M&A, RESTRUCTURING AND FA OPERATIONS IN THE DIGITAL AGE

DECLARATION OF COMPLIANCE WITH THE GUIDELINES FOR SMALL AND MEDIUM M&A (3RD EDITION)

We hereby declare that we are a support organization registered under the M&A Support Organization Registration System established by the Japanese government, and that we comply with the "Guidelines for Small and Medium-sized M&A (Third Edition)" (August 2024) established by the Small and Medium Enterprise Agency.
In compliance with the SME M&A Guidelines, we are implementing the following initiatives and responses. We do not enter into brokerage agreements.

Description:
○ Efforts to ensure and improve the quality of support

1 We will fulfill our obligations under the contract with the client.
-We will perform FA services with the care of a good manager (duty of care).
-We will not benefit ourselves or third parties at the expense of the client's interests.

2 Regardless of whether we are contractually obligated to do so, as a matter of professional ethics, we will respect the wishes of our clients and respond in a manner that realizes their interests.

3 The representative recognizes that in order to ensure and improve the quality of support, it is essential to (1) improve knowledge and capabilities, and (2) conduct business appropriately, and has sent out a message internally and externally stating that such efforts are important. In addition, we will implement initiatives consistent with the message we have sent out.

4 Effective efforts are being made to improve knowledge and skills.

5 Efforts are being made to ensure proper operations by officers and employees who perform support services.

6 When outsourcing a part of our business to a third party, we implement measures to ensure the proper execution of business by the outsourced company.

○SPECIFIC GUIDELINES FOR ACTION IN THE M&A PROCESS

[Decision Making]
7 Based on our professional expertise, we make practical proposals to our clients and assist them in their M&A decision making. In doing so, we will keep the following points in mind.
-Explain clearly to the client the possible material advantages and disadvantages of the proposed transaction to the best of our knowledge.
-With respect to the handling of the client's corporate information prior to the conclusion of an FA agreement, we are aware that we owe a duty of care to good managers (duty of care of a good manager), and we will handle the information in an appropriate manner.

8 We will properly conduct advertisements and sales activities for the conclusion of FA contracts in compliance with the following rules.
*In addition, in conducting advertisements and sales activities, we are required to observe professional ethics, and we note that we may be liable for tort under the Civil Code if, in light of past responses, frequency, etc., they are excessive and cause significant disruption to the business activities and lives of the managers of the SMEs to which we advertise and sales activities are conducted.
-If the advertising/sales partner indicates that it does not intend to implement M&A, that it does not wish to conclude an FA agreement, or that it does not wish to continue receiving advertising/sales (hereinafter referred to as "intention to cease") If the advertising/sales partner indicates that it does not intend to implement M&A, that it does not wish to conclude an FA agreement, or that it does not wish to continue receiving advertising/sales (hereinafter referred to as "intention to suspend"), we will not reject the intention to suspend and immediately suspend advertising/sales.
-If the advertising/business partner indicates its intention to cease advertising/business, we will systematically record and share the details of such intention.

-If we decide to resume advertising or sales to a person who has indicated a desire to suspend, we will do so after careful consideration and through a systematic decision (a decision made through a systematic process, not limited to a single person in charge, under clearly defined criteria, that is systematically recorded and verifiable after the fact). The decision will be based on the following criteria.
(2) We do not advertise or market in the following manner in order to appropriately support the decision-making of the small and medium-sized enterprises to which we advertise or market.
(i) Advertisements and sales activities that do not disclose the name of the Company, the name of the person conducting the solicitation, or the fact that the purpose is to solicit the conclusion of an FA agreement
(ii) Advertisements and sales activities that do not give the necessary time for the decision to be made on whether to conclude an FA agreement and proceed with M&A procedures, and that force an immediate decision
(iii) Advertisements and sales activities that do not provide information such as the possibility and conditions for the conclusion of M&A and that do not provide information on the M&A procedures such as the M&A procedures. (iii) Advertisements and sales that are false, factually incorrect, or misleading with respect to matters that influence the decision on whether or not to proceed with M&A procedures, such as the possibility of M&A closing and conditions, etc. (e.g., the following)

 that presents an excessive valuation of the level of the transfer price
 that provides information on the financial condition, future prospects, etc. of the transferee (transferee) that is different from the facts or better than the actual facts.
 that makes any other definitive judgment as to the likelihood of M&A or the terms thereof.

