JSP : Notice Regarding Repurchase of Own Shares, Tender Offer for Repurchase of Own Shares and Dissolution of Capital and Business Alliance Agreement

	October 31, 2023
Company name:	JSP Corporation
Representative:	Tomohiko Okubo, President &
	Representative Director
Code number:	7942, Tokyo Stock Exchange Prime Market
Contact:	Kazuhiro Nakajima
	Executive Officer, General Manager of
	Corporate Planning Division
	Phone: [phone]

Notice Regarding Repurchase of Own Shares, Tender Offer for Repurchase of Own Shares and

Dissolution of Capital and Business Alliance Agreement

JSP Corporation (hereinafter, the "Company") hereby announces that the Company resolved at the Board of Directors meeting held today to repurchase its own shares and implement a tender offer (hereinafter, the "Tender Offer") as a specific method specified under the provisions of Article 156, Paragraph 1 of the Companies Act (Act No. 86 of 2005, as amended; hereinafter, the "Companies Act"), as applied pursuant to the provisions of Article 165, Paragraph 3 of the same Act, and the provisions of the Company's Articles of Incorporation.

In addition, the Company announces that in case MITSUBISHI GAS CHEMICAL COMPANY, INC. (hereinafter, "MGC"), the lagest shareholder and the parent company of the Company as of today, ceases to be the parent company of the Company after the Tender Offer, the "Basic Agreement on Capital and Business Alliance" (hereinafter, the "Basic Agreement") dated February 4, 2015 between the Company and MGC will be terminated, and the capital and business alliance based on the Basic Agreement will be dissolved.

I. Repurchase of Own Shares and Tender Offer of Own Shares

1. Purpose of the Repurchase

The Company regards the return of profits to shareholders as an important policy. Regarding the distribution of profits, the policy of the Company is to value stable dividends and to make decisions comprehensively, while securing retained earnings for future business development in accordance with the consolidated business results for each fiscal year. The articles of Incorporation stipulate that, in accordance with the provisions of Article 459, Paragraph 1 of the Companies Act, the Company may distribute dividends from surplus by a resolution of the Board of Directors. In accordance with the above policy, the dividend for the year ended March 31, 2023 was set at 50 yen per share (interim dividend : 25 yen, year-end dividend : 25 yen), resulting in a payout ratio (consolidated) of 58.9%.

In addition, it is stipulated in the Company's Articles of Incorporation that the Company may acquire its own shares through market transactions, etc. by a resolution of the Board of Directors instead of a resolution of the General Meeting of Shareholders, in accordance with the provisions of Article 165, Paragraph 2 of the Companies Act.

To date, the Company has repurchased its own shares as part of the implementation of a flexible capital policy. Specifically, as far as the Company is aware, as stated in the press release on share repurchases issued at the time, ① 300,000 shares (shareholding ratio at the time of the repurchase (Note 1) : 0.96%) at 167,994,500 yen during the period from October 30, 2008 to December 19, 2008, by means of a market

purchase on Tokyo Stock Exchange, Inc. (hereinafter, "Tokyo Stock Exchange") in accordance with a resolution of the Board of Directors meeting held on October 30, 2008, ➁1,234,200 shares (shareholding ratio at the time of the repurchase (Note 2) : 3.97%) at 1,158,913,800 yen on August 10, 2010, by means of off-auction own share repurchase trading (ToSTNeT-3) on Tokyo Stock Exchange in accordance with a resolution of the Board of Directors meeting held on August 9, 2010, were repurchaced by the Company respectively.

（Note 1）This is the ratio (rounded to two decimal places) based on the number of shares (31,352,710 shares) obtained by deducting the number of treasury shares (60,763 shares) held by the Company as of September 30, 2008, as stated in the Summay of Financial Statements for the Second Quarter of the 51st term filed on November 12, 2008, from the total number of shares issued (31,413,473 shares) as of September 30, 2008, as stated in the above Summay of Financial Statements for the Second Quarter.

