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July 30, 2009
Promise Co., Ltd.
The Board of Directors of Promise Co., Ltd. approved a resolution today concerning the terms for the stock options to be granted as stipulated in Articles 236, 238 and 240 of the Corporation Law as compensation for directors, executive officers and advisers who are treated as executive officers and to distribute these stock options.
[A] Reason for Issuing Stock Acquisition Rights as Stock Options
The stock options will be issued to increase the motivation of individuals receiving these options to improve the performance of Promise and its corporate value over the medium-to long-term. The stock options will strengthen the link between the performance of Promise and the value of its stock. Individuals receiving these options will have the potential of benefiting from an increase in the stock price while also having exposure to the risk of a decline in the stock price.
[B] Summary of Terms for Granting Stock Options
1. Name of Stock Options
First Issue of Promise Stock Options for Compensation
2. Date of Stock Options Distribution
August 19, 2009
3. Individuals Receiving Stock Options
Eight directors, nine executive officers, and five advisers of Promise who are treated as executive officers
4. Number of Stock Options Issued
621 (Each stock option can be used to purchase 50 shares. However, if there is an adjustment in the number of shares as prescribed in item 7 below, the number of shares per option will be adjusted in the same manner.)
5. Stock Options Issue Price
The stock options are issued when they are allocated by using a fair calculation method, the Black-Scholes Model.
6. Amount Paid for Stock Options
The stock options are issued as compensation for directors and executive officers based on the fair value of the options as calculated using the Black-Scholes Model. Consequently, no payment is required when a stock option is received.
7. Type and Number of Shares to be Issued upon Exercise of Stock Options
31,050 shares of Promise common stock
8. 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.
9. Exercise Period of Stock Options
The stock options can be exercised from August 20, 2009, until July 31, 2049. However, if the last day of the exercise period is a company holiday, the last day will instead be the prior business day.
10. Increases in Common Stock and Capital Reserve due to Issue of Stock upon Exercise of Stock Options
1) If stock is issued upon the exercise of a stock option, the increase in common stock will be half of the limit for the increase in capital, etc. that is calculated pursuant to Article 17, Paragraph 1 of the company calculation rules. Any fractions of one yen will be rounded up.
11. Conditions for Exercising of Stock Options
A stock option holder, which includes Promise directors, corporate auditors, executive officers and advisers who are treated as executive officers, 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.
12. Conditions for Cancelation and Retirement of Stock Options
1) A stock option will be canceled if a stock option holder has not exercised the option by the end of the stock option exercise period prescribed in items 9 and 11.
(a) When the stock option holder has committed a serious crime that is covered by criminal laws.
13. Reasons for Acquisition of Stock Options by Promise and Terms for Acquisition
If any of the following items is approved at a shareholders meeting (or by the Board of Directors if not approved at a shareholders meeting), Promise can acquire all stock options not yet exercised with no compensation:
14. Inheritance of Stock Options
1) If a stock option holder dies, only one legal heir who is either the spouse or a relative in the first degree (“heir") can exercise the stock option(s). However, the exercise period for the heir ends after the six-month period that begins on the day following the day that the stock option inheritance was decided.
15. Restriction on Transfer of Stock Options
Approval of the Board of Directors is required for the transfer of ownership of stock options.
16. Handling of Stock Options if Promise Is Reorganized
If there is a reorganization (merger, absorption and divestiture, divestiture forming a new company, exchange of stock, stock transfer, etc.) of Promise, irrespective of the terms of item 11, the stock options can be exercised starting on the day after the reorganization was decided until the day before the reorganization takes place.
17. Discarding of Fractional Shares when Exercising Stock Options
If the exercise of a stock option results in a fraction of one share, the fractional share will be discarded.
18. Location for Payment upon Exercise of Stock Options
Sumitomo Mitsui Banking Corporation, Head Office
19. Other Items
All other conditions shall follow the agreement on the granting of stock options between the Company and the recipient.
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