[FA Contracts]
9 FA contracts that match the reality of the type of work are concluded.

10 Before concluding a contract, the firm shall provide a clear explanation to the client by delivering a document describing the important matters (the following (1) to (14)) pertaining to the FA contract, and otherwise obtain the client's understanding.
(1) Difference between an intermediary who concludes a contract with both the transferor and the transferee and advises both parties, and an FA who concludes a contract with only one party and advises only one party, and the characteristics of each (scope and content of services provided for each process such as valuation, matching and negotiation)
(2) Qualifications of the person in charge (2) Qualifications of the person in charge (e.g., certified public accountant, certified tax accountant, small and medium-sized enterprise consultant, lawyer, administrative scrivener, judicial scrivener, certified social insurance labor consultant, other accounting-related certifications (bookkeeping certification, business accounting certification, etc.), years of experience, and track record in closing deals)
(3) Items regarding fees (calculation criteria, amount, minimum fee, deduction of fees already paid, payment timing, etc.)
(4) Expenses to be paid by the client other than fees (types of expenses, timing of payment, etc.)
(5) Matters concerning confidentiality (if a confidentiality obligation is imposed on the client, a statement to that effect, facts subject to confidentiality, partial termination of confidentiality obligation if disclosed to professionals or the Business Succession & Succession Support Center, etc.) (e.g., termination, etc.)
(6) Matters concerning restrictions on direct negotiation (in cases where the client is prohibited from finding a candidate and directly negotiating with a candidate found by the client, a statement to the effect that direct negotiation is prohibited, the candidate to whom direct negotiation is restricted, the scope of the purpose of negotiation, etc.)
(7) Exclusivity clause (e.g., whether a second opinion is permitted)
(8) Tail clause (tail period) (e.g., the period of the contract, the period of renewal (extension of the period), etc.)
(9) Term of the contract (term of the contract, renewal (extension of the term), etc.)
(10) Matters relating to termination of the contract and, if the client is allowed to terminate the FA contract before the expiration date, matters relating to such termination
(11) Matters relating to liability (indemnity) (requirements for liability for damages, including the scope of indemnity amount) (12) Matters relating to the amount of compensation for damages
(12) Clauses that remain in effect after termination of the contract (applicable clauses, validity period, etc.)
(13) (In case of explanation to the transferor) Outline of the investigation to be conducted on the transferee (e.g., investigation on the main body of the investigation, financial status, compliance, business status, etc.)

(14) (In case of explanation to the transferee) (In case of explanation to the transferee) Participation or non-participation in information sharing mechanisms within the industry (if not, a statement to that effect)