（Note 2）This is the ratio (rounded to two decimal places) based on the number of shares (31,051,222 shares) obtained by deduing the number of treasury shares (362,251 shares) held by the Company as of June 30, 2010, as stated in the summay of financial statements for the first quarter of the 53rd term filed on August 11, 2010, from the total number of shares issued (31,413,473 shares) as of June 30, 2010, as stated in the above summay of financial statements for the first quarter.

In these circumstances, the Company was informed by MGC, the lagest shareholder and the parent company of the Company, of its intention to sell a part of the common shares of the Company (number of shares held as of July 26, 2023 and today : 16,020,882 shares, shareholding ratio (Note 3) : 53.75%) on July 26, 2023, based on the judgement that it is desirable for MGC and the Company to consider and promote their own growth strategies in the future to improve the corporate value of the group, as the efforts that can be made by both companies in the current relationship are limited and it is difficult to achieve results sufficient to maintain the Basic Agreement

（Note 3）The "shareholding ratio" means the ratio based on the number of shares (29,808,029 shares) obtained by deducting the number of treasury shares (1,605,444 shares) held by the Company as of September 30, 2023, from the total number of shares issued (31,413,473 shares) as of the same date, as stated in the "Summary of Financial Statements (Consolidated) for the Second Quarter of the Year Ending March 31, 2024〔Japanese GAAP〕" (hereinafter, the "Summary of Financial Statements for the Second Quarter of the Year Ending March 31, 2024") disclosed by the Company today, rounded to two decimal place. The same shall be applied hereinafter in the calculation of shareholding ratio.

After being contacted by MGC, the Company has considered comprehensively on the impact on the liquidity and market price of the Company's common shares in the event of temporal release of a large number of shares to the market, as well as the Company's financial situation, and has started specific discussions on the acquisition of the shares as treasury shares from July 31, 2023.

As a result, on August 21, 2023, the Company has concluded that the acquisition of the shares as treasury shares will contribute to improving the Company's capital efficiency including earnings per share (EPS) and return on equity (ROE), and will lead to a return of profit to shareholders. With regard to the specific method of acquiring its own shares, after careful consideration from the perspective such as (i) repurchasing of own shares in excess of a certain large quantity and amount, (ii) equality among shareholders, (iii) transparency of the transaction, (iv) the possibility of resulting in a reduction in the outflow of the Company's assets outside the Company as the common shares of the Company can be repurchased at a certain discount to the market price,

1. ensuring that shareholders are given a certain period for consideration and the opportunity to tender their shares while observing the market price trends, the Company has concluded on September 4, 2023 that the method of a tender offer is appropriate instead of the market purchase method through a financial instruments exchange. In addition, in determining the purchase price in the Tender Offer (hereinafter, the "Tender Offer

Price"), the Company considered a market price of the Company's common shares as the basis, from the perspective of clarity and objectivity of a criteria, by taking into consideration the fact that the Company's common shares are listed on a financial instruments exchange and thus have a market share price. The Company has concluded on September 20, 2023 that it would be desirable to repurchase the shares at a certain discount to a market price in order to limit the outflow of assets outside the Company as much as possible from the perspective of respecting the interests of shareholders who do not tender their shares in the Tender Offer and continue to hold the Company's common shares.

With regard to the discount rate, out of the 61 cases of tender offers for repurchaces of own shares announced between January, 2020 and October, 2023 (hereinafter, the "Cases") based on the consideration that it is objective and reasonable to refer to recent similar cases, the 38 Cases out of 61, which were the largest number, set a discount rate of around 10% (from 9% to 11%), and with regard to the price of the Company's common shares, which is the basis for the discount calculation, 50 Cases out of 61, which were the largest number, were based on the closing price of the common shares on the Tokyo Stock Exchange on the business day before the date of the resolution to implement a tender offer or the simple average closing price over the past one month or three months up to the same date. Based on these, on September 29, 2023, the Company approached MGC about the possibility of tendering their shares in the Tender Offer based on the lowest price among the closing price of the Company's common shares on October 30, 2023, which is the business day before the scheduled date of the Company's Board of Directors meeting which was considered to be the date of the resolution regarding the implementation of the Tender Offer (October 31, 2023), or the simple average closing price of the Company's common shares for 1 month up to October 30, 2023, or the simple average closing price of the Company's common shares for 3 months up to October 30, 2023, with a discount of 10% from the lowest price.

