Announcement of an Approbatory View of the Tender Offer for the Company’s Common Shares by Quantum Entertainment Corporation

OSAKA, Japan-(Business Wire)-September 11, 2009 - Yoshimoto Kogyo Co. Ltd. (the “Company”) is pleased to announce that at the meeting of its Board of Directors held on September 11, 2009, the Company resolved to present our approbatory view of the tender offer for the Company’s common shares (the “Tender Offer”) by Quantum Entertainment Corporation (the “Tender Offeror”) as follows.

The resolution presenting such approbatory view was based on the premises that, upon the completion of the Tender Offer, the Tender Offeror is expected to hold all of the Company’s issued and outstanding shares and that, thereafter, the Company’s shares will be delisted from the Tokyo Stock Exchange and the Osaka Stock Exchange.

1. Outline of the Tender Offeror

(1) Corporate Name:	Quantum Entertainment Corporation
(2) Description of Business:	The acquisition and holding of the shares of the Company and other related businesses
(3) Date of Incorporation:	April 22, 2009
(4) Place of the Head Office:	3-1, 1-chome, Marunouchi, Chiyoda-ku, Tokyo
(5) Title and Name of the Representative:	Nobuyuki Idei, Director
(6) Stated Capital:	JPY 1.5 million (as of September 11, 2009)
(7) Major Shareholders and Shareholding Ratio:	Quantum Leaps Corporation 100%
(8) Relationship between the Tender Offeror and the Company	Capital Relationship	Not Applicable
	Personal Relationship	Not Applicable
	Business Relationship	Not Applicable
	Relationship between Individuals concerned	Not Applicable

2. Substance of the Approbatory View of the Tender Offer and the Grounds and Reasons Therefor

(1) Substance of the approbatory view of the Tender Offer

At the meeting of its Board of Directors held on September 11, 2009 concerning the Tender Offer, based on the grounds and reasons described in sub-section (2) below, the Company unanimously resolved to: (i) approbate the Tender Offer of the Tender Offeror, and (ii) recommend to the Company’s shareholders that they tender their shares in the Tender Offer.

(2) Grounds and reasons for the opinion concerning the Tender Offer

① The Tender Offeror

The Tender Offeror and Quantum Leaps Corporation (“Quantum Leaps,” and together with the Tender Offeror, the “Tender Offerors”) have provided the Company with an explanation of the profile of the Tender Offeror as follows:

As of the date of this statement, the Tender Offeror is a company wholly-owned by Quantum Leaps, which was incorporated for the primary purpose of acquiring and holding shares of the Company.

As set forth in the sub-section, “(6) Matters regarding material agreements between the Tender Offeror and the Shareholders of the Company with respect to the tendering in the Tender Offer” described below, the Tender Offerors have agreed in the written Investment Agreement dated September 11, 2009 (the “Investment Agreement”) made and entered into with Fuji Media Holdings, Inc. (“FMH”), Nippon Television Network Corporation (“Nippon TV”), TBS Television, Inc. (“TBS”), TV Asahi Corporation (“TV Asahi”), TV Tokyo Corporation (“TV Tokyo”), Dentsu Inc. (“DENTSU”), Softbank Corp. (“SOFTBANK”), Yahoo Japan Corporation (“Yahoo”), Taiseitochi (“Taiseitochi”), TAISEI CORPORATION (“TAISEI”), Iwai Securities Co., Ltd. (“Iwai Securities”), Faith, Inc. (“Faith”), Kyoraku Industrial Co., Ltd. (“KYORAKU”) and Mco No. 1 Investment Limited Partnership (“Mezzanine”) (FMH, Nippon TV, TBS, TV Asahi, TV Tokyo, DENTSU, SOFTBANK, Yahoo, Taiseitochi, TAISEI, Iwai Securities, Faith and KYORAKU, collectively, the “Investors (Common Shareholders)”; and together with Mezzanine, the “Investors”) that, after the completion of the Tender Offer and before the date of the commencement of the settlement of the Tender Offer, (i) the Investors (Common Shareholders) shall invest in the Tender Offeror directly, or through a wholly-owned subsidiary (including a subsidiary all of whose outstanding shares are indirectly owned by an Investor) a total amount of JPY 19 billion, and (ii) Mezzanine shall invest JPY 5 billion in the Tender Offeror pursuant to an investment agreement that is expected to be separately executed (the “Mezzanine Investment Agreement”) (for the details of such agreement, please refer to sub-item (ii) of the sub-section, “(6) Matters regarding material agreements between the Tender Offeror and the Shareholders of the Company with respect to the tendering in the Tender Offer,” as provided hereafter). Furthermore, if the Tender Offer is successful, the Tender Offeror is expected to issue its common shares by means of a third-party allotment to companies or other entities whose principal businesses fall within industries such as broadcasting, advertising, mobile telecommunication, finance or insurance; provided that the amount of each share to be paid for the subscription of the shares shall be its fair value, which is JPY 50,000 or more. The maximum number of shares for subscription shall be 160,000 shares; and the maximum number of shares to be allocated to those belonging to the same corporate group shall be 40,000 shares. Please note, however, that the specific shares to be allocated have not yet been determined as of the date of this statement.

Please be informed that, as of the date of this statement, Quantum Leaps, the wholly-controlling company of the Tender Offeror, is a management consulting company in which Nobuyuki Idei carries out his duties as CEO. The said company is expected to assume the role of a management strategy advisor in adjusting the interests of the Investors for a series of transactions, including this Tender Offer, which aims to make the shares of the Company private (the “Transaction”).

② Outline of the Tender Offer and other matters related thereto

The Tender Offeror is implementing this Tender Offer to acquire all the shares of the Company except the treasury shares (37,485,962 shares, which is the difference between the 39,006,803 total issued and outstanding shares of the Company as of June 30, 2009 and the 1,520,841 treasury shares as of March 31, 2009).

The Tender Offeror established the lower limit of the anticipated purchase at 26,240,174 shares (the ratio of shares to the total amount of the issued and outstanding shares of the Company as of June 30, 2009, except the treasury shares held by the Company as of March 31, 2009 is 70% (the “Ownership Ratio”)). In the event the total number of the tendered share certificates, etc., is lesser than such lower threshold, the Tender Offeror will not purchase any of the said share certificates, etc. On the other hand, considering that the purpose of this Tender Offer is to acquire all of the issued and outstanding shares of the Company, thus making the shares of the Company private, an upper threshold for the anticipated number of purchases was not established; and when the number of tendered shares exceeds the lower threshold, all of the tendered share certificates, etc., shall be purchased.

