Notice of the Extraordinary General Meeting of Shareholders

(TRANSLATION)

Securities Code 5002

Date and Time Items for Resolution

10:00 a.m. on Tuesday, 1. To approve share exchange agreement December 18, 2018 between the Company and Idemitsu Kosan (Registration: planned to be 9:00 a.m.) Co., Ltd.

2. To approve revisions of the Company's Articles of Association.

Place 3. To approve the Appropriation of Profit.

Hilton TOKYO ODAIBA (1st Floor, Pegasus Room) 9-1, Daiba 1-chome, Minato-ku, Tokyo. (TRANSLATION) Securities Code: 5002 November 27, 2018 To our shareholders: 2-3-2, Daiba, Minato-ku, Tokyo Showa Shell Sekiyu K.K. Representative Director, President, Executive Officer, CEO: Tsuyoshi Kameoka

Notice of the Extraordinary General Meeting of Shareholders

Dear Shareholders,

We would like to hereby inform you that the Company’s Extraordinary General Meeting of Shareholders will be held as described below. You are cordially invited to attend the meeting.

If you are unable to attend the meeting, we would like to ask you to review the attached “reference materials” and exercise your voting right in writing or by electromagnetic means (the internet or other means). In that case, please review the “Notes on the execution of votes” on page 3 and exercise your voting rights by 5:30 p.m. (Japan standard time) on Monday, December 17, 2018.

1. Date and Time: 10:00 a.m. on Tuesday, December 18, 2018 (Registration: planned to be 9:00 a.m.) 2. Place: Hilton TOKYO ODAIBA (1st Floor, Pegasus Room) 9-1, Daiba 1-chome, Minato-ku, Tokyo 3. Agenda Items for Resolution 1. To approve share exchange agreement between the Company and Idemitsu Kosan Co., Ltd. 2. To approve revisions of the Company’s Articles of Association 3. To approve the Appropriation of Profit

End

◎ The financial statements, etc. of Idemitsu Kosan Co., Ltd. for the most recent fiscal year are on our website (http://www.showa-shell.co.jp/) instead of being attached to this notice according to laws, regulations and Article 17 of the Articles of Association of the Company. ◎ If any correction becomes necessary to the reference materials for the General Meeting of Shareholders, after the dispatch of notice until the day before the date of the General Meeting of Shareholders, the Company will disclose the corrected items in the Company’s website.

Notes on the execution of votes: The votes can be executed by following three (3) measures. We would like to ask you to review the attached “reference materials” and exercise your voting right.

1. If you plan to attend the meeting Please bring your mail ballot form with you and submit it at the front desk. Date and Time: 10:00 a.m. on Tuesday, December 18, 2018 (Registration: planned to be 9:00 a.m.) Place: Hilton TOKYO ODAIBA (1st Floor, Pegasus Room) 9-1, Daiba 1-chome, Minato-ku, Tokyo.

2. If you plan to exercise your voting right by mail Please send the enclosed mail ballot form with the indication of your approval or disapproval so that the mail ballot form reaches us by the day written below: Term of validity: by 5:30 p.m. on Monday, December 17, 2018

3. If you plan to exercise your voting right by internet Please access the web site (https://www.web54.net) with the voting code and password printed on the enclosed mail ballot form and exercise your voting right on the screen in accordance with the guidance (English NOT available). Please refer to the “Notes on the execution of votes by internet” on the next page for the details. Term of validity: by 5:30 p.m. on Monday, December 17, 2018

Notes on the handling of votes: 1. If no indication is made in the yes-no column on the mail ballot form submitted to the Company, the vote shall be deemed as in favor of the Company’s proposal. 2. If you exercise your vote both by mail and by electromagnetic means (the internet or other means), the vote exercised by electromagnetic means (the internet or other means) shall be deemed valid. 3. If you exercise your vote by electromagnetic means (the internet or other means) more than once, the last vote shall be deemed valid. Notes on proxy appointment: 1. You may exercise your vote by appointing a proxy who is also a shareholder of the Company with the right to vote at the General Meeting of Shareholders. Please note that only one (1) person will be appointed as your proxy. 2. If you plan to exercise your vote by appointing a proxy, a document authorizing the proxy shall be submitted to the Company at the front desk.

Notes on the execution of votes by internet: If you plan to exercise your voting right by internet, please access the web site on the computer and execute your voting right on the screen in accordance with the guidance (English NOT available). The website: https://www.web54.net

Your vote by internet will be valid, if it reaches to the Company by 5:30 p.m. on Monday, December 17, 2018.

1. Please access (https://www/web54.net) and click “next”. 2. Please enter the voting code printed on the enclosed mail ballot form and click “log in”. 3. Please enter the password printed on the enclosed mail ballot form and click “next” and exercise your voting right on the screen in accordance with the guidance.

Notes on the execution of votes by the platform: When institutional investors have made prior application for use of a platform operated by ICJ, Inc., for electronic votes, they may, as an alternative to exercising voting rights over the Internet as detailed above, use the platform as another way of electronically exercising voting rights at the Company’s Extraordinary General Meeting of Shareholders.

Reference Material for the General Meeting of Shareholders

Proposals and References Item 1: To approve Share Exchange Agreement between the Company and Idemitsu Kosan Co., Ltd. Showa Shell Sekiyu K.K. (the “Company”) and Idemitsu Kosan Co., Ltd. (“Idemitsu Kosan”) (collectively, the “Companies”) have agreed to bring about business integration (the “Business Integration”) by carrying out a share exchange (the “Share Exchange”) whereby Idemitsu Kosan will become a wholly owning parent company and the Company will become a wholly owned subsidiary on the effective date of April 1, 2019 (scheduled). On October 16, 2018, the Companies accordingly entered into a share exchange agreement (the “Share Exchange Agreement”) pertaining to the Share Exchange, based on resolutions approved by the Boards of Directors at their respective meetings held on October 16, 2018.

As such, approval of the Share Exchange Agreement is hereby proposed. When this proposal is approved, Idemitsu Kosan will acquire all of the issued shares of the Company by the effective date of the Share Exchange on April 1, 2019 (scheduled). Meanwhile, prior to that date the common stock of the Company will be delisted on March 27, 2019 (the last trading date will be March 26, 2019) under the prescribed procedures in accordance with the criteria for delisting of shares from the first section of the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”). The following describes the reasons of the Share Exchange, content of the Share Exchange Agreement, and other matters regarding this proposal.

1. Reasons for the Share Exchange (purpose of the Business Integration) The core businesses of the Company and Idemitsu Kosan are oil refining and distribution services in Japan. The Companies have operated their businesses in order to accomplish their social missions to provide a stable supply of energy, which is fundamental for the lives of people, and to support energy security in Japan.

However, the business environment of the Companies is likely to undergo substantial structural changes at an unprecedented pace from now until 2030. Looking above and beyond the medium- and long-term decline in demand for oil products, the Companies recognize the prospects of several of such trends going forward, including an increasing population worldwide, a decreasing population and super-aging demographic in Japan, expanding demand for energy amid economic growth in the Asian region, mounting demands from society to address intensifying climate change and other environmental challenges, increasingly volatile resource prices, transforming social and industrial frameworks brought about by technological innovations, and changing values and attitudes toward work.

Anticipating such substantial change in the business environment over the medium and long term, the Company and Idemitsu Kosan have been pursuing discussions regarding their business integration since July 2015, and have been vigorously carrying out initiatives to leverage synergies inherent in their shared core businesses (the crude & marine, refining, demand-supply, logistics, sales, and corporate sectors) under the alliance name “Brighter Energy Alliance,” since May 2017.

The Company and Idemitsu Kosan, based on a combined awareness that they must address the major changes in their business environment faster and more reliably, have reached the conclusion that their best means of enhancing corporate value through such efforts is twofold. First, they will bring their respective strengths to bear and combine their management resources by carrying out the Business Integration through the Share Exchange with the aim of maximizing their synergies in the short term and enhancing the competitive strengths of their core businesses particularly in terms of developing and fortifying the oil energy supply chain in Japan. Second, they will accelerate their efforts in growing industries and fields with the aims of optimizing their business portfolio over the medium and long term, while promoting their environment, social and governance initiatives. In so doing, the Companies will flexibly address the substantial changes to the business environment over the medium and long term, thereby heightening their respective corporate values by evolving into a resilient corporate entity.