On October 3, 2023, the Company received a response from MGC stating that MGC intends to tender 3, 600,000 shares (shareholding ratio : 12.08%, hereinafter referred to as the "shares agreed to be tendered") of the Company's common shares held by MGC (number of shares held : 16,020,882 shares, shareholding ratio : 53.75%), if the Company resolves to implement the Tender Offer. On the same day, the Company was requested by MGC to reconsider the Tender Offer Price based on the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer with a discount of 7% from that price. In response, the Company considered that it was still appropriate to set a discount rate of around 10%, which was the most common discount rate in the Cases, and that, with regard to the price of the Company's common shares, which is the basis for the discount calculation, although it is acceptable to exclude the simple average closing price of the Company's common shares for 3 months up to the business day before the date of the resolution to implement the Tender Offer given that the average share price over a three-months period of time is likely to increase the possibility of no longer reflecting the most recent corporate value of the Company and valuation of the Company by the market compared with the average price for 1 month, from the perspective of allowing the Company's common shares to be repurchased at a certain discount to the market price even if the price of the Company's common shares fluctuated, the Company considered it appropriate to take the lower of the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer or the simple average closing price of the Company's common shares for 1 month up to the date of the resolution to implement the Tender Offer.

Based on the above considerations, on October 10, 2023, the Company approached MGC about the possibility of tendering their shares in the Tender Offer with the discount rate of 10%, and with regard to the price of the Company's common shares, which is the basis for the discount calculation, at the lower of the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer or the simple average closing price of the Company's common shares for 1 month up to the business day before the date of the resolution to implement the Tender Offer. On October 11, 2023, the Company was requested by MGC to reconsider the discount rate at 9% and the price of the Company's

common shares, which is the basis for the discount calculation, at the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer. In response, on October 13, 2023, the Company approached MGC about the possibility of tendering their shares in the Tender Offer with the discount rate of 10% as only 1 Case of the 38 Cases with a discount rate of around 10% had a discount rate of 9% and therefore the Company still considered it appropriate to set a discount rate at 10%, and with regard to the price of the Company's common shares, which is the basis for the discount calculation, at the lower of the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer or the simple average closing price of the Company's common shares for 1 month up to the date of the resolution to implement the Tender Offer from the perspective of allowing the Company's common shares to be repurchased at a certain discount to the market price even if the price of the Company's common shares fluctuated. On October 16, 2023, MGC informed that with regard to the price of the Company's common shares, which is the basis for the discount calculation, it was still preferred to be the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer, and that, on the other hand, it was possible to accept the Company's proposal for the discount rate of 10% provided that the price of the Company's common shares, which is the basis for the discount calculation, is the closing price of the Company's common shares on October 30, 2023, the business day before the date of the resolution to implement the Tender Offer.

In response, on October 24, 2023, the Company approached MGC about the possibility of tendering their shares in the Tender Offer with the discount rate of 10% and with regard to the price of the Company's common shares, which is the basis for the discount calculation, at the lower of the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer or the simple average closing price of the Company's common shares for 1 month up to the business day before the date of the resolution to implement the Tender Offer due to the same reasons as before. On the same day, MGC informed that it was difficult to accept the Company's proposal regarding the price of the Company's common shares, which is the basis for the discount calculation, and that MGC would like the Company to accept the MGC's proposal regarding the price of the Company's common shares, which is the basis for the discount calculation, as MGC had accepted the Company's proposal to set the discount rate at 10%.

In response, the Company considered the matter again on October 26, 2023, and the Company concluded that it was reasonable to accept MGC's proposal to set the price of the Company's common shares, which is the basis for the discount calculation, at the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer because, in light of the idea that it is reasonable to allow the Company's common shares to be repurchased at a certain discount to the market price as mentioned above, the closing price of the Company's common shares was 1,844 yen on the same date (October 26, 2023), which is the latest share price at the time of the consideration, and the simple average closing price of the Company's common shares for 1 month up to October 26, 2023 was 1,943 yen (rounded to the nearest yen. The same shall be applied hereinafter in the calculation of the simple average closing price) on the same date, and based on the current share price trend of the Company, it was considered unlikely that the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer would exceed the simple average closing price of the Company's common shares for 1 month up to the business day before the date of the resolution to implement the Tender Offer.

