エスペック（6859） – Notice of Convocation Annual General Meeting 2022

Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. To our shareholders: Securities identification code: 6859 June 1, 2022 Satoshi Arata Representative Director and President ESPEC CORP. 3-5-6 Tenjinbashi, Kita-ku, Osaka NOTICE OF THE 69TH ORDINARY GENERAL MEETING OF SHAREHOLDERS You are hereby notified of the 69th Ordinary General Meeting of Shareholders of ESPEC CORP. (the “Company”), which will be held as described below. To prevent the spread of the novel coronavirus disease (COVID-19), to the extent possible we request that all shareholders exercise their voting rights in advance via postal mail or the Internet, etc. 1. Date and Time: Thursday, June 23, 2022 at 10:00 a.m. (Japan Standard Time) 2. Venue: Yae Room 5th floor, Imperial Hotel, Osaka 1-8-50 Temmabashi, Kita-ku, Osaka 3. Purposes: Items to be reported: Items to be resolved: 1. Business Report and Consolidated Financial Statements for the 69th Term (from April 1, 2021 to March 31, 2022), as well as the results of audit of the Consolidated Financial Statements by the Accounting Auditor and the Audit & Supervisory Board 2. Non-Consolidated Financial Statements for the 69th Term (from April 1, 2021 to March 31, 2022) Proposal 1: Appropriation of surplus Proposal 2: Partial amendments to the Articles of Incorporation Proposal 3: Election of seven (7) Directors (excluding Directors who are Audit & Supervisory Committee Members) Proposal 4: Election of three (3) Directors who are Audit & Supervisory Committee Members Proposal 5: Election of one (1) Substitute Director who is an Audit & Supervisory Committee member Proposal 6: Proposal 7: Proposal 8: Determination of amount of monetary remuneration of Directors (excluding Directors who are Audit & Supervisory Committee Members) Determination of amount of monetary remuneration of Directors who are Audit & Supervisory Committee Members Determination of amount and details of remuneration related to a performance-linked share-based remuneration system for Directors, etc. (excluding Outside Directors and Directors who are Audit & Supervisory Committee Members) – 1 – Reference Documents for the General Meeting of Shareholders Proposals and Reference Matters Proposal 1 Appropriation of surplus In addition to recognizing that returning profits to our shareholders is one of our major management challenges, the Company also considers increased shareholder value to be rooted in the perpetual expansion of corporate value, and as such makes it its basic policy to set dividends in light of continuity and dividend payout ratio. Based on the basic policy described above, the Company would like to set the year-end dividends as follows: Matters related to year-end dividends (1) Allocation of dividend property and total amount thereof 42 yen per common share of the Company Total amount of dividends: 947,081,016 yen (2) Effective date of distribution of dividends of surplus June 24, 2022 Further, the Company paid an interim dividend of 18 yen, so the dividend for the entire fiscal year is 60 yen per share. – 2 – Proposal 1 Partial amendments to the Articles of Incorporation 1. Reasons for the amendments (1) The Company has long been working to strengthen its corporate governance, aiming to achieve sustainable growth and improve its corporate value over the medium to long term. Seeking to enhance deliberations in the Board of Directors meetings and further strengthen the Board of Directors’ supervisory functions, the Company has now decided to transition to a Company with Audit & Supervisory Committee. Under this structure, directors who are Audit & Supervisory Committee Members hold voting rights in the Board of Directors. The amendments will add provisions related to the Audit & Supervisory Committee and Audit & Supervisory Committee Members, and will delete provisions regarding Corporate Auditors and the Board of Corporate Auditors, etc. Furthermore, in light of the current situation of the Company and a management structure expected in the future, the Company proposes to make changes to Article 25 of its current Articles of Incorporation to clarify positions of Directors, etc. (2) In accordance with the September 1, 2022, enforcement of the proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019), the amendments will add Article 16 (Measures, etc. for Providing Information in Electronic Format) of the proposed amendments and will delete the current Article 16(Online Disclosure of Reference Documents, etc. for shareholders meeting) which will be made unnecessary in the Articles of Incorporation, in order to prepare for the introduction of a system for electronic provision of reference documents for general meetings of shareholders. In accordance with the addition or deletion of the relevant provisions, supplementary provisions regarding effective date, etc. will be added. (3) The amendments will change the number of Articles, will amend wording, and will make other necessary changes associated with the aforementioned additions, changes, and deletions involving the text of Articles. 2. Details of the amendments Details of the amendments are as follows. (Underlined portions indicates changes.) The amendments to the Articles of Incorporation will enter into effect at the conclusion of this Ordinary General Meeting of Shareholders. (However, the time at which addition/deletions of provisions pertaining to 1. (2) above enter into effect will be in accordance with the provisions of Article 1 of the Supplementary Provisions of the proposed amendments.) – 3 – Current Articles of Incorporation Proposed amendments Article 1 through Article 14 (Omitted) Article 1 through Article 14 (Unchanged) Article 15 (Convener and Chair) Article 15 (Convener and Chair) Except as otherwise provided in laws and regulations, a shareholders meeting shall be convened and presided over by the president & director based on a resolution of the board of directors. (2) In the event that the president & director is unable to perform the above duty, one of the other directors shall preside over the meeting according to the order prescribed by the board of directors in advance. Except as otherwise provided in laws and regulations, a shareholders meeting shall be convened and presided over by the representative director stipulated by the board of directors. (2) In the event that the representative director specified in the preceding paragraph is unable to perform the above duty,one of the other directors shall preside over the meeting according to the order prescribed in advance by the board of directors. Article 16 (Online Disclosure of Reference Documents, etc. for (Deletion) shareholders meeting) In convening a shareholders meeting, the Company may provide information on matters to be stated or presented in the reference documents for the shareholders meeting, business reports, financial statements, and consolidated financial statements by disclosure using the Internet in accordance with applicable laws and regulations. (Addition) Article 16 (Measures, etc. for Providing Information in Electronic Format) When the Company convenes a general meeting of shareholders, for providing the content of reference information documents for the general meeting of shareholders, etc. in electronic format. that constitutes