The Tender Offer is meant to be carried out as a part of the Transaction. The Tender Offerors have explained to the Company the outline of this Transaction, including the Tender Offer, as follows:

Under the Investment Agreement, the Tender Offerors and the Investors have agreed with the shareholders of the Company who are also Investors, namely, Taiseitochi (number of shares owned is 3,680,000, with an Ownership Ratio of 9.82%), Faith (number of shares owned is 1,224,916, with an Ownership Ratio of 3.27%), TAISEI (number of shares owned is 1,010,000, with an Ownership Ratio of 2.69%), Iwai Securities (number of shares owned is 403,000, with an Ownership Ratio of 1.08%), TV Asahi (number of shares owned is 268,000, with an Ownership Ratio of 0.71%), TV Tokyo (number of shares owned is 161,000, with an Ownership Ratio of 0.43%), TBS (number of shares owned is 148,000, with an Ownership Ratio of 0.39%), FMH (number of shares owned is 144,000, with an Ownership Ratio of 0.38%) and Nippon TV (number of shares owned is 134,000, with an Ownership Ratio of 0.36%) (Taiseitochi, Faith, TAISEI, Iwai Securities, TV Asahi, TV Tokyo, TBS, FMH and Nippon TV, collectively, the “Tenderer”), that upon the Tender Offer, all of the shares of the Company owned by each of the Tenderer shall be tendered.

Furthermore, subject to the completion of the Tender Offer, the Tender Offeror will request the Company to implement the series of procedures set forth in the sub-section, “(4) Policies on corporate restructuring anticipated after the completion of the Tender Offer (matters concerning the so-called two-tier acquisition),” as described below (the “Wholly-owned Subsidiary Procedures”), to make the Company its wholly-owned subsidiary. After making the Company its wholly-owned subsidiary, the Tender Offeror will conduct a merger by absorption, whereby the Tender Offeror will be the surviving company and the Company will be the absorbed company (the “Merger”).

The Tender Offeror has concluded management agreements with Mr. Isao Yoshino, the Chairman and CEO of the Company (“Mr. Yoshino”); Mr. Hiroshi Osaki, the President and CEO of the Company (“Mr. Osaki”); and Mr. Hiroshi Nakata, a Director of the Company (“Mr. Nakata”), respectively, concerning their assumption of office as directors of the Tender Offeror after the Tender Offer and other matters related thereto (the “Management Agreements”). The Tender Offeror has entrusted to: (i) Mr. Yoshino and Mr. Osaki, subject to the completion of the Tender Offer, the duty to assume their offices as directors of the Tender Offeror (including the new merger company after the Merger (the “New Merger Company”)); the same shall apply hereafter in this section ②) from the date of their election as directors of the Tender Offeror, (ii) Mr. Nakata, the duty to assume his office as a director of the New Merger Company, and (iii) Mr. Yoshino, Mr. Osaki and Mr. Nakata (collectively, “Mr. Yoshino and Others”), the duty to continue to serve as directors of the Company even after the consummation of the Tender Offer. Subject to the resolution on the approbatory view of the Tender Offer by the Company’s Board of Directors as the Company’s officers (excluding Mr. Yoshino and Others, and any other person who may have an interest therein), Mr. Yoshino and Mr. Osaki have each signified an intent to accept the aforementioned duties entrusted by the Tender Offeror as described in items (i) and (iii), and Mr. Nakata has signified his intent to accept the aforementioned duties entrusted by the Tender Offeror as described in items (ii) and (iii). Each Management Agreement described above provides that the maximum annual amount of (i) the sum total of the remuneration to be received by Mr. Yoshino as a director of the Tender Offeror and the Company; (ii) the sum total of the remuneration to be received by Mr. Osaki as a director of the Tender Offeror and the Company; and (iii) the sum total of the remuneration to be received by Mr. Nakata as a director of the New Merger Company and the Company, shall be JPY100 million, respectively, and the specific remuneration amounts shall be determined by a separate agreement between the Tender Offeror and each of Mr. Yoshino and Others. Furthermore, each Management Agreement provides that Mr. Yoshino and Others shall be jointly and severally liable for any indebtedness that may be incurred by the Tender Offeror in relation to the loans to be obtained from Sumitomo Mitsui Banking Corporation, Sumitomo Trust & Banking Co., Ltd. and Mizuho Bank, Ltd. (with an aggregate revolving line of credit of JPY 30 billion) to raise the funds necessary for the settlement of the Tender Offer (the indebtedness, the “Debt,” and the loan, the “Acquisition Loan”) under the terms and conditions to be provided in the agreement concerning the Acquisition Loan that is expected to be separately executed (the “Acquisition Loan Agreement”), and that each of Mr. Yoshino and Others has accepted such obligation.

③ Procedures taken for adopting an approbatory view of the Tender Offer and the Management Policy after the completion of the Tender Offer

The Company is a content-production company that manages entertainers. The Company has the advantage of a business model it established to enable it to produce continuously an abundance of entertainers both in quality and quantity, and enjoys the profitable resources generated from such abundance through their management, content production as well as content delivery and distribution.

Furthermore, the Company, as a content-production company based on its talent-management activities, has strengthened its system for creative production for the group as a whole under the development strategy of expanding beyond the “comedy field.” The Company, has thus far, diversified, with serious efforts, into various subjects including a multifaceted variety of entertainers (in addition to comedy, it has advanced into the fields of sports and music), a multifaceted variety of content (multi-media expansion), and multifaceted categories (expansion into business advertising). As a result of such efforts, the Company is now able to produce and provide appealing content that can fit various categories, media or budgets.

However, the Company has always recognized that, in order to attain the Company’s growth potential and profitability, it must address the slowing growth of the content-production market that is accompanying the economic downturn and the maturation of the domestic economy.

Based on these circumstances, the Tender Offeror made the following proposals to the Company to enhance its corporate value:

In light of the substantial changes in the media environment such as the popularization of the Internet and mobile communications, broadbandization, as well as digitalization of content, it is becoming an important business challenge for each broadcasting station to maintain and enhance the appeal (the value as a media) of television. To address such business challenge, among the Investors, FMH, a certified broadcasting holding company, and the broadcasting stations, namely, Nippon TV, TBS, TV Asahi and TV Tokyo, are seeking future ways of producing television programs, while orienting themselves to produce more hit programs to maintain advertising revenue that constitutes their main source of income, and starting to produce high-quality programs with an intention to reduce costs notwithstanding the vanishing advertising expenses. Furthermore, as one of the measures to enhance the television stations’ media value, other new approaches are being launched, including the production of programs that complement Internet or mobile content.

An emerging business challenge for carriers or Internet service providers is ensuring a line up of excellent content and developing new business models in the midst of an accelerated growth of broadbandization. To work out such business challenges, one carrier among the Investors, SOFTBANK, has made it a priority to strengthen Internet content, and is making attempts to establish new business models beyond the boundaries of old-fashioned business models (which were sustained by the re-exploitation of content produced by other media, including television), such as to further develop appealing content by producing content by themselves and providing popular content to other media, including television.

As the media environment surrounding ordinary citizens undergoes substantial changes, it has become necessary for DENTSU, an advertising agency, to provide optimum solution services to its clients that fit the future characteristics and progress of all media and content, as well as the new lifestyle adopted by ordinary citizens. As a part of such an undertaking, it is critical for the future business expansion of DENTSU that it develops novel communication services, starting with the pivotal relationship between content and ordinary citizens. Furthermore, given the maturation of the domestic market, it is imperative for DENTSU’s potential growth that it strengthens its operating base in Asian and other emerging countries, as well as engage in novel expansions of its businesses, including its content business.

As noted earlier, the Company is a leading company engaged in the production and provision of content based on its management of entertainers. The Company has the advantage of a business model it established that enables it to produce continuously an abundance of entertainers both in quality and quantity, and it enjoys the profitable resources generated from such abundance through their management and, content production, as well as content delivery and distribution.

