2007 Press Releases-11

Yokogawa Electric Corporation (the "Company") announces that its board of directors has resolved in a meeting on this date to introduce countermeasures to the large-scale acquisition of the Company's shares (the "Plan"). Subject to the approval of shareholders at the ordinary general meeting of shareholders of the Company to be held in June 2007 (the "Ordinary General Meeting of Shareholders"), this Plan has the purpose of ensuring and enhancing the corporate value of the Company and, in turn, the common interests of its shareholders.

1. Purpose of Introducing the Plan

1.1. Efforts to Enhance the Company's Corporate Value and Serve the Common Interests of Shareholders

The Company is committed to contributing to industry based on an understanding of the factors that make up the Company's corporate value. This is in accordance with the corporate philosophy, which states, "As a company, our goal is to contribute to society through broad-ranging activities in the areas of measurement, control and information. Individually, we aim to combine good citizenship with the courage to innovate". Based on this philosophy, the board of directors believes that its business mission is the continual pursuit of sound business activities and the maximizing of corporate value for all stakeholders, including shareholders, customers, employees, and people in local communities.

With this as its base, the Company has aimed for healthy and profitable operation. It took on reforms to its business structure and group management, with fiscal year 2005 as the First Milestone for its VISION-21 & ACTION-21 long-term corporate strategy. A new scheme was introduced in fiscal year 2006 that will lead up to the Second Milestone of fiscal year 2010. This embarks on activities that will bring about even greater growth in the business, and is based on the foundation that was built through previous structural reforms. The specific managerial target of the Company is to achieve an operating income of 75 billion yen in fiscal year 2010, the final year of the Second Milestone phase. The specific measures for each business are as follows.

Industrial Automation and Control Business

The Company is planning to proactively develop the industrial automation and control business, with the goal of becoming the world's top company in this field by the year 2010. Besides cementing the number one position in regions where the Company is competitive and where market growth is high, the Company is also increasing its market share by responding to replacement demand in regions where the market has matured.

In the world market, the Vigilance marketing campaign has demonstrated the Company's commitment to customers and enhanced its reputation as a trusted partner. The Company is taking this opportunity to intensify its competitiveness and proactively develop international markets. While transferring production outside Japan and enhancing its engineering system to effectively utilize worldwide resources, the Company is also reinforcing its research and development functions in various parts of the world to meet the needs of the customer in each region, By these means, the Company plans to rapidly increase its share of the market.

The Company continues to increase its share of the Japan market by concentrating on replacement demand and making use of its long-cultivated ability to propose total solutions and provide reliable products that meet the customer's requirements. In addition, the Company is developing its businesses and expanding its business domain by offering new solutions in information fields such as manufacturing execution systems (MES) and enterprise resource planning (ERP) systems.

Test and Measurement Business

The Company is increasing its test and measurement business through the strategic launch of competitive products in the semiconductor market and the communications and measurement market. The Company plans to grow its semiconductor tester business through further technology development and by developing a product strategy that reinforces its product development capabilities and meets the needs of the customer. The Company is reinforcing its ability to propose solutions from the customer's point of view to the entire semiconductor test process, ranging from the semiconductor design environment to services. In addition, the Company is reinforcing its worldwide business structure.

The Company has determined that it will focus development resources on the following important fields in the communications and measurement business: mechatronics and energy, which is growing rapidly as a result of the increasing use of computer technologies in automobiles; electronics and semiconductors, which is expanding through the increasing use of information appliances; and optical communications and networks, which is expanding and gaining momentum as the result of the introduction of next-generation optical communications networks. The Company plans to grow this business by accelerating product development based on its leading edge measuring technology and semiconductor technology.

New and Other Business

In the photonics business, the Company is working to increase sales in the key optical communications market by establishing a business based on next-generation optical communications modules and optical communications subsystems. It is also accomplishing this by increasing sales in the optical packet network business, where the use of next-generation computers is expected to achieve a rapid increase in demand. The Company is concentrating on investing in the development of three core technologies for the advanced-stage business: precise positioning technology, highfunction and high-performance controller technology, and image protocol technology. By being a world technology leader, the Company is working to increase its share in the liquid crystal display manufacturing market and the semiconductor manufacturing market. The Company is also investing in resources for life science related businesses, with an aim to proactively open the market and launch its business. The Company plans to expand business in the aviation instruments field, actively tapping into traditional public-sector as well as private-sector demand.

1.2. Purpose of Introducing the Plan

The Plan will be introduced for the purpose of ensuring and enhancing the corporate value of the Company and, in turn, the common interests of its shareholders, as set out below.