The Company and Idemitsu Kosan, as the New Integrated Company, will promote initiatives geared to achieving growth in order to achieve the New Integrated Company vision stating that, “the New Integrated Company, a company originating in Japan which co-creates energy, will continue to strive to create new value together with its customers and stakeholders, while aiming to, based on diversity and inclusiveness, harmonize with the environment and society.”

More specifically, the New Integrated Company will build a business portfolio that adapts to change by accelerating its efforts in growing industries and fields. This will involve enhancing competitive strengths of the core petroleum and basic chemicals businesses, while also actively developing the growing fields of the functional materials business, renewable energy and electricity business, within and outside of Japan. With respect to enhancing the competitive strengths of its core businesses, the New Integrated Company will pursue more sophisticated means of drawing on strengths it wields in terms of petroleum (“noble use”), and will engage in optimal production that is efficient and places emphasis on high-value-added products. In so doing, it will enhance the competitiveness of the entire value chain in the Asian region, including the Nghi Son Refinery, as well as the seven refineries and petrochemical plants in Japan.

Also, the New Integrated Company will support such business activities by enhancing its risk management practices and building an advanced governance system so that it is able to respond to changes in the environment. In addition, the new entity will actively engage in initiatives that help

bring about a sustainable society by redoubling its efforts geared to sustainability, as typified by ESG (Environmental, Social, and Governance) and SDG (Sustainable Development Goals) practices.

Human potential is what will enable us to achieve our vision. With the aim of persistently striving to create new value, the New Integrated Company will realize an environment where each employee can perform to his or her full potential through the business, and where employees along with customers and stakeholders are able to achieve co-creation and growth.

By engaging in this strategy, the Company and Idemitsu Kosan will realize integration synergies of 60.0 billion yen through to the end of FY 2021 with respect to the New Integrated Company. Moreover, the New Integrated Company is projected to generate net income of no less than 500.0 billion yen in total over the three year period FY 2019 to FY 2021 (excluding inventory impact and other one-time factors), and 200.0 billion yen in FY 2021, the final fiscal year.

Cash flows generated by steadily realizing synergies will be optimally allocated to shareholder returns, strategic investment and enhancements of financial capacity. The New Integrated Company will particularly focus on return of profits to shareholders, which is an important responsibility of management. Accordingly, it aims to provide total return payout ratio of 50% or more with respect to the aforementioned net income target (10% or more of the shareholder return for each fiscal year will be provided through the acquisition of treasury shares). In addition, the New Integrated Company will strive to increase shareholder value by promoting business growth over the medium and long term, which will involve focusing investment on growing industries and fields, and on structural reforms.

Given this explanation, we would be grateful to our shareholders for understanding the purpose for the Business Integration, and ask that you accordingly furnish your approval for this proposal.

2. Content of the Share Exchange Agreement The content of the Share Exchange Agreement is as stated in the Share Exchange Agreement (copy) presented below.

Share Exchange Agreement（Copy）

Idemitsu Kosan Co., Ltd. (“Idemitsu”) and Showa Shell Sekiyu K.K. (“Showa Shell”) (each a “Party” and together the “Parties”) hereby enter into the following share exchange agreement (this “Agreement”) regarding the exchange of the shares of the Parties.

Article 1 Share Exchange The Parties shall conduct a share exchange in accordance with the provisions of this Agreement in which Idemitsu will be the wholly owning parent company resulting from the share exchange and Showa Shell will be the wholly owned subsidiary resulting from the share exchange (the “Share Exchange”).

Article 2 Trade names and addresses of wholly owning parent company resulting from Share Exchange and wholly owned subsidiary resulting from Share Exchange The trade names and addresses of the wholly owning parent company resulting from the Share Exchange and the wholly owned subsidiary resulting from the Share Exchange in respect to the Share Exchange are as set out in the following items. (1) Wholly owning parent company resulting from the Share Exchange Trade name: Idemitsu Kosan Co., Ltd. Address: 3-1-1 Marunouchi, Chiyoda-ku, Tokyo (2) Wholly owned subsidiary resulting from the Share Exchange Trade name: Showa Shell Sekiyu K.K. Address: 2-3-2 Daiba, Minato-ku, Tokyo

Article 3 Shares issued upon Share Exchange and allotment thereof 1. Upon the Share Exchange, Idemitsu shall, in exchange for the common shares of Showa Shell, deliver common shares of Idemitsu to the shareholders of Showa Shell (meaning the shareholders of Showa Shell after the cancellation of Showa Shell’s treasury shares under Article 11, excluding Idemitsu) as of the point in time immediately before the time at which Idemitsu acquires all of the issued shares of Showa Shell through the Share Exchange (the “Reference Time”) in the number obtained by multiplying the total number of common shares of Showa Shell held by those shareholders by 0.41 and shall allot common shares of Idemitsu at a ratio of 0.41 shares of Idemitsu for each common share of Showa Shell held by those shareholders. 2. If the number of common shares of Idemitsu allotted in accordance with the provisions of the preceding paragraph includes a fraction of less than one share, Idemitsu shall dispose of that fraction of a share in accordance with the provisions of Article 234 of the Companies Act.

Article 4 Amounts of stated capital and capital reserves of wholly owning parent company resulting from Share Exchange The amounts of Idemitsu’s stated capital, capital reserves, and retained earnings reserves to be increased due to the Share Exchange are as follows. (1) Stated capital: 0 yen (2) Capital reserves: The amount of changes in shareholders’ equity, etc. provided for in Article 39 of the Rules of Corporate Accounting (3) Retained earnings reserves: 0 yen

Article 5 Effective date The date on which the Share Exchange becomes effective (the “Effective Date”) is April 1, 2019. However, if necessary based on the progress of procedures for the Share Exchange, the Parties may change the Effective Date after consulting and agreeing to do so.

Article 6 Approval of shareholders meetings Each Party shall hold an extraordinary shareholders meeting (the “Idemitsu Extraordinary Shareholders Meeting” and the “Showa Shell Extraordinary Shareholders Meeting,” respectively) on December 18, 2018 (however, if necessary based on the progress of procedures for the Share Exchange, the Parties may change the date after consulting and agreeing to do so) and put forth a proposal regarding the approval of this Agreement.

Article 7 Amendment of articles of incorporation 1. Idemitsu shall put forth a proposal regarding the amendment of its articles of incorporation as follows at the Idemitsu Extraordinary Shareholders Meeting. This amendment of the articles of incorporation will take effect on the Effective Date, on the condition that the Share Exchange become effective. Proposed amendment to Articles of Incorporation (underlined parts are amended) Before amendment Amended Article 14. (Convening of Meetings and Article 14. (Convening of Meetings and Chairperson) Chairperson) 1. The Chief Executive Officer (hereinafter 1. The director appointed by the Board of “CEO”) of this company shall convene and Directors, shall convene and act as act as chairperson at all general meetings of chairperson at all general meetings of shareholders. shareholders. 2. In the event that the CEO is unable to 2. In the event that the director prescribed in the convene or act, another director shall preceding paragraph, is unable to convene or convene or act as chairperson at the act, another director shall convene or act as relevant general meeting of shareholders in chairperson at the relevant general meeting accordance with the order predetermined of shareholders in accordance with the order by the Board of Directors, as the case may predetermined by the Board of Directors, as be. the case may be.

Article 21. (Representative Directors and Article 21. (Representative Directors and Titled Directors) Titled Directors) 1. (Text omitted) 1. (Text omitted) 2. One (1) each of Chairman and CEO, one or 2. One (1) each of Chairman and CEO, one or more Executive Vice-Presidents, Senior more Executive Vice-Presidents, Senior Managing Directors and Managing Managing Directors, Managing Directors Directors may be elected by a resolution of and other executive directors may be elected the Board of Directors. by a resolution of the Board of Directors.