Furthermore, as a leading company engaged in content-production activities based on talent-management, the Company has strengthened its system for creative production for the group as a whole under the development strategy of expanding beyond the “comedy field”; and the Company has, thus far, made serious efforts to diversify various aspects of its business, including a multifaceted variety of entertainers (coming not only from comedy, but also from sports and music), a multifaceted variety of content (multi-media expansion), and multifaceted categories (expansion into business advertising). As a result of such efforts, the Company is now able to produce and provide appealing content that can fit various categories, media or budgets, and has been establishing its integral position as a content-provider for, among the Investors, those that are involved in content production and provision (consisting of FMH, Nippon TV, TBS, TV Asahi, TV Tokyo, DENTSU, SOFTBANK, Yahoo and Faith, collectively, the “Media-related Investors”).

Therefore, the Company believes that the strengthening of its capital relationship with such Media-related Investors will enable it to provide excellent content to such Media-related Investors faster and steadier than ever before, and will enhance the corporate value of each of the Media-related Investors.

As noted earlier, the Company has always recognized that, in order to attain the Company’s growth potential and profitability, it must address the slowing growth of the content-production market that is accompanying the economic downturn and the maturation of the domestic economy. If the Company’s capital and business involvement with the Investors becomes straightforward, such involvement may open a new vista for the Company’s future growth and the establishment of a management foundation to foster a stable profit increase therefor.

In addition, the Tender Offeror will seek the development of the business of the Company in two specific major directions. The first direction is the acceleration of the multi-exploitation of content in Japan among the Media-related Investors and the Company. For example, through the attempts of SOFTBANK and the Company, the “S-1 Battle,” as a moving-image content, gained popularity, especially among the younger generation, and showed their successful experience in creating a new business model. After the capital relationship with the Media-related Investors is strengthened through the Wholly-owned Subsidiary Procedures, the Company will be able to develop a device (i.e., an entertainment) that is novel for consumers in a larger scale and which will become available faster than ever if it foresees such multi-exploitation of content at the beginning of the planning stage. Other potential forms of multi-exploitation of content will vary. For example, the further expansion of object areas for advertisement. The Company recognizes that such provision of the Company’s content for such multi-exploitation is a new business model that is a possible future pillar of the mid-to-long term growth of the Company.

The second direction is the expansion of the Company’s content and business model to Asia. While the domestic economy has matured, an overview of the entertainment industry makes the Company aware that there exists a chance for future development in Asia, which has achieved a remarkable economic growth. Japanese entertainment content as well as the program format therefor is currently gaining popularity in Asia and worldwide. The Tender Offeror believes that a full-scale operation adopting the Company’s business model in Asia could create the No. 1 entertainment industry in Asia.

The Tender Offeror believes that, while a positive transformation of a business model to make a breakthrough in the Company’s current problems, future strategies and key issues do not always contribute to revenues as originally anticipated but entails material risks considering the fact that there is a substantial possibility that the concern for maximizing the profit for each fiscal period that should be valued as a listed company, and the concern for strengthening mid-to-long term competitiveness are incompatible. By making the shares of the Company private by the Tender Offeror for the purpose of the Company’s recapitalization, the Company will be able to further expedite the exercise of its business judgment under a simplified shareholding structure, and thus establish an organizational control that would facilitate swift business judgment that is less susceptible to short-term variances that may affect the performance of the Company. Therefore, the Tender Offeror believes that it is possible to enhance the corporate value of the Media-related Investors and the Company, and consequently, achieve a rapid growth of the entertainment industry in Japan as a whole; and that such goal may be realized by establishing a steady partnership with the Media-related Investors through the recapitalization of the Company. Thus, the Tender Offeror has decided to implement the Tender Offer. Please be informed that Taiseitochi, TAISEI, Iwai Securities and Kyoraku view the Transaction favorably and will make investments therein.

Moreover, the Tender Offeror plans to obtain the Acquisition Loan, and receive investments from the Investors (Common Shareholders) (made directly or through a wholly-owned subsidiary including a subsidiary all of whose outstanding shares are indirectly owned by an Investor) in the aggregate amount of JPY 19 billion as well as the investment from Mezzanine in the amount of 5 billion. As regards the Acquisition Loan, a security is planned to be established over the issued and outstanding shares of the Tender Offeror (i.e., shares held by Quantum Leaps as of the date of this statement and the shares that the Investor (Common Shareholders) shall obtain through their above investments), the Company’s shares that the Tender Offeror will obtain from the Tender Offer, and other certain assets owned by the Tender Offeror. In addition, Mr. Yoshino and Mr. Osaki are planned to be made jointly and severally liable as guarantors of the Acquisition Loan. Furthermore, in the event that the Tender Offeror obtains all of the issued and outstanding shares of the Company after the completion of the Wholly-owned Subsidiary Procedures, the Tender Offeror will make the Company and a part of its subsidiaries jointly and severally liable as guarantors of the Acquisition Loan, and it shall ensure that the Company and a part of its subsidiaries establish a security over certain assets owned by them. After the effective date of the Merger, Mr. Nakata is also planned to be made jointly and severally liable as a guarantor of the Acquisition Loan.

The Tender Offeror is considering the establishment of a “Special Fan Club” if the Merger becomes effective. For the details of the “Special Fan Club,” please refer to the Tender Offeror’s press release dated September 11, 2009, entitled “Announcement of the Consideration of a Special Fan Club for Yoshimoto Kogyo Co., Ltd. (this is a tentative name)” that was published by the Company at: (http://www.yoshimoto.co.jp/src/about/ir_pdf/ir_20090911_1.pdf) as per the request of the Tender Offeror.

Based on the proposal set forth above by the Tender Offeror concerning the enhancement of the Company’s corporate value, and as a result of a review of the proposal after a comprehensive consideration of the aforementioned current concerns of the Company, the Company concluded that it would be an effective measure to enhance the Company’s mid-to-long term corporate value to: (i) establish a partnership between the Media-related Investors and the Company through the recapitalization of the Company, (ii) make the Company a wholly-owned subsidiary of the Tender Offeror, (iii) make the shares of the Company private, (iv) further expedite the Company’s exercise of its business judgment under a simplified shareholding structure through the recapitalization of the Company, which would thus establish an organizational control that would facilitate swift business judgment that is less susceptible to short-term variances that may affect the performance of the Company, and (v) seek to develop the business of the Company in the two major directions proposed by the Tender Offeror. Furthermore, as described in sub-section (3) below, the price for the purchase, etc., of the Tender Offer (the “Purchase Price”) as well as the terms and conditions therefor are reasonable for the shareholders of the Company, and thus, the Tender Offer will provide the shareholders of the Company a reasonable opportunity to sell their shares. Therefore, the Company’s Board of Directors decided to make a resolution to present an approbatory view of the Tender Offer and to recommend to the Company’s shareholders that they tender their shares in the Tender Offer.