As described above, by having a well balanced portfolio of industrial automation and control, test and measurement, and new and other businesses, the Company can drive forward growth strategies whilst considering business risks, and develop mid- to long-term approaches to improving the corporate value. However, if a party carrying out a large-scale acquisition of the Company shares is not properly aware of the Company's growth strategies and the management environment that surrounds the business, it will become difficult to ensure and enhance the corporate value of the Company and the common interests of its shareholders, and it is possible that the common interests of the stakeholders, particularly shareholders, will be harmed.

In this regard, a decision regarding any proposal that would involve a transfer of corporate control of stock corporation, which is a public company, must be ultimately based upon the intent of all the shareholders. While accepting the concept that the shares of a publicly held company should be freely traded, the Company's board of directors believes that the decision whether to accept a large-scale acquisition of the Company's shares by a specific party should be ultimately left up to the shareholders of the Company.

There are corporate takeovers that do not contribute to the corporate value of the target company or the common interests of the shareholders, including (i) those with respect to which the purpose of the share acquisition requires the disposal of material business assets, etc., that would clearly harm the corporate value and, in turn, the common interests of shareholders, (ii) those that are likely to force shareholders to respond to a takeover in effect, (iii) those that do not provide adequate time and information for the board of directors and shareholders of the target company to consider the large-scale acquisition of shares, etc., or for the board of directors of the target company to submit an alternative proposal, and (iv) those that require the target company to negotiate with the offeror to procure more advantageous terms for the shareholders than those presented by the offeror.

For the Company to continuously ensure and enhance its corporate value, it is essential to understand the various factors that constitute the corporate value of the Company such as its managerial resources and workforce, the trusting relationship with customers, the future and potential value of its businesses, and the general value achieved through the organic combination of these factors. However, if a party carrying out a large-scale acquisition of Company shares is not properly aware of the sources of the Company's corporate value and cannot ensure and enhance it from a mid- to long-term perspective, the corporate value of the Company and the common interests of its shareholders will be harmed.

If a takeover were to be proposed by an outside party, after adequately ascertaining from all shareholders the various factors that compose the corporate value of the Company, it would be necessary to make a judgment on the effect that the takeover would have on the corporate value of the Company and, in turn, on the common interests of the shareholders.

The Company's board of directors has considered the need for securing sufficient time and information so that alternatives can be presented to shareholders and so that they can effectively judge whether to accept a large-scale acquisition of the Company's shares. Accordingly, they have come to the decision that the introduction of the Plan is necessary as a process for deterring acts that are against the Company's corporate value and, in turn, the common interests of the shareholders.

Currently, the Company is not aware of any specific threat of such an inappropriate acquisition. Principal shareholders of the Company as of March 31, 2007, are listed in Attachment 5 entitled "Outline of the Company's Shareholding".

2. Plan details

2.1. Plan outline

(a) Procedures for introduction of the Plan

In light of the importance of the introduction of the Plan, the Company considered it appropriate to reflect the intent of the shareholders. Therefore, the Company requests shareholders to approve the introduction of the Plan at the Ordinary General Meeting of Shareholders. Introduction of the Plan is subject to this item of business being approved with a majority of the votes cast by the shareholders attending the Ordinary General Meeting of Shareholders.

(b) Establishment of procedures for triggering the Plan

In the event of any proposal that involves acquisition of the Company's shares or a similar action or proposal (hereinafter referred to as the "Acquisition"), the Plan sets out procedures for conducting negotiations with the party effecting or proposing the Acquisition (hereinafter collectively referred to as the "Acquirer") such as presenting information such as alternative schemes and counterproposals by the Company's board of directors to the shareholders, as well as for requests to the Acquirer to provide information relating to the Acquisition in advance, and for securing sufficient time to collect information with respect to the Acquisition and to give it full consideration.

(c) Triggering the Plan by gratis allotment of Stock Acquisition Rights and use of an Independent Committee to eliminate arbitrary decisions by directors

If an Acquirer's actions are deemed to threaten to harm the Company's corporate value or the common interests of its shareholders, the Company will allot stock acquisition rights by means of a gratis allotment of stock acquisition rights to all shareholders on a certain day determined by the Company's board of directors upon resolution of the Company's board of directors (stock acquisition rights allotted hereby hereinafter referred to as the "Stock Acquisition Rights").