11 Explain the contents of the commission and services to be provided, as well as matters relating to the other party's commission, in accordance with the following.
-In addition to clearly explaining matters related to commissions, explain the nature of the services that you will provide in exchange for such commissions. Specifically, the fee rate used for contingency fees, the standard fee amount (transfer price/net assets/total assets transferred, etc.), the minimum fee amount, the timing of fee accrual (initiation fee/monthly fee/interim fee/contingency fee), and other fee calculation criteria and the specific services to be provided shall be explained in writing (including electromagnetic methods such as sending by e-mail, etc.). (Including provision by electromagnetic means such as sending e-mail, etc.). The explanation will be provided in writing (including provision by electromagnetic means such as sending e-mail).
-(2) The business to be provided shall be organized by "M&A process" (if the business is not provided in each process, this shall also be included). (If the business is not provided in each process, this includes a statement to that effect.) (2) Explanation. Specifically, for each "M&A process" in the table in Chapter II, Section II, 4 (i) of the Guidelines, the main business to be provided should be organized and an appropriate explanation should be provided (examples are provided in the "Main business to be provided" column in the same table). -The person(s) in charge of the project.
-Explain the qualifications held by the person in charge (e.g., certified public accountant, certified tax accountant, certified small and medium-sized enterprise consultant, lawyer, administrative scrivener, judicial scrivener, certified social insurance labor consultant, other accounting-related certifications (bookkeeping certification, business accounting certification, etc.), years of experience, and track record of contract execution).
-If the client is not convinced by the explanation given prior to the conclusion of the contract, and if the intermediary/FA is asked to negotiate with the client regarding the services and fees, we will consider a response in good faith.
-When we reduce the client's fee, we will explain again to the client that we have not increased the other party's fee as we originally explained.
-When we receive payment from an FA that supports the other party, we will explain to the client the amount of payment, the name of the payment, and the timing of the payment.

12 The explanations in 10 and 11 above are provided by the person authorized to conclude the contract (in the case of an individual, said individual; in the case of a juridical person, a representative or a person authorized to conclude the contract). In the case of a juridical person, the representative or a person who has been delegated the authority to conclude the contract.) (In the case of a corporation, the representative or a person authorized to enter into the contract).

13 After the explanations in 10 and 11 above, the client will be given sufficient time to consider the matter in order to make an appropriate decision regarding the conclusion of the contract.

Valuation (corporate valuation and business valuation)]
14 When conducting valuations, we explain the valuation methodology and assumptions to the client in advance, and obtain the client's consent to the valuation methodology and price range.

Selection of the transferee (Matching)]
15 Name clearing (disclosure of detailed materials such as a corporate profile including the name of the transferee) is conducted after obtaining consent from the transferee for the candidate who has expressed interest by presenting a non-name sheet (teaser), etc., and after concluding a confidentiality agreement with the candidate. The Company will then execute a confidentiality agreement with the candidate company.

16 With respect to consent from the transferee, consent will be obtained separately for each potential disclosure recipient.

17 Care is taken to ensure that detailed information about the transferee is not leaked or disclosed to outside parties prior to the signing of a nondisclosure agreement.

Negotiations]
18 We support negotiations by leaning on unfamiliar clients by, for example, explaining the overall picture of small- and medium-sized M&A and the future flow of the transaction as clearly as possible.

Due Diligence (DD)]
19 In conducting due diligence (DD), we encourage and support the transferee to prepare the materials required by the transferee.

Negotiation and conclusion of the final agreement]
20 During the period leading up to the conclusion of the final agreement, we help ensure that both the transferor and the transferee are satisfied as much as possible, and that the risk of problems arising between the parties after the M&A is completed is reduced (if the risk remains after reduction, at least that risk is understood by the parties). (If the risk remains after mitigation, at least the risk is understood by both parties.