(3) Measures for ensuring the fairness of the purchase price, avoiding conflicts of interest, and ensuring the fairness of the Tender Offer

As aforementioned in the item, “② Outline of the Tender Offer and other matters related thereto,” of sub-section (2) above, the Tender Offeror has made and entered into Management Agreements with Mr. Yoshino and Others, and entrusted: (i) Mr. Yoshino and Mr. Osaki, subject to the completion of the Tender Offer, the duty to assume their offices as directors of the Tender Offeror (including the New Merger Company, the same shall apply hereafter in this sub-section (3)) from the date of their election as directors of the Tender Offeror, (ii) Mr. Nakata, the duty to assume his office as a director of the New Merger Company, and (iii) Mr. Yoshino and Others, the duty to continue to serve as directors of the Company even after the consummation of the Tender Offer. Subject to the resolution on the approbatory view of the Tender Offer passed at the meeting of the Company’s Board of Directors consisting of the officers of the Company (excluding Mr. Yoshino and Others, and any other person who may have an interest therein), Mr. Yoshino and Mr. Osaki have each signified an intent to accept the aforementioned duties entrusted by the Tender Offeror as described in items (i) and (iii), and Mr. Nakata has signified his intent to accept the aforementioned duties entrusted by the Tender Offeror as described in items (ii) and (iii). As noted earlier, each Management Agreement described above provides that the maximum annual amount of (i) the sum total of the remuneration to be received by Mr. Yoshino as a director of the Tender Offeror and the Company; (ii) the sum total of the remuneration to be received by Mr. Osaki as a director of the Tender Offeror and the Company; and (iii) the sum total of the remuneration to be received by Mr. Nakata as a director of the New Merger Company and the Company, shall be JPY 100 million, respectively, and the specific remuneration amounts shall be determined by a separate agreement between the Tender Offeror and each of Mr. Yoshino and Others. Furthermore, the Management Agreements provide that Mr. Yoshino and Others shall become jointly and severally liable for the Debt to be assumed under the Acquisition Loan Agreement under the terms and conditions thereof, and that each of Mr. Yoshino and Others accepts such obligation.

Based on these circumstances, from the perspective of ensuring the fairness of the Purchase Price of the Tender Offer, eliminating arbitrariness in the decision-making process leading up to the implementation of the Tender Offer and avoiding conflicts of interest, the Tender Offeror and the Company took measures to ensure the fairness of the Transaction including the Tender Offer. Please be informed that the measures implemented by the Tender Offeror as described below are based on the explanation made by the Tender Offerors.

① Elimination of arbitrariness in the decision-making process leading up to the implementation of the Tender Offer

Upon the determination of the Purchase Price, in order to ensure the fairness of the Purchase Price, the Tender Offeror requested GCA Savvian Corp., a financial advisor as a third-party institution that is independent from the Company and the Tender Offeror, in May 2009, to assess the value the shares of the Company, and obtained a “Written Calculation of the Value of the Shares” from GCA Savvian Corp. as of September 11, 2009, and used it as reference.

Upon the valuation of the shares of the Company based on the business plans (wherein the Tender Offeror took into account the impact of the possible transaction to make the Company private and other subsequent measures), etc., provided by the Tender Offeror, GCA Savvian Corp. is of the view that it would be appropriate to value the shares of the Company using a number of methods and it prepared a valuation using the average market price method, comparable peer company analysis and the discounted cash flow method (“DCF Method”).

According to the Written Calculation of the Value of the Shares prepared by GCA Savvian Corp., the range of the share value per common share of the Company that was computed based on each of such methods is as follows:

(i) The average market price method: from JPY 983 to JPY 1,292

Period from which the share prices were adopted		Value per share
Closing price as of the critical date	September 10, 2009	JPY 1,292
Average during the period from the date of the previous announcement of financial statements until the critical date of the calculation	August 14, 2009 to September 10, 2009	JPY 1,140
Average during the previous one (1) month	August 11, 2009 to September 10, 2009	JPY 1,140
Average during the previous three (3) months	June 11, 2009 to September 10, 2009	JPY 1,047
Average during the previous six (6) months	March 11, 2009 to September 10, 2009	JPY 983
Result of the calculation		From JPY 983 to JPY 1,292

(ii) The comparable peer company analysis: from JPY 924 to JPY 1,218

(iii) DCF Method: from JPY 1,289 to JPY 1,604

(i) According to the average market price method, using the critical date of September 10, 2009 for the calculation of the share value of the Company, observations were made on both the share price and the volume of trade, and an analysis of the share value was made based on the closing price on the critical date, the average for the period from the date of the previous announcement of the financial statements until the critical date of the calculation, as well as the averages of the previous one (1) month, the previous three (3) months, and the previous six (6) months. As a result, the share value per share was calculated to be from JPY 983 to JPY 1,292.

(ii) According to the comparable peer company analysis, an analysis of the Company’s share value was made through a comparison with other market share prices or financial indices showing the profitability or performance of other listed companies engaged in a comparatively similar business as the Company. As a result, the share value per share was calculated to be from JPY 924 to JPY 1,218.

(iii) Pursuant to the DCF Method, based on the earnings forecast of the Company estimated by the Tender Offeror for the period commencing from the business term ending in March 2010 through the business term ending in March 2017, and considering various factors including the Company’s business plan (wherein the Tender Offeror took into account the impact of the possible transaction to make the Company private and other subsequent measures), current performance, and information disclosed to the public, an analysis was made of the corporate value or share value that would be derived, on a certain cut rate, from the free cash flow that is expected to be gained by the Company in the future. As a result, the share value per share was calculated to be from JPY 1,289 to JPY 1,604.

The Purchase Price of JPY 1,350 per share was determined with reference to the contents of the Written Calculation of the Value of the Shares prepared by GCA Savvian Corp., based on a comprehensive assessment of relevant factors including samples of the premium adopted on the occasion of the determination of the purchase price for the tender offer by offerors other than the issuer, the propriety of the Company’s approbatory view of the Tender Offer, the Company’s share price trend, and the forecast of the Tender Offer, as well as the results of the discussions and negotiations with the Company.

The Purchase Price represents a premium of (a) approximately 4.5% (rounded up or down to the first decimal place) over the closing price of JPY 1,292 for the shares of the Company on the Osaka Stock Exchange on September 10, 2009, (b) approximately 18.4% (rounded up or down to the first decimal place) over the simple average of the closing price of JPY 1,140 (rounded up or down to the nearest whole number) for the shares of the Company on the Osaka Stock Exchange for the previous one (1) month-period up to September 10, 2009, (c) approximately 29.0 % (rounded up or down to the first decimal place) over the simple average of the closing price of JPY 1,047 (rounded up or down to the nearest whole number) for the shares of the Company on the Osaka Stock Exchange for the previous three (3) month-period up to September 10, 2009, and (d) approximately 37.3 % (rounded up or down to the first decimal place) over the simple average of the closing price of JPY 983 (rounded up or down to the nearest whole number) for the shares of the Company on the Osaka Stock Exchange for the previous six (6) month-period up to September 10, 2009.