take measures it shall (2) Among items for which the measures for providing information in electronic format will be taken, the Company may exclude all or some of those items designated by the Ministry of Justice Order from statements in the paper-based documents to be delivered to shareholders who requested the delivery of paper-based documents by the record date of voting rights. Article 17 through Article 19 (Omitted) Article 20 (Minutes of Meeting) Article 17 through Article 19 (Unchanged) Article 20 (Minutes of Meeting) The proceedings of shareholders meetings shall be entered in writing or an electromagnetic record in accordance with applicable laws and regulations, and the chair and the directors and corporate auditors present shall sign or affix their names and seals, or electronic signatures. The proceedings of shareholders meetings shall be prepared in writing or an electromagnetic record in accordance with applicable laws and regulations. Article 21 (Omitted) Article 22 (Number) Article 21 (Unchanged) Article 22 (Number) Article 23 (Election) Article 23 (Election) The Company shall have eight (8) or fewer directors. (Addition) The directors shall be elected by a resolution of the shareholders meeting, and such resolution shall be put to a vote at a meeting attended by one third (1/3) or more of the voting rights held by shareholders entitled to exercise their voting rights and adopted by a majority of such voting rights. (2) (Article text omitted) The number of directors (excluding those who are audit & supervisory Committee Members) of the Company shall be eight (8) or fewer. The number of directors who are members of the audit & supervisory committee of the Company shall be four (4) or fewer. (2) With directors who are audit & supervisory Committee Members distinguished from other directors, the directors shall be elected by a resolution of the shareholders meeting, and such resolution shall be put to a vote at a meeting attended by one third (1/3) or more of the voting rights held by shareholders entitled to exercise their voting rights and adopted by a majority of such voting rights. (2) (Unchanged) – 4 – Current Articles of Incorporation Proposed amendments Article 24 (Term of Office) Article 24 (Term of Office) The term of office of directors shall be until the closing of the annual shareholders meeting pertaining to the last business year ending within one (1) year following the election thereof. (2) The term of office of any director elected to fill a vacancy or a newly created office shall be until the expiration of the term of office of the other directors currently in office or the relevant directors who have resigned. (Addition) (Addition) (Addition) The term of office of directors (excluding those who are audit & supervisory Committee Members) shall be until the closing of the annual shareholders meeting pertaining to the last business year ending within one (1) year following the appointment thereof. (2) The term of office of directors who are audit & supervisory Committee Members shall be until the closing of the annual shareholders meeting pertaining to the last business year ending within two (2) years following the appointment thereof. (Deletion) (3) The term of office of a director who are an audit & supervisory committee member and who was elected as a substitute for a resigned director who are an audit & supervisory committee member shall be until the expiration of the term of office of the resigned director who are an audit & supervisory committee member. (4) The validity of the provisional election of a director who are a substitute audit & supervisory Committee Members shall be until the start of the annual shareholders meeting pertaining to the last business year ending within two (2) years following the shareholders meeting at which the appointment was made. Article 25 (Representative Director and Directors Holding Managerial Article 25 (Representative Director and President) Positions) The board of directors shall appoint a representative director by its resolution. (2) (Omitted) (3) The board of directors may appoint one (1) president & director, as well as a few senior managing directors and managing directors by its resolution. Representative directors will be appointed from among directors (excluding those who are audit & supervisory Committee Members) by resolution of the board of directors. (2) (Unchanged) (3) One (1) president may be appointed from among directors (excluding those who are audit & supervisory Committee Members) by resolution of the board of directors. Article 26 (Convocation Notice of Board of Directors Meeting) Article 26 (Convocation Notice of Board of Directors Meeting) The convocation notice of a board of directors meeting shall be given to each director and corporate auditor no later than three (3) days prior to the date set for such meeting; provided, however, that this period may be shortened in case of emergency. (2) When all the directors and corporate auditors agree, a board of directors meeting may be held without the convocation procedure. The convocation notice of a board of directors meeting shall be given to each director no later than three (3) days prior to the date set for such meeting; provided, however, that this period may be shortened in case of emergency. (2) When all directors agree, a board of directors meeting may be held without going through the convocation procedure. Article 27 (Omitted) Article 27 (Unchanged) (Addition) Article 28 (Delegation of Important Decisions on the Execution of Business) Pursuant to the provisions of Article 399-13(6) of the Companies Act, the Company may, by resolution of the board of directors, delegate to directors some or all important decisions on the execution of business (excluding matters listed in the items of paragraph (5) of the same Article). (2) If all of the directors (limited to the directors who are entitled to participate in the vote on the relevant matter) have agreed on a matter to be resolved by the board of directors in writing or an electromagnetic record, the Company shall deem that the board of directors has passed a resolution approving such matter. Article 28 (Method of Resolution of Board of Directors) Article 29 (Method of Resolution of Board of Directors) (Omitted) (Unchanged) (2) If all of the directors (limited to the directors who are entitled to participate in the vote on the relevant matter) have agreed on a matter to be resolved by the board of directors in writing or an electromagnetic record, the Company shall deem that the board of directors has passed a resolution approving such matter; provided, however, that this shall not apply in cases where any corporate auditor raises an objection to the method of such resolution. – 5 – Current Articles of Incorporation Proposed amendments Article 29 (Minutes of Board of Directors Meeting) Article 30 (Minutes of Board of Directors Meeting) The proceedings of the board of directors meetings shall be entered in writing or an electromagnetic record in accordance with applicable laws and regulations, and the directors and corporate auditors present shall sign or affix their names and seals, or electronic signatures. The proceedings of the board of directors meetings shall be entered in writing or in an electromagnetic record in accordance