of independence.

30

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Apr. 1981
June 1989

10

Number of theCompany’s shares
ownedJoined Nissan Motor Co., Ltd.
Joined New York Headquarters of Goldman
Sachs & Co.
Nov. 1998
Managing Director of Goldman Sachs (Japan)
Ltd. (now Goldman Sachs Japan Co., Ltd.)
Oct. 2003
Visiting Associate Professor of School ofInternational Corporate Strategy of Hitotsubashi
University
June 2005
Outside Director of Miraka Holdings, Inc. (now
H.U. Group Holdings, Inc.)
Nov. 2005
Outside Director of FAST RETAILING CO.,LTD. (current post)
Nobumichi Hattori
Oct. 2006
Visiting Professor of School of International– shares(December 25, 1957)
Corporate Strategy of Hitotsubashi University
New election
Apr. 2009
Visiting Professor of Graduate School of
OutsideFinance, Accounting and Law (now Graduate
Independent
School of Business and Finance) of Waseda
Number of years in office at the
University (current post)
conclusion of this general
Mar. 2015
Outside Corporate Auditor of Frontier
meeting of shareholders: - years
Management Inc.
Attendance at Board of Directors June 2015
Outside Director of Hakuhodo DY Holdings Inc.
meetings: -/(current post)
July 2016
Special Guest Professor of Graduate School ofBusiness Administration of Keio University
Apr. 2017
Guest Professor of Graduate School of Business
Administration of Keio University (current post)[Reasons for nomination and overview of expected roles]
Having gained experience in the supervision of the M&A advisory business at a major U.S. investment bank, Mr. Hattori iscurrently engaged in teaching M&A, corporate valuation, and other concepts at a graduate institute of education, and iswell-versed in corporate valuation in the capital markets. In addition, his experience as an outside Director at other listedcompanies has given him a deep knowledge of corporate management in the retail industry and other areas. The Company
proposes Mr. Hattori as a candidate for outside Director because it believes that his knowledge in financial affairs makes
him qualified for the position of a Director who performs the function of supervising the decision making of theCompany’s management policies and corporate strategies and the execution of business.
Reason for concluding that the candidate is independent
The candidate fulfills the requirements for an independent officer as provided for by Tokyo Stock Exchange, Inc., theindependence criteria for outside Directors and outside Corporate Auditors set out by the Company, and also the immaterial
criteria for the judgement that the relationship with the Company is unlikely to affect shareholder’s decision concerning theexercise of voting rights, and is thus deemed to have a high degree of independence.

31

Candidate
No.

Name
(Date of birth)

Career summary, positions and responsibilities in the Company,
and significant concurrent positions outside the Company
Mar. 1986
May 2013

Joined Seven-Eleven Japan Co., Ltd.
Division Manager of Financial Accounting andDivision Manager of Corporate Behavior
Promotion Office

Mar. 2014
May 2016

Executive Officer
Senior Officer of Secretary Office of Seven & i
Holdings Co., Ltd.
Executive Officer and Senior Officer of Corporate
Development Department

Dec. 2016

July 2017
Mar. 201911

Number of theCompany’s shares
owned

Outside Director of the Company
Division Manager of the Corporate Personnel
Planning of Seven & i Holdings Co., Ltd.
Shigeki Kimura
Director of Seven-Eleven Japan Co., Ltd.
– shares(March 16, 1962)
May 2019
Director of Seven & i Holdings Co., Ltd.
New election
July 2019
Retired as outside Director of the Company
Outside
Mar.
2020
In
charge of Affiliates Governance of Seven & i
Independent
Holdings Co., Ltd.
Number of years in office at the
Director, Senior Managing Executive Officer andconclusion of this general
Division Manager of Management of Sevenmeeting of shareholders: - years
Eleven Japan Co., Ltd.
Attendance at Board of Directors
Apr. 2020
In charge of President Office and Group Liaison
meetings: -/of Seven & i Holdings Co., Ltd.
May 2022
Retired as Director of Seven & i Holdings Co.,
Ltd.
Mar. 2024
Director, Executive Vice President and Division
Manager of Management of Seven-Eleven Japan
Co., Ltd. (current post)[Reasons for nomination and overview of expected roles]
As a Director of a major retailer, Mr. Kimura not only has abundant knowledge of management roles but also possesses
wide-ranging insights and experience in such areas as management accounting, and risk management. Furthermore, heserved as an outside Director of the Company between July 2017 and July 2019, and during this period offered advice
mainly on finance, compliance and governance at meetings of the Board of Directors and at other times. The Company
proposes Mr. Kimura as a candidate for outside Director because of his management experience, knowledge in financial
affairs, legal and compliance, and the Cosmetic and Drug Store Business, and because the Company believes that he isqualified for the position of Director to make decisions on management policy and corporate strategy and to supervise theexecution of business operations.
Reason for concluding that the candidate is independent
The candidate fulfills the requirements for an independent officer as provided for by Tokyo Stock Exchange, Inc., theindependence criteria for outside Directors and outside Corporate Auditors set out by the Company, and also theimmaterial criteria for the judgement that the relationship with the Company is unlikely to affect shareholder’s decision
concerning the exercise of voting rights, and is thus deemed to have a high degree of independence.
Seven-Eleven Japan Co., Ltd., where he is a Director, and subsidiaries of the Company, have transactions such as realestate leasing, however, the amount of such transactions is less than 1% of the annual consolidated net sales of bothcompanies, and therefore meets the above criteria.

