TAKEFUJI CORPORATION   15-1 Nishi-Shinjuku 8-chome,Shinjuku-ku, Tokyo 163-8654 Japan
October 25, 2006
For release    Immediately
Representative Hikaru Kondo, President
Contact Investor Relations
Tel: 81-3-3365-8011
Fax: 81-3-3365-8070
Stock Code No. 8564 TYOSE



Introduction of Countermeasures to Large-Scale Acquisitions of
TAKEFUJI CORPORATION Shares (Takeover Defense Measures)



TAKEFUJI CORPORATION (the "Company") announces as follows that at a meeting of its board of directors held on October 25, 2006, the Company's board of directors resolved to introduce a plan for countermeasures to large-scale acquisitions of the Company's shares (takeover defense measures) (the "Plan"), for the purpose of ensuring and enhancing the corporate value of the Company and, in turn, the common interests of its shareholders.

1.Basic policy regarding those who control the Company's financial and business policies
  (Defined as the basic policy regarding those who control the Company's financial and business policies according to Article 127 of the Enforcement Regulations of the Corporate Code-Ministry of Justice Ordinance, No. 12, 2006)
The Company believes those who control the Company's financial and business policies exist through free transactions in the market and therefore the Company's shareholders should make the final decisions as to whether to accept a proposal of a large-scale acquisition that would result in a transfer of the Company's ownership.
However, in our recent capital markets, there is an emergence of a trend towards unilateral and forceful acquisitions of large numbers of shares without obtaining the approval of the management of the target companies. There are some forms of corporate acquisition that benefit neither the corporate value of the target company nor the common interests of its shareholders: those with a purpose that would obviously harm corporate value of the target company and the common interests of its shareholders; those with the potential to substantially coerce shareholders into selling their shares; those that do not provide sufficient time or information for the target company's board of directors and shareholders to consider the condition of the large-scale acquisition or similar action, or for the target company's board of directors to make an alternative proposal; and those that require the target company to negotiate with the acquirer in order to procure more favorable terms for shareholders than those presented by the acquirer.
  The Company believes such a large-scale acquirer of the Company's shares or a person or company who proposes such an inappropriate action that would harm the corporate value of the Company and the common interests of its shareholders, including those mentioned above, is exceptionally inappropriate to control the decision of the Company's financial and business policies.


2.Measures to realize the basic policy
  The Company has already launched the following measures to improve the corporate value of the Company and the common interests of the shareholders to ensure that investors can continue to invest in the Company over the long term. The Company believes such measures will contribute to the realization of the basic policy described in 1. above.

2.1  Efforts to enhance the corporate value through a "mid-to-long-term business strategy"
  This year, the Company celebrated the fortieth anniversary of its founding. The Company has always gone back to its origins at such milestones and reviewed its management policies. With the Japanese economy heading for recovery, the general employment situation has improved and personal spending has become active. However, the Company believes that future prospects are extremely harsh in the consumer finance industry, with the expected amendment to the Money Lending Business Law, and the resulting downward adjustment of maximum interest rates and introduction of limitations to aggregate borrowings. In such an environment, the Company intends to focus on its company-wide effort to improve business results and corporate value, based on the fundamental principles that the Company has had since its foundation of truly "Customer First" and "Management Efficiency".
  Specifically, the Company will promote a diversification of its income sources by advancing into new businesses, such as the secured loan business and venture investments. The Company will further promote the effective use of capital and proactively consider M&A and new investments in the retail financing sector, such as credit card and catalog / online shopping businesses, which produce a high synergy effect when combined with the Company's core business. Furthermore, taking into consideration the fact that the foreign shareholding ratio reached approximately 57% as of the end of September 2006, the Company will further enhance its IR activities both within Japan and overseas, and practice prompt and on-going fair disclosure in order to improve the Company's transparency as a corporation.

2.2  Efforts to enhance the corporate value through "reinforcement of corporate governance"
  The Company has set down as an important challenge and has made efforts towards the "reinforcement of corporate governance" as a vital mechanism in the enhancement of the corporate value and the common interests of shareholders. Specifically, the Company has implemented the following measures:
(a) Enhancement of corporate governance
  The fundamental management principle of the Company is to endeavor to improve its corporate value, and the Company believes that, in order to realize this objective, it is essential to establish corporate ethics and enhance corporate governance. To this end, the Company has established the following "Takefuji Corporation - Ethical Charter," and by promoting awareness of the Charter, the Company strives to establish corporate ethics, thus improving management transparency, efficiency and soundness, promoting full compliance with laws and regulations, and further promoting prompt disclosure.

Takefuji Corporation - Ethical Charter
  • Our founding spirit of gratitude is the basis of our entire code of conduct.
  • We believe that we must be a group of people who are proud to be part of the enterprise that has created a consumer finance business that helps consumers with household financial management, and who are therefore needed and trusted by society.
  • The objective of our business activities is to provide our financial services based on a customer focus to serve the customer.
  • We will strive to ensure that all our corporate activities are compliant with the relevant laws, ordinances, and regulations, conducted in accordance with fair commercial practices, while enhancing transparency.
  • We will remain aware of our position and responsibility as a corporate citizen, increase our ethics to a high level and act in accordance with the conscience of society.


(b) Corporate governance structure (diagram)


  As shown in the diagram above, the Company has chosen the structure of a company with a board of corporate auditors, and has established the Board of Directors and the Board of Corporate Auditors as organs subordinate to the General Meeting of Shareholders, as well as a Compliance Committee comprised of external experts. In addition, the Company introduced the executive officer system on a full scale in June 2004 to enforce and enhance the functionality of executive administration. Moreover, with the establishment of the Executive Committee, the Company has structured a system allowing sufficient discussion and prompt decision-making with respect to management issues, etc.
  The Inspection Department, which is in charge of internal audit, performs, on a periodical and special basis, audits with respect to the company-wide compliance with relevant laws and ordinances, protection of personal information, and other internal management, and upon guidance and advice as required to improve such matters, reports the results of such audits to the directors and statutory auditors.

2.3  The Company has implemented the various measures described above focusing on the mid-to-long-term business strategy. The Company will strive to ensure and enhance the corporate value of the Company and the common interests of shareholders by continuing to ensure the implementation of such measures from a midi-to-long-term perspective.


3. Measures to prevent the Company's financial and business policies from being controlled by an inappropriate party according to the basic policy

3.1  Purpose of introducing the Plan
  Since its foundation in 1966, the Company has nurtured as well as led the consumer finance industry in Japan as an independent consumer finance company, and making compliance with laws and regulations the backbone of management under the founding philosophy of "Customer First" and "Managing Efficiency", the Company has formulated its business model focusing on the unsecured loan business while accumulating its own unique know-how and systems. On the occasion of the fortieth anniversary since the Company's foundation, which could be expressed as its "renaissance," the Company is confident that it can build an even more solid management system based on a stable financial base.
  The Company believes that ultimately its shareholders as a whole must make the decision on any proposed acquisition that would involve a transfer of corporate control mentioned in 1. above.
  Nonetheless, recently, there is an increased risk of harming the corporate value of the Company and the common interests of its shareholders by an inappropriate large-scale acquisitions of the Company's shares. The major shareholders of the Company as of the end of September 2006 are as set forth in Attachment 1. A large percentage of the Company's shares are held by foreign investors, and shares held by family members of the late Mr. Yasuo Takei, the Company's founder, or affiliated parties have become increasingly dispersed, and therefore it is highly probable that the shareholding percentage of each shareholder will also fluctuate in the future. Thus, although no specific threat of takeovers exists at this time, there is still the undeniable threat that inappropriate large-scale acquisitions of the Company's shares as described above may take place.
  Under such circumstances, in a greatly changing environment and intense competition surrounding the consumer finance industry, including amendments to legal systems and emergence of new court rulings, in order for the Company to continue to ensure and enhance its corporate values on a long-term basis, the Company must give full consideration to issues of compliance based on its corporate philosophy, while making proactive efforts to implement each of the measures described above, based on the assets accumulated over the years such as the Company brand and know-how, and a trusting relationship with its stakeholders, including its shareholders, customers, local community and employees. Unless the acquirer of a proposed large-scale acquisition would ensure and enhance these elements over the mid-to-long-term, the corporate value of the Company and the common interests of its shareholders would be harmed.
  Taking into account these circumstances, the Board of Directors has decided that it is necessary to introduce a mechanism that enables the shareholders to be provided with appropriate and sufficient information regarding the content of the large-scale acquisition, its influence on the Company or the Company's corporate group, content of the post-acquisition management and business plan policies for the Company and the Company group, its influence on the Company's customers, business partners, employees, and any other stakeholders in the Company and the existence or nonexistence of the alternative proposal to the business plan of the acquirer, furthermore to ensure necessary time and opportunity to consider fully such provided information.
  For the reasons stated above, the Company's board of directors resolved to introduce the Plan, for the purpose of preventing the Company's financial and business policies from being controlled by an inappropriate party according to the basic policy.