While the closing price of the shares of the Company on the Osaka Stock Exchange was JPY 952 on July 27, 2009, it rose to JPY 1,205 on July 29, 2009 after certain initial media reports were made on July 28, 2009 regarding the possible transaction to make the Company private. Thereafter, the share price of the Company on the Osaka Stock Exchange started to fall, and was JPY1,062 on August 21, 2009. After certain other additional media reports were made on September 2, 2009 regarding the said possible transaction, it was JPY 1,250 on the closing of the said day. Thereafter, the closing price of the shares of the Company on the Osaka Stock Exchange went through slight fluctuations, and, after certain other additional media reports that were made on September 10, 2009, it was JPY1,292 on September 10, 2009. After certain initial media reports were made on July 28, 2009, other than the aforementioned media reports, the final accounts for the first quarter were published on August 13, 2009, and other certain media reports were made on August 20, 2009 regarding the said possible transaction. Nevertheless, it is unsure how much impact factors, such as the aforementioned publication or the relevant media reports, had on the aforesaid fluctuations in the value of the shares. For information purposes, the average closing price of the shares of the Company on July 27, 2009, which is the business day immediately before the first media reports were made; the simple average of the closing prices during the previous one (1) month up to the same date (rounded up or down to the nearest whole number); the simple average of the closing prices during the previous three (3) months up to the same date (rounded up or down to the nearest whole number); the simple average of the closing prices during the previous six (6) months up to the same date (rounded up or down to the nearest whole number); and the premium (rounded up or down to the nearest first decimal place) of the Purchase Price for each figure, are as follows:

The closing price on July 27, 2009: JPY952 (41.8% premium)

The simple average of the closing prices during the previous one (1) month up to the same date: JPY955 (41.3% premium)

The simple average of the closing prices during the previous three (3) months up to the same date: JPY932 (44.8% premium)

The simple average of the closing prices during the previous six (6) months up to the same date: JPY942 (43.2% premium)

On the other hand, as a measure for ensuring fairness in the decision-making process leading to the proposed Purchase Price of the Tender Offeror, and to avoid an unreasonably arbitrary determination, the Company’s Board of Directors solely appointed ABeam M&A Consulting Ltd., a third-party institution that is independent from the Company and the Tender Offeror, and requested it to determine the value of the shares of the Company.

In order to gather and review the information necessary to determine the value of the shares of the Company, ABeam M&A Consulting Ltd. obtained materials from the Company’s Board of Directors regarding the current and future business plans of the Company (the “Company’s Business Plans”), and based on such information, ABeam M&A Consulting Ltd. determined the value of the Company’s shares. On September 8, 2009, the Company’s Board of Directors obtained a calculation report on the value of the Company’s shares. On September 10, 2009, with respect to the said calculation report, the Company’s Board of Directors obtained a calculation report on the value of the Company’s shares that was updated with the calculation result based on the average market price method. Also, on September 8, 2009, the Board of Directors obtained an opinion on the fairness of the valuation of the Company’s shares stating that, based on certain assumptions, the Purchase Price of the Tender Offer is a financially reasonable offer for the shareholders of the Company. After considering the valuation methods to be adopted, ABeam M&A Consulting Ltd. implemented the valuation using the market share price method, the comparable peer company analysis and the DCF Method. As a result thereof and based on the Company’s Business Plans, ABeam M&A Consulting Ltd. reported its valuation of the appropriate value per share of the Company to be from JPY 932 to JPY 1,292 using the market share price method, from JPY 974 to JPY 1,171 using the comparable peer company analysis, and from JPY 1,218 to JPY 1,441 using the DCF Method based on the Company’s Business Plans [Note 1]. According to the market share price method, the extent of the value per share as of the critical dates of July 27, 2009 (the day immediately before July 28, 2009 on which certain media reports were made regarding the possible transaction to make the Company private), September 1, 2009 (the day immediately before September 2, 2009 on which certain detailed media reports were made again regarding the possible transaction to make the Company private) and September 10, 2009, was determined based on the closing price of JPY 1,292 for the shares of the Company on the Osaka Stock Exchange as of September 10, 2009, the average of the closing price for the previous periods of one (1) month, three (3) months and six (6) months retrospectively from September 1, 2009 (JPY 1,140, JPY 1,047 and JPY 983, respectively), the average of the closing price for the shares of the Company on the Osaka Stock Exchange for the previous periods of one (1) month, three (3) months and six (6) months retrospectively from September 1, 2009 (JPY 1,114, JPY 1,011 and JPY 963, respectively), the volume weighted average price (VWAP) on the Osaka Stock Exchange for the periods of one (1) month, three (3) months and six (6) months retrospectively from July 27, 2009 (JPY 960, JPY 933 and JPY 938, respectively), and the average of the closing price for the shares of the Company on the Osaka Stock Exchange for the previous periods of one (1) month, three (3) months and six (6) months retrospectively from July 27, 2009 (JPY 955, JPY 932 and JPY 942, respectively).

[Note 1] ABeam M&A Consulting Ltd. has received from the Tender Offeror the business and financing plans that were prepared by the Tender Offeror for the Company, and which are subject to the completion of the Transaction (the “Tender Offeror’s Plans”). Based on its trial calculation using the DCF Method taking into account the Tender Offeror’s Plans (provided that the discount rate identical to that of the DCF Method based on the Tender Offeror’s Plans shall be applied), ABeam M&A Consulting Ltd. reported that the result of JPY 1,331 to JPY 1,515 is appropriate.

Furthermore, upon a review of the proposal of the Tender Offeror concerning the Tender Offer, the Company appointed PwC Advisory Co., Ltd., an outside third party, as its financial advisor, and requested it to provide the Company with advice concerning the Tender Offer.

Moreover, upon a review of the proposal by the Tender Offeror concerning the Transaction, the Company nominated Oh-Ebashi LPC & Partners, an outside third party, as its sole legal advisor, and requested it to provide the Company with advice concerning the Transaction.

Having received the advice provided by PwC Advisory Co. Ltd. and the legal advice provided by Oh-Ebashi LPC & Partners, the Company made consultations and reviewed in a prudent manner whether or not the Transaction, including the Tender Offer, is acceptable, as well as the terms and conditions including the various procedures for the Tender Offer.

On July 15, 2009, the Company’s Board of Directors passed a resolution to form a special committee comprising of three (3) members independent from the Tender Offeror and the Company (the “Third Party Committee”) in order to ensure the fairness of the Tender Offer and to increase the transparency and objectivity of the Transaction. The Company commissioned this committee to submit an opinion on the propriety of the Company’s approbatory view of the Tender Offer as well as on the appropriateness of the Purchase Price of the Tender Offer to the Company’s Board of Directors to ensure the appropriateness of the Purchase Price of the Tender Offer and the fairness of the process with the purpose of protecting the interests of the minority shareholders. The Company appointed three (3) members to the Third Party Committee, namely: Mr. Masao Yanaga (Chairman, Professor of the Graduate School of Business Sciences, University of Tsukuba), Mr. Jun Nogami (a certified tax accountant and Partner of Ichijima & Nogami Accounting Office) and Mr. Satoshi Ishibashi (Representative Director of Klotho Partners Inc).