Article 22. (Convening of Meetings and Article 22. (Convening of Meetings and Chairperson) Chairperson) 1. Except as otherwise provided for by laws 1. The director appointed by the Board of or ordinances, the CEO of this company Directors, shall convene and act as shall convene and act as chairperson at the chairperson at the meetings of the Board of meetings of the Board of Directors. Directors. 2. In the event that the CEO is unable to 2. In the event that the director prescribed in convene or act, another director shall the preceding paragraph, is unable to convene or act as chairperson at the convene or act, another director shall relevant meeting of the Board of Directors convene or act as chairperson at the relevant in accordance with the order predetermined meeting of the Board of Directors in 8

by the Board of Directors, as the case may accordance with the order predetermined by be. the Board of Directors, as the case may be.

Article 27. (Limitation of Liability of Article 27. (Limitation of Liability of Directors) Directors) 1. (Text omitted) 1. (Text omitted) 2. According to Article 427, Paragraph 1 of the 2. According to Article 427, Paragraph 1 of the Company Act, this company may make an Company Act, this company may make an agreement with outside director(s) to agreement with director(s) (excluding those exempt the director from his or her liability who are Executive Directors, etc.), to exempt regarding damages arising from the the director from his or her liability regarding negligence in performing his or her duties damages arising from the negligence in as a director, provided however that the performing his or her duties as a director, limitation of the liability thereof shall be up provided however that the limitation of the to the amount that is prescribed in laws or liability thereof shall be up to the amount that ordinances. is prescribed in laws or ordinances.

Article 35. (Limitation of Liability of ASB Article 35. (Limitation of Liability of ASB Members) Members) 1. (Text omitted) 1. (Text omitted) 2. According to Article 427, Paragraph 1 of the 2. According to Article 427, Paragraph 1 of the Company Act, this company may make an Company Act, this company may make an agreement with outside ASB Member(s) to agreement with ASB Member(s) to exempt exempt the outside ASB Member from his the ASB Member from his or her liability or her liability regarding damages arising regarding damages arising from the from the negligence in performing his or negligence in performing his or her duties as her duties as an ASB Member, provided an ASB Member, provided however that the however that the limitation of the liability limitation of the liability thereof shall be up thereof shall be up to the amount that is to the amount that is prescribed in laws or prescribed in laws or ordinances. ordinances. 2. Showa Shell shall put forth a proposal regarding the amendment of its articles of incorporation as follows at the Showa Shell Extraordinary Shareholders Meeting. This amendment of the articles of incorporation will take effect on March 30, 2019, on the condition that this Agreement has not ceased to be effective at that time. Proposed amendment to Articles of Incorporation (underlined parts are amended) Before amendment Amended Article 15 (Specific Date for Rights (Deleted) concerning Annual General Meeting of Shareholders) Shareholders recorded in the Register of Shareholders as of 31st March each year shall be the shareholders having rights exercisable in the annual general meeting of shareholders held in relation to the corresponding business year.

Article 16 to Article 39 (Text omitted) Article 15 to Article 38 (Text omitted)

Supplementary provisions Supplementary provisions Article 1 The amendment to Article 14 shall (Deleted) take effect as of 1st July 2018.

Article 2 The amendment to Article 15 and 37 (Deleted)

shall take effect as of 1st April 2018.

Article 3 Regardless of Article 22, the term of Article 1 Regardless of Article 21, the term of office of the Directors appointed at the 106th office of the Directors appointed at the 106th Annual General Meeting Shareholders held on Annual General Meeting Shareholders held on 28th March 2018 shall be the end of the 107th 28th March 2018 shall be the end of the 107th Annual General Meeting of Shareholders. Annual General Meeting of Shareholders.

Article 4 Regardless of Article 36, the 107th Article 2 Regardless of Article 35, the 107th business year of the Company shall be 15 business year of the Company shall be 15 months months commencing on 1st January 2018 and commencing on 1st January 2018 and ending on ending on 31st March 2019. 31st March 2019.

Article 5 The amendment to Article 38 shall (Deleted) take effect as of 1st October 2018.

Article 6 (Text omitted) Article 3 (Text omitted)

Article 7 (Text omitted) Article 4 (Text omitted)

Article 8 Election of directors and statutory auditors and specification of statutory auditors subject to replacement by replacement statutory auditor at Idemitsu Extraordinary Shareholders Meeting; representative directors as of Effective Date 1. Idemitsu shall put forth a proposal at the Idemitsu Extraordinary Shareholders Meeting for the election of directors (with Tsuyoshi Kameoka, Tomonori Okada, Katsuaki Shindome, Masakazu Idemitsu, Kubohara Kazunari, Norio Otsuka, and Yuko Yasuda as candidates for directors of Idemitsu) to the effect that those candidates will assume office as directors of Idemitsu on the Effective Date on the condition that the Share Exchange becomes effective. However, if any of these people becomes unable to act in that capacity or it becomes otherwise necessary prior to the Idemitsu Extraordinary Shareholders Meeting, the Parties may change these people after consulting and agreeing to do so. 2. Idemitsu shall put forth a proposal at the Idemitsu Extraordinary Shareholders Meeting for the election of statutory auditors (with Kenji Takahashi and Kenji Yamagishi as candidates for statutory auditors of Idemitsu) to the effect that those candidates will assume office as statutory auditors of Idemitsu on the Effective Date on the condition that the Share Exchange becomes effective. However, if either of these people becomes unable to act in that capacity or it becomes otherwise necessary prior to the Idemitsu Extraordinary Shareholders Meeting, the Parties may change these people after consulting and agreeing to do so. 3. Idemitsu shall put forth a proposal at the Idemitsu Extraordinary Shareholders Meeting for the specification of statutory auditors subject to replacement by the replacement statutory auditor to the effect that Junko Kai, the replacement statutory auditor of Idemitsu, will act as replacement statutory auditor for Taigi Ito, statutory auditor of Idemitsu, and, if the proposal for the election of statutory auditors in the preceding paragraph is approved and Kenji Yamagishi assumes office as statutory auditor of Idemitsu on the Effective Date, Kenji Yamagishi. However, if the replacement statutory auditor of Idemitsu becomes unable to act in that capacity or it becomes otherwise necessary prior to the Idemitsu Extraordinary Shareholders Meeting, the Parties may change the replacement statutory auditor after consulting and agreeing to do so. 4. Idemitsu shall conduct the board of directors resolutions and other procedures necessary so that Takashi Tsukioka, Tsuyoshi Kameoka, Shunichi Kito, and Tomonori Okada (however, in regard to the people proposed as candidates for directors at the Idemitsu Extraordinary Shareholders Meeting in accordance with Paragraph 1, this is subject to the condition that they assume office 10

as directors of Idemitsu on the Effective Date) are selected as representative directors of Idemitsu on the Effective Date. However, if any of these people becomes unable to act in that capacity or it becomes otherwise necessary prior to the Idemitsu Extraordinary Shareholders Meeting, the Parties may change these people after consulting and agreeing to do so. 5. Idemitsu shall, by the day immediately preceding the Effective Date, obtain resignation notices from Susumu Nibuya, Kazuo Maruyama, Toshiaki Sagishima, Kiyoshi Homma, Eri Yokota, Ryosuke Ito, Sakae Hirano, and Shoichiro Niwayama to the effect that they each resign as director or statutory auditor of Idemitsu as of the day immediately preceding the Effective Date.

Article 9 Dividends from surplus and acquisition of treasury shares 1. Idemitsu may pay the following dividends from surplus: (1) interim dividends from surplus up to a limit of 50 yen per share, 10,400,000,000 yen total to the shareholders or registered pledgees of shares recorded in the final register of shareholders of September 30, 2018; and (2) year-end dividends from surplus up to a limit of 50 yen per share, 10,400,000,000 yen total to the shareholders or registered pledgees of shares recorded in the final register of shareholders of March 31, 2019. 2. Of the acquisition of treasury shares resolved by the board of directors meeting of Idemitsu held on July 10, 2018, the details of which are as stated below, Idemitsu may continue to acquire its treasury shares to be conducted after the execution date of this Agreement. (1) Class of shares to be acquired: Common shares of Idemitsu (2) Total number of shares to be acquired: 12,000,000 shares (maximum) (3) Total amount of acquisition price of shares: 55,000,000,000 yen (maximum) (4) Acquisition period: July 17, 2018 to December 28, 2018 (5) Acquisition method: Market purchase through discretionary investment 3. Showa Shell may pay year-end dividends from surplus up to a limit of 85 yen per share, 31,900,000,000 yen total to the shareholders or registered pledgees of shares recorded in the final register of shareholders of March 31, 2019. 4. Except in the cases provided for in the preceding paragraphs, after the execution of this Agreement, the Parties shall not resolve to pay dividends from surplus for which the record date is any day prior to the Effective Date and shall not resolve to conduct an acquisition of treasury shares for which the acquisition date is any day prior to the Effective Date (unless it is necessary to acquire treasury shares due to the exercise of rights by shareholders in accordance with applicable laws and ordinances).