Based on the above considerations, on October 26, 2023, the Company informed MGC that the discount rate shall be 10% and that the Company accepted the price of the Company's common shares, which is the basis for the discount calculation, to be the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer.

In addition, on October 3, 2023, it was considered appropriate to set the number of shares to be repurchased in the Tender Offer at the number of shares agreed to be tendered plus a certain number of shares, because the implementation of the Tender Offer is based on the idea that the method of a tender offer that provides shareholders with a certain period of time to consider the offer and ensures that they have the opportunity to

tender their shares while observing trends in market prices is appropriate, although the Company does not expect the tendering by shareholders of the Company other than MGC, as the Tender Offer is to be made at a discount from the market price of the Company's common share. In light of the fact that 23 Cases out of 61, which were the largest number, set the number of shares to be repurchased at an around 10% (9% to 11%) above the number of shares to be tendered by a certain shareholder, the Company decided that 3,960,000 shares (shareholding ratio : 13.29%), which is 10% above the shares agreed to be tendered, shall be the number of shares to be repurchased in the Tender Offer.

The Company has entered into a tender offer agreement (hereinafter, the "Tender Agreement") with MGC on October 31, 2023 to tender 3,600,000 shares (shareholding ratio : 12.08%), a part of the common shares of the Company held by MGC as of today, in the Tender Offer (However, in the event that a third party (excluding

• a person who is expected to make a proposal that may damage the Company's corporate value after the acquisition of the Company's shares to the Company's management, ➁ a person who operates or intends to operate a business that competes or may compete with the Company and its subsidiaries and related companies, and ③ a person who falls under the category of anti-social forces or anti-market forces or is deemed to be at risk of falling under such categories in the Company's judgement other than the Company commences a tender offer (hereinafter, the "Third-party Tender Offer") for the Company's shares after entering into the Tendering Agreement and no later than 10 business days prior to the last day of the Tender Offer Period (hereinafter, the "Expiry Date of the Tender Offer") in the Tender Offer, and if MGC tenders 3,600,000 common shares of the Company held by MGC (hereinafter, the "Eligible Tendered Shares") in the Tender Offer (hereinafter, the "Tendering") no later than 5 business days prior to the expiry of the Tender Offer Period, and MGC does not subsequently withdraw from tendering and it is objectively and reasonably considered that the fulfilment of the obligation not to terminate the agreement related to the purchase of the tendered shares which has been concluded as a result of the Tendering is likely to constitute a breach of the duty of loyalty or the duty of care by the directors of MGC (however, the conclusion shall not be based solely on the superiority of the offer price or other consideration in the Third-party Tender Offer, and shall require a sincere decision based on the perspective of improving the Company's corporate value), MGC shall promptly (must be no later than 8 business days prior to the Expiry Date of the Tender Offer) notify the Company in writing after making such decision and the specific grounds (including written advice from independent lawyers) on which MGC has made such decision. In such case, the Company may, within 5 business days of receiving such notice, make a written proposal to MGC regarding changes to the terms of the Tender Offer, and during such period MGC shall hold discussions in good faith with the Company regarding the Tender Offer. MGC is not required to fulfil the above obligations only if it is objectively and reasonably considered that fulfilment of such obligations, even after considering the results of discussions with the Company in good faith, is likely to constitute a breach of the duty of loyalty or the duty of care by MGC's directors.) The Company has been informed that there are no such preconditions and that MGC intends to continue to hold the 12,420,882 common shares of the Company (shareholding ratio : 41.67%) that are not tendered in the Tender Offer at the time of the signing of the Tender Agreement.
  If the total number of the share certificates, etc. tendered in the Tender Offer (hereinafter, the "Tendered Shares") exceeds the number of shares to be purchased, the purchase, etc. of all or part of the exceeded shares would not be made, and the purchase, etc., would be conducted on a pro rata basis pursuant to Article 27-13, Paragraph 5 of the Financial Instruments and Exchange Act (Act No.25 of 1948, as amended; hereinafter, the "Act") applied mutatis mutandis in Article 27-22-2, Paragraph 2 of the Act, and Article 21 of the Cabinet Office Order on Disclosure Required for Tender Offer for Listed Share Certificates, etc. by Issuer (Ministry of Finance Japan Ordinance No. 95 of 1994, as amended; hereinafter, the "Ordinance"). In this case, the Company will acquire a part of the 3,600,000 shares agreed to be tendered, and the Company was informed by MGC that MGC intends to sell the Company's common shares that were tendered in the Tender Offer but could not be acquired by the Company on the market, etc. after the Tender Offer.