On July 17, 2009, the Third Party Committee commenced the review of whether or not it is appropriate for the Company’s Board of Directors to take an approbatory view of the Tender Offer, and whether or not the Purchase Price is reasonable. The Third Party Committee held six (6) meetings to carry out deliberations regarding the above consultative matters, conducted hearings with Mr. Osaki, the President of the Company, and Mr. Nobuyuki Idei, the CEO of Quantum Leaps, and received explanations on the content of the Written Calculation of the Value of the Shares from ABeam M&A Consulting Ltd. with question-and-answer sessions in relation thereto. In light of the results of these investigations, and as a result of prudent reviews on the matters referred therein, the Third Party Committee unanimously passed a resolution, on September 9, 2009, to advise the Company’s Board of Directors that the Purchase Price is reasonable and also that it would be appropriate for the Company’s Board of Directors to present a report on an approbatory view of the Tender Offer [Note 2].

[Note 2] The Report written and submitted by the Third Party Committee to the Company’s Board of Directors on September 9, 2009 is posted on the Company’s website at (http://www.yoshimoto.co.jp/src/about/ir_pdf/ir_20090911_1.pdf).

Having received a report from the Third Party Committee that the Purchase Price is reasonable and also that it would be appropriate for it to present an approbatory view of the Tender Offer, and in light of the Written Calculation of the Value of the Shares as of September 8, 2009 obtained from ABeam M&A Consulting Ltd., the third-party calculation institution, which provided the Written Calculation of the Value of the Shares (updated with the calculation result according to the average market price method) on September 10, 2009, and, on September 8, 2009, provided an opinion on its fairness stating that, based on certain assumptions, the Purchase Price of the Tender Offer is a financially reasonable offer for the shareholders of the Company, and the legal opinion as of September 11, 2009 obtained from Oh-Ebashi LPC & Partners, the Company’s legal advisor, the Company’s Board of Directors held deliberations on the details of the Third Party Committee’s report, and the terms and conditions of the Transaction, including the Tender Offer. As a result of such deliberations, in the meeting held on September 11, 2009, the Company’s Board of Directors reached the conclusion that it would be an effective measure for the enhancement of the Company’s mid-to-long term corporate value to: (i) establish a partnership between the Media-related Investors and the Company through the recapitalization of the Company, (ii) make the Company a wholly-owned subsidiary of the Tender Offeror, (iii) make the shares of the Company private, (iv) further expedite the Company’s exercise of its business judgment under a simplified shareholding structure through the recapitalization of the Company, which would thus establish an organizational control that would facilitate swift business judgment that is less susceptible to short-term variances that may affect the performance of the Company, and (v) seek to develop the business in the two major directions proposed by the Tender Offeror. Also, the Company’s Board of Directors determined that the Purchase Price and other terms and conditions of the Tender Offer are reasonable for the shareholders of the Company, and that the Tender Offer provides such shareholders with a reasonable opportunity to sell their shares in the Company as stated above. As a result thereof, the Company’s Board of Directors resolved to present its approbatory view of the Tender Offer, as well as to recommend that the shareholders of the Company tender their shares in the Tender Offer (the “Resolution of the Company’s Board of Directors”).

Considering that Mr. Yoshino and Mr. Osaki, as aforementioned in the item, “② Outline of the Tender Offer and other matters related thereto,” of sub-section (2) above, have each made and entered into a Management Agreement, and, subject to the Resolution of the Company’s Board of Directors as officers of the Company (excluding Mr. Yoshino and Others, and any other person who may have an interest therein), have accepted to: (i) after the consummation of the Tender Offer, assume their offices as directors of the Tender Offeror, and (ii) continue to serve as directors of the Company even after the consummation of the Tender Offer; and considering that, in each of the aforementioned Management Agreements, which are coupled with provisions that limit the amount of the remuneration to be received by Mr. Yoshino and Mr. Osaki as directors of the Tender Offeror and the Company, it is stipulated that they will guarantee jointly and severally the Debt to be assumed under the Acquisition Loan Agreement under the terms and conditions thereof; Mr. Yoshino and Mr. Osaki did not participate in either the deliberations or voting with respect thereto, nor did they participate in the deliberations and negotiations with the Tender Offeror as representatives of the Company in light of the special interest that they have, or might have, in respect of their relationship with the Transaction.

Furthermore, considering that Mr. Nakata, as aforementioned in the item, “② Outline of the Tender Offer and other matters related thereto,” of sub-section (2) above, has made and entered into a Management Agreement, and, subject to the Resolution of the Company’s Board of Directors as officers of the Company (excluding Mr. Yoshino and Others, and any other person who may have an interest therein), has accepted to: (i) assume his office as a director of the New Merger Company, and (ii) continue to serve as a director of the Company even after the consummation of the Tender Offer, and considering that the aforementioned Management Agreement, which is coupled with a provision that limits the amount of the remuneration to be received by him as a director of the Company and the New Merger Company, provides that he will guarantee jointly and severally the Debt to be assumed under the Acquisition Loan Agreement under the terms and conditions provided therein; Mr. Nakata did not participate in either the deliberations or voting with respect thereto, nor did he participate in the deliberations and negotiations with the Tender Offeror as a representative of the Company in light of the special interest that he has, or might have, in respect of his relationship with the Transaction.

Moreover, Mr. Yoshiaki Okitsu, the Representative Director of Iwai Securities (“Mr. Okitsu”), and Mr. Yukio Kageyama, the Outside Director of Iwai Securities (“Mr. Kageyama”), who are expected to make investments in the Tender Offeror, did not participate in or express their opinion at the deliberations for the Resolution of the Company’s Board of Directors in light of any interest that they might have in respect of their relationship with the Transaction.

Furthermore, all the directors of the Company other than Mr. Yoshino and Others, and the statutory auditors other than Mr. Okitsu and Mr. Kageyama, attended the meeting for the deliberation on the Resolution of the Company’s Board of Directors, and the said resolution was passed with the unanimous approval of all the directors in attendance, including two (2) outside directors. Further, the two (2) statutory auditors of the Company, including one (1) outside statutory auditor have all given their opinions to the effect that they have no objection to the Company’s Board of Directors presenting an approbatory view of the Tender Offer.

② Measures to secure objective conditions to ensure the fairness of the Purchase Price

Whereas the shortest period stipulated for a tender offer under the Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended) is twenty (20) business days, the Tender Offeror, by setting a relatively longer period of thirty (30) business days as the period for the purchase, etc., in the Tender Offer (the “Tender Offer Period”), has ensured a reasonable opportunity for shareholders of the Company to accept the Tender Offer on the one hand, and ensured that any party other than the Tender Offeror has an opportunity to purchase shares of the Company as a countermeasure on the other hand. Thus, the Tender Offeror intends to ensure the fairness of the Purchase Price of the Tender Offer.

Also, there is no agreement between the Tender Offeror and the Company that would prohibit the Company to get in touch with a potential bidder that might compete with the Tender Offeror.

(4) Policies on corporate restructuring anticipated after the completion of the Tender Offer (matters concerning the so-called two-tier acquisition)

The Tender Offerors have provided the Company with the following explanation concerning the policies on corporate restructuring anticipated after the Tender Offer.

Upon the completion of the Tender Offer, the Tender Offeror will obtain an Ownership Ratio of 70 % or more. However, in the event that it is not able to acquire all of the shares of the Company except treasury shares in the Tender Offer, the Tender Offeror plans to make the Company a wholly-owned subsidiary in the manner described in the item, “② Outline of the Tender Offer and other matters related thereto,” of sub-section (2) above, and thus it will implement measures to render the Company a wholly-owned subsidiary following the completion of the Tender Offer, as part of the series of steps of the Transaction.