Article 10 Management of company assets, etc. From the execution of this Agreement until the Effective Date, each Party shall perform its business and manage and administer its assets with the due care of a good manager and shall consult with the other Party in advance before conducting any act that might have a material effect on its own assets, rights, or obligations, excluding any acts provided for in this Agreement or separately agreed to between the Parties.

Article 11 Cancellation of treasury shares Showa Shell shall, at the Reference Time, cancel all of the treasury shares it holds at the Reference Time (including shares acquired by Showa Shell pursuant to a share purchase demand by dissenting shareholders provided for in Article 785, Paragraph 1 of the Companies Act made in relation to the Share Exchange) by a resolution of a board of directors meeting of Showa Shell held by the day immediately preceding the Effective Date.

Article 12 Exercise of voting rights at 2019 annual shareholders meeting of Idemitsu Idemitsu shall, by the Effective Date, resolve at the board of directors to the effect that the shareholders of Showa Shell to be allotted common shares of Idemitsu upon the Share Exchange are, pursuant to Article 124, Paragraph 4 of the Companies Act, granted voting rights pertaining to the common shares of Idemitsu allotted to those shareholders for the annual shareholders meeting of Idemitsu planned to be held in June 2019 on the conditions that the amendments of the articles of incorporation provided for in Paragraph 2 of Article 7 become effective and that the Share Exchange becomes effective.

Article 13 Change to terms and conditions of Share Exchange and cancellation of Share Exchange From the execution of this Agreement until the Effective Date, the Parties may amend or cancel this Agreement after consulting in good faith if a material change in the financial status or business performance of either Party occurs or is discovered, if an event that might materially impede the execution of the Share Exchange in accordance with this Agreement occurs or is discovered, or if it otherwise becomes difficult to achieve the purpose of the Share Exchange.

Article 14 Effect of this Agreement This Agreement will cease to be effective in either of the cases set out in the following items. (1) The Idemitsu Extraordinary Shareholders Meeting or the Showa Shell Extraordinary Shareholders Meeting does not grant the approval of this Agreement provided for in Article 6 by the day immediately preceding the Effective Date. (2) The required approvals or the like from relevant authorities and the like in relation to the Share Exchange under laws and ordinances (including foreign laws and ordinances) are not obtained by the day immediately preceding the Effective Date.

Article 15 Jurisdiction The Tokyo District Court will have exclusive jurisdiction as the court of first instance in regard to all disputes related to this Agreement.

Article 16 Good faith consultation The Parties shall consult in good faith in accordance with the purpose of this Agreement in regard to any necessary matters related to the Share Exchange not provided for in this Agreement.

IN WITNESS WHEREOF, this Agreement has been prepared in two originals, to which each Party has affixed its name and seal, and each Party retains one original.

October 16, 2018

Idemitsu: 3-1-1 Marunouchi, Chiyoda-ku, Tokyo Idemitsu Kosan Co., Ltd. Representative Director & CEO, Shunichi Kito

Showa Shell: 2-3-2 Daiba, Minato-ku, Tokyo Showa Shell Sekiyu K.K. Representative Director, President, Executive Officer, & CEO, Tsuyoshi Kameoka

3. Matters related to adequacy of consideration for the exchange (1) Matters related to adequacy of total consideration for the exchange and allocation thereof i) Details of allocation in the Share Exchange At the time of the Share Exchange, Idemitsu Kosan will allocate 0.41 shares of Idemitsu Kosan’s common stock to the Company’s shareholders (meaning shareholders after the cancellation of the Company’s treasury shares described below, and excluding the Company and Idemitsu Kosan) for one share such holdings of the Company’s common stock at the time immediately before the Share Exchange takes effect (the “Reference Time”). Consequently, the number of shares of Idemitsu Kosan stock allocated and delivered by means of the Share Exchange will amount to a total of 105 million shares. The Company will at the Reference Time cancel all treasury shares it holds as of the Reference Time (including shares to be acquired by the Company in response to dissenting shareholders’ demands in relation to the Share Exchange to purchase their shares as stipulated in Article 785, paragraph 1 of the Companies Act) upon a resolution of the Company’s Board of Directors meeting to be held by the day immediately preceding the effective date of the Share Exchange (the “Effective Date”). The number of shares to be allocated and delivered through the Share Exchange may change due to change of the number of the Company’s treasury shares and for other reasons.

Idemitsu Kosan The Company

Share exchange ratio of the Share 1 0.41 Exchange

Number of shares to be delivered Common stock: 105 million shares (scheduled) through the Share Exchange

(Note 1) Treatment of shares constituting less than one unit It is expected that some shareholders will hold shares constituting less than one unit (100 shares) of Idemitsu Kosan stock as a result of the Share Exchange. Such shareholders will not be able to sell such shares constituting less than one unit of Idemitsu Kosan on any financial instruments exchange markets. On and after the Effective Date, shareholders who will hold shares constituting less than one unit of Idemitsu Kosan may make use of (i) the system to demand purchase of shares constituting less than one unit pursuant to Article 192, paragraph 1 of the Companies Act (system whereby Idemitsu Kosan purchases holdings of shares constituting less than one unit), and (ii) the system to further purchase shares constituting less than one unit pursuant to Article 194, paragraph 1 of the Companies Act and the relevant provision of Idemitsu Kosan’s Articles of Incorporation (system whereby shareholders holding shares constituting less than one unit purchase from Idemitsu Kosan the number of shares required, together with the number of shares constituting less than one unit they hold, to constitute one unit (100 shares). 13

(Note 2) Treatment of any fractional shares For the current shareholders of the Company who will receive a fraction less than one share of Idemitsu Kosan stock upon the Share Exchange, Idemitsu Kosan will pay cash to each such shareholder for the value of such fractional shares pursuant to Article 234 of the Companies Act and other relevant laws and regulations. ii) Basis for the calculation of the share exchange ratio of the Share Exchange A. Basis and reasons for the share exchange ratio The Company and Idemitsu Kosan carefully negotiated and discussed the share exchange ratio, referring to the share exchange ratio calculated by third party financial advisors appointed by each company, using the respective share prices as the main criterion, and based on the results of due diligence reviews mutually carried out by the Companies and the profit of the Companies’ shareholders, etc. After prudent and thorough discussions, the Companies have come to an agreement and concluded that the share exchange ratio described in 3. (1) i) above is appropriate.

B. Matters related to the calculation In order to ensure the fairness of the share exchange ratio of the Share Exchange for each company’s shareholders, each company appointed third party financial advisors for the calculation of the ratio. The Company retained Lazard Frères K.K. (“Lazard”) and Mizuho Securities Co., Ltd. (“Mizuho Securities”), and Idemitsu Kosan retained JPMorgan Securities Japan Co., Ltd., Goldman Sachs Japan Co., Ltd., and Daiwa Securities Co. Ltd. Although the Company and Idemitsu Kosan have obtained loans from a bank in Mizuho Securities’ group, Mizuho Securities and its group banks have developed appropriate conflict of interest management systems and make loans in accordance with the applicable laws and regulations. As the Company determined that appropriate measures to prevent inappropriate practices had been implemented in connection with the calculation of the share exchange ratio, it retained Mizuho Securities as a third party financial advisor. None of the other third party financial advisors of the Company or Idemitsu Kosan has any material interest to be noted in connection with the Share Exchange.

Please refer to the Supporting material 1 “Overview of analyses related to the share exchange ratio by each third party financial advisor” for an overview of the results of their analyses.