MGC is the largest shareholder and the parent company of the Company as of today, but if the Company purchases all the shares agreed to tendered in the Tender Offer, MGC's voting rights ratio (Note 4) will be 47.74%, and therefore MGC will no longer be the parent company of the Company after the Tender Offer and will be newly classified as an other affiliated company of the Company. In addition, if MGC ceases to be the parent company of the Company after the Tender Offer, the Basic Agreement (Note 5) will be terminated. If any of these events occur, the Company intends to disclose the information as soon as possible.

（Note 4）The term "voting rights ratio" means the ratio based on the number of voting rights (261,824 voting rights) obtainted by deducting the number of voting rights (36,000 voting rights) related to the number of shares agreed to be tendered (3,600,000 shares) from the number of voting rights (297,824 voting rights) as of March 31, 2023 as stated in the Securities Report of the 65th term filed on June 29, 2023, rounded to two decimal places. The same shall be applied hereinafter in the calculation of the voting rights ratio. In addition, the voting rights related to the common shares of the Company held by MGC's consolidated subsidiaries, Mitsubishi Gas Chemical Trading, Inc. (number of shares held : 58,250 shares), JAPAN FINECHEM COMPANY, INC. (number of shares held : 10,772 shares) and Japan U-PiCA Company Ltd. (number of shares held : 10,772 shares), are 796. In calculation of the voting rights ratio hereinafter, the number of voting rights related to indirect holdings through consolidated subsidiaries is included.

（Note 5）The summary of the Basic Agreement is as follows.

• Objective of the Basic Agreement

The Basic Agreement aims to realize synergies between the companies and increase corporate values of each company and thus enhance the corporate value of the group by strengthening profitability of both parties, creating and developing new businesses and improving management efficiency, etc. MGC will continue to respect the Company's management independence in entering into a capital and business alliance under the Basic Agreement.

• Details of the capital alliance

MGC will implement a tender offer (the tender offer for the Company's common shares implemented by MGC from February 5, 2015 to March 9, 2015 pursuant to the Basic Agreement, hereinafter referred to as the "Tender Offer by MGC") in accordance to the provisions of applicable law and the Basic Agreement. The Company will announce an opinion in favour of the Tender Offer by MGC (provided that it is left to the Company's shareholders to decide whether to tender their shares in the Tender Offer by MGC) and will not withdraw or change such opinion unless to do so would breach its legal duties as a director of the Company.

• Details of the business alliance

MGC and the Company shall discuss in good faith the details of the alliance and cooperation between the two companies with regard to various measures to create synergies in terms of research and development, manufacturing, sales, finance and administration, and shall work in good faith towards the realization and implementation of these measures.

• Prohibition, etc. on the purchase of additional shares or disposal of shares of the Company MGC and MGC's subsidiaries may purchase additional shares or dispose shares of the

Company only after the related parties have discussed the matter and reached a prior written agreement. The Company shall notify and consult with MGC in advance if the Company intends to carry out any action that would result in the number of shares of the Company held by the MGC group (MGC and its subsidiaries (but excluding the Company)) being less than 50% of the total number of shares issued by the Company. MGC will also maintain the listing of the Company's shares during the period of validity of the Basic Agreement.

• Management structure of the Company

The Company's various structures including governance structure and organizational and executive structure, management policies and strategies, and other various decisions are

entrusted to the Company's discretion. The Company will notify MGC in advance if the Company intends to carry out certain important actions. MGC may nominate three of the Company's Directors (one of whom shall serve as a President and Representative Director) and one of the Company's Audit & Supervisory Board members, in principle, from the Company's 57th Annual General Meeting of Shareholders in June 2015 onwards. In addition, these Directors and an Audit

• & Supervisory Board member of the Company designated by MGC may attend the Company's management meetings.