3.2  Plan outline
(a) Establishment of procedures for triggering the Plan
  For the purpose of ensuring and enhancing the corporate value of the Company and, in turn, the common interests of its shareholders, in the case that there is an Acquisition( defined in 3.3(a), 'Procedures for triggering the Plan' below. This definition is applied throughout this document.), in addition to allowing for requests to the person effecting the Acquisitions (the "Acquirer") to provide information in advance relating to the Acquisitions, and securing time to conduct information collection and consideration with respect to the Acquisition, the Plan also sets out procedures for presenting information such as plans and any alternative proposals of the Company's management to the shareholders, and for conducting negotiations with the Acquirers (for details see below at 3.3, 'Procedures for triggering the Plan').

(b) Use of a gratis allotment of Stock Acquisition Rights and the Independent Committee
  If an Acquirer effects an Acquisition without following the procedures set out in the Plan or otherwise acts in a way that is deemed to be harmful to the Company's corporate value or the common interests of its shareholders (for details of these requirements, see below at 3.4, 'Requirements for the gratis allotment of Stock Acquisition Rights'), the Company will allot stock acquisition rights having an exercise condition that does not allow the Acquirers to exercise and an acquisition provision to the effect that the Company may acquire the stock acquisition rights from persons other than the Acquirers in exchange for shares in the Company (the main details of such stock acquisition rights are set out below at 3.5, 'Outline of the gratis allotment of Stock Acquisition Rights'; "Stock Acquisition Rights") by means of a gratis allotment of stock acquisition rights (prescribed by Article 277 onwards of the Corporation Law of Japan) to all shareholders at that time.
  In order to eliminate arbitrary decisions by directors in implementing the Plan, decisions relating to the implementation or non-implementation of the gratis allotment of Stock Acquisition Rights, or the acquisition of the Stock Acquisition Rights, will be made through the judgment of an Independent Committee composed only of members who are highly independent from the management of the Company, such as (i) an outside director of the Company, (ii) an outside auditor of the Company, or (iii) other experts (such experts must be experienced corporate managers, parties with experience of government officials, parties with knowledge of the investment banking industry, lawyers, certified public accountants, learned persons or the like), in accordance with the Rules of the Independent Committee (see Attachment 2 for an outline) and transparency will be ensured by timely disclosure to the Company's shareholders.
  The initial Independent Committee is intended to be composed of Mr. Shogo Asaoka, Mr. Keisuke Kitajima and Mr. Fumio Masada, who are members of the Compliance Committee of the Company (see Attachment 3 for their careers).

(c) Exercise of the Stock Acquisition Rights and the Company's acquisition of Stock Acquisition Rights
  If a gratis allotment of Stock Acquisition Rights were to take place in accordance with the Plan and either the shareholders other than the Acquirer exercises the Stock Acquisition Rights or the shareholders other than the Acquirer receives shares in the Company in exchange for the Company acquiring the Stock Acquisition Rights, then it would be possible for the ratio of Company shareholder voting rights held by the Acquirer to be diluted by up to 50%.

3.3  Procedures for triggering the Plan
(a) Targeted acquisitions
  The gratis allotment of Stock Acquisition Rights will take place according to the procedures established by the Plan in cases where there is an acquisition of share certificates, etc. of the Company or any similar action, or a proposal for such action (the "Acquisition"), that falls under (i) or (ii) below.

 
(i)An Acquisition that would result in the sum of the holding ratio of share certificates, etc. (kabuken tou hoyuu wariai)1 of a holder (hoyuusha)2 , joint holders (kyoudouhoyuusha)3 of holders and any affiliated party of any party of these party above (kanrensha)4 newly amounting to 20% or more of the share certificates, etc. (kabuken tou)5 issued by the Company; or

(ii)A tender offer (koukai kaitsuke)6 that would result in the owning ratio of share certificates, etc. (kabuken tou shoyuu wariai)7 of share certificates, etc. (kabuken tou)8 relating to the tender offer and the owning ratio of share certificates, etc. of a person having a special relationship (tokubetsu kankei-sha)9 and any affiliated party of these party above (kanrensha) totaling at least 20% of the share certificates, etc. issued by the Company.

(b) Request to the Acquirer for the provision of information
  Unless otherwise approved by the Board of Directors, the Company will require any Acquirer conducting an Acquisition described above at 3.3(a) to submit to the Company in a form prescribed by the Company, before effecting the Acquisition, the information necessary for the consideration of the Acquisition as described in each of the list below ("Essential Information") and a written undertaking that the Acquirer will upon the Acquisition comply with the procedures established by the Plan ("Acquisition Statement").

1  Defined in Article 27-23(4) of the Securities and Exchange Law of Japan. This definition is applied throughout this document.
2  Including persons described as a holder under Article 27-23(3) of the Securities and Exchange Law of Japan (including persons considered to fall under this provision by the Company's board of directors). The same is applied throughout this document.
3  "Joint holders" are as defined in Article 27-23(5) of the Securities and Exchange Law of Japan, including persons regarded as a joint holder under Article 27-23(6) of the Securities and Exchange Law of Japan (inlcuding persons that the Company's board of directors recognizes as falling under the above). The same is applied throughout this document.
4  "kanrensha" means a person who substantially controls, is controlled by, or is under common control with such given party (including any person who is deemed by the Company's board of directors tofall under the above), or a person deemed by the Company's board of directors to act in concert with such given party. "Control" means to "control the determination of the financial and business policies" (as defined in Article 3(3) of the Enforcment Regulations of the Corporation Law) of other corporations or entities.
5  Defined in Article 27-23(1) of the Securities and Exchange Law of Japan. Unless otherwise provided for in this document, this definition is applied throughout this document.
6  Defined in Article 27-2(6) of the Securities and Exchange Law of Japan. This definition is applied throughout this document.
7  Defined in Article 27-2(8) of the Securities and Exchange Law of Japan. This definition is applied throughout this document.
8  Defined in Article 27-2(1) of the Securities and Exchange Law of Japan. This definition is applied in 3.2(a)(ii).
9  Defined in Article 27-2(7) of the Securities and Exchange Law of Japan (including persons considered to fall under this provision by the Company's board of directors); provided, however, that persons provided for in Article 3(1) of the Cabinet Office Regulations concerning Disclosure of a Tender Offer by an Acquirer other than the Issuing Company are excluded from the persons described in Article 27-2(7)(i) of the Securities and Exchange Law of Japan. The same is applied throughout this document.


  On receiving the Acquisition Statement mentioned above, the Board of Directors will provide it to the Independent Committee. If the Independent Committee determines that the information provided by the Acquirer is insufficient as the Essential Information, it may fix a deadline for response and request, either directly or indirectly, that the Acquirer additionally provide the Essential Information through the Board of Directors. In such case, the Acquirer should additionally provide such information within the relevant time limit.

 
(i)Details (including the specific name, capital structure and financial position) of the Acquirer and its group (including joint holders, persons having a special relationship and, in the case of funds, each partner and other constituent members).

(ii)The purpose, method and terms of the Acquisition (including amount and type of consideration for the Acquisition, the timeframe of the Acquisition, the scheme of any related transactions, the legality of the Acquisition method, and the probability that the Acquisition will be effected).

(iii)The basis for the calculation of the purchase price of the Acquisitions (including the underlying facts of the calculation, the calculation method, the numerical data used in the calculation, the details of any expected synergies from any series of transactions relating to the Acquisition, and the details of such synergies to be shared with other shareholders).

(iv)Financial support for the Acquisition (specifically including the name, financing methods and the terms of any related transactions of the funds providers (including all indirect funds providers)).