with applicable laws and regulations, and the directors present shall sign or affix their names and seals, or electronic signatures. (2) (Omitted) (2) (Unchanged) Article 30 (Omitted) Article 31 (Unchanged) Article 31 (Remuneration, etc.) Article 32 (Remuneration, etc.) Article 32 (Liability Limitation Agreement with Outside Director) Article 33 (Liability Limitation Agreement with Outside Director) The remuneration, bonuses, retirement benefits, and any other property benefits receivable by directors from the Company as consideration for the execution of duties (hereinafter “remuneration, etc.”) shall be determined by resolution of a shareholders meeting, with directors who are audit & supervisory Committee Members distinguished from other directors. The Company may, pursuant to the provisions of Article 427(1) of the Companies Act, make an agreement with outside directors limiting their liability for damages pursuant to Article 423(1) of the Companies Act; provided, however, that the limit of liability for damages under such agreement shall be the “Minimum Liability Amount” as defined in Article 425(1) of the Companies Act. (Deletion) (Deletion) (Deletion) (Deletion) The remuneration, bonuses, retirement benefits, and any other property benefits receivable by directors from the Company as a consideration for the execution of duties shall be determined by a resolution of the shareholders meeting. The Company may, pursuant to the provision of Article 427(1) of the Companies Act, make an agreement with outside directors for limiting their liability for damages arising from neglect of their duties; provided, however, that the limit of liability for damages under such agreement shall be the “Minimum Liability Amount” as defined in Article 425(1) of the Companies Act. Chapter 5 Corporate Auditors and Board of Corporate Auditors Article 33 (Establishment of Corporate Auditors and Board of Corporate Auditors) The Company shall have corporate auditors and a board of corporate auditors. Article 34 (Number) Article 35 (Election) The Company shall have four (4) or fewer corporate auditors. The corporate auditors shall be elected by a resolution of the shareholders meeting, and such resolution shall be adopted by a majority of the voting rights held by the shareholders present at the meeting where the shareholders holding one third (1/3) or more of the voting rights of the shareholders entitled to exercise their voting rights at such shareholders meeting are present. The term of office of the corporate auditors shall be until the closing of the annual shareholders meeting pertaining to the last business year ending within four (4) years following the election thereof. (2) The term of office of any corporate auditor elected to fill a vacancy shall be until the expiration of the term of office of the relevant corporate auditor who has resigned. Article 36 (Term of Office) (Deletion) Article 37 (Full-Time Corporate Auditors) (Deletion) The board of corporate auditors shall appoint one or more full-time corporate auditors from among the corporate auditors. Article 38 (Convocation Notice of Board of Corporate Auditors Meeting) (Deletion) The convocation notice of a board of corporate auditors meeting shall be given to each corporate auditor no later than three (3) days prior to the date set for the relevant meeting; provided, however, that this period may be shortened in case of emergency. (2) Where all the corporate auditors agree, a board of corporate auditors meeting may be held without going through the convocation procedure. – 6 – Current Articles of Incorporation Article 39 (Method of Resolution of Board of Corporate Auditors) Except as otherwise provided in applicable laws and regulations, resolutions of the board of corporate auditors shall be adopted by a majority of the corporate auditors. Proposed amendments (Deletion) Article 40 (Minutes of Board of Corporate Auditors Meeting) (Deletion) Article 41 (Board of Corporate Auditors Rules) (Deletion) Article 42 (Remuneration, etc.) (Deletion) Article 43 (Liability Limitation Agreement with Outside Corporate (Deletion) The proceedings of the board of corporate auditors meetings shall be entered in writing or an electromagnetic record in accordance with applicable laws and regulations, and the corporate auditors present shall sign or affix their names and seals, or electronic signatures. Any matter related to the board of corporate auditors shall be governed by the Board of Corporate Auditors Rules established by the board of corporate auditors, in addition to applicable laws and regulations or these Articles of Incorporation. The remuneration, bonuses, retirement benefits, and any other property benefits receivable by the corporate auditors as a consideration for the execution of duties shall be determined by a resolution of the shareholders meeting. Auditor) The Company may, pursuant to the provision of Article 427(1) of the Companies Act, make an agreement with outside corporate auditors for limiting their liability for damages arising from neglect of their duties; provided, however, that the limit of liability for damages under such agreement shall be the “Minimum Liability Amount” as defined in Article 425(1) of the Companies Act. (Addition) Article 36 (Convocation Notice of Audit & Supervisory Committee (Addition) (Addition) (Addition) Chapter 5 Audit & Supervisory Committee Article 34 (Establishment of Audit & Supervisory Committee) The Company shall have an audit & supervisory committee. Article 35 (Standing Audit & Supervisory Committee Members) The audit & supervisory committee may appoint standing audit & supervisory Committee Members from among audit & supervisory Committee Members. Meetings) The convocation notice of an audit & supervisory committee meeting shall be given to each audit & supervisory committee member no later than three (3) days prior to the date set for said meeting; provided, however, that this period may be shortened in case of emergency. (2) When all audit & supervisory Committee Members agree, an audit & supervisory committee meeting may be held without going through the convocation procedure. Resolutions of the audit & supervisory committee shall be adopted by a majority of the audit & supervisory Committee Members present at the meeting where the majority of the audit & supervisory Committee Members entitled to participate in the vote are present. (Addition) Article 37 (Method of Resolution of Audit & Supervisory Committee) – 7 – Current Articles of Incorporation Proposed amendments (Addition) Article 38 (Minutes of Audit & Supervisory Committee Meetings) (Addition) Article 39 (Audit & Supervisory Committee Rules) The proceedings of audit & supervisory committee meetings shall be entered in writing or in an electromagnetic record in accordance with applicable laws and regulations, and the audit & supervisory Committee Members present shall sign or affix their names and seals, or electronic signatures. Any matter related to the audit & supervisory committee shall be governed by the audit & supervisory committee rules established by the audit & supervisory committee, in addition to applicable laws and regulations or these Articles of Incorporation. Article 44 through Article 46(Omitted) Article 40 through Article 42 (Unchanged) Article 47 (Remuneration, etc. of