32

(Notes)

Independent officer
Ms. Noriko Endo, Mr. Hideki Kuriyama, Ms. Mariko Watahiki, Mr. Nobumichi Hattori and Mr. Shigeki
Kimura are candidates for outside Director. The Company has submitted notification to the Tokyo Stock
Exchange that Ms. Noriko Endo and Mr. Hideki Kuriyama have been designated as independent officers asprovided for by the aforementioned exchange. If they are reelected, the Company plans for their designation
as independent officers to continue. The Company plans to notify the stock exchange concerning theappointment of Ms. Mariko Watahiki, Mr. Nobumichi Hattori and Mr. Shigeki Kimura as Independent
Officers.
Ms. Noriko Endo, Mr. Hideki Kuriyama, Ms. Mariko Watahiki, Mr. Nobumichi Hattori and Mr. Shigeki
Kimura fulfill the requirements for an independent officer as provided for by the aforementioned exchange,
the independence criteria for outside Directors and outside Corporate Auditors set out by the Company, andalso the immaterial criteria for the judgement that the relationship with the Company is unlikely to affectshareholder’s decision concerning the exercise of voting rights.

33

[Reference] The skill sets and main skills of Directors and Corporate Auditors after this general meeting ofshareholders
The Company has a business strategy of growth in both the Dispensing Pharmacy Business and the Cosmetic and Drugstore
Business, and after deliberations by the Nomination and Remuneration Committee regarding skills for providing supervisory
functions that contribute to increases in corporate value over the medium to long term, the Board of Directors has beenreviewing the required skills. Recently, the Board has made a partial review of the skill sets, adding “experience in financial
strategies such as investment decision-making, including M&A” to the skills content of “finance,” and changing “legal affairs
and risk management” to “legal and compliance,” and has identified them as follows.
Required skill

Management experience

Finance

Legal /
Compliance

Sustainable management

Dispensing Pharmacy Business

Cosmetic and Drug StoreBusiness

Details of skill
Has management experience in a listedcompany or core business company
Holds certified public accountant or tax
accountant qualifications, or has operational
experience in financial institutions or
accounting departments, or has experience infinancial strategy, such as investment
decisions, including M&A
Holds attorney at law qualifications, or has
experience as a corporate auditor, or has
operational experience in legal affairs, risk
management, internal audit, or compliancedepartments, or possesses specialist
knowledge
Has operational or management experienceof sustainable management, such as humancapital or environmental conservation, or
possesses specialist knowledge
Knowledge and experience of the
Dispensing Pharmacy Business, such as
market development (store operation,
development, implementation of new
initiatives, etc.), or healthcare policy(formulation and execution of strategies
aimed at revisions in laws and regulations,etc.)
Knowledge and experience of the Cosmetic
and Drug Store Business, including market
and product development, or branddevelopment

34

Reason for selecting
Necessary for building appropriate
management strategies for increasing
corporate value over the medium to longterm, and providing effective supervision of
execution by management
Necessary for achieving sound management
and promoting financial strategy that iscongruent with management strategy

Because a proper awareness andmanagement of various risks associated withcorporate activities and of compliance isnecessary for appropriate execution by
management
Necessary for the promotion of appropriate
management strategies to achieve sustainablegrowth of the business and increases incorporate value over the medium to longterm
Necessary for achieving a bird’s eye view ofthe business in general, including such issues
as healthcare industry insurance systems, andlegal regulations, and for effectively
supervising execution of business
Necessary for achieving a bird’s eye view ofthe business in general, including market
trends in the retail industry, and for
effectively supervising execution of business

The main skills of Directors and Corporate Auditors after this general meeting of shareholders when the Company Proposals
are approved and adopted as originally proposed are as follows:
Name

IndependenceManagement(for outside
experience
officers only)

Finance

Legal /
Compliance

Sustainable
management

Dispensing
Pharmacy
Business

President andRepresentative
－
●
●
●
●
Director
Kiichi Otani
Representative Senior－●●●
Managing Director
Shoichi Shudo
Representative Senior－
Managing Director●●●●
Toshihide Mizushima
Representative Senior－●●●
Managing Director
Miya Oishi
Director－●●
Rieko Kimei
Director－●●
Nobuyuki Takakura
Outside Director●●●●
Noriko Endo
Outside Director●●
Hideki Kuriyama
Outside Director●●
Mariko Watahiki
Outside Director●●
Nobumichi Hattori
Outside Director●●●●
Shigeki Kimura
Standing Corporate
Auditor－●●Koichi Kawamura
Outside Corporate
Auditor●●●Ayako Sano
Outside Corporate
Auditor●●Minako Mizutani(Note) This is an indication of the skills expected by the Company and does not represent all the skills possessed.

