1. Motivation for a joint-operation contract

To better confront the rapidly changing environment in the convenience store industry, Lawson and Poplar signed a capital and business alliance in December 8, 2014. That alliance has since spanned a range of activities from joint procurement of raw materials and products to joint use of distribution infrastructure. Subsequently, on September 18, 2015, Lawson and Poplar signed a basic business alliance at the store level. Then, in November 2015, Poplar Project Co., Ltd. (a fully owned subsidiary of Poplar Co., Ltd.) started operating two stores under a new LAWSON POPLAR brand, which have proved a successful precursor to the development a full-fledged double-brand store network in the region. With that aim in mind, both companies have decided to sign a joint-operation contract for the San’in region. The contract will involve the transfer of a portion of the rights and obligations relating to Poplar’s convenience store operation in the San’in region to Lawson.

2. Overview of joint-operation contract

Having satisfied all legal procedures and actions to prevent the forming of a private monopoly and to ensure fair trading, Lawson intends to establish Lawson San’in Co., Ltd. (temporary name) in the San’in region. The new company will develop a regional franchise operation, incorporating any established POPLAR-brand convenience store that wishes to transfer to a joint LAWSON POPLAR brand, and all LAWSON stores operated by Lawson’s Tottori and Shimane branch offices. Details of the joint-operation agreement decided at the Lawson Board meeting on Thursday, August 4, 2016 are listed below:

• (1) Lawson will aim to establish a fully owned subsidiary, Lawson San’in Co., Ltd., in September 2016, which will act as an area franchise headquarters for the San’in region.
• (2) Poplar will transfer a portion of the assets, rights and obligations pertaining to the convenience stores operations for existing POPLAR stores in the San’in region that wish to change to the joint LAWSON POPLAR brand. This transfer will be conducted via company split No.1, the price of which will be equal to, or less than, 30% of Lawson San’in stock.
• (3) Poplar Project will transfer to Lawson San’in via company split No.2 a portion of the assets, rights and obligations pertaining to the operations of its two experimental double-brand convenience stores.
• (4) Lawson will inherit from Poplar the land titles and lease contracts for stores transferring from POPLAR to the LAWSON POPLAR brand and for the two experimental double-brand stores, along with any rights to claim return of security deposit relating to those contracts (claims for return of security payments for cooperative building sinking funds, etc.). This transfer will be conducted via company split No.3.
• (5) Lawson will transfer all the assets, rights and obligations pertaining to convenience store operations managed by its Totorri and Shimane branches to Lawson San’in via company split No.4.

The detailed content of the company splits will be disclosed once it has been confirmed.

3. Schedule

Note: Each company split is a simple company split as determined under Item 2, Article 796 of the Companies Act for both Lawson and Poplar. As such, the company splits are expected to be executed without seeking prior approval from respective general shareholders’ meetings.

4. Overview of Lawson, Inc. and Poplar Co., Ltd.

5. Future business outlook

We expect the impact from company splits No.1, 2, 3 and 4 on Lawson’s overall business performance to be minimal. Any further details will be disclosed swiftly following the Board of Directors’ meeting to be held on September 6, 2016.