Sakai Ovex : Notice of Conducting an MBO and Opinion in Support of the Tender Offer

Capital relationship

[Reference Translation]

July 27, 2021

To Whom it may concern:

SAKAI OVEX CO.,LTD.

(Tokyo Stock Exchange (First Section) Code No.3408) Rep: Shintaro Matsuki

Representative Director and President Attn: Koichi Murosaka

Chief of General Affairs Department

(TEL: [phone])

Notice of Conducting anMBO and Opinionin Support of the Tender Offer

SAKAI OVEX CO., LTD. (the "Company") hereby announces that the Company, at the Board of Directors Meeting held on July 27, 2021, resolved to express its opinion in favor of the tender offer ("Tender Offer") to be conducted by Sakai Textile Co., Ltd (the "Tender Offeror") for the common shares of the Company (the "Company Shares") and Share Options (as defined below in "2. Tender Offer Price". The same applies below.) as a part of so-called management buyout (MBO) (Note), to recommend the shareholders of the Company to tender their Company Shares in the Tender Offer and to leave the decision as to whether or not holders of Share Options (the "Share Option Holders") tender their Share Options in the TenderOfferto the Share Option Holders asfollows.

The aforementioned resolution at the Board of Directors Meeting was adopted on the understanding that the Company Sharesare to be delisted through the Tender Offer and a series of procedures to be implemented thereafter.

Note "Management buyout (MBO)" generally refers to a transaction where the management team of a target company contributes all or part of the acquisition funds to purchase the shares of the target company based on the premise of continuing the business of the target company.

1. Overview ofthe Tender Offeror

(1)	Name	Sakai Textile Co.,Ltd
(2)	Address	2-15-1 Hanandoh Naka, Fukui-City, Fukui
(3)	Name and title of	Shintaro Matsuki, Representative Director
representative
(4)	Description ofbusiness	Control and management of businessactivity of the Company through obtaining
and holding Company Sharesand Share Options
(5)	Capital stock	JPY 10,000
(6)	Date of incorporation	January 15, 2021
(7)	Major shareholdersand	Shintaro Matsuki	100.00%
shareholding ratios

1. Relationship between the Company and the Tender Offeror Not applicable.
   As of today, Shintaro Matsuki ("Mr. Matsuki"), the Representative Director of the

Tender Offeror, holds 35,600 shares of the Company Shares and 117 options of the Share Options (for the details, please see "3. Details and Grounds and Reasons for, the Opinion Regarding the Tender Offer" "(2) Grounds and Reasons for the Opinion Regarding the Tender Offer" "a.Overview ofthe Tender Offer" below).

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	Personal relationship	Mr. Matsuki, the Representative Director of the Tender Offeror, also serves as
	Representative Director and President of the Company.
	Business relationship	Not applicable.
		Mr. Matsuki, the Representative Director and the President of the Company, owns
	Status asrelated parties	all of the voting rights of the Tender Offeror and the Tender Offeror corresponds to
		a related party of the Company.

2. Tender Offer Price

(1) Common shares:

JPY 3,810 per share (the "Tender Offer Price")

1. Share Options
2. 1. Share Options issued based on the resolution of the Board of DirectorsMeeting of the Company held on June 20, 2014 (the "Series 1 Share Options.") (The exercise period is from July 26, 2014 to July 25, 2044): JPY 1 per option
   2. Share Options issued based on the resolution of the Board of DirectorsMeeting of the Company held on June 19, 2015 (the "Series 2 Share Options.") (The exercise period is from July 25, 2015 to July 24, 2045): JPY 1 per option
   3. Share Options issued based on the resolution of the Board of DirectorsMeeting of the Company held on June 24, 2016 (the "Series 3 Share Options.") (The exercise period is from July 23, 2016 to July 22, 2046): JPY 1 per option
   4. Share Options issued based on the resolution of the Board of DirectorsMeeting of the Company held on June 23, 2017 (the "Series 4 Share Options," and the Series 1 Share Options, the Series 2 Share Options, the Series 3 Share Options and the Series 4 Share Options are collectively referred to as "Share Options.") (The exercise period is fromJuly 29, 2017 to July 28,2047): JPY1 per option