(v)Post-Acquisition management policy, business plan, capital and dividend policies for the Company and the Company group.

(vi)Post-Acquisition policies dealing with the Company's employees, business partners, customers, and any other stakeholders in the Company.

(vii)Any other information that the Independent Committee or other bodies reasonably considers necessary.
  If the Independent Committee recognizes that an Acquirer has initiated an Acquisition without complying with the procedures set by the Plan, as a general rule, it will recommend the Company's board of directors to implement a gratis allotment of Stock Acquisition Rights in accordance with (d) below, except in particular circumstances where it should continue with its requests for the submission of an Acquisition Statement and the Essential Information, and its discussion and negotiation with the Acquirer.

(c) Consideration of Acquisition terms, negotiation with the Acquirer, and consideration of an alternative proposal

 
(i)Request to the Company's board of directors for the provision of information
   If the Acquirer submits an Acquisition Statement and the Essential Information, the Independent Committee may request that the Company's board of directors present an opinion (including reservations; hereinafter the same) on the Acquirer's Acquisition terms and supporting materials, an alternative proposal (if any), and any other information that the Independent Committee considers suitably necessary.

(ii)Independent Committee consideration
   If the Independent Committee determines that the information provided by the Acquirer is sufficient as the Essential Information, it may set a reply period (up to ninety days as a general rule, in this regard, however the Independent Committee may extend the period by its resolution in accordance with (d) below, hereinafter the "Independent Committee Consideration Period").Upon taking receipt of the information from the Acquirer and the Company's board of directors (if the Special Committee requested the Company's board of directors to provide information), the Independent Committee should conduct its consideration of the Acquirer's Acquisition terms, information collection on the business plans and other information of the Acquirer and the Company's board of directors and comparison thereof, and consideration of any alternative proposal presented by the Company's board of directors, and the like.
  If the Independent Committee directly or indirectly requests the Acquirer to provide materials for consideration or any other information, or to discuss and negotiate with the Independent Committee, the Acquirer must promptly respond to such request. In addition, the Acquirer must not launch the tender offer until the termination of the Independent Committee Consideration Period.
  In order to ensure that the Independent Committee's decision ensures the Company's corporate value and the common interests of its shareholders, the Independent Committee may at the cost of the Company obtain advice from independent third parties (including financial advisers, certified public accountants, attorneys, consultants or any other experts).

(iii)Disclosure of information
   At a time the Independent Committee considers appropriate, the Company will disclose by itself or through the Company's board of directors, etc. the fact that an Acquirer has emerged, the fact that it has received an Acquisition Statement from the Acquirer and any matters considered appropriate by the Independent Committee out of the Essential Information or other information to the shareholders.

(d) Independent Committee procedures for recommendation, etc.
  If an Acquirer emerges, the Independent Committee will make recommendation to the Company's board of directors or take other actions in accordance with the following procedures. If the Independent Committee makes any of the resolutions for recommendation to the Company's board of directors or otherwise as listed in 3.3(d)(i) through 3.3(d)(iii) below, or otherwise believes it to be appropriate, the Independent Committee shall disclose an outline of the recommendation or the like and any other matters that the Independent Committee considers appropriate (in the case of extending the Independent Committee Consideration Period in accordance with (iii) below, including the fact and the outline of the reason for such extension), promptly after the resolution.

 
(i)The Independent Committee recommends the triggering of the Plan
   If the Acquirer fails to comply with the procedures set forth above at (b) or (c), or if otherwise as a result of the consideration of the terms of the Acquirer's Acquisition, the Independent Committee determines that the Acquisition by the Acquirer meets any of the requirements set out below at 3.4, 'Requirements for the gratis allotment of Stock Acquisition Rights', the Independent Committee will recommend the implementation of the gratis allotment of Stock Acquisition Rights to the Company's board of directors, regardless of whether the Independent Committee Consideration Period has commenced or ended.
  However, even after the Independent Committee has already made one recommendation for the implementation of the gratis allotment of Stock Acquisition Rights, if the Independent Committee determines that either of the events below apply, it may make a new recommendation that until the gratis allotment has taken effect the Company should suspend the gratis allotment of Stock Acquisition Rights, or that after the gratis allotment has taken effect and before the date immediately prior to the Exercise Period Commencement Date, the Company should acquire the Stock Acquisition Rights without consideration.
  • The Acquirer withdraws the Acquisition or the Acquisition otherwise ceases to exist after the recommendation.
  • There is a change in the facts or information upon which the recommendation decision was made, and the Acquisition by the Acquirer does not meet any of the requirements set out below in 3.4, 'Requirements for the gratis allotment of Stock Acquisition Rights,'.

(ii)The Independent Committee recommends the non-triggering of the Plan
   If as a result of its consideration of the terms of the Acquirer's Acquisition and discussion, negotiation or the like with the Acquirer, the Independent Committee determines that the Acquisition by the Acquirer does not meet any of the requirements set out below at 3.4, 'Requirements for the gratis allotment of Stock Acquisition Rights,' or The Company's board of directors did not provide the opinion set forth above at (c)(i) or information or supporting materials, etc. despite the requirement by the Independent Committee, the Independent Committee will recommend the non-implementation of the gratis allotment of Stock Acquisition Rights to the Company's board of directors, regardless of whether the Independent Committee Consideration Period has ended.
  However, even after the Independent Committee has already made one recommendation for the non-implementation of the gratis allotment of Stock Acquisition Rights, if there is a change in the facts, information or otherwise upon which a recommendation decision was made and the situation has come to satisfy the requirements set out below at 3.4, the Independent Committee may make a new decision including a recommendation on the implementation of the gratis allotment of Stock Acquisition Rights, and recommend that decision to the Company's board of directors.

(iii)The Independent Committee defers triggering the Plan
   If the Independent Committee does not reach a recommendation for either the implementation or non-implementation of the gratis allotment of Stock Acquisition Rights by the expiry of the initial Independent Committee Consideration Period, the Independent Committee will, to the reasonable extent that it is considered necessary for actions such as consideration of the terms of the Acquirer's Acquisition, negotiation with the Acquirer and the consideration of an alternative proposal, pass a resolution to extend the Independent Committee Consideration Period (and any extension of the new period after a period has been extended will follow the same procedure).
  If the Independent Committee Consideration Period is extended as a result of the resolution described above, the Independent Committee will continue with its information collection, consideration process and like activities, and use best efforts to make a recommendation for the implementation or non-implementation of the gratis allotment of Stock Acquisition Rights within the extended period.

(e) Resolutions of the board of directors
  If the Independent Committee reached a recommendation, the Company's board of directors, in exercising their role under the Corporation Law, will promptly pass a resolution relating to the implementation or non-implementation of a gratis allotment of Stock Acquisition Rights taking into consideration any recommendation of the Independent Committee described above to the maximum extent. Promptly after passing such a resolution, the Company's board of directors will disclose an outline of its resolution, and any other matters that the board of directors considers appropriate.

3.4  Requirements for the gratis allotment of Stock Acquisition Rights
The Company intends to implement the gratis allotment of Stock Acquisition Rights by a resolution of the Company's board of directors as described above at (e) of 3.3, 'Procedures for triggering the Plan'. However, the Company's board of directors will without fail make its determination as to whether an action of an Acquirer falls under a requirement below through the recommendation of the Independent Committee in accordance with (d) of section 3.3 above, 'Procedures for triggering the Plan.'

(a)An Acquisition not in compliance with the procedures prescribed in the Plan such as present of information or ensuring the Committee Consideration Period, etc. set out above at 3.3(b).
(b)An Acquisition that threatens to cause obvious harm to the corporate value of the Company and, in turn, the common interests of its shareholders through actions including any of the actions below:
 
(i)A buyout of share certificates to require such share certificates to be compulsorily purchased by the Company at an inflated price
(ii)Management that achieves an advantage for the Acquirer to the detriment of the Company, such as temporary control of the Company's management for the low-cost acquisition of the Company's material assets.
(iii)Diversion of the Company's assets to secure or repay debts of the Acquirer or its group company.
(iv)Temporary control of the Company's management to bring about a disposal of high-value assets that have no current relevance to the Company's business and declaring temporarily high dividends from the profits of the disposal, or selling the shares at a high price taking advantage of the opportunity afforded by the sudden rise in share prices created by the temporarily high dividends.