In order to eliminate arbitrary decisions by directors relating to the implementation or non-implementation of the gratis allotment of Stock Acquisition Rights, or the acquisition of the Stock Acquisition Rights, the Plan is designed to require objective decisions from an independent committee, which is comprised of persons who are completely independent of the Company's management, such as outside directors, in accordance with the Rules of the Independent Committee.

The people scheduled to be the initial members of the Independent Committee for the introduction of the Plan are: Mr. Masahisa Naito (a candidate for outside director), Mr. Yasuro Tanahashi (a candidate for outside director), Mr. Shigeru Hikuma (an outside statutory auditor), Mr. Takaaki Wakasugi (an outside expert) and Mr. Naoto Nakamura (an outside expert). (Please refer to Attachment 3 for the names and career summaries of the members.)

(d) Exercise of Stock Acquisition Rights and the Company's acquisition of Stock Acquisition
Rights

If a gratis allotment of Stock Acquisition Rights were to take place in accordance with the Plan and either the shareholders other than the Acquirer exercised the Stock Acquisition Rights or the shareholders other than the Acquirer received shares of the Company in exchange for the Company acquiring the Stock Acquisition Rights, then it would be possible for the ratio of Company shareholder voting rights held by the Acquirer to be diluted up to approximately one half.

2.2. Procedures for triggering the Plan

(a) Targeted acquisitions

Where there is an Acquisition that falls under (i) or (ii) below, the Company will, pursuant to the Plan, administer gratis allotment of Stock Acquisition Rights in accordance with the terms and conditions set out in the Plan:

(i) An Acquisition that would result in the holding ratio of share certificates, etc. (kabuken tou hoyuu wariai)*1 of a holder (hoyuusha)*2 amounting to 20% or more of the share certificates, etc. (kabuken tou)*3 issued by the Company; or

(ii) A tender offer (koukai kaitsuke)*4 that would result in the ownership ratio of share certificates, etc. (kabuken tou shoyuu wariai)*5 of share certificates, etc. (kabuken tou)*6 relating to the tender offer and the owning ratio of share certificates, etc. of a person having a special relationship (tokubetsu kankei-sha)*7 totaling at least 20% of the share certificates, etc. issued by the Company.

(b) Request to the Acquirer for the provision of information

Excluding for Acquisitions determined by the Company's board of directors to be friendly Acquisitions, the Company will promptly send any Acquirer conducting an Acquisition described above in 2.2(a) an undertaking written in Japanese and in the form prescribed by the Company pledging that the Acquirer will upon the Acquisition comply with the procedures established in the Plan (hereinafter referred to as the "Acquisition Statement") and an inquiry about information prepared in the form prescribed by the Company and in Japanese that is necessary to review details of acquisition by the Acquirer as described in each item of the list below (hereinafter referred to as the "Essential Information").

As a general rule, the Company requires the Acquirer to submit to the Company's board of directors the Acquisition Statement and the Essential Information within ten business days after the Acquirer has received the materials sent by the Company before effecting the Acquisition. The Company's board of directors will send soon the materials to the Independent Committee.

In case the Independent Committee evaluates that the Acquisition Statement and the Essential Information provided is inadequate as the Essential Information, it may fix the Acquirer a deadline for response, and request by itself or through the Company's board of directors that the Acquirer provide additional Essential Information. In such case, the Acquirer should provide the additional Essential Information within the relevant time limit.

(i) Details (including the specific name, capital composition, and financial condition) of the Acquirer and its group (including joint holders*8, persons having a special relationship and, in the case of funds, each partner and other constituent members).

(ii) The purpose, method and terms of the Acquisition (including information regarding the amount and type of consideration for the Acquisition, the timeframe of the Acquisition, the scheme of any related transactions, the legality of the Acquisition method, and the probability that the Acquisition will be effected).

(iii) The basis for the calculation of the price of the Acquisition (including the underlying facts and assumptions of the calculation, the calculation method, the numerical data used in the calculation, the details of any expected synergies from any series of transactions relating to the Acquisition (including the details of such synergies to be shared with other shareholders), and the calculation basis therefor).

(iv) Financial support for the Acquisition (including the specific name, financing methods and the terms of any related transactions of providers of the funds for the Acquisition (including all indirect fund providers)).

(v) Post-Acquisition management policy, business plan, capital and dividend policies for the Group.

(vi) Post-Acquisition policies dealing with the Company's employees, business partners, clients, and other stakeholders in the Company.

(vii) Specific measures to avoid conflicts of interest with other shareholders of the Company.

(viii) Any other information that the Independent Committee considers reasonably necessary.