C. Measures to ensure fairness With respect to deliberating on the Business Integration, the Company and Idemitsu Kosan will implement the following measures in order to ensure fairness regarding the share exchange ratio and fairness otherwise regarding the Share Exchange.

(A) Obtaining valuation reports and written fairness opinions from independent third party financial advisors

From the Company’s independent third party financial advisors stated in 3. (1) ii) B. above, the Company (i) received valuation reports with respect to the share exchange ratio of the Share Exchange, and (ii) obtained written fairness opinions to the effect that, as of the date of such opinion and based on the assumptions set forth by each independent third party financial advisor in Supporting material 1 “Overview of analyses related to the share exchange ratio by each third party financial advisor” and other conditions, the share exchange ratio is reasonable or fair, from a financial point of view.

Idemitsu Kosan (i) received valuation reports with respect to the share exchange ratio of the Share Exchange from its independent third party financial advisors stated in 3. (1) ii) B. above, and (ii) obtained a written fairness opinion from each independent third party financial advisor to the effect that, as of the date of such opinion and based on certain conditions, the share exchange ratio is fair, from a financial point of view, to Idemitsu Kosan.

(B) Advice from independent law firms The Company has obtained advice while conducting the due diligence and the various procedures for the Business Integration from legal consultants from Mori Hamada & Matsumoto.

Idemitsu Kosan has obtained advice while conducting the due diligence and the various procedures for the Business Integration from legal consultants from Nishimura & Asahi.

(C) Advice from independent accounting and tax firms The Company has obtained advice while conducting the due diligence from financial and tax consultants from Ernst & Young Transaction Advisory Services Co., Ltd. and Ernst & Young Tax Co.

Idemitsu Kosan has obtained advice while conducting the due diligence from accounting and tax consultants from Deloitte Tohmatsu Financial Advisory LLC.

(D) Establishment of a special committee at the Company and obtaining its report In relation to the Business Integration with Idemitsu Kosan, in order to secure a transparent and fair decision-making process, the Company’s Board of Directors has established a special committee consisting of its independent officers, with which it has consulted as to whether: (a) the special committee can reasonably determine that the Share Exchange will enhance the corporate value; (b) the special committee can reasonably determine that the Share Exchange will be implemented through a fair procedure for the shareholders, and respect their interests, and (c) the Share Exchange is not detrimental to the minority shareholders, and the Company has obtained from the special committee a report stating that (1) it is reasonable for the Company’s Board of Directors to decide to implement the Share Exchange based on the fact that (i) it can be reasonably concluded that the Share Exchange contributes to enhancing the Company’s corporate value, and (ii) it can be reasonably concluded that the Company’s shareholders’ 15

interests in the Share Exchange have been considered through fair procedures, and (2) it can be reasonably concluded that the minority shareholders of the Company are not disadvantaged by the Share Exchange. For more details, please see 3. (1) ii) D. (A) below.

(E) Obtaining a written calculation and opinion from the Company’s special committee’s own independent financial advisor The Company’s special committee has independently nominated Nomura Securities Co., Ltd. (“Nomura Securities”) as its independent financial advisor and third-party calculation agent, by which it has been advised regarding the points to be noted, etc. in relation to the Share Exchange, and from which it has obtained a written calculation of the share exchange ratio of the Share Exchange. Further, the special committee has obtained a written fairness opinion to the effect that, based on the assumptions set forth in Supporting material 2 “Overview of the special committee’s analysis of share exchange ratio” and other conditions, the share exchange ratio is reasonable, from a financial point of view, to shareholders of the Company, excluding Idemitsu Kosan common stock (excluding Idemitsu Kosan and its affiliate companies).

(F) Advice from the Company’s special committee’s own independent legal advisor The Company’ special committee has independently nominated Nakamura, Tsunoda & Matsumoto as its independent legal advisor, from which it has obtained advice, from a legal perspective, with respect to the special committee’s deliberation methods and process, and the points to be noted, etc. in relation to the Share Exchange.

D. Measures to avoid conflicts of interest In order to secure a transparent and fair decision-making process in relation to the execution of the Share Exchange Agreement, the Company took the following measures, because Idemitsu Kosan owns 117,761,200 shares, which is equivalent to 31.25% of the outstanding shares, of the Company, and has interests in the Business Integration.

(A) Establishment of a special committee at the Company and obtaining its report On February 10, 2015, in relation to the Business Integration with Idemitsu Kosan, in order to secure a transparent and fair decision-making process, the Company’s Board of Directors established a special committee consisting of the Company’s independent officers at the time. The special committee has, since March 28, 2018, collected information and deliberated on the propriety of the Business Integration and decision-making process regarding the Business Integration, with the four committee members being Norio Otsuka and Yuko Yasuda, both of whom are the Company’s outside directors, and have been filed with the Tokyo Stock Exchange as independent officers, and Midori Miyazaki and Kenji Yamagishi, both of whom are the Company’s outside Audit & Supervisory Board Members, and have been filed with the Tokyo Stock Exchange as independent officers. Also, on September 6, 2018, after the decision to realize

the Business Integration by way of share exchange, the Company’s Board of Directors, when specifying what matters the special committee would be consulted about and deliberating on with respect to the Share Exchange, consulted with the special committee as to whether: (i) the special committee can reasonably determine that the Share Exchange will enhance the corporate value; (ii) the special committee can reasonably determine that the Share Exchange will be implemented through a fair procedure for the shareholders, and respect their interests; and (iii) the Share Exchange is not detrimental to the minority shareholders.

In addition to holding a total of 16 meetings from March 28, 2018 to October 16, 2018, the special committee carefully deliberated on the Business Integration, by mutually consulting each other from time to time between those meeting dates through e-mails, etc., as well as collecting information individually, or through independent advisors. At the time of those deliberations, the special committee received an explanation from the Company, regarding the purposes of the Business Integration, the management structure after the Business Integration, integration synergies from the Business Integration, results of the due diligence conducted in the course of deliberating on the Share Exchange, the details and formulation procedures for the business plan which will be used as the basic materials for the calculation of the share exchange ratio of the Share Exchange, and the terms and conditions of the Share Exchange. Also, as well as discussing the negotiation policy on the share exchange ratio of the Share Exchange, the special committee (i) obtained a detailed report regarding information sharing on the status of the negotiations, (ii) represented and exchanged opinions regarding the share exchange ratio based on advice from Nomura Securities, an independent financial advisor, and of Nakamura, Tsunoda & Matsumoto, an independent legal advisor, and (iii) was substantially involved in negotiations regarding the share exchange ratio of the Share Exchange. Further, submitting a report, the special committee has obtained advice from Nomura Securities, in addition to Mizuho Securities and Lazard, both of whom are the Company’s third-party financial advisors, from a financial perspective, regarding the share exchange ratio of the Share Exchange. Further, the special committee respectively obtained, (i) from Mori Hamada & Matsumoto, the Company’s legal advisor, advice, from a legal perspective, on the decision-making methods, processes, and points to be noted about the Company’s Board of Directors regarding the Share Exchange, and (ii) from Nakamura, Tsunoda & Matsumoto, a legal advisor appointed by the special committee independently from the Company, advice, from a legal perspective, on the deliberating methods, processes, and points to be noted about the special committee regarding the Share Exchange.

As a result, on October 16, 2018, the special committee submitted, to the Company’s Board of Directors, a report which substantially contained the details below.

(a) In the petroleum wholesale industry that the Company belongs to, the reinforcement of companies’ competitiveness through business integration has become a pressing task, but 17

synergies are reasonably expected to increase to up to a maximum of 60.0 billion yen as a result of the Business Integration, and the Share Exchange can be reasonably concluded to contribute to enhancing the Company’s corporate value.