(c)Certain Acquisitions that threaten to have the effect of coercing shareholders into selling shares, such as coercive two-tiered tender offers (meaning acquisitions of shares including tender offers that do not offer to acquire all shares in the initial acquisition, and set acquisition terms for the second stage or do not set clear terms that are unfavorable for the second stage).

(d)Acquisitions that do not provide the Company's board of directors with the period of time reasonably necessary to submit an alternative proposal to the Acquisition.

(e)Acquisitions in which the Essential Information or any other information considered reasonably necessary to assess the Acquisition terms is not provided to Company's shareholders, or the provision of such information (if any) is inadequate.

(f)Acquisitions whose terms (including amount and type of consideration for the Acquisition, the Acquisition timing, post-Acquisition management policies and business plans, and post-Acquisition policies dealing with the Company's other shareholders, employees, business partners and any other stakeholders in the Company) are significantly inadequate or inappropriate in light of the Company's intrinsic value.

(g)Acquisitions that materially threaten to be against the corporate value of the Company and, in turn, the common interests of shareholders, by destroying the brand or relationship with shareholders, customers, society and any other stakeholders of the Company, which are indispensable to the generation of the Company's corporate value.

3.5  Outline of the gratis allotment of Stock Acquisition Rights
  An outline of the gratis allotment of Stock Acquisition Rights under the Plan is described below (for particulars regarding the gratis allotment of Stock Acquisition Rights, see Attachment 4, ' Terms and Conditions of the Stock Acquisition Rights').

(a) Number of Stock Acquisition Rights
  The number of the Stock Acquisition Rights will be the same number as the final and total number of issued and outstanding shares in the Company (excluding the number of shares in the Company held by the Company at that time) on a certain date (the "Allotment Date") that is separately determined by the Company's board of directors in a resolution relating to the gratis allotment of Stock Acquisition Rights ("Gratis Allotment Resolution").

(b) Shareholders eligible for allotment
  The Company will allot the Stock Acquisition Rights to those shareholders, other than the Company, who are entered or recorded in the Company's final register of shareholders or register of beneficial shareholders on the Allotment Date, at a ratio of one Stock Acquisition Right for every one share of the Company held.

(c) Effective date of gratis allotment of Stock Acquisition Rights
  The Company's board of directors will separately determine the effective date of the gratis allotment of Stock Acquisition Rights in the Gratis Allotment Resolution.

(d) Class and number of shares to be acquired upon exercise of the Stock Acquisition Rights
  The class of shares to be acquired upon exercise of each Stock Acquisition Right is to be the common stock of the Company, and the number of shares to be acquired upon exercise of each Stock Acquisition Right (the "Applicable Number of Shares") shall be one share except as separately adjusted.

(e) The amount of properties to be contributed upon exercise of the Stock Acquisition Rights
  Contributions upon exercise of the Stock Acquisition Rights are to be in cash, and the amount per share of properties to be contributed upon exercise of the Stock Acquisition Rights will be an amount separately determined by the Company's board of directors in the Gratis Allotment Resolution within the range between a minimum of one yen and a maximum of any amount equivalent to one-half of the fair market value of one share of the Company.

(f) Exercise period of the Stock Acquisition Rights
  The commencement date will be the effective date of gratis allotment of Stock Acquisition Rights or a date determined by the Company's board of directors in the Gratis Allotment Resolution, and the period will be a period from one month to two months long as determined by the Company's board of directors in the Gratis Allotment Resolution; provided, however, that if the Company acquires the Stock Acquisition Rights pursuant to the provisions of paragraph (i) (ii) below, the exercise period for the Stock Acquisition Rights with respect to that acquisition will be up to and including the business day immediately prior to the relevant acquisition date. Further, if the final day of the exercise period falls on a holiday for the payment place for the cash payable upon exercise, the final day will be the preceding business day.

(g) Conditions for the exercise of the Stock Acquisition Rights
  As a general rule, the following parties may not exercise the Stock Acquisition Rights (the parties falling under (i) through (vi) below shall collectively be referred to as "Specified Purchasers"):

 
(i)Specified Large Holders10 ;
(ii)Joint Holders of Specified Large Holders;
(iii)Specified Large Purchasers11 ;
(iv)Persons having a Special Relationship with Specified Large Purchasers;
(v)Any transferee of or successor to the Stock Acquisition Rights of any person falling under (i) through (iv) without the approval of the Company's board of directors; or
(vi)Any Affiliated Party of any person falling under (i) through (v).


  Further, nonresidents of Japan who are required to follow certain procedures under foreign laws and ordinances to exercise the Stock Acquisition Rights may not as a general rule exercise the Stock Acquisition Rights (provided, however, that certain nonresidents such as those who may use any exemption provision under applicable laws and ordinances in such foreign country will be able to exercise the Stock Acquisition Rights and the Stock Acquisition Rights held by nonresidents will be subject to acquisition by the Company in exchange for shares of the Company as set out in (i) below). For details of the terms used above, see Attachment 4, 'Terms and Conditions of the Stock Acquisition Rights.'

(h) Restriction on assignment of the Stock Acquisition Rights
  Any acquisition of the Stock Acquisition Rights by assignment requires the approval of the Company's board of directors.

(i) Acquisition of the Stock Acquisition Rights by the Company
 
(i)At any time on or before the date immediately prior to the Exercise Period Commencement Date, if the Company's board of directors recognizes that it is appropriate for the Company to acquire the Stock Acquisition Rights, the Company may, on a day that falls on a date separately determined by the Company's board of directors, acquire all of the Stock Acquisition Rights without consideration.

(ii)On a day that falls on a date separately determined by the Company's board of directors, the Company may acquire all of the Stock Acquisition Rights that have not been exercised before or on the business day immediately prior to such date determined by the Company's board of directors, that are held by parties other than Specified Purchasers and, in exchange, deliver shares of the Company in the number equivalent to the number of the Applicable Number of Shares for every one Stock Acquisition Right. The Company may implement such acquisition more than once.

  For definitions and details of the terms used above, see Attachment 4, 'Terms and Conditions of the Stock Acquisition Rights.'

3.6  Effective period of the Plan
  The effective period of the Plan shall be the period until the conclusion of the ordinary general meeting of shareholders scheduled to be held on June, 2007. The Company will confirm the intent of its shareholders with respect to the Plan by referring the matter to the shareholders for approval as a proposal at this ordinary general meeting of shareholders. If the approval by a majority of the voting rights of the shareholders present is unable to be obtained, the Plan will be abolished as of that time. Furthermore, the effective period of the Plan after such ordinary general meeting of shareholders is scheduled to be put to a vote at such ordinary general meeting of shareholders as the period starting from the conclusion of that ordinary general meeting of shareholders and ending at the conclusion of the ordinary general meeting of shareholders scheduled to be held in June 2010.

10  "Specified Large Holder" means a person who is a holder of share certificates, etc. issued by the Company and whose holding ratio of share certificates, etc. in respect of such share certificates, etc. is at least 20% total when combined with holding ratio of share certificates, etc. in respect of such share certificates, etc. of joint holders (kyoudouhoyuusha) of holders and any affiliated party of any party of these party above (kanrensha).
11  "Specified Large Purchaser" means a person who makes a public announcement of purchase, etc. (as defined in Article 27-2(1) of the Securities and Exchange Law; the same applies hereinafter) of share certificates, etc. (as defined in Article 27-2(1) of the Securities and Exchange Law; the same applies hereinafter in this subparagraph (iii)) issued by the Company through tender offer and whose ratio of ownership of share certificates, etc. in respect of such share certificates, etc. owned by such person after such purchase, etc. (including similar ownership as prescribed in Article 7(3) of the Order of the Enforcement of the Securities and Exchange Law) is at least 20% when combined with the ratio of ownership of share certificates, etc. of a person having a Special Relationship, joint holders (kyoudouhoyuusha) of holders and any affiliated party of any party of these party above (kanrensha).