35

Cosmetic andDrug StoreBusiness
●

●

●
●

●

Experience, etc. providing the basis for skills
Management experience: President and Representative Director of the Company / Finance: Promotes financial strategy as
Representative Director / Sustainable management: Promotes sustainable management as chairman of the Sustainability
Committee / Dispensing Pharmacy Business: Holds pharmacist qualifications, founded and has driven the expansion of the business/ Cosmetic and Drug Store Business: Founded and has driven the expansion of the drugstore business
Management experience: Representative Director of the Company, President and Representative Director of AIN PHARMACIEZ
INC. / Finance: In charge of Store Development for the Company / Dispensing Pharmacy Business: In charge of Dispensing
Pharmacy Operations Management of the Company
Management experience: Representative Director of the Company / Finance: Promotes financial strategy as person in charge ofOperational Support/ Sustainable management: Promotes sustainable management as the deputy chairman of the Sustainability
Committee / Dispensing Pharmacy Business: In charge of Operating Management of the Company, President and Representative
Director of WHOLESALE STARS Co., Ltd. / Cosmetic and Drug Store Business: In charge of Cosmetic and Drug StoreOperations Management of the Company
Management experience: Representative Director of the Company, President and Representative Director of AIN PHARMACIEZ
INC. / Sustainable management: Promotes initiative as person responsible for the materialities of: contribute to local healthcare;safety, piece of mind and trust; ensure sound management base; cooperate with local communities and businesses / Dispensing
Pharmacy Business: Holds pharmacist qualifications,
Division Manager of Dispensing Pharmacy Operating Management of the Company / Cosmetic and Drug Store Business:
President and Representative Director of AIN PHARMACIEZ INC.
Management experience: Director of the Company, President and Representative Director of AYURA LABORATORIES Inc. /Sustainable management: as Division Manager of Personnel of the Company, leads initiatives for diversity and opportunities for
women in the workplace / Cosmetic and Drug Store Business: Division Manager of Cosmetic and Drug Store Business of theCompany and President and Representative Director of AYURA LABORATORIES Inc.
Legal and compliance: Person in charge of Risk Management, Chief Social Responsibility Officer at Teijin Group and CSR Officer,
experience having led responses of said group’s compliance and risk management efforts from a CSR perspective / Sustainable
management: Experience having played a central role in systematizing the Company’s sustainable management, experience having
led the promotion of CSR at Teijin Group as Chief Social Responsibility Officer and CSR Officer
Financial: Knowledge of international finance, fiscal policy, macro economy, and other areas as the editor of an economics
magazine / Legal and compliance: Research at university into risk and security governance / Sustainable management: Knowledgeof energy and environmental problems obtained through research into public policy as it pertains to energy
Sustainable management: Knowledge in organizational governance and human capital management, gained through efforts todevelop human resources as a manager of a professional baseball team and of the Japan national baseball teamLegal and compliance: Holds attorney at law qualifications, experience as a judge
Financial: Managing Director of Goldman Sachs (Japan) Ltd. (now Goldman Sachs Japan Co., Ltd.), Visiting Professor of Schoolof International Corporate Strategy of Hitotsubashi University, Visiting Professor of Graduate School of Business and Finance ofWaseda University, Guest Professor of Graduate School of Business Administration of Keio University
Management experience: Director of Seven & i Holdings Co., Ltd., Director of Seven-Eleven Japan Co., Ltd. / Financial: Division
Manager of Financial Accounting and Division Manager of Management of Seven-Eleven Japan Co., Ltd. / Legal and compliance:
Division Manager of Management of Seven-Eleven Japan Co., Ltd. / Cosmetic and Drug Store Business: Director of Seven & i
Holdings Co., Ltd., Director of Seven-Eleven Japan Co., Ltd.
Financial: Department Manager of Accounting Dept. and Corporate Auditor of AIN MEDICAL SYSTEMS Inc. (now AINHOLDINGS INC.), Standing Corporate Auditor of the Company / Legal and compliance: Department Manager of Administration
Dept. of the Company, Standing Corporate Auditor of the Company
Financial: Was employed by Goldman Sachs (Japan) Ltd. (now Goldman Sachs Japan Co., Ltd.), tax attorney procedures / Legaland compliance: Holds attorney at law qualifications, has experience as member of risk review team as outside director of anothercompany, outside audit & supervisory board member of another company
Financial: Holds tax accountant qualification

36

Appendix: “Shareholder Proposal”* The Shareholder Proposal is a transcription of the original statements contained in the Shareholder
Proposal submitted by the Proposing Shareholder, with some adjustments in the format.
I.

