Proposal to Grant Stock Options as Compensation for Directors

The Board of Directors of Promise Co., Ltd. approved a motion today to submit a resolution to grant stock options as compensation for directors at the 48th annual shareholders meeting to be held on June 23, 2009.

Promise has reexamined compensation for directors as part of its ongoing management reforms. The Company has already decided to terminate the directors’ retirement benefit system at the end of the shareholders meeting to be held in June 2009.
        In association with the termination of this retirement system, Promise plans to begin granting stock options to directors as part of their compensation. Holding stock options will align the interests of directors with those of shareholders with regard to stock price movements. In addition, stock options will give directors more motivation to achieve medium- to long-term improvements in operating results and corporate value.
        These stock options will be linked to Promise’s operating results and stock price but will not exceed half of the fiscal year allowance provided by the terminated retirement benefit payment, or 27 million yen in one year.
        Terms for the stock options are as follows:

1. Type and Number of Shares to be Issued upon Exercise of Stock Options

Holders of stock options will receive one unit of stock (tangen), which is currently 50 shares, of Promise common stock upon the exercise of each option (“number of shares granted”).
        If there is a stock split (including a gratis split of Promise common stock), stock consolidation or other similar event that requires an adjustment to the number of shares granted, Promise will perform the adjustment as necessary.
 

2. Amount Paid for Stock Options (Issue Price)

The amount paid per stock option is the price calculated when the stock options are allocated by using a fair calculation method such as the Black-Scholes Model. Directors who receive stock options can deduct the amount due from their compensation in lieu of making a payment.

3. Amount Paid upon Exercise of Stock Options

The amount paid upon the exercise of a stock option is the exercise price of one yen per share of stock received multiplied by the number of shares granted.

4. Exercise Period of Stock Options

There is no requirement to remain in the employment of Promise in order to exercise stock options. Promise directors, corporate auditors, executive officers and advisers of a certain level can continue to exercise their stock options for a period of up to five years beginning on the day after their term of office or employment ends.

5. Restriction on Transfer of Stock Options

Approval of the Board of Directors is required for the transfer of ownership of stock options.

6. Other Items

The Board of Directors will determine other terms for the stock options.

(Reference)

In addition to distributing stock options as compensation to directors, Promise plans to distribute stock options as compensation to executive officers who are not directors and to advisers of a certain level, by resolution of the Board of Directors, as prescribed in the Company Law.