Accounting Auditor) Article 43 (Remuneration, etc. of Accounting Auditor) The remuneration, etc. receivable by the accounting auditor(s) shall be determined by the president & director with the consent of the board of corporate auditors. The remuneration, etc. of accounting auditors shall be determined by representative directors specified in advance by the board of directors, with the consent of the audit & supervisory committee. Article 48 through Article 51 (Omitted) Article 44 through Article 47 (Unchanged) (Addition) (Addition) Supplementary Provisions Article 1 (Transitional Measures for Providing Informational Materials for the General Meeting of Shareholders in Electronic Format) The deletion of Article 16 (Online Disclosure of Reference Documents, etc. for shareholders meeting) in the current Articles of Incorporation and the establishment of the new Article 16 (Measures, etc. for Providing Information in Electronic Format) in the proposed amendments shall be effective from September 1, 2022, which is the date of enforcement of the revised provisions provided for in the proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019) (hereinafter referred to as the “Date of Enforcement”) (2) Notwithstanding the provisions of the preceding paragraph, Article 16 of the current Articles of Incorporation shall remain effective regarding any general meeting of shareholders held on a date within six (6) months from the Date of Enforcement. (3) These Supplementary Provisions shall be deleted on the date when six (6) months have elapsed from the Date of Enforcement or three (3) months have elapsed from the date of the preceding the general meeting of shareholders paragraph, whichever is later. in – 8 – Proposal 3 Election of seven (7) Directors (excluding directors who are Audit & Supervisory Committee Members) If Proposal 2 “Partial amendments to the Articles of Incorporation” is approved and passed as originally proposed, the Company will make a transition to a “Company with Audit & Supervisory Committee,” and the terms of office of all eight (8) Directors will expire at the time that the amendments to the Articles of Incorporation enter into effect. Accordingly, the Company proposes to appoint seven (7) Directors (excluding Directors who are Audit & Supervisory Committee Members; the same shall apply hereinafter in this proposal). This proposal shall enter into effect on the condition that the amendments to the Articles of Incorporation in Proposal 2 “Partial amendments to the Articles of Incorporation” enter into effect. The candidates for Directors are as follows: No. Name １ Masaaki Ishida Reelection ２ Satoshi Arata Reelection ３ Kazuhiro Suehisa Reelection Current Position in the Company Representative Director and Chairperson Representative Director and President Director and Managing Executive Officer Number of Years in Office as a Director 14 years 4 years 4 years ― ― ４ Keiji Oshima New candidate Executive Officer ５ Junko Nishitani New candidate Executive Officer ６ Akihiko Yanagitani Outside Director 1 year Reelection, Candidate for Outside Director, and Candidate for Independent Officer New candidate, Candidate for Outside Director, and Candidate for Independent Officer ７ Kazuo Hirata ― ― Notes: 1. The tenure as a Director for each candidate is tenure as of the date of this meeting. 2. There is no special interest between any of the candidates and the Company. 3. Keiji Oshima, Junko Nishitani and Kazuo Hirata are new candidate for Director. 4. The Company has entered into a directors and officers liability insurance policy as stipulated in Article 430-3 paragraph 1 of the Companies Act with an insurance company. An overview of the policy details is provided on page 16 of the Business Report. If the proposal is passed and the candidates assume office as Directors, they will be included in the insured persons of the insurance policy. Furthermore, the Company plans to renew the insurance policy with the same details at the next renewal date. 5. The Company has entered into a limited liability agreement with Akihiko Yanagitani to ensure that he can fulfill his expected roles, and plans to renew the said agreement provided that this proposal is passed and he assume office as Outside Directors. Further, plans to renew the said agreement provided that this proposal is passed and Kazuo Hirata assume office as Outside Directors. The summary of the limited liability agreement is as follows: • If the said Outside Director incurs liability for damages arising out of failure to perform his duties, his liability shall be limited to the minimum amount provided for in Article 425, paragraph 1 of the Companies Act. • The above limitation shall only apply when it is recognized that the Outside Director performed the duties giving rise to such liability in good faith and with no gross negligence. – 9 – Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） 14years Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 13 out of 13 Attendance rate: 100% Number of Company shares held 73,058 shares Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） 4 years Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 13 out of 13 Attendance rate: 100% Number of Company shares held 30,850 shares Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） 4 years Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 13 out of 13 Attendance rate: 100% Number of Company shares held 13,923 shares Masaaki Ishida (November 26, 1954) No. 1 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1977 Joined the Company June 2008 Director June 2009 Managing Director Apr. 2011 President Apr. 2022 Representative Director and Chairperson (present position) Reasons for nomination as a candidate for Director: The candidate has primarily committed himself to the development of the Company’s operations in the fields of research and development, quality assurance and international operations, etc. Since 2011, he has demonstrated leadership and has led the Group’s growth strategy in his role as President. Further, on the Board of Directors, in addition to appropriately managing proceedings as Chairman, he draws on his wealth of experience and achievements to decide on important matters and oversee the execution of business operations. For these reasons, he has been nominated as a candidate having been deemed fully capable of continuing to fulfill his role as Director. Satoshi Arata (October 7, 1966) No. 2 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1991 Joined the Company Apr. 2018 Senior Executive Officer June 2018 Director Apr. 2019 Chief Officer, Environmental Test Equipment Headquarters Apr. 2021 Chief Officer, International Business Headquarters General Manager, Fukuchiyama Plant Apr. 2022 Representative Director and President (present position) (Significant concurrent positions outside the Company) Director, ESPEC NORTH AMERICA, INC. Chairman, SHANGHAI ESPEC ENVIRONMENTAL EQUIPMENT CORP. Chairman, ESPEC ENVIRONMENTAL EQUIPMENT (SHANGHAI) CO., LTD. Chairman, ESPEC TEST EQUIPMENT (GUANGDONG) CO., LTD. Director, ESPEC (CHINA) LIMITED Reasons for nomination as a candidate for Director: The candidate has primarily committed himself to the development of the Company’s operations in the fields of the China business, etc., and had currently promoted growth strategy as