(b) In addition to (i) the plan to appropriately disclose information in relation to the Share Exchange, (ii) guaranteeing a structure for the Share Exchange that respects the special committee’s conclusion, (iii) the plan to obtain approval from all Directors (excluding Directors who have interests), and an opinion of no objection from all Audit & Supervisory Board Members, (iv) obtaining advice from multiple independent financial advisors and legal advisors, (v) obtaining share exchange ratio calculation reports and fairness opinions from multiple independent third party financial advisors (i.e., two financial advisors of the Company and one financial advisor independent from the special committee for a total of three companies), (vi) attaching a premium to the share exchange ratio that exceeds the median premium of the most recent, similar precedent cases within the scope of the evaluated ranges of the results calculated by Mizuho Securities and Lazard (i.e., the Company’s third party financial advisors) and Nomura Securities (i.e., the special committee’s third party financial advisor), and (vii) the agreement reached as a result of sincere negotiations with Idemitsu Kosan, (viii) it can be reasonably expected that synergies will increase to up to a maximum of 60.0 billion yen as a result of the Share Exchange, and that the Company’s shareholders can enjoy those synergies by remaining as shareholders of Idemitsu Kosan after the Share Exchange. Based on the above, it can be reasonably concluded that the shareholders’ interests in the Share Exchange have been considered through fair procedures.

(c) Based on (a) and (b) above, it is reasonable for the Company’s Board of Directors to decide to implement the Share Exchange.

(d) Since, as described in (a) and (b) above, it can be reasonably concluded that the Share Exchange contributes to enhancing the Company’s corporate value, and the shareholders’ interests in the Share Exchange have been considered through fair procedures, it can be reasonably concluded that the minority shareholders of the Company are not disadvantaged by the Share Exchange.

(B) Approval from all Directors (excluding Directors who have interests) and an opinion of no objection from all Audit & Supervisory Board Members of the Company The proposal regarding the execution of the Share Exchange Agreement submitted at the Company’s Board of Directors meeting was unanimously approved and passed by all Directors of the Company (excluding Daisuke Seki and Katsumi Saito, both of whom may have interests in the Business Integration through having been Directors of Idemitsu Kosan in the past), and all

Audit & Supervisory Board Members of the Company stated their opinions that they have no objection to the implementation of the Share Exchange.

Neither Daisuke Seki nor Katsumi Saito attended the deliberation or the resolution on the proposal regarding the Share Exchange at the Company’s Board of Directors meeting, in order to avoid any conflicts of interest. Neither of them attended the consultations or negotiations regarding the Share Exchange with Idemitsu Kosan, from the standpoint of the Company.

(2) Reasons for having selected the common stock of Idemitsu Kosan as consideration for the exchange The Company and Idemitsu Kosan have selected the common stock of Idemitsu Kosan, the wholly owning parent company resulting from the share exchange, for use as consideration for the Share Exchange.

With respect to consideration for the exchange, the Company has deemed it appropriate that the common stock of Idemitsu Kosan be used as consideration for the Share Exchange, having taken into account factors that include: (i) the common stock of Idemitsu Kosan is listed on the first section of the Tokyo Stock Exchange and trades on that exchange, thereby ensuring opportunities to trade the shares on the market subsequent to the Share Exchange, and (ii) it will be possible for shareholders of the Company who accept common stock of Idemitsu Kosan to benefit from integration effects derived as a result of the Share Exchange.

(3) Matters related to amounts of stated capital and capital reserves of Idemitsu Kosan The Company and Idemitsu Kosan have decided to set the following increased amounts of Idemitsu Kosan’s stated capital and capital reserves by means of the Share Exchange.

i) Stated capital: 0 yen ii) Capital reserves: The amount of changes in shareholders’ equity, etc. provided for in Article 39 of the Regulation on Accounting of Companies iii) Retained earnings reserves: 0 yen These stated capital and capital reserve amounts were determined within the scope of Article 39 of the Regulation on Accounting of Companies, and have been deemed appropriate, upon having comprehensively considered the financial status of Idemitsu Kosan and other circumstances with respect to carrying out agile and flexible capital policy.

4. Matters for reference involving consideration for the exchange (1) Provisions of Idemitsu Kosan’s Articles of Incorporation Refer to Supporting material 3 for the Articles of Incorporation of Idemitsu Kosan. The Articles of Incorporation provided in Supporting material 3 is that of Idemitsu Kosan’s Articles of Incorporation as of the current date. Subsequent to the Share Exchange, the Articles of 19

Incorporation will be changed to that of Supporting material 4, “Proposal for Partial Amendment to the Articles of Incorporation of Idemitsu Kosan Co., Ltd.” pursuant to approval granted in the Idemitsu Kosan Extraordinary General Meeting of Shareholders to be held on December 18, 2018.

(2) Matters related to the conversion method with respect to consideration for the exchange i) Market where consideration for the exchange is traded The common stock of Idemitsu Kosan is traded on the first section of the Tokyo Stock Exchange. ii) Party who acts as intermediary, brokerage or agency service for the transaction involving consideration for the exchange Transaction intermediary, brokerage and other services with respect to the common stock of Idemitsu Kosan are provided by respective financial instrument business operators (securities companies, etc.) across Japan. iii) Description of restrictions on transfer or other disposition of consideration for the exchange Not applicable.

(3) Matters related to market price with respect to consideration for the exchange The following section provides information on share price trends for the past six months of the common stock of Idemitsu Kosan traded on the first section of the Tokyo Stock Exchange. September Month May 2018 June 2018 July 2018 August 2018 October 2018 2018 Highest share 4,370 yen 4,205 yen 5,230 yen 5,750 yen 6,240 yen 6,430 yen price Lowest share 3,565 yen 3,425 yen 3,740 yen 4,915 yen 5,400 yen 4,830 yen price Refer to the Japan Exchange Group, Inc. website for the latest market price for common stock of Idemitsu Kosan traded on the first section of the Tokyo Stock Exchange (https://www.jpx.co.jp/).

(4) Content of the balance sheets for Idemitsu Kosan’s last five fiscal years as of the last day of the respective years Idemitsu Kosan has submitted the annual securities reports pursuant to the provisions of Article 24, paragraph 1 of the Financial Instruments and Exchange Act for each of those fiscal years.

5. Matters related to adequacy of provisions for share acquisition rights Not applicable.

6. Matters related to financial statements, etc. (1) Content of financial statements, etc. for Idemitsu Kosan’s latest fiscal year The financial statements and other such documents pertaining to Idemitsu Kosan’s latest fiscal

year (April 1, 2017 to March 31, 2018) have been posted to the Company’s website (http://www.showa-shell.co.jp/), pursuant to laws, regulations and provisions of Article 17 of the Company’s Articles of Association.

(2) Details of events that have a significant effect on corporate assets, occurring subsequent to the last day of the most recent fiscal year of the Company and Idemitsu Kosan i) The Company A. The Company has concluded an agreement regarding business integration with Idemitsu Kosan, as of July 10, 2018.

B. In the Mid-Term Business Strategy formulated in 2017, the Company stated that further focus on “additional shareholder return” and “strategic investment for the future growth” is our basic policy of cash allocation. Accordingly, we expect a record-high profit for this accounting period with free cash flow far exceeding the original estimate. Given such circumstances and as an additional shareholder return based on the Mid-Term Business Strategy above, at its meeting held on August 9, 2018, the Board of Directors resolved to repurchase its shares, as detailed below, in accordance with Article 156 of the Companies Act of Japan, as applied pursuant to Article 165, paragraph 3 of the Companies Act of Japan, and also resolved to cancel a part of treasury shares in accordance with Article 178 of the Companies Act of Japan.

(A) Details of share repurchase (a) Class of shares: Common stock (b) Total number of shares to be repurchased: 6,000,000 shares (upper limit) (1.59% of total issued shares, excluding treasury shares) (c) Total amount of purchase price: 10.0 billion yen (upper limit) (d) Period for share repurchase: From August 16, 2018 to October 31, 2018 (e) Repurchase method: Market purchase at the Tokyo Stock Exchange (B) Details of cancellation (a) Class of shares: Common stock (b) Total number of shares of treasury stock to be cancelled: All of the shares of common stock to be repurchased pursuant to (A), above. (c) Scheduled date of cancellation: November 30, 2018 The Company has finished repurchasing its shares upon having purchased 4,254,400 shares of common stock (total amount of purchase price: 9,999,883,800 yen) by October 12, 2018, in accordance with the resolution above.