In particular, the Tender Offeror plans to request, after the completion of the Tender Offer, that the Company hold a general meeting of the shareholders to consider, among other proposals, the following proposals (i) through (iii): the Company should (i) amend its Articles of Incorporation to make the Company a company with class shares as provided for in the Companies Act (Act No. 86 of 2005 as amended), which may issue class shares other than common shares; (ii) amend its Articles of Incorporation to subject all of the common shares issued by the Company to a Wholly Call (i.e., the provisions regarding the matters listed in Article 108(1)(vii) of the Companies Act); and (iii) obtain all of such shares of the Company (except treasury shares) in exchange for which it will deliver another class of shares in the Company.

If proposal (i) above is approved at the aforementioned general meeting of the shareholders, the Company will be a company with class shares as provided for in the Companies Act, and the amendment as set forth in proposal (ii) above will not become effective unless a resolution is passed at a Class Meeting constituted by all of the Class Shareholders holding the Company’s common shares with Wholly Call, pursuant to Article 111(2)(i) of the Companies Act, in addition to the resolution at the aforementioned general meeting of the shareholders. Therefore, the Tender Offeror plans to request the Company to hold a Class Meeting constituted by all of the Class Shareholders of the Company to consider, among other proposals, the proposal set forth in item (ii) above for the partial amendment of the Articles of Incorporation.

Upon the completion of the Tender Offer, the Tender Offeror will obtain 70% or more of the total amount of the Company’s issued shares except treasury shares. If it is determined to adopt the aforementioned procedures, the Tender Offeror plans to vote in favor of each of the above proposals at the aforementioned general meeting of the shareholders and Class Meeting.

If the above-mentioned procedures are implemented, all common shares issued by the Company will have a Wholly Call, all of which (except treasury shares) will be acquired by the Company, and the shareholders of the Company will receive a different class of shares of the Company in compensation for such acquisition. Shareholders allotted only a fractional number of such class shares of the Company will instead receive, in place of such fractional shares in the Company, the cash equivalent of what the Company would obtain through a sale (or other relevant method) of the aggregate amount of such fractional shares in accordance with the procedures under Article 234 of the Companies Act or other relevant laws and regulations (in case where the resulting aggregated number includes a fractional number, such fractional number will be rounded off). As for the sale price of such fractional shares in the Company, the amount of cash to be delivered to the shareholders as a result of the sale of the Company’s shares corresponding to the aggregate amount of such fractional shares will be computed based on the price equivalent to the Purchase Price. Although the class and number of the Company’s shares to be allotted to shareholders in exchange for common shares with Wholly Call are still undetermined as of the date of this statement, it is expected that a request will be made to determine that the number of new Company’s shares to be allotted to shareholders who do not tender their shares in the Tender Offer will be set at less than one (1) share in order to allow the Tender Offeror to hold all of the Company’s issued shares except treasury shares. Please be informed that, in principle, pursuant to the Tender Offer the measures to make the Company a wholly-owned subsidiary of the Tender Offeror are planned to be completed by the target date of June 30, 2010.

Under certain provisions of the Companies Act that specifically aim to protect the interests of the minority shareholders in connection with the aforementioned procedures, it is required that: (a) when the Articles of Incorporation of the Company are amended to allow the Company to subject all the common shares to the Wholly Call as specified in proposal (ii) above, the shareholders will have a right to request the Company to purchase the shares that they hold in accordance with the provisions of Articles 116 and 117 of the Companies Act, and other relevant laws and regulations; and (b) in the event that a resolution for the Company to acquire all the common shares with Wholly Call is adopted at a general meeting of the shareholders, a petition may be filed by the shareholders to determine the acquisition price of such shares in accordance with the provisions of Article 172 of the Companies Act, and other relevant laws and regulations.

The Tender Offer plans to implement the Merger after the completion of the aforementioned procedures.

The Tender Offer is not at all intended to solicit the shareholders of the Company to make affirmative votes for the proposal(s) at the above general meeting of the shareholders. Further, with respect to the above-mentioned method, depending on the interpretation by the authorities of the relevant laws and regulations, the Tender Offeror’s holding ratio of the share certificates following the Tender Offer, the holding of the Company’s shares by the Company’s shareholders other than the Tender Offeror, or other circumstances, a different method having the same effect may be implemented, and such implementation may require time. However, even in such a case, it is expected that the Company will become a wholly-owned subsidiary of the Tender Offeror by providing cash to the Company’s shareholders other than the Tender Offeror. As to the amount of cash to be delivered to such the Company’s shareholders in such a case, it will be computed in a way that would make such amount equivalent to the price that is a product of the Purchase Price and the number of common shares of the Company held by each of the shareholders of the Company.

The Company passed a resolution at the meeting of the Board of Directors held on September 11, 2009 providing that, subject to the Tender Offer taking effect, the Company shall not distribute dividends of any surplus to the shareholders recorded in the shareholder registry as of September 30, 2009 and March 31, 2010.

The Company also passed a resolution at the aforesaid meeting of the Board of Directors providing that, subject to the Tender Offer taking effect, the hospitality programs shall be abolished after such programs for the shareholders recorded in the shareholder registry as of September 30, 2009 are availed of by such shareholders. Please note, however, that, even if a shareholder subscribes to the Tender Offer before September 30, 2009, his/her name on the shareholder registry shall not be changed until the Tender Offer comes into effect, and the aforementioned hospitality programs shall only apply to shareholders who subscribe to the Tender Offer and are recorded in the shareholder registry as of September 30, 2009.

(5) Likelihood of the delisting of the Company’s shares and the reasons therefor

While the common shares of the Company are listed at the Osaka Stock Exchange and Tokyo Stock Exchange as of the date of this statement, in the event that, as a result of the Tender Offeror not setting an upper limit of the number of share certificates, etc., that it will purchase in the Tender Offer, the shares of the Company fall within the criteria for the delisting of shares from the Osaka Stock Exchange and Tokyo Stock Exchange, then there is a possibility that, following the implementation of specific procedures, the shares of the Company will be delisted. Furthermore, even in the event that the shares of the Company do not fall within such criteria, as aforementioned, at the time of the completion of the Tender Offer, the Tender Offeror still plans to make the Company a wholly-owned subsidiary pursuant to the applicable laws and regulations, and in such event, the common shares of the Company will be delisted.