the Chief Officer of Environmental Test Equipment Headquarters, the Chief Officer of International Business Headquarters. Since 2022, he has been demonstrating leadership and leading the Group’s growth strategy in his role as Representative Director and President. He also draws on his wealth of experience and achievements to decide on important matters and oversee the execution of business operations on the Board of Directors. For these reasons, he has been nominated as a candidate having been deemed fully capable of continuing to fulfill his role as Director. No. 3 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1987 Joined the Company Apr. 2018 Senior Executive Officer June 2018 Director (present position) Apr. 2021 Chief Officer, Business Development Headquarters Kazuhiro Suehisa (November 26, 1963) Chief Officer, Production Management Headquarters (present position) Apr. 2022 Director and Managing Executive Officer (present position) Technical Supervisor (present position) In charge of Production (present position) Plant Manager, Fukuchiyama (present position) (Significant concurrent positions outside the Company) President, ESPEC TEST SYSTEM CORP. President, ESPEC THERMALTECH SYSTEM CORP. Reasons for nomination as a candidate for Director: The candidate has primarily committed himself to the development of the Company’s operations in the fields of product development and design, etc., and is currently promoting growth strategy as the Technical Supervisor,In charge of Production and Chief Officer of Production Management Headquarters. He also draws on his wealth of experience and achievements to decide on important matters and oversee the execution of business operations on the Board of Directors. For these reasons, he has been nominated as a candidate having been deemed fully capable of continuing to fulfill his role as Director. – 10 – Keiji Oshima (February 14, 1958) No. 4 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1983 Joined the Company Apr. 2008 General Manager, General Affairs & Human Resources Department Apr. 2012 Chief Officer of Management June 2013 Director Apr. 2016 Senior Executive Officer Apr. 2022 Executive Officer (present position) Chief Officer of Corporate Control Headquarters (present position) Chief Officer of Export Control Group (present position) In charge of Management (present position) Reasons for nomination as a candidate for Director: The candidate has worked in the fields of Management and Corporate Planning for many years, and is currently engaged in stakeholder management as the Chief Officer of Corporate Control Headquarters and the Chief Officer of the Export Control Headquarters. He has been nominated as a candidate having been deemed fully capable of drawing on his wealth of experience and achievements to fulfill his role as Director. Junko Nishitani (August 10, 1959) No. 5 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1982 Joined the Company Apr. 2014 General Manager, Corporate Communication Department Apr. 2016 General Manager, Espec Vision Support Department Apr. 2017 Executive Officer (present position) Apr. 2019 General Manager, Sustainability Management Apr. 2022 In charge of Sustainability (present position) In charge of IR and PR (present position) Chief Officer of Sustainability Management Headquarters (present position) Reasons for nomination as a candidate for Director: The candidate has been involved in efforts aimed at penetration of the corporate philosophy and branding for many years, and is currently engaged in stakeholder management as the person in charge of IR and PR and as the Chief Officer of the Sustainability Promotion Headquarters. She has been nominated as a candidate having been deemed fully capable of drawing on his wealth of experience and achievements to fulfill his role as Director. Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year － Number of Company shares held 24,267 shares Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year － Number of Company shares held 6,876 shares Akihiko Yanagitani (June 22, 1955) No. 6 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1981 Joined Sanyo Special Steel Co., Ltd. June.2017 Director, Senior Managing Executive Officers, Sanyo Special Steel Co., Ltd. June.2018 Specially Appointed Professor, University of Hyogo (present position) Jan. 2019 Fellow, Sanyo Special Steel Co., Ltd. Apr. 2019 Guest Professor, Osaka University (present position) June.2021 Outside Director, the Company (present position) Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） 1 year Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 10 out of 10 Attendance rate: 100% Number of Company shares held 126 shares Reasons for nomination as a candidate for Director: In addition to his wealth of insight and experience gained through company management and research into industry-academia collaboration, etc., the candidate is considered to be highly independent and to present no risk of conflict of interest with general shareholders, and has therefore been nominated as a candidate having been deemed fully capable of continuing to fulfill his role as Outside Director. Matters related to independence: The candidate satisfies the Criteria for the Independence of Outside Officers of the Company established by the Company (listed on pg. 16). The Company has appointed him to the position of Independent Officer, a position required by the Tokyo Stock Exchange, and plans to renew his appointment as an Independent Officer provided that this proposal is passed and he assumes office as an Outside Director. – 11 – No. 7 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1971 Joined Nippon Telegraph and Telephone Public Corporation Kazuo Hirata (December 4, 1946) (Current NIPPON TELEGRAPH AND TELEPHONE CORPORATION) July 1993 Deputy Director, Nippon Telegraph and Telephone Public Corporation. Apr. 1996 Joined New Japan Radio Co., Ltd(Current Nisshinbo Micro Devices Inc.) June 2007 President and Representative Director, New Japan Radio Co., Ltd Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year － Number of Company shares held － Reasons for nomination as a candidate for Director: In addition to his wealth of insight and experience gained through company management, etc., the candidate is considered to be highly independent and to present no risk of conflict of interest with general shareholders, and has therefore been nominated as a candidate having been deemed fully capable of continuing to fulfill his role as Outside Director. Matters related to independence: The candidate satisfies the Criteria for the Independence of Outside Officers of the Company established by the Company (listed on pg. 16). The Company has appointed him to the position of Independent Officer, a position required by the Tokyo Stock Exchange, and plans to renew his appointment as an Independent Officer provided that this proposal is passed and he assumes office as an Outside Director. – 12 – Proposal 4 Election of three (3) Directors who are Audit & Supervisory Committee Members If Proposal 2 “Partial amendments to the Articles of Incorporation” is passed as originally proposed, the Company will make a transition to a “Company with Audit & Supervisory Committee.” Accordingly, the Company proposes to appoint three (3) Directors who are Audit & Supervisory Committee Members. The Company has received the consent of the Audit & Supervisory Board for the proposal. This proposal will enter into effect on the condition that the amendments to the Articles of Incorporation in Proposal 2 “Partial amendments to the Articles of Incorporation” enter into effect. The candidates for Directors who are Audit & Supervisory Committee Members are as follows: No. Name １ Kunikazu Ishii New candidate ２ Takahiro Tanaka ３ Yasuko Yoshida New candidate, Candidate for Outside Director, and Candidate for Independent Officer New candidate, Candidate for Outside Director, and Candidate for Independent Officer Notes: 1. There is no special interest between the candidate and the Company. Current Position in the Company The Standing Audit & Supervisory Board Member Outside Audit & Supervisory Board Member Outside Audit & Supervisory Board Member Number of Years in Office as a Director － － － 2. Kunikazu Ishii, Takahiro Tanaka and Yasuko Yoshida are a new candidate for Outside Audit & Supervisory Board Member. 