3. Details and Groundsand Reasonsfor, the Opinion Regarding the Tender Offer

1. Details of the Opinion
   Based on the grounds and reasons set out in "(2) Grounds and Reasons for the Opinion Regarding the Tender Offer" below, the Company, at the Board of Directors Meeting held on July 27, 2021, resolved to express its opinion in favor of the Tender Offer, to recommend the shareholders of the Company to tender their Company Shares in the Tender Offer and to leave the decision as to whether or not Share Option Holders tender their Share Options in the Tender Offer to the Share Option Holders.
   The aforementioned resolution at the Board of Directors Meeting was resolved pursuant to the method set out in "(6) Measures to Ensure Fairness of the Tender Offer such as Measures to Ensure Fairness of the Tender Offer Price and Measures to Avoid Conflicts of Interest" "d. Approval of all non-interested Directors (including audit and supervisory committee members) of the Company" in below.
2. Grounds and Reasonsfor the Opinion Regarding the Tender Offer
   Of the following statements, statements relating to the Tender Offeror are based on explanations received from the Tender Offeror.

1. Overview of the TenderOffer

The Tender Offeror is a stock company established by Mr. Matsuki, Representative Director and President of the Company, on January 15, 2021, for the main purposes of acquisition and ownership of the Company Shares and

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Share Options through the Tender Offer. As of today, Mr. Matsuki owns 100% of the issued shares of the Tender Offeror and serves as Representative Director. Asof today, the Tender Offeror does not own the Company Shares or the Share Options. As part of a series of transactions ("Previous Transaction") for the purpose of acquiring all of the Company Shares (includes shares issued upon the exercise of Share Options, but excludes the treasury shares owned by the Company) which are listed on the First Section of the Tokyo Stock Exchange, Inc. ("TSE") and Share Options, delisting the Company Shares, and the Tender Offeror becoming the sole shareholder of the Company, the Tender Offeror conducted a Tender Offer (period for purchase etc. from February 9, 2021 through March 24, 2021, purchase etc. price (the "Previous Tender Offer Price") 3,000 yen per share for Company Shares, one (1) yen per unit for Share Options, "Previous Share Option Offer Price" "Previous Tender Offer"), however it was unsuccessful since the minimum number of shares planned to be purchased in the Previous Tender Offer was 4,127,800 shares, and the total number of share certificates, etc. tendered in the Previous Tender Offer was 3,939,239 shares, which did not meet the minimum 4,127,800shares.

As part of a series of transactions ( "Transactions") for the purpose of acquiring all of the Company Shares (includes shares issued upon the exercise of Share Options, but excludes treasury shares owned by the Company, and the Agreed Non-tendering Shares (defined below, and the same shall apply hereinafter.) owned by the Company's largest shareholder City Index Eleventh Co., Ltd. (number of shares owned: 515,600 shares, Ownership Ratio (Note 1): 8.33% ("CIE")) which are listed on the First Section of TSE and Share Options, delisting the Company Shares, and the Tender Offeror and the largest shareholder CIE becoming the sole shareholders of the Company (Note 2).the Tender Offeror has decided to conduct the Tender Offer on July 27, 2021.

The Transactions fall under the category of a management buyout (MBO), and Mr. Matsuki plans to continue to manage the Company after the Transactions. There is no special agreement between the Tender Offeror and other Directors of the Company (including Audit and Supervisory Committee Members) regarding their appointment as officersafterthe Tender Offer.,

Note 1 "Ownership Ratio" is the ratio of Company Shares owned divided by the number of shares (6,191,133 shares, "Basis Number of shares") which is obtained by adding the number of Company Shares which are the subject of 313 units of Share Options (Note 3) listed in the Company's 128th Securities Report ("Company Securities Report") as of March 31, 2021 (31,300 shares), submitted by the Company on June 28, 2021 (6,467,558 shares), to the total number of shares issued and outstanding in the Company Securities Report as of March 31, 2021 (6,436,258 shares), then deducting the number of treasury shares owned by the Company listed in the Company "Securities Report" as of March 31, 2021 (276,425 shares) (rounded off to two decimal places; the same applies to Ownership Ratio hereinafter.)