If the Independent Committee recognizes that an Acquirer has initiated an Acquisition without complying with the procedures set by the Plan, as a general rule, it will advise the Company's board of directors to implement a gratis allotment of Stock Acquisition Rights in accordance with 2.2(d)(i) below, except in particular circumstances where board of directors should continue its requests for submission of an Acquisition Statement and the Essential Information, and board of directors' discussions and negotiations with the Acquirer.

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*1 Defined in Article 27-23(4) of the Securities and Exchange Act of Japan. This definition is applied throughout this document.
*2 Including persons described as a holder under Article 27-23(3) of the Securities and Exchange Act of Japan (including persons considered by the Company's board of directors to fall under this provision). This definition is applied throughout this document.
*3 Defined in Article 27-23(1) of the Securities and Exchange Act of Japan. Unless otherwise provided for in this document, the same is applied throughout this document.
*4 Defined in Article 27-2(6) of the Securities and Exchange Act of Japan. The same is applied throughout this document.
*5 Defined in Article 27-2(8) of the Securities and Exchange Act of Japan. The same is applied throughout this document.
*6 Defined in Article 27-2(1) of the Securities and Exchange Act of Japan. The same is applied in 3.1 (a)(ii).
*7 Defined in Article 27-2(7) of the Securities and Exchange Act of Japan (including persons considered by the Company's board of directors to fall under this provision); provided, however, that persons provided for in Article 3(2) of the Cabinet Office Regulations concerning Disclosure of a Tender Offer by an Acquirer other than the Issuing Company are excluded from the persons described in Article 27-2(7)(i) of the Securities and Exchange Act of Japan. The same is applied throughout this document.
*8 "Joint holders" are as defined in Article 27-23(5) of the Securities and Exchange Act of Japan, including persons regarded as a joint holder under Article 27-23(6) of the Securities and Exchange Act of Japan (including persons that the Company's board of directors recognizes as falling under the above). The same is applied throughout this document.

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(c) Consideration of Acquisition terms, negotiations with the Acquirer, and consideration of an alternative proposal

(i) Request to the Company's board of directors for the provision of information

If the Acquirer submits an Acquisition Statement, the Essential Information and the Essential Information required by the Independent Committee to be provided additionally (if any), the Independent Committee may set a reply period (up to 60 days as a general rule) and request that the Company's board of directors present an opinion on the Acquirer's terms and supporting materials for the Acquisition (including reservations; hereinafter the same), an alternative proposal (if any), and any other information and materials that the Independent Committee considers suitably necessary, in order to compare the details of the Acquisition Statement and the Essential Information to the business plan of the Company's board of directors and the company valuation conducted by the Company's board of directors for the purposes of ensuring and enhancing the Company's corporate value and the common interests of its shareholders.

(ii) Independent Committee consideration

Upon receiving the information and materials from the Acquirer and the Company's board of directors (if the Independent Committee requested the Company's board of directors provide information as set out above), the Independent Committee should consider the Acquirer's Acquisition terms, collect information on the business plans and other information and materials of the Acquirer and the Company's board of directors and comparisons thereof, and consider any alternative proposal presented by the Company's board of directors, and the like for a maximum period, as a general rule, of 60 days from such receipt (provided, however, that in the case described below in 2.2(d)(iii) or the like, the Independent Committee may extend this period (hereinafter the "Independent Committee Consideration Period")).

The Independent Committee recommends the Company's board of directors presents an alternative proposal to shareholders with the view of ensuring and enhancing the Company's corporate value and the common interests of its shareholders.

In order to ensure that the Independent Committee's decision enhances the Company's corporate value and the common interests of its shareholders, the Independent Committee may at the cost of the Company obtain advice from independent third parties (including financial advisers, certified public accountants, attorneys, consultants or any other experts).

(iii) Disclosure of information

At a time the Independent Committee considers appropriate, the Company will disclose to shareholders the fact that the Acquirer submitted an Acquisition Statement and any matters considered appropriate by the Independent Committee out of the Essential Information or other information.

(d) Independent Committee methods for judgment

If an Acquirer emerges, the Independent Committee will take the following procedures.

(i) The Independent Committee recommends triggering the Plan

If the Acquirer fails to comply with the procedures set forth in 2.2(b) and (c) above, or if otherwise as a result of the consideration of the terms of the Acquirer's Acquisition, the Independent Committee determines that the Acquisition by the Acquirer meets any of the requirements set out in 2.3 'Requirements for the gratis allotment of Stock Acquisition Rights' below and that the implementation of the gratis allotment of Stock Acquisition Rights is reasonable, the Independent Committee will recommend the implementation of the gratis allotment of Stock Acquisition Rights to the Company's board of directors, regardless of whether the Independent Committee Consideration Period has commenced or ended.