21 最終契約後・クロージング後に当事者間での争いに発展する可能性があるリスクについて、最終契約の締結までの調整の実施や依頼者への説明を行います。具体的には、特に下記の対応を実施します。
·譲り渡し側の経営者保証の扱いに関しては、譲り渡し側経営者と方針を相談の上、対応を検討します。
① 譲り渡し側経営者の経営者保証に係る意向を丁寧に聴取するとともに、士業等専門家（特に弁護士）や事業承継・引継ぎ支援センターへの相談や保証の提供先である金融機関等に対するM&A成立前の相談も選択肢である旨を説明します。
※ただし、金融機関等に対する事前相談については、M&A成立前に当該金融機関等に情報提供を行うことによる留意点（M&Aが成立しなかった場合における情報の扱い等）についても伝えた上で、譲り渡し側経営者の適切な判断を支援します。
② 譲り渡し側が経営者保証の扱いについて、士業等専門家や金融機関等に対して相談を希望する場合には、その実施を拒まず、FA契約等における秘密保持条項の対象から相談先の士業等専門家や金融機関等を除外します。さらに、譲り受け側との契約において秘密保持条項がある場合には、譲り受け側に対して、秘密保持条項の対象から相談先の士業等専門家や金融機関等を除外するよう働きかけます。
③ 最終契約における経営者保証の扱いに関して、保証の解除又は譲り受け側への移行を想定する場合には、最終契約において譲り受け側の義務として保証の解除又は移行を明確に位置付けることを検討します。具体的には、譲り受け側の義務として保証の解除又は移行を位置付けた上で、保証の解除又は移行のクロージング条件としての設定や仮に保証の移行がなされなかった場合を想定した条項（例えば、契約解除条項や補償条項等）を盛り込む方向で調整します。
※具体的な条件として、（a)譲り受け側が、最終契約締結後・クロージング前に保証の提供先の金融機関等から保証の解除又は移行が実行できるか組織的な意向表明を取得すること、（b)当該意向表明の結果、保証の解除又は移行の手続を進めることができる場合には、譲り受け側が、最終契約締結後・クロージング前に当該手続の上で必要となる書面を保証の提供先の金融機関等に提出するとともに、代表者の変更登記に係る必要書類の作成すること、を設定することが考えられます。
※その上で、万全を期す場合には、クロージング日に（必要に応じて金融機関等の同席の下で）代表者の変更登記の手続、保証の解除又は移行の手続を同時に実施することが考えられます。
※保証の解除又は移行を確実に実施するための手段としては、クロージング時に、譲り渡し側の経営者保証の対象となっている債務を譲り受け側の資力により返済し、別途譲り受け側が借り換えを行うといった方法も考えられます。
·依頼者に対し、デュー・ディリジェンス（DD）は、譲り渡し側・譲り受け側双方にとって重要なプロセスである旨を説明します。
·依頼者に対し、表明保証の内容はデュー・ディリジェンス（DD）の結果を踏まえて適切に検討されるべきであり、期間や責任上限が設定されていない場合や適用場面が一義的に明確でない規定が存在する場合、譲り渡し側が過大な表明保証責任を負担することとなり、当事者間で争いが生じるリスクがある旨を説明します。
·クロージング後の支払・手続、最終契約後の支払の調整・修正、最終契約後の譲り渡し側の資産・貸付金の整理、最終契約からクロージングまでの期間に関して、両当事者間での調整が十分になされていない段階において、本リスクを生じさせる条項やスキームを安易に提案せず、慎重に検討の上、仮に提案する場合には、組織的な判断（明確化された基準の下での一担当者限りではなく組織的なプロセスによる判断であって、組織的に記録され、事後に検証可能であるものをいう。）により、提案の際には、リスクの詳細とリスクが顕在化した場合に生じうる結果について可能な限り具体的に説明します。
※本リスクを認識した段階で当事者に対し、当該リスクの詳細とリスクが顕在化した場合に
生じうる結果について可能な限り具体的に説明することが望ましい。

22 In concluding the final contract, we encourage the client to reconfirm the contents of the contract to ensure that there are no omissions.
*If the contents of the final contract include risk matters that may lead to disputes between the parties after the conclusion of the final contract or closing, it is desirable to explain the details of such risk matters and the possible consequences if the risks materialize as specifically as possible before the conclusion of the final contract again. The following is an example of a risk matter that may be included in the final contract.

[Closing]
23 After making specific arrangements for the closing, we will ensure that the consideration for the transfer has been received by the assignee on the day of the closing.