Proposed Agenda Items
Agenda 1: Dismissal of two (2) Directors
Agenda 2: Appointment of four (4) Directors
Agenda 3: Determination of the fixed remuneration amount paid to each Outside Director
Agenda 4: Determination of Remuneration for Granting Restricted Shares to Outside Directors

II.

Outline of the proposals and reasons for the proposals

1.

Agenda 1: Dismissal of two (2) Directors
The general reasons applicable to each of the proposals falling within Agenda 1 and Agenda 2 above are as follows:
Taking into account that there is a possibility that the Company's Stock Handling Rules require that reasonsprovided for each proposal must not exceed 400 letters in Japanese, we have drafted the reasons for Agenda 1 andAgenda 2 combined using less than 2400 letters in Japanese.
As publicized in the Company's press release dated April 18, 2024, former directors of the Company and its
subsidiary (the "Defendants") were arrested and charged with obstruction of public contract-related auctions, andsubsequently convicted (although the Defendants have since appealed). The Company explained that an
investigation team was set up on October 5, 2023, but the Company did not disclose this fact for more than six
months - until the press release dated on April 18, 2024, which was publicized in response to the guilty verdict
against the Defendants. The "investigation team" cannot be said to be a "third-party committee" following the"Third-Party Committee Guidelines" and the "Scandal Response Principles", which means there is no guaranteethat objectivity, neutrality, and expertise were actually ensured during the process for preparation of theinvestigation report (the "Investigation Report") by the investigation team.
From the perspective of corporate governance, the above scandal reveals the existence of serious problems in the
Company. In this regard, the Investigation Report clearly points out that the sales approach adopted by theCompany and its subsidiary, "can be viewed as illegal activities or, even if not so, as improper or wrong conduct,
not only from the view point of competitor companies, but also from the viewpoint of common sense, which may
evoke substantial reputational risk". Furthermore, it was revealed that such sales approach (i.e., proposal
replacement) had been used for other cases than the Case, such as Case X and Case Y, as well.
Additionally, the Investigation Report confirmed the fact that the Company's board has never, in substance,
reviewed "the legal and compliance risk with respect to the business activities for development of in-hospital
pharmacies" nor controlled nor supervised such business activities, which means that the Board of Directors of theCompany failed to develop effective corporate governance. The Investigation Report indicates the enhancementof governance by outside officers as a preventative measure against recurrence of incidents like the Case. The factthat enhancement of governance by outside officers should act as a preventative measure against such scandals
shows such governance by the outside directors to date has been inadequate. In this regard, individuals who lacksubstantive independence have assumed the position of the Company's "independent directors" for such a longtime and therefore, it cannot be said that the Company's governance has been working effectively, and this led tothe scandal. Therefore, it is necessary to invite competent outside directors who can truly exercise their governancefunctions and rebuild the Company's corporate governance structure as soon as possible.
For example, Mr. Yamazoe had been working for years and held the position of Senior Executive Vice President
and Vice Chairman in Marubeni Corporation ("Marubeni") which has a close relationship with the Company
37

since Marubeni's investment in Ain in 1999. The Company has continuously accepted more than seven (7)directors from among individuals who are working for (or had worked for) Marubeni from 1999 to date. Mr.
Yamazoe holds a position of director thanks to his long career at Marubeni and, thus, has a conflict in that he could
prioritize interests of Marubeni, a company has a business relationship with the Company, rather than the common
interests of the Company's shareholders.
Furthermore, Mr. Yamazoe once held an independent outside director position in FUJITEC CO., LTD. ("Fujitec"),
when Fujitec was accused of corporate governance issues regarding related-party transactions with Fujitec's
founding family. Mr. Yamazoe, as an independent outside director, held a lead position in the investigation andeventually concluded, as chairman of the board, that there were no issues with the board of directors' resolution
from either a legal or corporate-governance viewpoint. However, there were later claims that the investigation was
inadequate, so an additional investigation by a third-party committee was required. That ended with the abnormal
situation that the third-party committee abandoned the investigation saying they could not build a trust relationshipwith Fujitec management. Furthermore, Fujitec itself acknowledged a part of the suspicion of defamation andintimidation or other influence against candidates for director proposed through shareholder's proposals arose. Eachof these events occurred when Mr. Yamazoe was required to show his supervisory responsibility and explicitly
reveals his inadequacy as independent outside director.
Mr. Ito is a Representative Director of Seven & i Holdings Co., Ltd. ("Seven & i") which has been in a capital andbusiness alliance with the Company since 2008. Members from Seven & i, as well as Marubeni, have held director
positions for generations even before Mr. Ito became an outside director. Thus, Mr. Ito, like Mr. Yamazoe, has aconflict with the Company and the Company's general shareholders in that he could prioritize Seven & i's interests.
Outside directors are required to represent the common interests of all shareholders including minority shareholders,
independent from the management, but these two individuals lack substantive independence.
The Company has faced a critical event where the Defendants were arrested and charged with obstruction of public
contract-related auctions, and subsequently convicted in the first trial in relation to the Company's business anddrastic corporate governance structure reform is an urgent issue. In this situation, not only the fact that Mr. Yamazoeand Mr. Ito lack substantive independence (a fundamental requirement for proper function of outside directors),
but also past incidents show Mr. Yamazoe's inability to perform his supervisory responsibilities. It is necessary to
dismiss Mr. Yamazoe and Mr. Ito immediately since the two directors keeping their positions as "independent"
outside directors is harmful to the Company.
In view of the fact that the scandal occurred while members from companies having capital and business allianceswith the Company have long been "independent" outside directors, there is an urgent need to appoint individuals
who are not from companies having capital and business alliances and who have no special interests with theCompany, and who have relevant expertise and experience and will contribute to enhancing the Company's
corporate values. In order to achieve this purpose, Oasis proposes to appoint Mr. Hajime Yoshitake, Mr. Shogo
Maeda, Mr. Alexander Dmitrenko, and Mr. Kenji Shinmori, and as candidates for the Board of Directors.
(1) Proposal 1(A) Summary
Dismissal of Director Mr. Shigeru Yamazoe Shigeru(B) Reasoning
As given above(2) Proposal 2(A) Summary
Dismissal of Director Mr. Junro Ito(B) Reasoning
As given above
2.