However, even after the Independent Committee has already made one recommendation for the implementation of the gratis allotment of Stock Acquisition Rights, if the Independent Committee determines that either of the events below applies, it may make a new recommendation by the day prior to the Exercise Period Commencement Date (defined below in (f) of 2.4) that (before the gratis allotment has taken effect) the Company should suspend the gratis allotment of Stock Acquisition Rights or that (after the gratis allotment has taken effect) the Company should acquire the Stock Acquisition Rights without compensation.

• The Acquirer withdraws the Acquisition or otherwise ceases to exist after the recommendation.
   
• There is a change in the facts or circumstances upon which the recommendation decision was made, and the Acquisition by the Acquirer does not meet any of the requirements set out in 2.3 ‘Requirements for the gratis allotment of Stock Acquisition Rights' below, or it is not reasonable to implement the gratis allotment or allow for shareholders to exercise the Stock Acquisition Rights even if the Acquisition by the Acquirer does meet one of the requirements under 2.3 below.

(ii) The Independent Committee recommends the non-triggering of the Plan

If as a result of its consideration of the terms of the Acquirer's Acquisition, the Independent Committee determines that the Acquisition by the Acquirer does not meet any of the requirements set out below in 2.3 ‘Requirements for the gratis allotment of Stock Acquisition Rights,' or that the implementation of the gratis allotment of Stock Acquisition Rights is not reasonable even if the Acquisition by the Acquirer does meet one of the requirements set out in 2.3 below, the Independent Committee will recommend the non-implementation of the gratis allotment of Stock Acquisition Rights to the Company's board of directors, regardless of whether the Independent Committee Consideration Period has ended.

However, if there is a change in the facts, circumstances or otherwise upon which a recommendation decision was made and the requirements set out in the first paragraph of (i) above have come to be satisfied, the Independent Committee may make a separate decision including a recommendation to implement the gratis allotment of Stock Acquisition Rights, and advise the Company's board of directors.

(iii) The Independent Committee defers recommendation concerning the Plan

If the Independent Committee does not reach a recommendation for either the implementation or non-implementation of the gratis allotment of Stock Acquisition Rights by the expiry of the initial Independent Committee Consideration Period, the Independent Committee will pass a resolution to extend the Independent Committee Consideration Period to the reasonable extent considered necessary to weigh up the terms of the Acquirer's Acquisition.

If the Independent Committee Consideration Period is extended as a result of the resolution described above, the Independent Committee will continue with its information collection and consideration, and make best efforts to recommend the implementation or non-implementation of the gratis allotment of Stock Acquisition Rights within the extended period.

(iv) Information Disclosure

If the Independent Committee passes a resolution set out in (i) through (iii) above or in any other case where the Independent Committee considers appropriate, the Company will promptly disclose information on the outline of the resolution and other matters that the Independent Committee considers appropriate (including the reason of extension of the Independent Committee Consideration Period if it is extended in accordance with (iii) above).

(e) Resolutions of the board of directors

The Company's board of directors*, in exercising their role under the Corporation Law, will pass a resolution relating to the implementation or non-implementation of a gratis allotment of Stock Acquisition Rights giving the utmost consideration to any recommendation of the Independent Committee described above. Promptly after passing such resolution, the Company's board of directors will disclose an outline of its resolution, and any other matters that the board of directors considers appropriate. In addition, the Acquirer may not implement the Acquisition until the Company's board of directors passes a resolution for non-implementation of gratis allotment of Stock Acquisition Rights.

* As three out of the ten Directors to be appointed at the Ordinary General Meeting of Shareholders are part-time directors who are independent from current management (including two outside directors), the judgment of the Company's board of directors is ensured to be transparent and objective.

2.3. Requirements for the gratis allotment of Stock Acquisition Rights

The Company intends to implement the gratis allotment of Stock Acquisition Rights by a resolution of the Company's board of directors as described above in (e) of 2.2 ‘Procedures for triggering the Plan,' if it is considered that an act by an Acquirer falls under any of the items below and it is reasonable to implement the gratis allotment of Stock Acquisition Rights. As described in (d) of section 2.2 above, ‘Procedures for triggering the Plan,' fulfillment of the requirements below and the appropriateness of the implementation of gratis allotment of the Stock Acquisition Rights must be determined based on the recommendation of the Independent Committee.