3.7  Abolition and amendment of the Plan
  If, even before the expiration of the effective period, (a) a general meeting of shareholders of the Company passes a resolution to withdraw the abovementioned assignment to the board of directors to decide matters relating to the gratis allotment of the Stock Acquisition Rights under the Plan, or (b) the Company's board of directors passes a resolution to abolish the Plan, the Plan shall be abolished at that time.
  Further, the Company's board of directors may revise or amend the Plan even during the effective period of the Plan, if such revision or amendment is not against the purpose of the assignment by the Ordinary General Meeting of Shareholders and subject to the approval of the Independent Committee.
  If the Plan is abolished, amended or the like, the Company will promptly disclose facts including the fact that such abolition, amendment or the like has taken place, and (in the event of an amendment or the like) the details of the amendment or the like and any other matters.
  The provisions of laws and ordinances referred to above are subject to the prevailing provisions as of October 25, 2006. If it becomes necessary after such date to amend the terms and conditions or definitions of terms set out in the paragraphs above due to the formulation, amendment or abolishment of laws and ordinances, the terms and conditions or definitions of terms set out in the paragraphs above shall be read accordingly as required to a reasonable extent, taking into consideration the purposes of such formulation, amendment or abolishment.

4. The Plan that complies with the basic policy, agrees with the corporate value of the Company and the common interests of the shareholders and does not pursue the personal interests of the Company's management

4.1   Fully satisfying the requirements of the Guidelines for Takeover Defense Measures
  The Plan fully satisfies the three principles set out in the Guidelines Regarding Takeover Defense Measures for the Purposes of Ensuring and Enhancing Corporate Value and Shareholders' Common Interests released by the Ministry of Economy, Trade and Industry and the Ministry of Justice on May 27, 2005.

4.2   Introduction for the purpose of ensuring and enhancing the common interests of the shareholders
  As set out above at 3.1 above, the Plan is introduced for the purpose of ensuring and enhancing the corporate value of the Company and, in turn, the common interests of the shareholders by introducing a mechanism that enables the Board of Directors to present an alternative proposal to the shareholders, ensures necessary time and information for the shareholders to decide whether or not to accept such proposal, and for the Board of Directors to negotiate for the benefit of the shareholders on occasions when it receives an acquisition proposal for the shares in the Company from an acquirer.

4.3   Placing value on the intent of shareholders
  As set out above at 3.6 and 3.7 above, the effective period of the Plan shall be the period until the conclusion of the ordinary general meeting of shareholders scheduled to be held on June, 2007, furthermore if, even before the expiration of the effective period, (a) a general meeting of shareholders of the Company passes a resolution to withdraw the abovementioned assignment to the board of directors to decide matters relating to the gratis allotment of the Stock Acquisition Rights under the Plan, or (b) the Company's board of directors passes a resolution to abolish the Plan, the Plan shall be abolished at that time. In this regard, the life and content of the Plan is based on the intent of the shareholders of the Company.
  As set out above at 3.6 and 3.7, the Company intends to confirm the intent of its shareholders with respect to the Plan by referring the matter to the shareholders for approval as a proposal at such ordinary general meeting of shareholders.
  Furthermore, the Articles of Incorporation of the Company provide that the term of office of the directors of the Company shall be one year. Therefore, the Company is also able to reflect the intent of the shareholders with respect to the Plan through the exercise of their voting rights concerning the proposal for the election of directors at the ordinary general meetings of shareholders held each year.

4.4   Disclosure of information and emphasis on the decisions of independent parties
  In introducing the Plan, the Company will establish the Independent Committee as an organization that will eliminate arbitrary decisions by its directors and objectively carry out the substantive decisions on behalf of the shareholders in the event of triggering, abolition or other operation of the Plan.
  The Independent Committee composed only of members who are highly independent from the management of the Company, such as (i) an outside director of the Company, (ii) an outside auditor of the Company, or (iii) other experts (such experts must be experienced corporate managers, parties with experience of government officials, parties with knowledge of the investment banking industry, lawyers, certified public accountants, learned persons, or the like), in accordance with the Rules of the Independent Committee. (As mentioned at 3.2(b) above, the initial Independent Committee is intended to be composed of Mr. Shogo Asaoka, Mr. Keisuke Kitajima and Mr. Fumio Masada).
  If an Acquisition of shares in the Company were to occur, this Independent Committee would, as set out above in 3.3, 'Procedures for triggering the Plan,' and in accordance with the Rules of the Independent Committee, make substantive determinations, as to whether or not the Acquisition would have a detrimental effect on the corporate value of the Company and the common interests of shareholders. Then, the Company's board of directors would, by taking into consideration those determinations to the maximum extent, pass a resolution pursuant to the Corporation Law of Japan.
  In this way, the Independent Committee will strictly monitor any arbitrary actions by non-outside directors and disclose outlines of its decisions to the shareholders, and will ensure a structure under which the Plan is only operated in a transparent way to the extent contributing to the corporate value of the Company and the common interests of its shareholders.

4.5   Establishment of reasonably objective requirements
  As set out above at section 3.3(d), and 3.4, 'Requirements for the gratis allotment of Stock Acquisition Rights,' it can be said that the Plan is established so that it will not be triggered unless reasonable and detailed objective requirements have been satisfied, and ensures a structure to eliminate arbitrary triggering by the Company's board of directors.

4.6   Obtaining the advice of third-party experts
  As set out above at section 3.3(c), if an Acquirer emerges, the Independent Committee may seek to obtain the advice of independent third parties (financial advisors, certified public accountants, lawyers, consultants and other experts) at the cost of the Company. This is a mechanism to even more securely enhance the objectivity and fairness of the decisions made by the Independent Committee.

4.7   The term of office of directors of the Company being one year
  The term of office of the directors of the Company shall be one year. Therefore, the Company is also able to reflect the intent of the shareholders with respect to the Plan through the exercise of their voting rights concerning the proposal for the election of directors at the ordinary general meetings of shareholders held each year.

4.8   No dead-hand or slow-hand takeover defense measures
  As stated above in section 3.7, 'Effective Period, Abolition and Amendment of the Plan,' the Plan may be abolished by a person who acquires a large number of share certificates of the shares in the Company through an election at a general meeting of shareholders of directors nominated by that person and through a resolution of the Board of Directors attended by the so-elected directors.
  Therefore, the Plan is not a dead-hand takeover defense measure (a takeover defense measure in which even if a majority of the members of the Board of Directors are replaced, the triggering of the measure cannot be stopped). Also, as the Company has not adopted a system of staggered terms of office, the Plan is not a slow-hand takeover defense measure either (a takeover defense measure in which triggering takes more time to stop due to the fact that the members of the Board of Directors cannot be replaced all at once).


5. Impact on shareholders and other stakeholders
5.1   Impact on shareholders and investors at the time of introduction
  At the time of its introduction, the Plan will have no direct or material impact on the rights and interests of shareholders and investors. This is because at that time, no actual gratis allotment of Stock Acquisition Rights will be implemented.

5.2   Impact on shareholders and investors at the time of the gratis allotment of Stock Acquisition Rights
(a) Procedures of the gratis allotment of Stock Acquisition Rights and the procedures for entry of name change
  If the Company's board of directors resolves to implement a gratis allotment of Stock Acquisition Rights, the Company will first make public notice of the Allotment Date for the gratis allotment of Stock Acquisition Rights. In this case, as the Company will make a gratis allotment of Stock Acquisition Rights to the shareholders who are entered or recorded in the Company's last register of shareholders and register of beneficial shareholders as of the Allotment Date ("Shareholders Eligible for Allotment") at a ratio of one Stock Acquisition Right for every one share in the Company held. Therefore, it will be necessary for shareholders to arrange for the procedures for entry of name change as soon as possible. (Please note that no procedures for entry of name change are required for those share certificates deposited with the Japan Securities Depository Center, Inc.). In this connection, all of the shareholders who are entered or recorded in the Company's last register of shareholders or register of beneficial shareholders as of the Allotment Date will become Stock Acquisition Right holders as a matter of course on the effective date of the gratis allotment of Stock Acquisition Rights.
  Furthermore, even after the Allotment Date has come or the gratis allotment of Stock Acquisition Rights has taken effect, the Company may cancel the gratis allotment or acquire those Stock Acquisition Rights without consideration nor delivery of the shares in the Company to the entitled shareholders up until the day immediately prior to the date of commencement of the exercise period taking into consideration the recommendation of the Independent Committee described at 3.3(d)(i) to the maximum extent, in which case, the change of the price of the Company's stock may make a commensurate impact on the investors who have traded the shares of the Company on the premise the dilution effect of the value per share in the Company.