C. The Company has concluded the Share Exchange Agreement with Idemitsu Kosan, as of October 16, 2018. Please refer to “2. Content of the Share Exchange Agreement” of this proposal for

details on the Share Exchange Agreement. ii) Idemitsu Kosan A. Idemitsu Kosan has concluded an agreement regarding business integration with the Company, as of July 10, 2018.

B. Idemitsu Kosan is expected to increasingly achieve a stable financial position after the completion of the Business Integration with the Company. As such, in consultation with its major shareholders, Idemitsu Kosan determined that conducting a repurchase of its own shares in order to appropriately return profits to its shareholders before the implementation of the Business Integration is the best method for profit return to its current shareholders. Accordingly, at its meeting held on July 10, 2018, Idemitsu Kosan’s Board of Directors resolved to repurchase shares as follows, in accordance with its Articles of Incorporation, under the provision of Article 459, paragraph 1 of the Companies Act of Japan.

(A) Class of shares: Common stock (B) Total number of shares to be repurchased: 12,000,000 shares (upper limit) (5.77% of total issued shares, excluding treasury shares) (C) Total amount of purchase price: 55.0 billion yen (upper limit) (D) Period for share repurchase: From July 17, 2018 to December 28, 2018 (E) Repurchase method: Market purchase based on the discretionary dealing contract

Idemitsu Kosan has finished repurchasing its shares upon having purchased 10,439,700 shares of common stock (total amount of purchase price: 54,999,551,500 yen) by November 9, 2018, in accordance with the resolution above.

C. Idemitsu Kosan’s Board of Directors resolved to issue unsecured bonds as follows at its meeting held on September 12, 2018.

Name of bonds Idemitsu Kosan Co. Ltd. sixth Idemitsu Kosan Co. Ltd. seventh unsecured bonds (with inter-bond unsecured bonds (with inter-bond pari passu clause) pari passu clause)

Total amount of 10.0 billion yen 10.0 billion yen bounds Amount of each 0.1 billion yen 0.1 billion yen bound Book-entry These bonds shall be subject to the Act on Book-Entry of Company Bonds, transfer Shares, etc. Corporate bond certificates may not be issued for book-entry

corporate bonds transfer corporate bonds under Article 67 (1) of the Act. Interest rate 0.270% annually 0.414% annually Amount to be 100 yen per amount of 100 yen in each bond paid Amount to be 100 yen per amount of 100 yen in each bond redeemed Maturity, date 7 years 10 years and redemption A. Maturity A. Maturity method The full principal amount of the bond The full principal amount of the bond is redeemed on September 19, 2025. is redeemed on September 19, 2028.

B. Retirement of bonds The bonds can be retired at any time from the day following the payment date unless provided by the book-entry institution. Coupon payment March 19 and September 19 of each year date Period of September 12, 2018 application Payment date September 19, 2018 Method of Public subscription invitation for subscription Security These bonds are not secured or guaranteed. No specific assets are retained for these bonds. Financial Negative pledge clause is included. covenants Underwriters Daiwa Securities Co. Ltd., Mitsubishi SMBC Nikko Securities Inc., UFJ Morgan Stanley Securities Co., Mitsubishi UFJ Morgan Stanley Ltd., SMBC Nikko Securities Inc. Securities Co., Ltd., Daiwa Securities and Mizuho Securities Co., Ltd. Co. Ltd., and Mizuho Securities Co., Ltd. Place for Underwriters’ head office and branches in Japan treatment of application Fiscal agent, Sumitomo Mitsui Trust Bank, Limited issuing agent and

paying agent Book-entry Japan Securities Depository Center, Incorporated institution Rating obtained A (Japan Credit Rating Agency, Ltd.)

D. Idemitsu Kosan has concluded the Share Exchange Agreement with the Company, as of October 16, 2018.

Supporting material 1

Overview of analyses related to the share exchange ratio by each third party financial advisor

(Lazard) In performing its analysis, Lazard reviewed certain publicly available financial information of the Company and Idemitsu Kosan as well as financial information provided by each of the Company and Idemitsu Kosan, in addition to reviewing the terms and conditions of the Share Exchange. To evaluate the valuation of each of the Company and Idemitsu Kosan, Lazard performed a discounted cash flow analysis of each company (“DCF analysis”). In addition, since the shares of both companies are listed on a securities exchange and market share prices are publicly available, Lazard also performed a stock price analysis with respect to each company. The ranges of the share exchange ratio set forth below represent the ranges for the number of shares of Idemitsu Kosan common stock to be allocated in exchange for one share of the Company common stock as a result of the analyses performed by Lazard.

Analysis method Valuation range of share exchange ratio DCF analysis 0.34 ~ 0.47 Stock price analysis 0.39 ~ 0.41

The DCF analysis was based on stand-alone business plan for each of the Company and Idemitsu Kosan (as adjusted by the Company in terms of business plan of Idemitsu Kosan) provided by the Company and Idemitsu Kosan, which did not take into account potential synergies resulting from the Business Integration. The business plan of Idemitsu Kosan for the fiscal years ending March 2019 to March 2023, used as the basis for the DCF analysis by Lazard, does not include fiscal years with an expected substantial earnings increase or decrease. On the other hand, the business plan of the Company for the fiscal years ending March 2019 to March 2023, used as the basis for the DCF analysis by Lazard, includes fiscal years with an expected substantial earnings increase or decrease. Specifically, the Company expects the earnings for the fiscal year ending March 2019 to increase substantially on a year-on-year basis, due to improvement in profitability of the Oil Business, earnings for the fiscal year ending March 2020 to decrease substantially on a year-on-year basis due to, among other things, an unfavorable petroleum products market condition and periodic maintenances of refineries, and earnings for the fiscal year ending March 2021 to increase substantially on a year-on- year basis due to, among other things, profit improvement due to recovery of overseas petroleum products market condition along with changes in regulations and completion of periodic maintenances of refineries. In performing the stock price analysis, Lazard used October 15, 2018 as the reference date and reviewed the closing share price on the reference date and the average of the closing share prices during the most recent month, the most recent three (3) months and the most recent six (6) months, each ending on the reference date.

The above description of financial analyses by Lazard is a summary of certain parts of the financial analyses undertaken by Lazard in connection with the provision of its opinion described below, and accordingly, it is not a comprehensive description of all financial analyses undertaken by Lazard in connection with such opinion. Any financial analyses undertaken in connection with an opinion require a considerable degree of judgment relating to each financial analysis methodology, and therefore, they must be considered in its entirety.

Upon the request from the Company’s Board of Directors, Lazard provided an opinion (the “Opinion”) to the Company’s Board of Directors to the effect that the share exchange ratio agreed upon with Idemitsu Kosan as of October 16, 2018 is fair from a financial point of view to the shareholders of the Company common stock (excluding those shareholders who demanded an appraisal of their shares of the Company common stock as well as Idemitsu Kosan, “the Company’s Common Stockholders”) subject to the following assumptions and certain other conditions.

Lazard reviewed certain information provided by each of the Company and Idemitsu Kosan as well certain publicly available information as it deemed appropriate for purposes of providing its Opinion and in conducting a per share value analysis that forms the basis thereof. Such information included the projected synergies and other benefits for each of the Company and Idemitsu Kosan that are anticipated by the managements of the Company and Idemitsu Kosan to be realized from the Business Integration. Lazard, however, assumed and relied upon the accuracy and completeness of the foregoing information, without independent verification of such information. Lazard has not conducted any independent valuation or appraisal of any of the assets or liabilities (contingent or otherwise) of the Company or Idemitsu Kosan or concerning the solvency or fair value of the Company or Idemitsu Kosan, and Lazard was not furnished with any such valuation or appraisal. With respect to the business plans utilized in its analyses, including those related to projected synergies and other benefits anticipated by the managements of Idemitsu Kosan and the Company to be realized from the Business Integration, Lazard has assumed, with the consent of the Company, that such business plans had been reasonably prepared on bases reflecting the best currently available estimates and judgments as to the future financial performance of the Company and Idemitsu Kosan, respectively, and such synergies and other benefits. Lazard assumed no responsibility for and expressed no view as to any such business plans or the assumptions on which they are based.