Agenda 2: Appointment of four (4) Directors
The common reasoning for Agenda 2 is as given above. Each of the candidates is proposed to be approved to be adirector of the Company. Agenda 2 of this shareholder's proposal requires separate appointment of each candidate.

(1) Proposal 1(A) Summary
Appointment of Mr. Hajime Yoshitake as Director(B) Reasoning
As given above(C) Biography and other information about the candidate
Birthday: July 1, 1956
Hajime Yoshitake
Number of shares of the Company
owned: 0 Shares■Biography, position, responsibilities, and status of important concurrent positions
Apr, 1979
The Kyowa Bank Ltd. (currently Resona Bank, Limited.)
Apr, 1991
Manager, New York Branch, The Kyowa Saitama Bank, Limited,
Apr, 2002
Nihon Unisys, Ltd. (currently BIPROGY Inc.)
Oct, 2007
Part-time Lecturer, Professional Graduate School of Meiji University (current position)
Jun, 2008
Director, The Institute of Internal Auditors-Japan (current position)
Jun, 2009
Executive Officer and General Manager of Internal Audit Division, Resona Holdings, Inc.,
Jun, 2011
Full-time Company Auditor, Saitama Resona Bank Limited
Apr, 2013
Part-time Lecturer, College of Law of Nihon University
Jun, 2016
Full-time Outside, Independent Company Auditor, TAIYO YUDEN CO., LTD.
May, 2021
Advisor, Specified Non-profit Corporation Japan Platform
July, 2023
Special Advisor to International Internal Audit Standards Board, The Institute of Internal
Auditors, Inc.
May, 2024
Auditor, Specified Non-profit Corporation Japan Platform (current position)
July, 2024
The Institute of Internal Auditors, Inc. Institute Relations Committee Member (scheduled toassume the position in July 2024)<Status of important concurrent positions>Part-time Lecturer, Professional Graduate School of Meiji University
Director, The Institute of Internal Auditors-Japan
Specified Non-profit Corporation Japan Platform, Auditor
The Institute of Internal Auditors, Inc. Institute Relations Committee Member
There is no special interest between the candidate and the Company.
■Reasons for Nomination as a Director Candidate
Mr. Yoshitake has many years of experience as a company auditor in the private sector, as well as leading teachingpositions at educational institutions as an internal audit professional and as director of the Institute of Internal
Auditors-Japan. He is a leader in internal auditing and related fields in Japan. He also has experience working at
major financial institutions and IT vendors, and a wealth of expertise in finance and IT and DX.
In the Investigation Report addressing the case in which the directors of the Company and its subsidiary werearrested, it is confirmed that the Internal Audit Section of the Company had not conducted the necessary audit andwarning and, therefore, drastic improvement in the corporate governance system on a company-wide basis(including internal auditing) is now required. It is expected that Mr. Yoshitake will provide useful advice andsupervisory functions to the management of the Company based on his expertise and experience in corporate
governance including internal auditing cultivated over many years.
For these reasons, Oasis proposes to appoint Mr. Yoshitake as a Director.
Note: Mr. Hajime Yoshitake is a candidate for Outside Director.
(2) Proposal 2(A) Summary
Appointment of Mr. Shogo Maeda as Director.
(B) Reasoning
As given above(C) Biography and other information about the candidate
Shogo Maeda