(a) An Acquisition does not comply with procedures described in the Plan.
(b) An Acquisition that threatens to cause obvious harm to the corporate value of the
Company and, in turn, the common interests of its shareholders through actions such as those described below:

(i)	A buyout of share certificates, etc. that requires such share certificates, etc. to be compulsorily acquired by the Company at an inflated price.
(ii)	Management that advantages the interests of the Acquirer to the detriment of the Company, such as temporary control of the Company's management for the low-cost acquisition of the Company's material assets.
(iii)	Diversion of the Company's assets to secure or repay debts of the Acquirer or its group company.
(iv)	Temporary control of the Company's management to bring about the disposal of high-value assets that have no current relevance to the Company's business and declaring temporarily high dividends from the profits of the disposal, or selling the shares at a high price by taking advantage of the opportunity afforded by the sudden rise in share price created by the temporarily high dividends.

(c) Certain Acquisitions that threaten to have the effect of coercing shareholders into selling shares, etc. such as coercive two-tiered tender offers (meaning acquisitions of shares including tender offers that do not offer to acquire all shares in the initial acquisition, and set unfavorable or unclear acquisition terms for the second stage).

(d) Acquisitions whose terms (including amount and type of compensation, the Acquisition schedule, the legality of the Acquisition method, and the probability of the Acquisition being effected) are inadequate or inappropriate in light of the Company's corporate value and, in turn, common interests of its shareholders.

(e) Acquisitions that materially threaten to harm the corporate value of the Company and, in turn, the common interests of shareholders by destroying tangible and intangible management resources, such as personnel networks with employees and business partners and global service networks, which are indispensable to generating the Company's corporate value and are the source of generating the value of the Company's corporate brand and corporate value.

2.4. Outline of the gratis allotment of Stock Acquisition Rights

An outline of the gratis allotment of Stock Acquisition Rights to be implemented under the Plan is described below. (Please refer to Attachment 1 'Yokogawa Electric Terms and Conditions of the Stock Acquisition Rights' for details of Stock Acquisition Rights.)

(a) Number of Stock Acquisition Rights

The number of the Stock Acquisition Rights granted will be equal to the final and total number of issued and outstanding shares in the Company (excluding the number of shares in the Company held by the Company at that time) on a certain date (the 'Allotment Date') that is determined by the Company's board of directors in a resolution relating to the gratis allotment of Stock Acquisition Rights (the 'Gratis Allotment Resolution').

(b) Shareholders eligible for allotment

The Company will implement gratis allotment of the Stock Acquisition Rights to shareholders other than the Company who are entered or recorded in the Company's final register of shareholders or register of beneficial shareholders (the 'Applicable Shareholders') on the Allotment Date, at a ratio of one Stock Acquisition Right for every one share held.

(c) Effective date of gratis allotment of Stock Acquisition Rights

The Company's board of directors will determine the effective date of the gratis allotment of Stock Acquisition Rights in the Gratis Allotment Resolution.

(d) Number of shares to be acquired upon exercise of Stock Acquisition Rights

The number of shares to be acquired upon exercise of each Stock Acquisition Right (the 'Applicable Number of Shares') shall be determined by the Company's board of directors in the Gratis Allotment Resolution within the range of a half and one share. If the Applicable Number of Shares is less than one share, the Company shall make a bulk sale of these shares and allocate the disposal proceeds to shareholders pro rata in accordance with the fractions they hold.

(e) The amount of assets to be contributed upon exercise of Stock Acquisition Rights

Contributions upon exercise of the Stock Acquisition Rights are to be in cash, and the amount per share of assets to be contributed upon exercise of the Stock Acquisition Rights will be an amount determined by the Company's board of directors in the Gratis Allotment Resolution within the range of a minimum of one yen and a maximum the amount equivalent to 50% of the fair market value of one share of the Company. The 'fair market value' means the value equivalent to the average closing price of regular transactions in the Company's shares of common stock conducted on the Tokyo Stock Exchange for the 90 days (excluding any day on which no trade occurred) immediately prior to the date of the Gratis Allotment Resolution, and any fraction of a yen shall be rounded up to the nearest whole yen.

(f) Exercise period of Stock Acquisition Rights

The commencement date will be a date determined by the Company's board of directors in the Gratis Allotment Resolution (the commencement date of this exercise period shall be referred to as the 'Exercise Period Commencement Date'), and the period will be a period of one to three months as determined by the Company's board of directors in the Gratis Allotment Resolution; provided, however, that if the Company acquires the Stock Acquisition Rights pursuant to the provisions of paragraph (i) below, the exercise period for the Stock Acquisition Rights will be up to and including the day immediately prior to that acquisition date. Further, if the final day of the exercise period falls on a holiday for the payment place of the cash payable upon exercise, the final day will be the preceding business day.