Note 2 However, after the Tender Offer, in the event that there are shareholders who own equal shares or more than the Agreed Non-tendering Shares owned by CIE, the Tender Offeror, CIE, and the said shareholders would have a consultation on the improvement of the corporate value of the Company and their respective roles ("Trilateral Consultation"). After careful and due consultation, if they fail to reach an agreement at the Trilateral Consultation, the Tender Offeror will consider another course, including making itself the sole shareholder of the Company, and CIE will support a decision made by the Tender Offeror ("Support (CIE)." A series of procedures to have consultations and gain the Support (CIE) in the case of their failure to reach an agreement, "Procedures for Consultations and Support").

Note 3 The table below shows the breakdown of 313 units of Share Options. The Share Option Holders are Directors and executive employees of the Company. It is provided that the Share Option Holders may exercise their allotted Share Options on or after the day following the day when they lose their position as Director or Corporate Officer of the Company, respectively, within the exercise period for Share Options.

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Name of Share	Number of unitsas of March 31, 2021	Number of subject Company Shares
Options	(units)	(shares)
Series 1 Share	61	6,100
Options
Series 2 Share	60	6,000
Options
Series 3 Share	96	9,600
Options
Series 4 Share	96	9,600
Options
Total	313	31,300

For conducting the Tender Offer, the Tender Offeror has executed an agreement with CIE on July 27, 2021, under which CIE will not tender all the Company Shares owned (number of shares owned: 515,600 shares, Ownership Ratio: 8.33%, "Agreed Non-tenderingShares") in the Tender Offer ("Non-TenderAgreement"). In addition to the above agreement, the Tender Offeror plans to conclude a shareholders' agreement in consultation with CIE separately, but as of today, the specific timing and details of the agreement have not been decided. For the outline of the Non-Tender Agreement and the matters that may be provided for in the shareholders' agreement, please see "4 Important Agreements relating to the Tender Offer," "(1) Non-Tender Agreement" and "(6) Others" below.

At the same time, the Tender Offeror has executed an agreement dated July 27, 2021, with Toray Industries, Inc. (number of shares owned: 464,530 shares, Ownership Ratio:7.50%, "Toray"), the second-largest shareholder of the Company. Also, it has executed the same dated July 26, 2021, with The Fukui Bank, Ltd. (number of shares owned: 165,000 shares, Ownership Ratio: 2.67%, "Fukui Bank"), the tenth-largest shareholder of the Company, under which Toray and Fukui Bank will tender all Company Shares owned, respectively, (shares owned by Toray and Fukui Bank are collectively referred to as "Agreed Tendering Shares" (total number of shares owned: 629,530 shares, total Ownership Ratio: 10.17%) in the Tender Offer (agreement with Toray "Tender Agreement (Toray)," and agreement with Fukui Bank "Tender Agreement (Fukui).")

For an overview of these agreements, please see "4 Material Agreements on the Tender Offer," "(2) Tender Agreement (Toray)"and "(3)Tender Agreement (Fukui)" below.

In addition, the Tender Offeror was informed from NIPPON ACTIVE VALUE FUND PLC (number of shares owned: 389,800 shares, Ownership Ratio: 6.30%, "NAVF"), the forth-largest shareholder of the Company, that it has supported the intent of the Transactions and is positively considering tendering all Company Shares owned (number of shares owned: 389,800 shares, Ownership Ratio: 6.30%, all Company Shares owned by NAVF are referred to as "Planned Tendering Shares") in the Tender Offer. For the Previous Tender Offer, on February 8, 2021, the Tender Offeror executed an agreement with NAVF under which NAVF would tender all its Company Shares (389,800 shares) in the Previous Tender Offer ("Previous Tender Agreement (NAVF)." On February 8, 2021, the Tender Offeror also executed another agreement with NAVF under which it would allocate Class B Shares of the Tender Offeror (Note 4) to NAVF upon completion of a series of procedures to make the Tender Offeror the sole shareholder of the Company ("Previous Investment Agreement (NAVF)"). Besides, the Tender Offeror planned to execute a shareholders'agreement with NAVF upon the consultation (as of February 9, 2021, the specific timing of execution and the details of the agreement have not been decided.) (The outline of the Previous Tender Agreement (NAVF) and the Previous Investment Agreement (NAVF) executed between the Tender Offeror and NAVF are as described below. (Note 5))

Meanwhile, regarding the existence of the agreement on the Tender Offer, no agreement exists between the Tender Offeror and NAVF other than the fact that the Tender Offeror was informed from NAVF that it has supported the intent of the Transactions and is positively considering tendering all the Company Shares owned (number of shares owned: 389,800 shares, Ownership Ratio: 6.30%) in the Tender Offer.