(b) Procedures for exercising Stock Acquisition Rights
  The Company will deliver, as a general rule, an exercise request form for the Stock Acquisition Rights (in a form prescribed by the Company and containing necessary matters such as the terms and number of the Stock Acquisition Rights for exercise and the exercise date for the Stock Acquisition Rights, as well as representations and warranties regarding matters such as whether the shareholders themselves satisfy the conditions for the exercise of the Stock Acquisition Rights, indemnity clauses and other covenants) and other documents necessary for the exercise of the Stock Acquisition Rights to all Shareholders Eligible for Allotment as of the Allotment Date. After the gratis allotment of Stock Acquisition Rights, the shareholders will be issued one share in the Company per one Stock Acquisition Right upon submitting these necessary documents and paying to the place handling such payments the price determined by the Company's board of directors in the Gratis Allotment Resolution, which will be an amount within the range between a minimum of one yen and a maximum of any amount equivalent to one-half the fair market value of one share of the Company, during the exercise period of the Stock Acquisition Rights.
  If the Company's shareholders do not exercise their Stock Acquisition Rights or pay the amount equivalent to the exercise price, the shares they hold in the Company will be diluted by the exercise of Stock Acquisition Rights by other shareholders.
  However, it is also possible for the Company to acquire the Stock Acquisition Rights of all shareholders other than Specified Purchasers and, in exchange, deliver shares in the Company, in accordance with the procedures set out in (c) below. If the Company carries out such an acquisition procedure, all shareholders other than Specified Purchasers will come to receive shares in the Company without exercising their Stock Acquisition Rights or paying an amount equivalent to the exercise price, and, in principle, no dilution of the shares in the Company they hold will result.

(c) Procedures for the acquisition of Stock Acquisition Rights by the Company
  If the Company's board of directors determines to acquire the Stock Acquisition Rights, the Company will acquire the Stock Acquisition Rights in accordance with the statutory procedures, on the date separately determined by the Company's board of directors. In this case, such shareholders will come to receive shares in the Company without exercising their Stock Acquisition Rights or paying an amount equivalent to the exercise price. Further, in such case, the shareholders concerned will be separately requested to submit, in a form prescribed by the Company, representations and warranties regarding matters such as the fact that they are not Specified Purchasers, indemnity clauses and other covenants.
  In addition to the above, the Company will disclose information or notify all of its shareholders with respect to the particulars of the allotment method, exercise method and method for acquisition by the Company after the Gratis Allotment Resolution, so we request that shareholders check these details at that time.



Attachment 1
Conditions of Major Shareholders (as of September 30, 2006)
Shareholder Capital Contribution to the Company
Number of shares held Percentage of voting rights

Mellon Bank Treaty Clients Omnibus		 (In thousands)
12,237		 %
8.70
Daio Co., Ltd.(Note)
7,6465.43
Marutake Sangyo LTD.(Note)
7,2995.19
Taketeru Takei(Note)
6,8914.90
State Street Bank and Trust Company 5051035,0153.56
Hiroko Takei(Note)
4,9273.50
Toshiki Takei(Note)
4,8663.46
The Master Trust Bank of Japan, Ltd. (Trust Account)4,4543.17
Japan Trustee Services Bank, Ltd. (Trust Account)4,1612.96
The Bank of New York, Treaty JASDEC Account3,3882.41
(Note)These companies and individuals are family members of the late Mr. Yasuo Takei, the Company's founder, or affiliated parties, and together with those that are not listed above, the aggregate number of shares held by the family members of the late Mr. Yasuo Takei and affiliated parties is 35,001,000 shares (percentage of voting rights: 24.88%).



Attachment 2
Outline of the Rules of the Independent Committee
•The Independent Committee shall be established by resolution of the Company's board of directors.
•There shall be no less than three (3) members of the Independent Committee, and the Company's board of directors shall elect the members from
 (i)outside directors of the Company,
 (ii)outside statutory auditors of the Company, and
 (iii)other outside experts
 who are independent from the management that conducts the execution of the business of the Company. However, such experts must be experienced corporate managers, parties with experience of government officials, parties with knowledge of the investment banking industry, lawyers, certified public accountants, learned persons, or the like, or parties of similar qualifications, and must have executed with the Company an agreement separately specified by the Company's board of directors that contains a provision obligating them to exercise the duty of care of a good manager or a similar provision.
•Unless otherwise determined by a resolution of the Company's board of directors, the term of office of members of the Independent Committee shall be until the conclusion of the ordinary general meeting of shareholders scheduled to be held in June 2007. However, the term of office of any member of the Independent Committee who is an outside director or outside statutory auditor shall end simultaneously in the event that they cease to be a director or statutory auditor (except in the case of their re-appointment).
•The Independent Committee shall make decisions on the matters listed below and submit recommendations to the Company's board of directors containing the details of and reasons for the recommendation. Respecting such recommendations of the Independent Committee to the maximum extent, the Company's board of directors shall pass resolutions concerning the implementation, non-implementation or other action pertaining to a gratis allotment of Stock Acquisition Rights as a function under the Corporation Law of Japan. Each member of the Independent Committee and each director of the Company must make such decisions with a view to whether or not the corporate value of the Company and the common interests of its shareholders will be enhanced, and they must not serve solely for the purpose of their own interests or those of the management of the Company.
 (a)The implementation or non-implementation of the gratis allotment of Stock Acquisition Rights.
 (b)The cancellation of the gratis allotment of Stock Acquisition Rights or the gratis acquisition of Stock Acquisition Rights.
 (c)Any other matters that are for determination by the Company's board of directors in respect to which it has consulted the Independent Committee.
•In addition to the matters prescribed above, the Independent Committee may conduct the matters listed below.
 (a)Determining whether the Acquisitions should be made subject to the Plan.
 (b)Determining the information that the Acquirer and the Company's board of directors should provide to the Independent Committee, and the deadline for the provision of that information.
 (c)Determining the extension of the Independent Committee Consideration Period.
 (d)Examination and consideration of the terms of the Acquirer's Acquisitions.
 (e)Negotiation and discussion with the Acquirer.
 (f)Request for an alternative proposal and consideration of the alternative proposal to the Company's board of directors.
 (g)Approval of modification or amendment of the Plan.
 (h)Any other matters that the Plan prescribes that the Independent Committee may conduct.
 (i)Any matters that the Company's board of directors separately determines that the Independent Committee may conduct.
•If the Independent Committee decides that the Acquisition Statement provided are inadequate as Essential Information, it shall request that the Acquirer submit additional information. Further, if the Independent Committee receives from the Acquirer the Acquisition Statement and the additional Essential Information requested to provide by the Independent Committee, it may request that the Company's board of directors provide within a certain reasonable period an opinion regarding the terms of the Acquisition by the Acquirer and materials supporting that opinion, an alternative proposal (if any), and any other information and the like that the Independent Committee may consider necessary from time to time.
•If it is necessary , the Independent Committee shall through the Company's board of directors, etc. discuss and negotiate with the Acquirer, or present to shareholders or others the alternative plan presented by the Company's board of directors, or conduct any similar action from the standpoint of ensuring and enhancing the corporate value of the Company and the common interests of its shareholders.
•In order to collect the necessary information, the Independent Committee may request the attendance of a director, statutory auditor or employee of the Company, or any other person that the Independent Committee considers necessary, and may require explanation of any matter it requests.
•The Independent Committee may, at the Company's expense, obtain the advice of an independent third party (including financial advisors, certified public accountants, lawyers, consultants and other experts) and similar actions.
•Any member of the Independent Committee may convene a meeting of the Independent Committee when an Acquisition arises, or at any other time.
•Resolutions of a meeting of the Independent Committee shall, as a general rule, pass with at least majority of the votes cast when all of the members of the Independent Committee are in attendance.



Attachment 3
Name and Career Summary of Independent Committee Member Candidates
Shogo Asaoka
1931Born
Apr. 1955Joined the Ministry of Labor
Apr. 1963Admitted to the bar
Jan. 1972Appointed as Director of Shogo Asaoka Law Office (incumbent)
Apr. 1980Appointed as Vice-Chairman of the Dai-ichi Tokyo Bar Association
Appointed as Executive Governor of the Japan Federation of Bar Associations
June 2001Appointed as Member of the Expropriation Commission of the Tokyo Metropolitan Government
Feb. 2003Appointed as Outside Statutory Auditor of TOKYOKOKI SEIZOSHO LTD.