Birthday: January 1, 1957

Number of shares of the Company
owned: 0 Shares■Biography, position, responsibilities, and status of important concurrent positions
Jul, 1981
Japan Equity Analyst at Overseas Investment Advisor Office, Nomura Securities Co., Ltd.
Oct, 1985
Investment Banking Group, New York Headquarter, Manufacturers Hanover Trust Company
Nov, 1987
Nomura Investment Management Co., Ltd. (currently Nomura Asset Management Co., Ltd.)
Sep, 1989
Senior Portfolio Manager, Nomura Investment Management Co., Ltd.
Sep, 1994
Head of Japanese Equities, Goldman Sachs Asset Management Co., Ltd.
Apr, 2002
Director, Asia-Pacific Equities CIO, and Head of Japan Equities, Goldman Sachs AssetManagement Co., Ltd.
Jan, 2006
Head of Japan Equities, Schroder Investment Management Limited
Dec, 2012
Director and Head of Japan Equities, Schroder Investment Management (Japan) Limited
Mar, 2018
Executive Director, The Grew Bancroft Foundation (current position)<Status of important concurrent positions>Executive Director, The Grew Bancroft Foundation
There is no special interest between the candidate and the Company.
■Reasons for Nomination as a Director Candidate
Mr. Maeda has held important positions, such as director, in various financial institutions, and has a deep expertisein finance in general and capital markets in particular.
The Company's stock price has been stagnant for a long period of time, and its total shareholder return (TSR) has
been significantly lower than TOPIX on a long-term basis. Although the Company is in an emergent situation as the
directors of the Company and its subsidiary were arrested, the Company's communication with investors wasinsufficient such that appropriate disclosure to investors concerning the investigation into such scandal was delayed.
Under these circumstances, as Mr. Maeda has a deep expertise in finance and capital markets, it can be expected that
Mr. Maeda can provide useful advice and supervision to the management of the Company, not only for
implementation of appropriate M&A and business investment, but also in considering actions for enhancing thecorporate value and dialogue with shareholders given that one of the Company's important business challenges is toengage in and/or respond to the future restructuring of the industry.
For these reasons, Oasis proposes to appoint Mr. Maeda as a Director.
Note: Mr. Shogo Maeda is a candidate for Outside Director.
(3) Proposal 3(A) Summary
Appointment of Mr. Alexander Dmitrenko as Director(B) Reasoning
As given above(C) Biography and other information about the candidate
Birthday: May 25, 1977
Alexander Dmitrenko
Number of shares of the Company
owned: 0 Shares■Biography, position, responsibilities, and status of important concurrent positions
Mar 2001
Roy Elliott O'Connor LLP
Oct 2006
Dewey & LeBoeuf LLP
Oct 2009
Sojitz Corporation
Jul 2013
Debevoise & Plimpton LLP
Sep 2015
Freshfields Bruckhaus Deringer LLP
October 2019
Counsel and Head of Asia Sanctions, Freshfields Bruckhaus Deringer LLP
Nov 2019
Chairperson, Japan Sub-Committee, Asia Advisory Committee, Temple Law School's Centerfor Compliance and Ethics (current position)
Jan 2020
Adjunct Professor, Temple Law School Japan Campus (current position)
May 2021
Counsel and Head of Sanctions, Freshfields Bruckhaus Deringer LLP
Nob 2021
Partner elect, Ashurst LLP
Jan 2022
Partner, Ashurst LLP (current position)