(g) Conditions for the exercise of Stock Acquisition Rights

As a general rule, the following parties may not exercise the Stock Acquisition Rights:
(I) Specified Large Holders;
(II) Joint Holders of Specified Large Holders;
(III) Specific Large Acquirers;
(IV) Persons having a Special Relationship with Specific Large Acquirers;
(V) Any transferee of or successor to the Stock Acquisition Rights of any person falling under (I) through (IV) without the approval of the Company's board of directors; or
(VI) Any Affiliated Party of any person falling under (I) through (V).
Further, nonresidents of Japan who are required to follow certain procedures under foreign laws and ordinances to exercise the Stock Acquisition Rights may not as a general rule exercise the Stock Acquisition Rights (provided, however, that the Stock Acquisition Rights held by nonresidents will be subject to acquisition of shares of the Company by the Company in exchange for shares of the Company as set out in (i) below). Please refer to Attachment 1 'Yokogawa Electric Terms and Conditions of the Stock Acquisition Rights' for definitions and details of terms used above.

(h) Assignment of Stock Acquisition Rights

Any acquisition of the Stock Acquisition Rights by assignment requires the approval of the Company's board of directors.

(i) Acquisition of Stock Acquisition Rights by the Company

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Attachment 3

Name and Career Summary of Members of the Independent Committee

The following five candidates are the proposed initial members of the Independent Committee at the time of introduction of the Plan:

1. Masahisa Naito

Born February 20, 1938
Chairman and CEO of the Institute of Energy Economics, Japan

[Career Summary]
Apr. 1961	Joined Ministry of International Trade and Industry
June 1991	Appointed Deputy Vice-Minister of International Trade and Industry
June 1993	Appointed Chief of Industrial Policy Bureau
Apr. 1998	Appointed Representative Director and Executive Vice President of Itochu Corporation
Jan. 2000	Appointed Outside Director of DuPont, USA (current)
Apr. 2000	Appointed Director and Executive Vice Chairman of Itochu Corporation
June 2003	Appointed Chairman and CEO of the Institute of Energy Economics, Japan (current) Appointed Outside Director of Yokogawa Electric Corporation (current)
June 2006	Appointed Outside Director of Nippon Koei Co., Ltd. (current) Appointed Outside Director of ESPEC Corp. (current)

Mr. Masahisa Naito is a candidate for the outside director who satisfies the requirements of an outside director set out in Article 2.3 (7) of the Enforcement Regulations of the Corporation Law of Japan and is scheduled to be appointed as an outside director after being approved at the Ordinary General Meeting of Shareholders. He does not have any special interests in the Company.

2. Shigeru Hikuma

Born November 6, 1946
President of CRD Management Council

[Career Summary]
Apr. 1970	Joined Bank of Japan
Sept 1997	Appointed Director-General of Business Management Department of Bank of Japan
May 1998	Appointed Executive Director of Bank of Japan
May 2000	Retired from Bank of Japan.
May 2001	Appointed President of Credit Risk Database Association, a Limited Liability Intermediate Corporation
June 2004	Appointed Outside Statutory Auditor of Yokogawa Electric Corporation (current)
Apr. 2005	Appointed President of CRD Management Council (current)

Mr. Shigeru Hikuma is a the outside statutory auditor set out in Article 2.16 of the Enforcement Regulations of the Corporation Law of Japan. He does not have any special interests in the Company.

3. Yasuro Tanahashi

Born January 4, 1941
Representative Director and Chairman of NS Solutions Corporation

[Career Summary]
Apr. 1963	Joined Fuji Steel Co.
June 1995	Appointed Director of Nippon Steel Corporation
Apr. 1997	Appointed Managing Director of Nippon Steel Corporation
Apr. 2000	Appointed Representative Director-President of Nippon Steel Information & Communication Systems Inc. (current NS Solutions Corporation)
Apr. 2003	Appointed Representative Director-Chairman of NS Solutions Corporation
June 2004	Appointed Outside Director of Internet Initiative Japan Inc. (current)
June 2005	Appointed Outside Director of Murata Manufacturing Company, Ltd. (current)

Mr. Yasuro Tanahashi is a candidate for the outside director set out in Article 2.3 (7) of the Enforcement Regulations of the Corporation Law of Japan and is scheduled to be appointed as an outside director after he is elected as such at the Ordinary General Meeting of Shareholders. NS Solutions Corporation accounted for 0.005% or less of the total sales proceeds of the Company for the fiscal year, which ended in March 2007. The Company does not have records of transaction with NS Solutions Corporation. Therefore, the Company and NS Solutions Corporation have no significant effect on each other and the Company believes that it will not be an obstacle in obtaining an independent opinion from Mr. Tanahashi.

