Update on Interview Requests made by Toyo’s Officer Nomination and Compensation Committee with Executive Candidates Proposed in Our Shareholder Proposal

Attachment: “Response to the Request for Interviews by Your Company’s Officer Nomination and Compensation Committee”

Toyo Construction Co., Ltd.

Chair of the Board of Directors

Representative Director and President Kyoji Takezawa

Response to the Request for Interviews by Your Company’s Officer Nomination and Compensation Committee

May 2, 2023

Proposed director nominee in the shareholder proposal from Yamauchi-No.10 Family Office LLC

Toshiaki Yamaguchi (seal)

Greetings

I am a nominee in the shareholder proposal “proposal for nomination of directors” sent to your company on April 17, 2023 by Yamauchi-No.10 Family Office LLC (“YFO”).  I received from YFO a letter that your company prepared dated April 24, 2023 entitled “Request to conduct an interview with you” (“Your Interview Request Letter”).  I reviewed that letter.  I respond as follows having done so.

YFO contacted me to the effect that each director and statutory auditor nominee should handle Your Interview Request Letter of their own volition as they see fit.  However, I thought there is a risk that useful information would not be provided for ordinary shareholders to appropriately exercise their voting rights on the shareholder proposal if we were to proceed with these interviews without fully understanding the positioning of these interviews proposed in Your Interview Request Letter.

For that reason, I consulted with the other director and statutory auditor nominees (who similarly received requests for interviews from your company), and I now respond to your company with the consensus among us.

First, the conclusion of each of the 10 individual nominees for director or statutory auditor who your company requested to interview at this time was that we will not accept your request for an interview with the nominating and compensation committee of your company.  The reasons are as follows.

We director and statutory auditor nominees in this shareholder proposal all have a desire to be nominated after having obtained the acceptance of the company side, if that were possible, whether we are proposed as executive directors or non-executive directors.  However, your company’s management has had a breakdown of trust with YFO in relation to the TOB proposed by YFO, continuously over a long period of time, for reasons of “problems with your company’s corporate governance.”  Given this state of affairs, we do not feel it is possible to expect that your company’s nominating and compensation committee would evaluate the appropriateness of the director and statutory auditor candidates that YFO proposed in a neutral and fair manner.  Moreover, we would like to provide as much as possible the information that is necessary for ordinary shareholders to evaluate the appropriateness of all board candidates.  However, it is difficult to see how the results of an evaluation by your company’s nominating and compensation committee could be useful information for ordinary shareholders’ exercise of voting rights since that committee is comprised of outside directors who YFO has described as unsuitable as well as your company’s two representative directors.

Also, we understand from the history of negotiations between YFO and your company’s management team to date that there is a large difference between your company’s management and YFO as to the strategy on how to increase your company’s corporate value in the medium to long term.

I too am serving as the chair of a nominating and compensation committee of a company listed on the Tokyo Stock Exchange’s Prime Market.  I truly feel that there can be a difference in who is the right person to select at the next CEO or next member of the board of directors, and what skills should be held by such a person, depending on the management direction over the medium to long term of the corporate group as a whole.

While the decision as to whether your company’s management or YFO has the better management strategy is up to the shareholders, I and the other director and statutory auditor nominees in the shareholder proposal found YFO’s way of thinking about your company’s sound governance and sustainable growth to be appealing, and we understand that it will require independent management to be achieved.  If we were to be interviewed by your company’s nominating and compensation committee at this time, there is a risk that we would be evaluated based on whether we would be appropriate to contribute to the growth strategy that your company’s management has envisioned, and if we would not contribute to that strategy that we would be deemed not suitable.  We are concerned that the meaning behind YFO’s shareholder proposal would not be communicated to your company’s shareholders and employees in this way.  As nominees who found YFO’s way of thinking about your company’s sound governance and sustainable growth to be appealing, this would be contrary to our intention.

Finally, this is not to deny that the appropriate functioning of a voluntary nominating and compensation committee contributes to your company’s governance as an advisory body to the board of directors.  However, on this occasion it is clear that the current management and the proposing shareholder are in conflict with each other as to the evaluation of your company’s corporate governance.  We understanding it would be difficult for this voluntary nominating and compensation committee comprised of your company’s representative directors and outside directors to fulfill its originally intended function in the present circumstances, where the annual shareholders meeting at which ordinary shareholders will be asked to make a decision on these matters is fast approaching.  Please understand that this kind of understanding is the basis for our view.

This conclusion and its reasons have been collected from each director and statutory auditor candidate, and each of us has agreed with it.  Accordingly, I have responded on behalf of each of the other director and statutory auditor candidates to whom your company sent a request for an interview.  Also, this response’s content is based on consultation among myself and the other director and statutory auditor candidates, and the views of YFO are not in any respect contained herein.

Respectfully,

Toshiaki Yamaguchi