3. The Company has entered into a directors and officers liability insurance policy as stipulated in Article 430-3 paragraph 1 of the Companies Act with an insurance company. An overview of the policy details is provided on page 16 of the Business Report. If the proposal is passed and the candidates assume office as Directors who are Audit & Supervisory Committee Members, they will be included in the insured persons of the insurance policy. Furthermore, the Company plans to renew the insurance policy with the same details at the next renewal date. 4. The Company plans to enter into a limited liability agreement with Takahiro Tanaka and Yasuko Yoshida to ensure that they can fulfill their expected roles provided that this proposal is passed and their assumes office as Outside Directors. The summary of the limited liability agreement is as follows: ・If the said Outside Director incurs liability for damages arising out of failure to perform his duties, his liability shall be limited to the minimum amount provided for in Article 425, paragraph 1 of the Companies Act. ・The above limitation shall only apply when it is recognized that the Outside Director performed the duties giving rise to such liability in good faith and with no gross negligence. – 13 – Kunikazu Ishii (May 27, 1958) No. 1 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1981 Joined the Company Apr. 2002 Executive Officer Apr. 2008 President, ESPEC TECHNO CORP. (now ESPEC TEST SYSTEM CORP.) June 2009 Director Apr. 2011 Director, ESPEC NORTH AMERICA, INC. June 2012 Managing Director June 2019 The Standing Audit & Supervisory Board Member (present position) Reasons for nomination as a candidate for Director who is Audit & Supervisory Committee Member : The candidate has been nominated as a candidate having been deemed fully capable of fulfilling his role as an Audit & Supervisory Board Member because of his wealth of accumulated experience and knowledge gained through his professional experience as a Director of the Company and through the management of Japanese and U.S. subsidiaries. No. 2 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 2000 Registered with the Osaka Bar Association Takahiro Tanaka (January 17, 1973) Joined Nakanoshima Chuo Law Office Jan. 2007 Partner, Nakanoshima Chuo Law Office (present position) June 2010 Outside Audit & Supervisory Board Member, Shinko Wire Company, Ltd. Apr. 2014 Visiting Professor, Graduate School of Intellectual Property, Osaka Institute of Technology (present position) June 2015 Outside Director, Shinko Wire Company, Ltd. (present position) June 2019 Outside Director, FUNAI ELECTRIC CO., LTD. June 2020 Outside Audit & Supervisory Board Member, the Company (present position) Reasons for nomination as a candidate for Outside Director who is Audit & Supervisory Committee Member : In addition to his wealth of insight and experience gained as an attorney, the candidate is considered to be highly independent and to present no risk of conflict of interest with general shareholders, and has therefore been nominated as a candidate having been deemed fully capable of continuing to fulfill his role as Outside Director. Matters related to independence: The candidate satisfies the Criteria for the Independence of Outside Officers of the Company established by the Company (listed on pg. 16). The Company plans to appoint him to the position of Independent Officer, a position required by the Tokyo Stock Exchange provided that this proposal is passed and he assumes office as an Outside Director. No. 3 Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Oct. 2000 Joined Asahi & Co. (now KPMG AZSA LLC) May. 2004 Registered as a certified public accountant July. 2005 Registered as a certified tax accountant Yasuko Yoshida (November 26, 1976) Launched Yoshida Certified Public Accountant Office (present position) Feb. 2019 Outside Audit & Supervisory Board Member, OSAKA ORGANIC CHEMICAL INDUSTRY LTD. May. 2021 Registered as U.S. Certified Public Accountant (State of Washington) June 2021 Outside Audit & Supervisory Board Member, the Company (present position) Reasons for nomination as a candidate for Outside Director who is Audit & Supervisory Committee Member : In addition to her wealth of insight and experience gained as a certified public accountant, the candidate is considered to be highly independent and to present no risk of conflict of interest with general shareholders, and has therefore been nominated as a candidate having been deemed fully capable of continuing to fulfill her role as Outside Director. Matters related to independence: The candidate satisfies the Criteria for the Independence of Outside Officers of the Company established by the Company (listed on pg. 16). The Company plans to appoint him to the position of Independent Officer, a position required by the Tokyo Stock Exchange provided that this proposal is passed and she assumes office as an Outside Director. – 14 – Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 13 out of 13 Attendance rate: 100% Number of Company shares held 36,589 shares Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 13 out of 13 Attendance rate: 100% Number of Company shares held 545 shares Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 10 out of 10 Attendance rate: 100% Number of Company shares held 211 shares The composition of the Board of Directors and the skill matrix of Directors’ experience and expertise if Proposals 3 and 4 are approved and passed are as follows: Experience and expertise Name Outside E F G H (Reference) Position in the Company after the proposals are approved and passed Director and Chairperson Director and President Director and Managing Executive Officer Director and Executive Officer Director and Executive Officer Masaaki Ishida Satoshi Arata Kazuhiro Suehisa Keiji Oshima Junko Nishitani Akihiko Yanagitani Director Kazuo Hirata Director Kunikazu Ishii Takahiro Tanaka Yasuko Yoshida Director (Audit & Supervisory Committee member) Director (Audit & Supervisory Committee member) Director (Audit & Supervisory Committee member) ● ● ● ● A ● ● ● ● ● ● B ● ● ● C ● ● ● D ● ● ● ● ● ● ● ● ● ● ● ● ● ● Note: The above list does not cover all of the knowledge and experience of the candidates. A. Experience and expertise B. International experience