(6) Matters regarding material agreements between the Tender Offeror and the Shareholders of the Company with respect to the tendering in the Tender Offer

The Tender Offerors explained to the Company that the Tender Offeror Quantum Leaps and the Investors have agreed as follows:

(i) An agreement that the Tenderer shall surrender all of its holdings for the Tender Offer

Each Tenderer has agreed to tender his or her holdings for the Tender Offer. However, the Tender Offeror may request a Tenderer not to tender his or her shares for the Tender Offer (if such request is made before the tender for the Tender Offer) or cancel an agreement concerning the Tender Offer (if it is made after the tender for the Tender Offer) upon notice in writing before the expiration of the Tender Offer Period pertaining to the Tender Offer in the event that:

(a) the Tenderer is found to have materially violated, or if it is reasonably foreseeable that such Tenderer will materially violate, any representation or warranty provided in the Investment Agreement;

(b) the Tenderer materially breaches any of its obligations in the Investment Agreement, including a failure to tender the shares of the Company owned by it;

(c) the Tender Offeror deems that any of the following conditions or other conditions provided in the Investment Agreement is not fulfilled, or that any event has occurred which endangers compliance with such conditions:

1. The Company has not withdrawn, reserved or changed its approbatory view of the Tender Offer;

2. No procedures for bankruptcy, civil rehabilitation, corporate reorganization, special liquidation or other similar legal bankruptcy procedures have been commenced by, or filed against, the Company or its subsidiary, nor has any cause for such insolvency proceedings or the suspension of payments occurred;

3. The material business of the Company or its subsidiary has not been abolished;

4. No disposition by suspension of business has been made at any clearinghouse; or

5. No event that may give rise to a material adverse effect to the business or assets of the Company, Act of God, significant deterioration in economic condition or any other event reasonably deemed by the Company as to obstruct the acquisition of the Company’s shares, has occurred.

(ii) An agreement concerning the investment in the Tender Offeror and the Tender Offeror’s capital formation after the Tender Offer takes effect

The Tender Offerors and the Investors have agreed that, subject to several conditions including: (i) there is no material breach of any representation and warranty made by the Tender Offeror or Quantum Leaps, and their respective obligations to be performed under the Investment Agreement, and (ii) the Tender Offeror completes its internal corporate procedures concerning the investment to be made by the Investors; FMH shall invest JPY 3 billion; Nippon TV, TBS, TV Asahi, Taiseitochi and KYORAKU shall each invest JPY 2 billion; SOFTBANK shall invest JPY 1.5 billion; TV Tokyo, DENTSU and Faith shall each invest JPY 1 billion; Yahoo, and TAISEI and Iwai Securities shall each invest JPY 500 million. Such investments in an aggregate amount of JPY 19 billion shall be in the Tender Offeror directly or through a wholly-owned subsidiary (including a subsidiary all of whose outstanding shares are indirectly owned by an Investor) after the Tender Offer takes effect and before the commencement date of the settlement of the said Tender Offer.

The aforementioned investments to be made by the Investors (Common Shareholders) will be implemented by means of a third-party allotment of common shares of the Tender Offeror.

Furthermore, the Tender Offeror and Mezzanine have agreed that Mezzanine shall invest JPY 5 billion in the Tender Offeror after the completion of the Tender Offer and before the date of the commencement of the settlement of the Tender Offer pursuant to the Mezzanine Investment Agreement. After the amendment of the Articles of Incorporation of the Tender Offeror to make the Tender Offeror a company with class shares, the said investment to be made by Mezzanine will be implemented by means of a third-party allotment of preferred shares that are without voting rights and are convertible to common shares (the “Preferred Shares”).

Furthermore, the Tender Offeror, Quantum Leaps and the Investors have agreed that, in the event that the Tender Offer takes effect, the Tender Offeror shall be entitled to determine the issuance of common shares of the Tender Offeror thereafter and before the commencement date of the settlement of the said Tender Offer, by means of a third-party allotment to companies or other entities whose principal businesses fall within industries such as broadcasting, advertising, mobile telecommunication, finance or insurance; provided that the amount per share to be paid for the shares for subscription shall be its fair value, which is JPY 50,000 or more. The maximum number of the shares for subscription shall be 160,000 shares; and the maximum number of shares to be allocated to members of the same corporate group shall be 40,000 shares.

The Investment Agreement provides that, after the due date of the payment for the aforementioned investments and until the lapse of three (3) years after the effective date of the Merger, the Investors (Common Shareholders) shall not, in principle, assign, attach any security to, or otherwise dispose all or a part of the shares of the Tender Offeror (or, after the Merger, the New Merger Company) held by the said Investors (Common Shareholders).

(iii) An agreement concerning the Company’s Wholly-owned Subsidiary Procedures and the Merger

The Tender Offeror, Quantum Leaps and the Investors as aforementioned in the sub-section, “(4) Policies on corporate restructuring anticipated after the completion of the Tender Offer (matters concerning the so-called two-tier acquisition),” have agreed that the Tender Offeror shall implement the Wholly-owned Subsidiary Procedures pertaining to the Company and the Merger.

(iv) An agreement concerning the corporate governance of the Tender Offeror and the Company upon the completion of the Tender Offer

The Tender Offeror, Quantum Leaps and the Investors have agreed, among others: (a) immediately after the completion of the settlement of the Tender Offer, to make the Tender Offeror a company with a Board of Directors, and in principle, appoint Mr. Idei, Mr. Yoshino and Osaki thereto, and (b) that, after the date of the commencement of the settlement of the Tender Offer and on or before the day prior to the effective date of the Merger, the Tender Offeror shall not distribute dividends of any surplus.

Furthermore, the Tender Offeror, Quantum Leaps and the Investors have agreed, among others: (a) after the effective date of the Merger, to make the New Merger Company a company with a Board of Directors, a Board of Auditors and Accounting Auditors, and to appoint Mr. Idei, Mr. Yoshino and Others and other person(s) to be determined at the general meeting of the shareholders of the New Merger Company; and (b) ① to establish, immediately after the Merger, a management strategy committee that will serve as a consultation body for the Board of Directors of the New Merger Company, ② to constitute the management strategy committee with five (5) members, who in principle, shall be appointed for a term of one (1) year by a resolution passed at the general meeting of the shareholders of the New Merger Company, and Mr. Idei shall assume the position of the initial representative member, and ③ that the New Merger Company shall consult the management strategy committee with regard to any formulation or changes in the mid-term management plan prior to making decisions regarding the same, and to make its decisions by placing great value upon the recommendations of the said management strategy committee, which recommendations are to be made in reply to consultations made by the New Merger Company.

3. Outline of the Giving of Benefits by the Tender Offeror or its Special Related Parties

Not applicable.

4. Measures on the Basic Policies on Controlling the Company

Not applicable.

5. Questions for the Tender Offeror

Not applicable.

6. Outline of the Tender Offer by the Tender Offeror

Please refer to the attached material released by the Tender Offeror today (“Announcement Concerning the Commencement of the Tender Offer for the shares of Yoshimoto Kogyo Co. Ltd.”).

*Recipients must note that, under paragraphs 3 and 4 of Article 167 of the Financial Instruments and Exchange Act and Article 30 of the Order for Enforcement of the Financial Instruments and Exchange Act, individuals who have browsed the matters described in this press release may be treated as first recipients of insider information under the regulations on insider trading and thus, are prohibited from purchasing share certificates, etc., in the Company until after the lapse of twelve (12) hours from the announcement of this press release. The Company shall not assume any responsibility for any criminal, civil or administrative liability incurred by anyone who has received this press release and purchased or otherwise acquired or disposed of shares in the Company.

*Attachments:

“ANNOUNCEMENT OF THE COMMENCEMENT OF THE TENDER OFFER TO THE SHARES OF YOSHIMOTO KOGYO CO. LTD.”

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