Takeover Defense

As a publicly traded company, our stock is subject to the free trade between and among shareholders and investors. The Company believes that, even in the event of the proposal of a takeover bid or similar of Company stock, the ultimate decision to buy or sell is that of the individual shareholder, and the Company will not categorically oppose the transaction.

However, among such large-scale purchases of, or tender offers for, Company stock, there is no shortage of cases that clearly, from the objectives implied, intend to damage Company corporate value or shareholder common interest, cases that may involve coercion of shareholders to sell their shares, cases in which the target company is not provided enough time or information to fully investigate the tender offer and/or make a counter-offer, etc.

We believe that persons in charge of making decisions related to Company finances and business policies should be those persons who fully understand and support Company management philosophies, the various sources of corporate value, and the relationship of trust with the stakeholders who support the Company; they must be persons who are dedicated to improving the mid- to long-term value of the corporate, as well as the common interest of our shareholders. Accordingly, the Company believes that any person who engages in a takeover bid or similar act that may damage corporate value and/or shareholder common interest is not appropriate as a person to be in charge of decisions related to financial or business policies of the Company.

Therefore, in the event that a person indicates the intent to engage in a takeover bid that includes the transfer of Company control, we believe that it is the responsibility of the Board of Directors to our shareholders, as the ultimate decision-makers, to require such bidder to either submit complete information related to the stock purchase terms, as well as management policy, business plans, etc. subsequent to such proposed purchase, for careful review by the Board of Directors and, as necessary, by shareholders, or to provide sufficient time to allow the Board of Directors to offer an alternative plan.

In reflection of the basic policies noted above, a resolution to continue “the defense against large-scale purchases of Company stock by certain shareholder groups” (“the Plan”) was passed during the May 13, 2010 meeting of the Company Board of Directors. The Plan provides a mechanism to prevent inappropriate parties from exercising control over policy decisions related to Company finances and/or business operations, ensuring the protection of Company corporate value and shareholder common interest. The Plan was approved at the 60th Annual General Shareholders’ Meeting held on June 29, 2010.
The Company shall continue to adhere to the Plan, ensuring the fair interest of our shareholders.

As stated above, the Plan was approved on June 29, 2010 during the annual general shareholders' meeting. The effective term of the Plan is three years subsequent to the date of resolution (annual general shareholders' meeting in June 2013); however, if the resolution is made at a general shareholders’ meeting or Board of Directors meeting to abolish the Plan before that date, the Plan will be terminated as of the date of the resolution.

The Plan may be terminated at any time by Board of Directors' resolution; accordingly, the Plan is not a “dead-hand” against corporate acquisition in which a majority of board directors are replaced. The articles of incorporation have established the term of directors to one year, and do not adopt staggered terms of service. Accordingly, the Plan is not a slow-hand plan designed to prevent corporate takeover. Furthermore, the Plan is designed to be triggered only when rational, objective conditions determined beforehand have been met. The Company has established an objective advisory organ to be used when the Plan is triggered or terminated. This advisory organ is an independent committee consisting of external directors and external corporate auditors to ensure a framework against the arbitrary initiation of the Plan by the Board of Directors.

Accordingly, the Plan is designed neither to harm shareholder common interest, nor to preserve the status of Company directors.