• Maintenance of the Company's trade name, etc. and brand

MGC shall maintain the trade name, head office address and brand of the Company, and shall not change them unless the Company changes at its own discretion.

• Effective Period

The effective period of the Basic Agreement shall continue until the Basic Agreement is terminated for reasons of a written agreement, breach of obligations under the Basic Agreement or the Company ceasing to be a consolidated subsidiary of MGC.

The entire funds required for the Tender Offer are to be financed by borrowing up to 8 billion yen (hereinafter, the "Bank Loan") from Sumitomo Mitsui Banking Corporation (hereinafter, the "Sumitomo Mitsui Banking") and the Bank Loan is to be received no later than 21 December 2023, the business day prior to the commencement of settlement of the Tender Offer, on condition of the completion of the Tender Offer and other conditions. As the Company's liquidity on hand on a consolidated basis was 18,263 million yen (Ratio of liquidity on hand :

1.71 months, Note 6) as stated in the Summary of Financial Statements for the Second Quarter for the Fiscal Year Ending March 31, 2024, and cash flows (operating cash flows for the year ended March 31, 2023 amounted to 8,725 million yen) generated by the future business of the Company are expected to accumulate to a certain extent, the Company considers that the Company will be able to repay the loans without affecting its financial situation or dividend policy even after the entire funds for the repurchase are financed by the Bank Loan, and the Company's future business operations, financial soundness and stability will be maintained after the Tender Offer is implemented.

（Note 6）The value (rounded to one decimal place) obtained by dividing the Company's liquidity on hand on a consolidated basis as of September 30, 2023, as stated in the "Summary of Financial Statements for the Second Quarter of the Year Ending March 31, 2024, by the monthly sales calculated from the Securities Report of the 65th term (consolidated sales for the year ended March 31, 2023 divided by 12 months).

Furthermore, if the Company ceases to be a consolidated subsidiary of MGC following the repurchase of own shares in the Tender Offer, the Basic Agreement will be terminated and therefore the capital and business alliance provided for in the Basic Agreement will be dissolved. Even if the capital and business alliance is dissolved, a negligible impact on the Company's performance is expected considering the Company's previous performance and it is considered to be desirable in the future to improve the corporate value of the group while both companies independently consider and promote growth strategies.

As of today, as MGC owns 16,020,882 common shares of the Company (shareholding ratio : 53.75%) and is the lagest shareholder and the parent company of the Company, the repurchase of its own shares from MGC in the Tender Offer is considered to be a material transaction with a controlling shareholder as defined in the Securities Listing Regulations of the Tokyo Stock Exchange. In addition, if the Company ceases to be a consolidated subsidiary of MGC following the repurchase of its own shares in the Tender Offer, the Basic Agreement will be terminated and therefore the capital and business alliance provided for in the Basic Agreement will be dissolved, which will also be considered as a material transaction with the controlling shareholder under the Securities Listing Regulations of the Tokyo Stock Exchange.

Under the Securities Listing Regulations of the Tokyo Stock Exchange, the Company is required to obtain an opinion to the effect that a matter will not undermine the interests of the minority shareholders from persons who have no interest in the controlling shareholder if the matter constitute a material transaction with the controlling shareholder. On October 10, 2023, the Company has consulted with the permanently installed Special Committee on Governanve consisting of four independent outside directors of the Company (Mr. Hisashi Shinozuka, Mr. Takayuki Ikeda, Mr. Kiyoshi Ito and Ms. Ryoko Sugiyama) who have no interest in MGC and are not likely to have a conflict of interest with minority shareholders (the "Special Committee on Governance") whether it would be disadvantageous to the Company's minority shareholders if the Company decides to enter into the Tender Agreement with MGC and to implement repurchase of its own shares in the Tender Offer, and if the capital and business alliance provided for in the Basic Agreement is dissolved in accordance with the termination of the Basic Agreement in case that the Company ceases to be a consolidated subsidiary of MGC by the repurchase of its own shares in the Tender Offer. On October 31, 2023, the Company has received a report from the Special Committee on Governance on the decision to conclude that it would not be disadvantageous to the Company's minority shareholders to enter into the Tender Agreement with MGC and to implement the repurchase of own shares in the Tender Offer, and to dissolve the capital and business alliance provided for in the Basic Agreement in accordance with the termination of the Basic Agreement in case that the Company ceases to be a consolidated subsidiary of MGC by the repurchase of its own shares in the Tender Offer.