C. ESG D. Technology development and manufacturing E. Sales and marketing F. Human resource labor and development G. Finance and accounting H. Legal affairs – 15 – Proposal 5 Election of one (1) Substitute Director who is an Audit & Supervisory Committee Member If Proposal 2 “Partial amendments to the Articles of Incorporation” is approved and passed as originally proposed, the Company will make a transition to a “Company with Audit & Supervisory Committee.” Accordingly, the Company proposes to appoint one (1) substitute Director who are an Audit & Supervisory Committee Member, in preparation for the event that the number of Directors who are Audit & Supervisory Committee Members falls short of the number stipulated by laws and regulations. A resolution on this proposal will be effective until the start of the Ordinary General Meeting of Shareholders pertaining to the last business year ending within two (2) years after the resolution, and the appointments may be revoked by a resolution of the Bo ard of Directors with the consent of the Audit & Supervisory Committee, only prior to the assumption of office. The Company has received the consent of the Audit & Supervisory Board for the proposal. This proposal will enter into effect on the condition that the amendments to the Articles of Incorpo ration in Proposal 2 “Partial amendments to the Articles of Incorporation” enter into effect. The candidates for substitute Directors who are an Audit & Supervisory Committee Member are as follows: Masahiko Tsutsumi (April 27, 1954) Career Summary, Position and Responsibilities (Significant concurrent positions outside the Company) Apr. 1978 Joined Auditing Firm Chuo Accounting Office Feb. 1981 Registered as a certified public accountant Feb. 1994 Launched Tsutsumi Certified Public Accountant Office (present position) June 2005 Outside Audit & Supervisory Board Member, TOYO SHUTTER CO., LTD. June 2014 Outside Audit & Supervisory Board Member, the Company (present position) Aug. 2022 Representative Alpha Tax Accountants’ Corporation (present position) Number of Years in Office as a Director（At the close of this General Meeting of Shareholders） － Attendance at Board of Directors meetings during the current fiscal year Board of Directors meetings: 13 out of 13 Attendance rate: 100% Number of Company shares held 2,272 shares Reasons for nomination as candidate for Substitute Director who is an Audit & Supervisory Committee member: In addition to his wealth of insight and experience gained as a certified public accountant, the candidate is considered to be highly independent and to present no risk of conflict of interest with general shareholders, and has therefore been nominated as a candidate having been deemed fully capable of continuing to fulfill he assumes office as an Outside Director. Matters related to independence: The candidate satisfies the Criteria for the Independence of Outside Officers of the Company established by the Company (listed on pg. 16). The Company plans to appoint him to the position of Independent Officer, a position required by the Tokyo Stock Exchange provided that this proposal is passed and she assumes office as an Outside Director. Notes: 1. The candidate is no special interest between the candidate and the Company. 2. Masahiko Tsutsumi is a new candidate for Substitute Director who are an Audit & Supervisory Committee Member. 3. The Company has entered into a directors and officers liability insurance policy as stipulated in Article 430-3 paragraph 1 of the Companies Act with an insurance company. An overview of the policy details is provided on page 16 of the Business Report. If the proposal is passed and the candidates assume office as Substitute Director who are an Audit & Supervisory Committee Member, he will be included in the insured persons of the insurance policy. Furthermore, the Company plans to renew the insurance policy with the same details at the next renewal date. 4. The Company plans to enter into a limited liability agreement with Masahiko Tsutsumi to ensure that they can fulfill their expected role provided that this proposal is passed and he assumes office as an Outside Director. The summary of the limited liability agreement is as follows: ・If the said Outside Director incurs liability for damages arising out of failure to perform his duties, his liability shall be limited to the minimum amount provided for in Article 425, paragraph 1 of the Companies Act. ・The above limitation shall only apply when it is recognized that the Outside Director performed the duties giving rise to such liability in good faith and with no gross negligence. (Reference)・Overview of directors and officers liability insurance policy The Company has concluded a directors and officers liability insurance policy as provided under Article 430-3 paragraph 1 of the Companies Act with an insurance company. The insureds under the policy are officers of the Company and its subsidiaries. The Directors and Audit & Supervisory Board Members of the Company bear around 10% of the cost of the premiums (a portion corresponding to the rider providing coverage for shareholder representative lawsuits). In brief, the policy provides coverage by the insurance company for liabilities arising from claims received by the insureds in relation to liabilities they have assumed in the execution of their duties, or the pursuit of such liabilities. The policy is renewed each year. (Reference)・Criteria for the Independence The Company shall judge Outside Officers to be independent unless any of the following items apply. (1) The party is a business executor of the ESPEC Group*1, or was a business executor of the ESPEC Group during the past 10 years. (2) The party is an entity for which the ESPEC Group is a major business partner*2, or a business executor of said entity. (3) The party is a major business partner of the ESPEC Group*3, or a business executor of said major business partner. (4) The party receives 5 million yen or more per year or other financial compensation, excluding remuneration as a director or audit & supervisory board member, from the ESPEC Group as a consultant, accountant, or lawyer (or an employee of a corporation, cooperative and other organization receiving such compensation). (5) The party is a person or corporate business executor receiving contributions or subsidies in the amount of 5 million yen or more per year from the ESPEC Group during the most recent fiscal year. (6) The party is a person who falls under 2 through 5 above during the past 3years. (7) The party is the next of kin*5of a person who falls under 2 through 6 above (limited to important persons*4) *1. “A business executor” refers to an executive director, executive officer or equivalent party or employee. *2. “A major business partner” refers to a business partner providing products or services to the ESPEC Group whose transaction amounts exceeded 2% of yearly consolidated net sales in the most recent business year. *3. “The party is a major business partner of the ESPEC Group” refers to a business partner refers to a business partner which the ESPEC Group provides products or services to whose transaction amounts exceeded 2% of yearly consolidated net sales in the most recent business year. *4. “Important persons” refers to officers or employees in upper