○ Efforts to eliminate inappropriate transferees

24 From the viewpoint of eliminating inappropriate transferees to the maximum extent possible, the following efforts will be made.
-We will conduct an investigation of the transferee party from the perspective of confirming that the transferee party has the intention and ability to fulfill the definitive agreement and take over the subject business.
-The assignee side, which is the client, will then be briefed on the outline of the investigation of the assignee side prior to the conclusion of the FA agreement (or prior to registration on the M&A platform in the case of an M&A platform). Specifically, for each "investigation item" in the table in Chapter II, Section II, 6 (1) of the Guidelines, the contents of the investigation to be conducted shall be reviewed and explained to the client.
(i) The details of the investigation to be conducted shall include confirmation of the financial condition and business status of the transferee party, confirmation of the transferee party's (including related parties such as representatives, officers, and shareholders) (ii) The contents of the detailed investigation will include confirmation of the financial condition and business status of the transferee, and confirmation of the compliance of the transferee (including representatives, officers, shareholders, and other related parties), such as whether the transferee is an anti-social force or has caused M&A-related problems in the past. In particular, we will appropriately check the financial condition of the target company from the perspective of whether it is able to procure the expected level of consideration for the transfer and whether it is in a position to continue operating the target business after the M&A is executed.
(ii) As for the timing of the investigation, we will conduct the necessary investigation prior to the conclusion of the FA agreement with the transferee (prior to registration on the M&A platform in the case of an M&A platform), as well as during the progress of the M&A process, to fully confirm the transferee before the final agreement is signed.
(iii) The method of investigation is expected to include checking the tax returns and commercial registry of the transferee party, as well as checking the compliance of the representatives, directors, shareholders, and other related parties listed in the tax returns and commercial registry of the transferee party. In such cases, we will conduct a particularly careful investigation, and at the very least, we will confirm the financial condition of the transferee company by checking its financial statements and tax returns.
If we obtain information on inappropriate transferees, such as non-fulfillment of final contracts, through the provision of information on transferees we have supported in the past or through information sharing mechanisms within the industry, we will share such information systematically and not just at the level of the person in charge, and establish a system to carefully consider providing matching support to such transferees. (2) Establish a system to carefully consider the provision of matching support to the transferee.
-With respect to the implementation of new support to the transferee, we will carefully examine the content of the acquired information and consider the disadvantages to the transferee of similar actions, and if implemented, we will make a systematic decision (
decision through a systematic process, not limited to a single person in charge under clarified criteria, and that decision will be systematically recorded and verified after the fact). (A decision that is made through a systematic process, not limited to one person under well-defined criteria, that is systematically documented and can be verified after the fact). The decision will be made by the following methods.

○NOTES ON THE CONTRACTUAL PROVISIONS OF THE FA CONTRACT

With respect to full-time provisions, we will act in compliance with the following points, among others

25 IF AN EXCLUSIVITY CLAUSE IS ESTABLISHED, THE SCOPE OF THE CLAUSE WILL BE LIMITED AS MUCH AS POSSIBLE. SPECIFICALLY, AFTER CLARIFYING TO THE INTERMEDIARY/FA THE AREAS IN WHICH THE CLIENT WISHES TO SEEK OPINIONS FROM OTHER SUPPORT ORGANIZATIONS, IF THERE IS NO REASONABLE REASON TO PREVENT THIS, THE CLIENT IS ALLOWED TO SEEK A SECOND OPINION FROM OTHER SUPPORT ORGANIZATIONS. HOWEVER, CONSIDERATION WILL BE GIVEN TO INFORMATION MANAGEMENT, SUCH AS PROHIBITING THE DISCLOSURE OF INFORMATION ABOUT THE OTHER PARTY, OR LIMITING THE CONSULTATION TO PERSONS WHO ARE LEGALLY OR CONTRACTUALLY OBLIGATED TO MAINTAIN CONFIDENTIALITY, OR TO PUBLIC INSTITUTIONS SUCH AS THE BUSINESS SUCCESSION/TRANSITION SUPPORT CENTER.

26 If a full-time clause is provided, the maximum length of the contract should be between 6 months and 1 year.

27 CLAUSES, ETC., STATING THAT THE CLIENT MAY TERMINATE THE FA CONTRACT AT ANY POINT IN TIME (INCLUDING VERBAL CLARIFICATION). (INCLUDING A VERBAL STATEMENT).