（For a summary of the report, see "②Background of the calculation" in "(3) Basis for the calculation of the tender offer price" in "3. Summary of the Tender Offer" below.）

Based on the above considerations and discussions, the Company resolved at the Board of Directors meeting held today that, by a unanimous vote of all the Company's Directors who participated in the deliberations and resolutions (nine Directors excluding Mr. Tomohiko Okubo, Mr. Yoshikazu Shima and Mr. Tomoyuki Kiura), the Company shall repurchase its own shares and implement the Tender Offer as a specific method specified under the provisions of Article 156, Paragraph 1 of the Companies Act as applied pursuant to the provisions of Article 165, Paragraph 3 of the same Act, and the provisions of the Company's Articles of Incorporation, that the Tender Offer Price shall be set at 1,661 yen, which is with a discount of 10% from 1,846 yen, the closing price of the Company's common shares on October 30, 2023, the business day prior to the date of the Company's Board resolution (October 31, 2023) and that the number of shares to be purchased in the Tender Offer shall be 3,960,000 shares (shareholding ratio : 13.29%) which is 10% more than the 3,600,000 shares agreed to be tendered in order to provide shareholders other than MGC with an opportunity to tender their shares in the Tender Offer, after confirming that the closing price of the Company's common shares on October 30, 2023, the business day prior to the date of the Company's Board resolution, is 1,846 yen among the market prices of the Company's common shares. As Mr. Tomohiko Okubo and Mr. Yoshikazu Shima had worked at MGC and Mr. Tomoyuki Kiura is a specially appointed executive of MGC, in order to avoid any conflict of interest, the above three Directors of the Company did not participate in the deliberations and resolutions of the Company's Board of Directors regarding the implementation of the Tender Offer, nor did they participate in any discussions or negotiations with MGC regarding the terms and conditions of the Tender Offer on behalf of the Company.

As Mr. Hideki Honda, the Audit & Supervisory Board member of the Company, is also an employee of MGC, he did not participate in any of the deliberations of the Board of Directors meeting mentioned above and refrained from expressing his opinion on the resolution of the Board of Directors meeting mentioned above, in order to avoid any suspicion of a conflict of interest.

In determining the Tender Offer Price, the Company did not obtain a valuation report from a third party evaluator, because it was considered to be objective to use a market price as a reference when calculating and determining the Tender Offer Price as the Company's common shares are listed on the Prime Market of

the Tokyo Stock Exchange and thus have a market price, and because it was considered that acquiring common shares of the Company at a discount from a market price from MGC, the lagest shareholder and the parent company of the Company, would not be disadvantageous to minority shareholders of the Company.

The plan for the disposal, etc. of own shares repurchased in the Tender Offer has not been decided yet and will be disclosed as soon as a specific decision has been made.

2. Details of the resolution of Board of Directors meeting on the repurchase of own shares

(1) Details of the resolution

Share class	Total number of shares to be		Total repurchase price
	repurchased
Common shares	Up to 3,960,100 shares		Up to 6,577,726,100 yen

（Note 1）Total number of shares issued : 31,413,473 shares (as of October 31, 2023)

（Note 2）Ratio to the total number of shares issued : 12.61％（Rounded to two decimal places）

（Note 3）Repurchase period : November 1, 2023 through December 29, 2023

（Note 4）The total number of shares to be repurchased resoluted by the Board of Directors meeting is one unit (100 shares) added to the total number of shares to be repurchased, as it is possible that total number of shares to be repurchased would exceed as a result unit adjustments based on a pro rata basis if the total number of the Tendered Shares exceeds the total number of shares to be repurchased.