Keisuke Kitajima
1936Born
Apr. 1961Appointed as Public Prosecutor
Dec. 1997Appointed as Superintending Prosecutor of the Tokyo High Public Prosecutors Office
June 1998Appointed as Prosecutor-General
Sept. 2001Admitted to the bar, appointed Director of Kitajima Law Office (incumbent)
June 2002Appointed as Outside Statutory Auditor of NIPPON YUSEN KABUSHIKI KAISHA (incumbent)
July 2002Appointed as Outside Statutory Auditor of Nippon Life Insurance Company (incumbent)
June 2004Appointed as Outside Statutory Auditor of Daiwa Securities Group Inc. (incumbent)

Fumio Masada
1936Born
Apr. 1959Joined Nippon Life Insurance Company
July 1986Appointed as Director of Nippon Life Insurance Company
March 1994Appointed as Vice President and Director of Nippon Life Insurance Company
March 1997Appointed as President of NLI Research Institute
Sept. 2006Appointed as President of Life Underwriting Academy (incumbent)
Sept. 2006Appointed as Outside Statutory Auditor of Yucho Co., Ltd. (incumbent)



Attachment 4
Terms and Conditions of the Stock Acquisition Rights
I.Determination on Gratis Allotment of Stock Acquisition Rights

1.    Terms and number of the Stock Acquisition Rights
 The terms of stock acquisition rights to be allotted to the shareholders (individually or collectively, the "Stock Acquisition Rights") are based on the terms set forth in section II below. The number of the Stock Acquisition Rights will be the same number as the final and total number of issued and outstanding shares in the Company (excluding the number of shares in the Company held by the Company at that time) on a certain date (the "Allotment Date") to be separately determined by the Company's board of directors in a resolution relating to the gratis allotment of Stock Acquisition Rights (the "Gratis Allotment Resolution").

2.    Shareholders eligible for allotment
 The Company will allot the Stock Acquisition Rights to those shareholders, other than the Company itself, who are entered or recorded in the Company's final register of shareholders or register of beneficial shareholders on the Allotment Date, at a ratio of one Stock Acquisition Right for every one share in the Company held.

3.    Terms and number of the Stock Acquisition Rights
 The Company's board of directors will separately determine the effective date of gratis allotment of Stock Acquisition Rights in the Gratis Allotment Resolution.

II.Terms of the Stock Acquisition Rights

1.    Number of shares to be acquired upon exercise of the Stock Acquisition Rights
 1)The class of shares to be acquired upon exercise of each Stock Acquisition Right is to be the common stock of the Company, and the number of shares in the Company to be acquired upon exercise of one Stock Acquisition Right (the "Applicable Number of Shares") shall be one share.

However, in the event of a stock split or stock consolidation by the Company, the Number of Shares per Stock Acquisition Right shall be adjusted using the following formula and any fraction of a share resulting from the adjustment shall be rounded down to the nearest whole share, and no cash adjustment shall be made.

Adjusted Number of Shares per Stock Acquisition Right = Number of Shares per Stock Acquisition Right before adjustment ~ Ratio of stock split or consolidation

 2)The post-adjustment Applicable Number of Shares shall be applied on and after the allotment date in relation to the share split in case of the share split, whereas it shall be applied on and after the effective date of the share consolidation as stipulated in Article 180, Paragraph 2, Item 2, of the Corporate Code in case of the share consolidation.

 3)In addition to the adjustment stated in the preceding paragraph (i), if any adjustment of the Applicable Number of Shares becomes necessary in cases where the Company conducts actions that occurs or may occur the change of the number of shares issued by the Company, such as gratis Allotment of Stock Acquisition Rights, merger, demerger, etc., the Company shall conduct a reasonable adjustment regarding the Applicable Number of Shares after taking into account the various conditions.

2.    The amount of properties to be contributed upon exercise of the Stock Acquisition Rights
 (1)Contributions upon exercise of the Stock Acquisition Rights are to be in cash, and the amount of properties to be contributed upon exercise of the Stock Acquisition Rights will be an amount equal to the Exercise Price (as defined in (2) below) multiplied by the Applicable Number of Shares.
 (2)The amount per share of the Company of properties to be contributed upon exercise of the Stock Acquisition Rights (the "Exercise Price") will be an amount separately determined by the Company's board of directors in the Gratis Allotment Resolution, but within the range between a minimum of one yen and a maximum of the amount equivalent to one-half (1/2) of the fair market value per share of the Company. The fair market value means an amount equivalent to the average closing price (including quotations) for regular transactions of the Company's shares on the Tokyo Stock Exchange on each day during the ninety (90) day period prior to the date of the Gratis Allotment Resolution (excluding the day on which trades are not made), with any fraction of a yen after such calculation to be rounded up to the nearest whole yen.

3.    Exercise period of the Stock Acquisition Rights
 The commencement date of the exercise period will be the Effective date of gratis allotment of Stock Acquisition Rights or a date separately determined by the Company's board of directors in the Gratis Allotment Resolution, and the period will be a period from one month to two months long as separately determined by the Company's board of directors in the Gratis Allotment Resolution; provided, however, that if the Company acquires the Stock Acquisition Rights in accordance with the provisions of section 7 2) below, the exercise period for the Stock Acquisition Rights with respect to that acquisition will be up to and including the business day immediately prior to the relevant acquisition date. Further, if the final day of the exercise period falls on a holiday for the payment place for the cash payable upon exercise, the final day will become the preceding business day.

4.    Conditions for the exercise of the Stock Acquisition Rights
 (1)The following parties may not exercise the Stock Acquisition Rights:
  (i)Specified Large Holders;
  (ii)Joint Holders of Specified Large Holders;
  (iii)Specified Large Purchasers;
  (iv)Persons having a Special Relationship with Specified Large Purchasers;
  (v)Any transferee of or successor to the Stock Acquisition Rights of any person falling under (i) through (iv) without the approval of the Company's board of directors; or
  (vi)Any Affiliated Party of any party falling under (i) through (v) (any party set out in (i) through (vi) shall be hereinafter referred to as the "Specified Purchasers").

  The terms used above shall have the following meanings:
  (a)"Specified Large Holder" means a person who is a holder (including any person who is described as a holder under Article 27-23(3) of the Securities and Exchange Law) of share certificates, etc. (as defined in Article 27-23(1) of the Securities and Exchange Law; the same applies hereinafter unless otherwise provided for) issued by the Company and whose holding ratio of share certificates, etc. (as defined in Article 27-23(4) of the Securities and Exchange Law) in respect of such share certificates, etc. is at least 20% total when combined with holding ratio of share certificates, etc. in respect of such share certificates, etc. of joint holders (kyoudouhoyuusha) of holders and any affiliated party of any party of these party above (kanrensha) (including any person who is deemed to fall under the above by the Company's board of directors).

  (b)"Joint Holder" means a person who is defined in Article 27-23(5) of the Securities and Exchange Law, and includes any person who is deemed as a joint holder under Article 27-23(6) of the Securities and Exchange Law (including any person who is deemed to fall under the above by the Company's board of directors).

  (c)"Specified Large Purchaser" means a person who makes a public announcement of purchase, etc. (as defined in Article 27-2(1) of the Securities and Exchange Law; the same applies hereinafter) of share certificates, etc. (as defined in Article 27-2(1) of the Securities and Exchange Law; the same applies hereinafter in this subparagraph (c)) issued by the Company through tender offer (as defined in Article 27-2(6) of the Securities and Exchange Law) and whose ratio of ownership of share certificates, etc. (as defined in Article 27-2(8) of the Securities and Exchange Law; the same applies hereinafter) in respect of such share certificates, etc. owned by such person after such purchase, etc. (including similar ownership as prescribed in Article 7(3) of the Order of the Enforcement of the Securities and Exchange Law) is at least 20% when combined with the ratio of ownership of share certificates, etc. of a person having a Special Relationship (including any person who is deemed to fall under the above by the Company's board of directors), joint holders (kyoudouhoyuusha) of holders and any affiliated party of any party of these party above (kanrensha).