management with a rank of department head or higher. *5. “Next of kin” refers to a spouse or relative to the second degree. – 16 – Proposal 6 Determination of amount of monetary remuneration of Directors (excluding Directors who are Audit & Supervisory Committee Members) If Proposal 2 “Partial amendments to the Articles of Incorporation” is passed as originally proposed, the Company will make a transition to a “Company with Audit & Supervisory Committee.” The amount of monetary remuneration for Directors of the Company had been approved at the 55th Ordinary General Meeting of Shareholders convened on June 24, 2008, up to an amount of ¥300 million per year. In line with the transition to a Company with an Audit & Supervisory Committee, the Company proposes the abolition of the current monetary remuneration framework for Directors and a new amount of monetary remuneration for Directors (excluding Directors who are Audit & Supervisory Committee Members), which will be set to the same amount, ¥300 million or less per year (including ¥25 million or less for Outside Directors). An outline of the content of policy for decisions concerning the details of individual remuneration for Directors in the fisc al year under review is as described on page 17. If Proposal 2 and Proposals 6 through 8 are approved, the Company plans to change the content as stated on page 17. The content of this proposal is in line with the policy and reasonable, as it was determined through a comprehensive consider ation of factors including the scale of the Company’s business, the Officer remuneration system and its level of payment, the current number of Officers, and future trends, and therefore the proposal is believed to be appropriate. The Company intends that the amount of monetary remuneration for Directors (excluding Directors who are Audit & Supervisor y Committee Members) under this proposal will not include the employee portion of salary for those who also continue to serve as employees. If Proposals 2 and 3 are approved and passed as originally proposed, the number of Directors (excluding Directors wh o are Audit & Supervisory Committee Members) will be seven (7) (including two (2) Outside Directors). This proposal shall enter into effect on the condition that the amendments to the Articles of Incorporation in Proposal 2 “Partial amendments to the Articles of Incorporation” enter into effect. (Reference) Company resolved at the Board of Directors meeting held on December 7, 2015, policy for decisions concerning the details of individual remuneration for Directors. An outline of the contents are as follows. ・As a basic policy, the Company shall ensure that its decisions regarding the compensation of directors are fair and rational. At the same time, the compensation structure shall provide directors with suitable incentives for raising their motivation to achieve sustainable growth and improve corporate value over the medium to long term for the Company. ・Compensation of internal directors shall consist of a fixed amount of basic compensation set based on considerations such as rank and tenure, and a performance-linked compensation set based on the Company’s business performance in each fiscal year. Outside directors receive only a fixed amount of basic compensation because of their non-executive status and from the standpoint of ensuring independence. The Board of Directors decides the amount of compensation for each director following a review by the Nomination and Compensation Committee. ・Audit & supervisory board members receive only a fixed amount of basic compensation from the standpoint of ensuring independence. The Audit & Supervisory Board decides the amount of compensation for each audit & supervisory board member following a review by the Nomination and Compensation Committee. (Reference) If Proposal 2 “Partial amendments to the Articles of Incorporation” is passed as originally proposed, policy for decisions concerning the details of individual remuneration for Directors following transition to a Company with Audit & Supervisory Committee are as follows. ・As a basic policy, the Company shall ensure that its decisions regarding the compensation of directors are fair and rational. At the same time, the compensation structure shall provide directors with suitable incentives for raising their motivation to achieve sustainable growth and improve corporate value over the medium to long term for the Company. ・Compensation of Directors (excluding Outside Directors and Directors who are Audit & Supervisory Committee members) shall consist of a fixed amount of basic compensation set based on considerations such as rank and tenure, and a performance-linked compensation set based on the Company’s business performance in each fiscal year. ・Outside directors receive only a fixed amount of basic compensation because of their non-executive status and from the standpoint of ensuring independence. ・The Board of Directors (excluding directors who are Audit & Supervisory Committee members) decides the amount of compensation for each director following a review by the Nomination and Compensation Committee. ・Directors who are Audit & Supervisory Committee members receive only a fixed amount of basic compensation because of their non-executive status and from the standpoint of ensuring independence. The Directors who are Audit & Supervisory Committee decides the amount of compensation for each Directors who are Audit & Supervisory Committee following a review by the Nomination and Compensation Committee. – 17 – Proposal 7 Determination of amount of monetary remuneration of Directors who are Audit & Supervisory Committee Members If Proposal 2 “Partial amendments to the Articles of Incorporation” is passed as originally proposed, the Company will make a transition to a “Company with Audit & Supervisory Committee.” Accordingly, the Company proposes the setting of the amount of remuneration, etc. for Directors who are Audit & Supervisory Committee Members to ¥80 million or less per year, taking into consideration economic conditions and other circumstances. An outline of the content of policy for decisions concerning the details of individual remuneration for Directors in the fisc al year under review is as described on page 17. If Proposal 2 and Proposals 6 through 8 are approved, the Company plans to change the content as stated on page 17. The content of this proposal is in line with the above policy and reasonable, as it was determined through a comprehe nsive consideration of factors including the scale of the Company’s business, the Officer remuneration system and its level of payment, the current number of Officers, and future trends, and therefore the proposal is believed to be appropriate. If Proposals 2 and 4 are approved and passed as originally proposed, the number of Directors who are Audit & Supervisory Committee Members will be three (3) (including two (2) Outside Directors) This proposal shall enter into effect on the condition that the amendments to the Articles of Incorporation in Proposal 2 “Partial amendments to the Articles of Incorporation” enter into effect. – 18 – Proposal 8 Determination of amount and details of remuneration related to a performance-linked share-based remuneration system for Directors, etc. (excluding Outside Directors and Dir