1. Listed share certificates, etc. related to the repurchase of own shares already acquired based on the resolution of Board of Directors meeting
   Not applicable.

3. Summary of the Tender Offer

(1) Schedule

	①	Date of Resolution by the	Tuesday, October 31, 2023
	Board of Directors Meeting
		Date of Public Notice of	Wednesday, November 1, 2023
		An electronic public notice will be posted, and this information will be
	②	the Commencement of the
	published in the Nikkei Shimbun.
		Tender Offer
		（Electronic publication address : https://disclosure2.edinet-fsa.go.jp/）
	③	Submisstion Date of the	Wednesday, November 1, 2023
		Tender Offer Notification
	④	Tender Offer Period	From Wednesday, November 1 to Thursday, November 30, 2023（20
	business days）
(2) Tender offer price
		1,661 yen per common share

1. Basis for the calculation of the tender offer price
2. • Basis of calculation

In determining the the Tender Offer Price, the Company considered the market price of the Company's common shares as the basis from the perspective of clarity and objectivity of a criteria, by taking into

consideration the fact that the Company's common shares are listed on a financial instruments exchange and thus have a market share price. On September 20, 2023, the Company has concluded that it would be desirable to repurchase the shares at a certain discount to the market price in order to limit the outflow of assets outside the Company as much as possible from the perspective of respecting the interests of shareholders who do not tender their shares in the Tender Offer and continue to hold the Company's common shares.

With regard to the discount rate, based on the consideration that it is objective and reasonable to refer to recent similar cases, 38 Cases out of 61, which is the largest number, set a discount rate of around 10% (from 9% to 11%), and with regard to the price of the Company's common shares, which is the basis for the discount calculation, 50 Cases out of 61, which were the largest number, were based on the closing price of the common shares on the Tokyo Stock Exchange on the business day before the date of the resolution to implement a tender offer, or the simple average closing price over the past one month or three months up to the same date. Based on these, on September 29, 2023, the Company approached MGC about the possibility of tendering their shares in the Tender Offer based on the lowest price among the closing price of the Company's common shares on October 30, 2023, which is the business day before the scheduled date of the Company's Board of Directors meeting which was considered to be the date of the resolution regarding the implementation of the Tender Offer (October 31, 2023), or the simple average closing price of the Company's common shares for 1 month up to October 30, 2023, or the simple average closing price of the Company's common shares for 3 months up to October 30, 2023, with a discount of 10% from the lowest price.

On October 3, 2023, the Company received a response from MGC stating that MGC intends to tender 3,600,000 shares agreed to be tendered (shareholding ratio : 12.08%) of the Company's common shares held by MGC (number of shares held : 16,020,882 shares, shareholding ratio : 53.75%), if the Company resolves to implement the Tender Offer. On the same day, the Company was requested by MGC to reconsider the Tender Offer Price based on the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer with a discount of 7% from that price. In response, the Company considered that it was still appropriate to set a discount rate of around 10%, which was the most common discount rate in the Cases, and that, with regard to the price of the Company's common shares, which is the basis for the discount calculation, although it is acceptable to exclude the simple average closing price of the Company's common shares for 3 months up to the business day before the date of the resolution to implement the Tender Offer given that the average share price over a three-months period of time is likely to increase the possibility of no longer reflecting the most recent corporate value of the Company and valuation of the Company by the market compared with the average price for 1 month, from the perspective of allowing the Company's common shares to be repurchased at a certain discount to the market price even if the price of the Company's common shares fluctuated, it was appropriate to take the lower of the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer or the simple average closing price of the Company's common shares for 1 month up to the date of the resolution to implement the Tender Offer.

Based on the above considerations, on October 10, 2023, the Company approached MGC about the possibility of tendering their shares in the Tender Offer with the discount rate of 10%, and with regard to the price of the Company's common shares, which is the basis for the discount calculation, at the lower of the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender Offer or the simple average closing price of the Company's common shares for 1 month up to the business day before the date of the resolution to implement the Tender Offer. On October 11, 2023, the Company was requested by MGC to reconsider the discount rate at 9% and the price of the Company's common shares, which is the basis for the discount calculation, at the closing price of the Company's common shares on the business day before the date of the resolution to implement the Tender