4. Takaaki Wakasugi

Born March 11, 1943
Professor of Finance, School of Business Administration, at Tokyo Keizai University

[Career Summary]
Jan. 1972	Appointed Assistant Professor of the Faculty of Commerce, Yokohama City University
Apr. 1974	Appointed Assistant Professor of the Faculty of Economics, Tohoku University
June 1985	Appointed Professor of the Faculty of Economics at the University of Tokyo
Apr. 2003	Appointed Chairman & CEO of Japan Corporate Governance Research Institute Inc. (current)
Apr. 2004	Appointed Professor of Finance, School of Business Administration, at Tokyo Keizai University (current)
June 2004	Named Professor emeritus at the University of Tokyo
June 2005	Appointed Outside Director of Richo Company, Ltd. (current)
June 2006	Appointed Outside Statutory Auditor of JFE Holdings, Inc. (current)

Mr. Takaaki Wakasugi does not have any special interests in the Company.

5. Naoto Nakamura

Born January 25, 1960
Partner at Nakamura, Tsunoda and Matsumoto

[Career Summary]
Oct. 1982	Passed bar exam
Apr. 1985	Graduated from the Legal Training and Research Institute of Japan Registered on Daini Tokyo Bar Association
Apr. 1985	Joined Mori Sogo Law Offices
Apr. 1998	Established Hibiya Park Law Offices, Appointed Partner
Feb. 2003	Established Nakamura Naoto Law Office (current Nakamura, Tsunoda & Matsumoto), Appointed Partner (current)
Mar. 2003	Appointed Outside Statutory Auditor of Asahi Breweries, Ltd. (current)
June 2004	Appointed Outside Director of Eisai Co., Ltd. (current)
June 2006	Appointed Outside Statutory Auditor of Mitsui & Co., Ltd. (current)

Mr. Naoto Nakamura does not have any special interests in the Company.

 

Attachment 4

Proposed Amendment to Articles of Incorporation

The amendment is as follows:

1. Purpose of amending the Articles of Incorporation
   The Company will amend the Articles of Incorporation in order to enable issue of stock acquisition rights in accordance with the takeover defense measures and to increase the current total number of issuable shares from 483,735,000 shares to 600,000,000 shares for the purpose of flexible funding to provide for future business expansion.
    
2. Proposed Amendment
   

   Current	Proposed amendment
   Article 6 (TOTAL NUMBER OF ISSUABLE SHARES) The total number of shares that may be issued by the Company shall be 483,735,000 shares.	Article 6 (TOTAL NUMBER OF ISSUABLE SHARES) The total number of shares that may be issued by the Company shall be 600,000,000 shares.

    
3. Schedule
   

   Date of General Meeting of Shareholders to resolve the amendment to the Articles of Incorporation	June 27, 2007 (Wed.)
   Effective date of the amendment to the Articles of Incorporation	June 27, 2007 (Wed.)

 

Attachment 5

Outline of the Company's Shareholding

Principal shareholders of the Company as of March 31, 2007 are as follows.

	Name of Shareholders	Status of Investments in the Company
		Number of shares held (shares)	Shareholding Ratio (%)
1	The Master Trust Bank of Japan, Limited (Trust Account)	27,463,600	10.223
2	The Dai-ichi Mutual Life Insurance Company	22,697,000	8.449
3	Japan Trustee Services Bank, Limited (Trust Account)	17,583,900	6.545
4	Nippon Life Insurance Company	13,284,615	4.945
5	Retirement Benefit Trust in Mizuho Trust (Mizuho Corporate Bank, Ltd. account) Asset Management Services Trust for Beneficiary of Retrust	6,643,990	2.473
6	SSB Client Omnibus OM04	6,433,100	2.394
7	Yokogawa Electric Corporation	5,733,063	2.134
8	Tokio Marine & Nichido Fire Insurance Co., Ltd.	4,694,936	1.747
9	Retirement Benefit Trust in Mizuho Trust (Mizuho Bank, Ltd. account) Asset Management Services Trust for Beneficiary of Retrust	4,617,010	1.718
10	Japan Trustee Services Bank, Limited (Trust Account 4)	4,482,200	1.668

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