<Status of important concurrent positions>
Adjunct Professor, Temple Law School Japan Campus
Chairperson, Japan Sub-Committee, Asia Advisory Committee, Temple
Law School's Center for Compliance and Ethics
Partner, Ashurst
There is no special interest between the candidate and the Company.
■Reasons for Nomination as a Director Candidate
During his more than 20 years practicing law both inside and outside Japan, Mr. Dmitrenko has provided advice
to companies across Asia and, in particular, Japanese corporations, with respect to all aspects of cross-bordertransactions, compliance, and crisis management and also teaches at Temple Law School and has extensive expertisein this area. As the Company is in need of drastically improving its corporate governance system, Mr. Dmitrenko is
expected to provide useful advice and supervisory functions to the Company's management from both a legal andstrategic standpoint.
In addition, Mr. Dmitrenko undertakes the position of chairperson at a non-profit organization for sexual minorities(LLAN) and at the Tokyo English Life Line (TELL Japan) and, through these volunteer activities, has gained broad
expertise on diversity and human rights issues, areas relevant to the Company's business, and is expected to provide
useful advice and supervision to the Company in these areas.
For these reasons, Oasis proposes to appoint Mr. Dmitrenko as a Director.
Note: Mr. Dmitrenko is a candidate for Outside Director.
(4) Proposal 4(A) Summary
Appointment of Mr. Kenji Shinmori as Director(B) Reasoning
As given above(C) Biography and other information about the candidate
Birthday: June 2, 1959
Kenji Shinmori
Number of shares of the Company
owned: 0 Shares■Biography, position, responsibilities, and status of important concurrent positions
Apr, 1982
Sumitomo Corporation
Apr, 2006
Head of Human Resources, Sumitomo Corporation
Apr, 2010
Deputy General Manager of Lifestyle & Retail Business, Sumitomo Corporation
Apr, 2011
General Manager of Lifestyle & Retail Business Unit, Sumitomo Corporation
Apr, 2014
General Manager of Public Relations Department, Sumitomo Corporation
Apr, 2018
Executive Officer and General Manager of Public Relations Department, Sumitomo
Corporation
Apr, 2019
President & CEO, Jupiter Shop Channel Co., Ltd.
Apr, 2020
Advisor, Sumitomo Corporation
Apr, 2022
Special Advisor, Jupiter Shop Channel Co., Ltd.
Nov, 2023
Executive Director, Smileseed Cooperative Association (current position)<Status of important concurrent positions>Executive Director, Smileseed Cooperative Association
There is no special interest between the candidate and the Company.
■Reasons for Nomination as a Director Candidate
Mr. Shinmori engaged in consumer business at a trading house and has substantive expertise and experience invarious types of consumer business. In particular, Mr. Shinmori, as General Manager of the Lifestyle & Retail
Business Unit at Sumitomo Corporation, supervised the drugstore business operated by Tomod's Inc. and, thus, hasexperience in the Company's business area. Mr. Shinmori also held key positions in the corporate division of
Sumitomo Corporation.
The scandal the Company is now facing may require strategic reconstruction of its in-hospital pharmacy businessthat is a strategic pillar of the Company's business. Additionally, the issue of insufficiency of dialogue withstakeholders concerning crisis management has been raised. Based on his expertise in consumer business and thepharmaceutical industry, and his experience as General Manager of Public Relations Department, among otherpositions at one of the top Japanese companies, Mr. Shinmori is expected to provide useful advice and supervision
concerning the Company's management and disclosure.
For the above reasons, Oasis proposes to appoint Mr. Shinmori as a Director.
Note: Mr. Shinmori is a candidate for Outside Director.
3.

Agenda 3: Determination of the fixed remuneration amount paid to each Outside Director(A) Summary
We hereby propose to set 10,000,000 JPY as the fixed compensation amount paid to each outside Director
for each business year.
(B) Reason
In order to properly supervise the operation of the board of directors which operates under the strong
influence of the Company's founder, Mr. Otani, and to enhance corporate value, the Company must
appoint individuals who are significantly experienced, highly competent, and truly independent as outside
directors. To that end, the Company should pay outside directors fair compensation corresponding to theirrole and responsibility. However, the Company's compensation for outside directors has been around
5,000,000 JPY per annum on average for the past many years. This low compensation cannot securecompetent individuals. It is also necessary to increase the predictability of compensation in order to makethe outside director position attractive to people with truly high qualifications. Furthermore, by deciding
the amount payable to each Director at the shareholders' meeting, it may ensure transparency in thedecision-making process and may also improve the independence of the outside directors. Therefore, Oasis
proposes to set a fixed remuneration in the amount of 10,000,000 JPY per annum for each outside director.

4.