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Note 4	Class B Shares of the Tender Offeror to be issued under the Previous Investment	Agreement
	(NAVF) were non-voting shares, and it did not give a holder any rights to preference dividend,
	preference allotment of residual assets, nor put option (the right of a holder of Class B Shares to
	require the Tender Offeror to acquire Class B Shares in exchange for common shares of the Tender
	Offeror,monies, or equivalent).
Note 5	The outline of the Previous Tender Agreement (NAVF), the Previous Investment Agreement (NAVF),
	and the shareholders'agreement to be executed in the Previous Tender Offer isas follows:

1. PreviousTenderAgreement (NAVF)

The Tender Offeror had executed the Previous Tender Agreement (NAVF) dated February 8, 2021, with NAVF, who was the third shareholder of the Company as of February 9, 2021, when the Previous Tender Offer was announced, under which NAVF would tender all the Company Shares owned, 389,800 shares (Ownership Ratio 6.30%) in the Previous Tender Offer. The Previous Tender Agreement (NAVF) provided for the following conditions precedents for NAVF to tender: (a) the Tender Offeror's representations and warranties (Note 6) are true and accurate in all material respects; (b) the Tender Offeror has performed or complied with its obligations under the Tender Agreement (NAVF) (Note 7) in all material respects; (c) a resolution has been adopted by the Board of Directors of the Company to express its opinion supporting the Previous Tender Offer and recommending that the Company's shareholders tender their shares in the Previous Tender Offer, and such a resolution has been publicly announced and not been changed or withdrawn; (d) the Previous Tender Offer has been lawfully commenced and not been withdrawn; and (e) no petition, lawsuit orproceedings that would limit or forbid the Previous Tender Offer or NAVF's tender therein is pending with any judicial, administrative authority or other competent agencies, and there exists none of laws, regulations, and other rules, or none of orders, dispositions, or judgments issued by a judicial or administrative organ, or another similar authority that limits or forbids the Previous Tender Offer or NAVF's participation therein. The execution of the Previous Investment Agreement (NAVF) and other matters regarding its capital contribution through subscribing for Class B Shares were not provided for as conditions precedents for tendering. Provided, however, that even if any or all of the above conditions precedent are not satisfied, NAVF was not restricted to waive the said conditions and tender in the Previous Tender Offer at its discretion.

Note 6 Under the Previous Tender Agreement (NAVF), the Tender Offeror represented and warranted as follows: (a) due incorporation and valid existence; (b) that it has the power and authority required to execute and perform the Previous Tender Agreement (NAVF), and it has performed the necessary procedures; (c) the enforceability; (d) that it has obtained all the licenses, approvals, and other permits relating to the execution and performance of the Previous Tender Agreement (NAVF) required to obtain from judicial and administrative agencies on or before the execution or performance thereof; (e) the absence of conflicts between the execution and performance of the Previous Tender Agreement (NAVF) and laws, regulations, other rules, the articles of incorporation, internal rules, agreements, and the like; and (f) the absence of any relationship with antisocial forces, and the like.

Note 7 Under the Previous Tender Agreement (NAVF), the Tender Offeror assumed obligations to NAVF for

(a) indemnification and (b)confidentiality.

Furthermore, under the Previous Tender Agreement (NAVF), NAVF would tender its shares in the Previous Tender Offer and not cancel any agreements related to the purchase of Company Shares to be formed by its tendering of shares. However, in the event that, after the date of execution of the Previous Tender Agreement (NAVF), another tender offer for the Company Shares was commenced by a third party with a purchase price higher than the Previous Tender Offer Price, NAVF might choose not to tender its shares in the Previous Tender Offer or

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