  (d)"Person having a Special Relationship" is defined in Article 27-2(7) of the Securities and Exchange Law (including persons who are deemed to fall under the above by the Company's board of directors); provided, however, that those persons provided for in Article 3(1) of the Cabinet Ordinance concerning Disclosure of a Tender Offer by an Acquirer other than the Issuing Company are excluded from the persons described in Article 27-2(7)(i) of the Securities and Exchange Law.

  (e)An "Affiliated Party" of a given party means a person who substantially controls, is controlled by, or is under common control with such given party (including any person who is deemed by the Company's board of directors tofall under the above), or a person deemed by the Company's board of directors to act in concert with such given party.

 (2)Notwithstanding (1) above, the parties set out in (a) through (d) below are not Specified Large Holders or Specified Large Purchasers:

  (a)the Company, its subsidiaries (as defined in Article 8(3) of the Regulations concerning Terminology, Forms and Method of Preparation of Financial Statements, etc.) or its affiliates (as defined in Article 8(5) of the Regulations concerning Terminology, Forms and Method of Preparation of Financial Statements, etc.);

  (b)a person that the Company's board of directors recognizes as a person that fell under the requirements as set forth in (1)(i) above with no intention to control the Company and that ceased to fall under the requirements as set forth in (1)(i) above due to a disposal of the share certificates, etc. of the Company held within ten (10) days after falling under the requirements as set forth in (1)(i) above (provided, however, that the ten (10) day period may be extended by the Company's board of directors);

  (c)a person that the Company's board of directors recognizes as a person that involuntarily fell under the requirements as set forth in (1)(i) above by the Company acquiring treasury stock or for any other reason (excluding cases where the person thereafter newly acquires the Company's share certificates, etc. at its own discretion); or

  (d)a person that the Company's board of directors recognizes as a person whose acquisition or holding of share certificates, etc. of the Company is not contrary to the Company's corporate value or the common interests of shareholders (includng a person previously determined as a Specified Purchaser by the Company's board of directors, but whose acquisition or holding of share certificates, etc., of the Company is later determined by the Company's board of directors not to be contrary to the Company's corporate value or the common interests of shareholders, and if the Company's board of directors determines that an acquisition or holding is not contrary to the Company's corporate value or common interests of shareholders under certain conditions, such recognition is effective to the extent that these conditions are satisfied.)

 (3)Under the applicable foreign laws and ordinances, if a person located under a jurisdiction of such laws and ordinances is required for the purposes of exercising the Stock Acquisition Rights to (i) perform certain procedures, (ii) satisfy certain conditions (including prohibition of exercise for a certain period of time or submission of specified documents), or (iii) both perform such procedures and satisfy such conditions (collectively, the "Governing Law Exercise Procedures and Conditions"), such person may exercise the Stock Acquisition Rights only if the Company's board of directors recognizes that it fully performs or satisfies the Governing Law Exercise Procedures and Conditions, and such person may not exercise the Stock Acquisition Rights if the Company's board of directors does not recognize that it satisfies the Governing Law Exercise Procedures and Conditions. The Company shall bear no obligation to implement or satisfy any Governing Law Exercise Procedures and Conditions which are required in order for the person under such jurisdiction to exercise the Stock Acquisition Rights. In addition, if a person located under such jurisdiction is not permitted to exercise the Stock Acquisition Rights under such laws and ordinances, such person who locates in such jurisdiction shall not exercise the Stock Acquisition Rights.

 (4)Notwithstanding (3) above, a person located in the United States may exercise the Stock Acquisition Rights, only if (i) such person represents and warrants that it is an accredited investor as defined in Rule 501(a) of the U.S. Securities Act of 1933, and (ii) such person covenants to resell the shares of the Company to be acquired upon exercise of the Stock Acquisition Rights held by such person only through a regular transaction at the Tokyo Stock Exchange or the Osaka Stock Exchange (not on the basis of any previous arrangements and without previous solicitation). In such case only, the Company shall perform or satisfy the Governing Law Exercise Procedures and Conditions under Regulation D of the U.S. Securities Act of 1933 and U.S. state laws that are required to be performed or satisfied by the Company for exercise of the Stock Acquisition Rights by a person located in the United States. A person located in the United States shall not exercise the Stock Acquisition Rights if the Company's board of directors determines that such person is not permitted to legally exercise the Stock Acquisition Rights under the U.S. Securities Act due to a change in the law of the United States or some other reason, even though such person satisfies the conditions as described in (i) and (ii) above.

 (5)A holder of the Stock Acquisition Rights may exercise the Stock Acquisition Rights only if the holder submits to the Company a written statement in which the holder undertakes representations and warranties, including, but not limited to, the fact that the holder is not a Specified Purchaser, nor a person that has any intention to exercise the Stock Acquisition Rights on behalf of a Specified Purchaser and that the holder satisfies the conditions for the exercise of the Stock Acquisition Rights, provisions for indemnification and other matters prescribed by the Company and any written statement required under the laws and ordinances.

 (6)Even if a holder of the Stock Acquisition Rights is unable to exercise the Stock Acquisition Rights in accordance with the provisions of this section 4, the Company shall not be liable to such holder of the Stock Acquisition Rights for damages or any other obligations.

5.    Capital and capital reserve to be increased upon issuance of shares by exercise of the Stock Acquisition Rights
 The Company's Board of Directors shall determine the capital and capital reserve to be increased upon issuance of shares by exercise of the Stock Acquisition Rights in the Gratis Allotment Resolution.

6.    Restrictions on assignments of the Stock Acquisition Rights
 (1)Any acquisition of the Stock Acquisition Rights by assignment requires approval of the Company's board of directors.

 (2)If a person who intends to assign the Stock Acquisition Rights is located outside Japan and is unable to exercise the Stock Acquisition Rights in accordance with the provisions of section 4(3) and 4(4) (excluding a Specified Purchaser), then the Company's board of directors shall determine if it gives such approval as described in the above paragraph considering the following matters:

  (a)whether or not a written undertaking prepared and signed or sealed with printed name by the transferor and transferee (including provisions for representations and warranties with respect to the matters described in (b), (c) and (d) below and provisions for indemnification) is submitted with respect to the acquisition by assignment of all or part of the Stock Acquisition Rights by a person who locates in such jurisdiction;

  (b)whether or not it is clear that the transferee is not a Specified Purchaser;

  (c)whether or not it is clear that the transferee is not located in such jurisdiction and does not intend to accept the Stock Acquisition Rights for a person located in such jurisdiction;

  (d)whether or not it is clear that the transferee does not intend to accept the Stock Acquisition Rights for a Specified Purchaser.

7.    Acquisition of the Stock Acquisition Rights by the Company
 (1)At any time on or before the date immediately prior to the Exercise Period Commencement Date, if the Company's board of directors recognizes that it is appropriate for the Company to acquire the Stock Acquisition Rights, the Company may, on a day that falls on a date separately determined by the Company's board of directors, acquire all of Stock Acquisition Rights without consideration.

 (2)On a day that falls on a date separately determined by the Company's board of directors, the Company may acquire all (though partial acquisiton is not permitted) of the Stock Acquisition Rights that have not been exercised before or on the day immediately prior to such date determined by the Company's board of directors, that are held by persons other than Specified Purchasers and, in exchange, deliver shares of the Company in the number equivalent to the number of the Applicable Number of Shares for every one Stock Acquisition Right. The Company may implement of such acquisition more than once.

8.    Delivery of the Stock Acquisition Rights in the case of merger (limited to a merger where the Company ceases to exist due to such merger), absorption-type demerger (kyushu bunkatsu), incorporation-type demerger (shinsetsu bunkatsu), share exchange (kabushiki koukan), and share transfer (kabushiki iten) and its conditions
 The Company's board of directors will separately determine these matters in the Gratis Allotment Resolution.

9.    Issuance of certificates representing the Stock Acquisition Rights
 Certificates representing the Stock Acquisition Rights will not be issued.

10.    Revision due to amendment to laws and ordinances
 The provisions of the laws and ordinances referred to above are subject to the prevailing provisions as of October 25, 2006. If it becomes necessary after such date to amend the terms and conditions or definitions of terms set out in the paragraphs above due to the formulation, amendment or abolishment and the like of laws and ordinances, the terms and conditions or definitions of terms set out in the paragraphs above shall be read accordingly as required to a reasonable extent, taking into consideration the purposes of such formulation, amendment or abolishment.



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by Takefuji co.