Agenda 4: Determination of Remuneration for Granting Restricted Shares to Outside Directors(A) Summary
While the Company adopted, as a separate stock compensation additional to cash-based remuneration, a
remuneration for granting shares with restriction on transfer, targeting Directors (other than Outside
Directors) with the upper limit of 50 million JPY and 50,000 shares per annum (the "Current Stock
Compensation Plan") at the 53rd Annual General Meeting of Shareholders held on July 28, 2022, theCompany should newly introduce a separate stock compensation plan (the "Plan"), targeting Outside
Directors, which is based on the Current Stock Compensation Plan, but making the following changes. The
Plan is another compensation arrangement, which is separate from "Proposal No. 4: Revision of
Remuneration Amount for Directors" and "Proposal No. 5: Determination of Remuneration for Granting
Restricted Shares to Directors (Excluding outside Directors)", which were approved at the 53rd Annual
General Meeting of Shareholders held on July 28, 2022.
(1) The content of the Plan
The remuneration to be paid to Outside Directors (the "Eligible Directors") for the purpose of
granting restricted shares under the Plan shall be monetary claims, and the total amount of such claims
shall be within 50 million JPY per year. Moreover, the Board of Directors will decide the specifictiming and allocation of payments to each Eligible Director.
The Eligible Directors shall contribute all of the monetary claims provided by this Plan as
contributions-in-kind based on resolution by the Board of Directors of the Company, and then theyshall receive the common stock of the Company issued or disposed of by the Company. The total
number of shares of common stock of the Company to be thereby issued or disposed of shall be
50,000 shares or less per year (provided, however, in the event where the common stock of theCompany undergoes a split (including the gratis allotment of the common stock of the Company) or
reverse split or other event which requires adjustment of the total number of shares of common stockof the Company to be issued or disposed of by the Company as restricted shares after the date of thePlan being approved and adopted, the total number of the common stock issued or disposed of shallbe adjusted within the appropriate range).
The amount to be paid per share will be decided by the Board of Directors within the range notconstituting an especially favorable price to the Eligible Director who receives the common stock,based on the closing price of the Company's common stock on the Tokyo Stock Exchange on thebusiness day immediately before each resolution of the Board of Directors (if the trading is notconducted on that day, the latest trading day prior to that). The issuance or disposal of the Company's
common stock and the contribution of monetary claims as contributions-in-kind shall be subject toexecution of an agreement for allotment of shares with transfer restrictions (the "Allotment
Agreement") entered into by and between the Company and the Eligible Director, which includes
the following terms:(2) Summary of the Terms of the Allotment Agreement(i) Transfer Restriction Period
An Eligible Director shall not transfer, render as collateral, or otherwise dispose of the Company's
common stock allotted under this Allotment Agreement (the "Allotted Shares") from the date ofreceiving the allotment until retirement from the position of Outside Director of the Company (the"Transfer Restriction Period") (the "Transfer Restriction").
(ii) Handling upon retirement
If an Eligible Director resigns from Outside Director of the Company before expiration of the term
determined by the Board of Directors of the Company in advance (the "Term of Service"), theCompany will, as a matter of course, acquire the Allotted Shares free of charge except for the casesof resignment due to expiration of his/her term of office or death, or any other justifiable reason.
(iii) Lifting of the Transfer Restriction
The Company shall lift the Transfer Restriction for all Allotted Shares when the Transfer
Restriction Period expires subject to the condition that the Eligible Director has been in the positionof Outside Director of the Company throughout his/her Term of Service. Provided, however, (i) if
the Eligible Director resigns from the position of Outside Director of the Company due tojustifiable reasons before expiration of the Term of Service, or (ii) if the Eligible Director resigns
from a position determined by the Board of Directors of the Company in advance after expirationof the Term of Service but before expiration of the Transfer Restriction Period for any reasons
other than justifiable reasons, the number of Allotted Shares subject to lifting of Transfer
Restriction and the timing for lifting the Transfer Restriction shall be reasonably adjusted asnecessary. Immediately after the Transfer Restrictions have been lifted in accordance with theabove mentioned, the Company will acquire, as a matter of course and free of charge, the Allotted
Shares for which the Transfer Restrictions have not been lifted.
(iv) Handling in case of group reorganization, etc.
Notwithstanding item (i) above, if (a) a merger agreement in which the Company becomes anextinguished company, (b) a share exchange agreement or a share transfer plan, in which theCompany becomes a wholly owned subsidiary, or (c) other items related to the Company's
reorganization is approved by the General Meeting of Shareholders of the Company (or by the
Board of Directors of the Company, if approval by the General Meeting of Shareholders of theCompany is not required for the organizational restructuring, etc.) during the Transfer Restriction
Period, the Company shall, prior to the effective date of the subject organizational restructuring
and by resolution of the Board of Directors of the Company, lift the Transfer Restrictions for thenumber of Allotted Shares reasonably determined based on the period from the start date of theTransfer Restriction Period to the date of approval of the relevant reorganization.
Immediately after the Transfer Restriction has been lifted in accordance with the above mentioned,
the Company will acquire, as a matter of course and free of charge, the Allotted Shares for which
the Transfer Restrictions have not been lifted.
(v) Other matters
Other matters concerning this Allotment Agreement shall be determined by the Board of Directorsof the Company.

(B) Reason for the proposal
The Company has already adopted an arrangement of the Remuneration for Granting Restricted Shares as
non-cash-based remuneration. However, such arrangement is available only to Directors other than Outside
Directors. The guidelines of the Ministry of Economy, Trade and Industry 1 mention granting stockcompensation of which the number of shares is not affected by performance as a key option for enhancing
Outside Directors' sense of ownership as members of the board and aligning their interests with those of theshareholders. Taking into account the case that, last year, the Director of the Company was arrested,
prosecuted, and convicted in the first trial, the Company is now facing a situation that requires improvementof governance, and, for the Company's mid- and long-term growth, it is indispensable for the Board of
Directors of the Company to work as one team including Outside Directors to aggressively undertake thenecessary actions aimed at enhancing the Company's corporate value. . To that end, the Company needs toadopt the Plan in order to retain exceptional candidates with rich diversity and have a sense of ownership as
Outside Directors.
END

1 Page 65 of the Ministry of Economic, Trade and Industry’s “Practical Guide for Corporate Governance System (CGS Guidelines)”(https://www.meti.go.jp/policy/economy/keiei_innovation/keizaihousei/pdf/cgs/guideline2022.pdf)