With respect to the provisions regarding restrictions on direct negotiations, we will act in compliance with the following points, among others

28 DIRECT NEGOTIATIONS ARE RESTRICTED TO ONLY THOSE CANDIDATES THAT THE M&A SPECIALIST HAS BEEN INVOLVED WITH, CONTACTED, AND INTRODUCED TO THE CLIENT (EXCEPT IN CASES WHERE THE CLIENT EXPLICITLY AGREES "NOT TO DISCOVER THE CANDIDATE ON HIS/HER OWN" AND "NOT TO NEGOTIATE DIRECTLY WITH THE CANDIDATE DISCOVERED ON HIS/HER OWN (ASSUMING THE CLIENT REQUESTS THE M&A SPECIALIST TO ASSIST IN CONCLUDING AN M&A WITH THE DISCOVERED CANDIDATE)"). (EXCEPT IN THE CASE WHERE THE CLIENT EXPRESSLY AGREES "NOT TO DISCOVER A POTENTIAL BUYER ON ITS OWN" AND "NOT TO NEGOTIATE DIRECTLY WITH A POTENTIAL BUYER THAT IT HAS DISCOVERED ON ITS OWN (ASSUMING THE CLIENT REQUESTS AN M&A SPECIALIST TO ASSIST IN CONCLUDING AN M&A WITH A POTENTIAL BUYER THAT IT HAS DISCOVERED). (III) THE CLIENT DOES NOT NEGOTIATE DIRECTLY WITH THE M&A SPECIALIST.

29 NEGOTIATIONS FOR WHICH DIRECT NEGOTIATION IS RESTRICTED ARE LIMITED TO THOSE CONDUCTED FOR PURPOSES RELATED TO THE M&A OF THE CLIENT AND THE CANDIDATE.

30 THE TERM OF VALIDITY OF THE CLAUSE ON LIMITATION OF DIRECT NEGOTIATIONS IS LIMITED TO THE END OF THE FA CONTRACT.

With regard to tail provisions, we will act in compliance with the following points, among others.

31 The maximum tail period should be no more than two to three years.

32 The tail clause shall be limited solely to the transferee party who was involved or contacted by the M&A specialist concerned and who was introduced to the transferee party. Specifically, if only a long/short list or non-name sheet (teaser) is presented, it is not subject to the Tail Clause. At least a name clearance (sending a corporate profile to the transferee and disclosing the name of the transferee) The tail clause is limited to a transferee that has at least been name-cleared (i.e., sent a corporate profile to the transferee and disclosed the name of the transferee) and introduced to the transferee.
The Guidelines indicate that the scope of the tail provision should be limited to the transferee party whose name has been cleared and who has been introduced to the transferee party, and the Guidelines do not recognize the validity of the tail provision in all cases where this is satisfied.

33 IF THE FA AGREEMENT DOES NOT PROVIDE FOR A DEDICATED CLAUSE, AND THE CLIENT RECEIVES ASSISTANCE FROM MORE THAN ONE M&A SPECIALIST AND AS A RESULT IS INTRODUCED TO THE SAME CANDIDATE BY MORE THAN ONE M&A SPECIALIST, AND THE CLIENT DOES NOT SELECT THE M&A SPECIALIST AS THE M&A SPECIALIST WHO WILL ASSIST THE CLIENT IN CLOSING THE DEAL, THE CLIENT WILL BE CHARGED A FEE BASED ON THE TAIL CLAUSE. THE CLIENT WILL NOT BE CHARGED A FEE BASED ON THE TAIL CLAUSE.

○Others

34 In addition to the above, we will endeavor to take actions in accordance with the intent of the Guidelines for Small and Medium M&A.
For further information, please contact our representative attorney, Hisashi Yoshizawa.
The above