Further, its Opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date thereof. Lazard assumed no responsibility for updating or revising the Opinion based on circumstances or events occurring after the date thereof. Lazard did not express any opinion as to the prices at which shares of common stock of the Company or Idemitsu Kosan common stock may trade at any time subsequent to the announcement of the Business Integration. In connection with its engagement related to the Business Integration, Lazard was not authorized to, and did not, solicit indications of interest from third parties regarding a potential transaction with the Company. In addition, its Opinion does not address the relative merits of the Business Integration as compared to any other transaction or business strategy in which the Company might engage or the merits of the underlying decision by the Company to engage in the Business Integration.

In rendering its Opinion, Lazard assumed, with the consent of the Company, that the Business Integration will be consummated on the terms described in the Share Exchange Agreement, without any waiver or modification of any material terms or conditions. Lazard also assumed, with the consent of the Company, that obtaining the necessary governmental, regulatory or third party approvals and consents for the Business Integration will not have an adverse effect on the Company, Idemitsu Kosan or the Business Integration. Lazard further assumed, with the consent of the Company, that the Business Integration will be a tax-free transaction for Japanese tax purposes for the Company Common Stockholders. Lazard did not express any opinion as to any tax or other consequences that might result from the Business Integration, nor does Lazard’s opinion address any legal, tax, regulatory or accounting matters, as to which Lazard understands that the Company obtained such advice as it deemed necessary from qualified professionals. Lazard expressed no view or opinion as to any terms or other aspects (other than the share exchange ratio to the extent expressly specified therein) of the Business Integration, including, without limitation, the form or structure of the Business Integration or any agreements or arrangements entered into in connection with, or contemplated by, the Business Integration. In addition, Lazard expressed no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the Business Integration, or class of such persons, relative to the share exchange ratio or otherwise.

Lazard is acting as financial advisor to the Company in connection with the Business Integration and will receive a fee for such services, substantial portions of which are contingent upon the progress of the Business Integration. In addition, in the ordinary course, Lazard and its affiliates and employees may trade securities of the Company, Idemitsu Kosan and certain of their respective affiliates for their own accounts and for the accounts of their customers, may at any time hold a long or short position in such securities, and may also trade and hold securities on behalf of the Company, Idemitsu Kosan and certain of their respective affiliates.

Lazard’s engagement and the opinion expressed in the Opinion, as summarized herein, are solely for the benefit of the Company’s Board of Directors (in its capacity as such) and its Opinion was rendered to the Company’s Board of Directors in connection with its evaluation of the Business Integration. Lazard’s engagement and opinion are not on behalf of, and are not intended to confer rights or remedies upon, any shareholder of the Company or Idemitsu Kosan or any other person and may not be disclosed or otherwise referred to, nor may its opinion be used or relied upon by any third party for any purpose, without its prior written consent.

(Mizuho Securities) In the calculation of the share exchange ratio between the Company and Idemitsu Kosan common stock, Mizuho Securities has adopted, among other things, a stock price analysis based on market stock prices as the Companies are both listed in the Tokyo Stock Exchange, along with a discounted cash flow method (“DCF analysis”) to reflect the status of future business activities of the Companies on its evaluation. Supposing the stock value per share of Idemitsu Kosan is one (1), the valuation ranges based on the respective calculation methods are as follows:

Analysis method Valuation range of share exchange ratio Stock price analysis 0.39～0.41 DCF analysis 0.31～0.46

In its valuation based on the stock price analysis, Mizuho Securities set the calculation base date to October 15, 2018 and adopted the simple average of closing prices of the Companies on the Tokyo Stock Exchange for the past one-month, three-month and six-month periods prior to the base date.

The business plan of Idemitsu Kosan for the fiscal years ending March 2019 to March 2023, used as the basis for the DCF analysis by Mizuho Securities, does not include fiscal years with an expected substantial earnings increase or decrease. On the other hand, the business plan of the Company for the fiscal years ending March 2019 to March 2023, used as the basis for the DCF analysis by Mizuho Securities, includes fiscal years with an expected substantial earnings increase or decrease. Specifically, the earnings for the fiscal year ending March 2019 is expected to increase substantially on a year-on-year basis, due to improvement in profitability of the Oil Business, earnings for the fiscal year ending March 2020 is expected to decrease substantially on a year-on-year basis due to, among other things, an unfavorable petroleum products market condition and periodic maintenances of refineries, and earnings for the fiscal year ending March 2021 is expected to increase substantially on a year-on-year basis due to, among other things, profit improvement due to recovery of overseas petroleum products market condition along with changes in regulations and completion of periodic maintenances of refineries.

On October 16, 2018 Mizuho Securities has issued its opinion as to the fairness of the exchange ratio from a financial point of view (so-called “Fairness Opinion” referred to herein as “Opinion Letter”) in light with the interests of common shareholders of the Company based on the following assumptions.

In rendering its opinion, Mizuho Securities has relied upon and assumed the accuracy and completeness of all public information that was reviewed by Mizuho Securities and all financial and other information that was provided to or discussed with Mizuho Securities by the Companies and formed a substantial basis for this valuation (the “Base Information”), and Mizuho Securities has not independently verified, nor has it assumed responsibility or liability for independently verifying such Base Information for its accuracy or completeness. The conclusion expressed in the Opinion Letter could potentially differ if there are matters that would make the Base Information materially incorrect, or if there is a fact or circumstance not disclosed at the time of delivery of this Opinion Letter, or which occurs subsequent to delivery of the Opinion Letter (including facts which potentially existed at the time this report was delivered but became apparent subsequently). Mizuho Securities has assumed that the management of the Company is unaware of any fact that would make the information provided to or discussed by each company with Mizuho Securities incomplete or misleading.

With respect to the financial forecasts and other forward-looking information provided to Mizuho Securities, including future revenue and expenditure projections, expected cost savings, business plans of the Companies and financial projections and business plans which have been partially changed through discussions between the Company and Mizuho Securities (collectively, the “Business Plan”), Mizuho Securities has assumed that such information was reasonably prepared by the management of the Companies and modified or discussed by the Company management team based on reasonable judgement on a basis reflecting the best currently available estimates and judgments of management as to the expected future results of operations and financial condition of the Companies and their affiliates. In the Opinion Letter, Mizuho Securities relied on these forecasts and the Business Plan without independent verification, and it expresses no view as to any analyses or forecasts referred to herein or the assumptions on which they are based. With respect to the synergistic effects that the Companies expect to generate through the Transaction, Mizuho Securities does not, at the time of delivery of the Opinion Letter, recognize any factor with which it could quantitatively evaluate material potential impacts on the valuation, nor has it taken into account such potential impact in the Opinion Letter.

With respect to any information Mizuho Securities requested in connection with the Opinion Letter that was not provided or disclosed to Mizuho Securities by the Companies, or any information provided or disclosed to Mizuho Securities but was too uncertain at this stage, to determine the possible impact on the corporate value of the Companies, or any information that cannot be used as the basis of its evaluations, Mizuho Securities has, with the Company’s consent, used assumptions it believes to be reasonable and appropriate, and thus the conclusion expressed therein could potentially differ if such assumptions prove to be incorrect in material aspects. Projections used for our analysis and the valuation range derived from such analysis are subject to material uncertainties and thus should not be interpreted as our opinion with regard to the equity value of each company.

Mizuho Securities has further assumed that the Transaction will qualify as a tax-free transaction for the Companies under Japanese corporate tax law and that other tax-related matter will not affect the exchange ratio. In addition, Mizuho Securities has assumed, without independent verification, that the Transaction will be consummated in a timely manner and that all material governmental, regulatory and other consents and approvals necessary for the consummation of the Transaction (whether or not the acquisition of such consents and approvals are required under the laws, regulations or agreements) will be obtained without any adverse effect on the Companies or the expected benefits of the Transaction. Mizuho Securities has also assumed that such consents and approval will not affect the exchange ratio, and that in the event where any order, measure or other disposition is made or taken by regulatory authorities or other competent authorities to the Companies, there will be no impact on future business results of the Companies, except for those have disclosed by the Companies. Mizuho Securities is not legal, regulatory, or accounting/tax experts and has therefore relied on evaluations of

such matters submitted by external experts of the Companies. In addition, Mizuho Securities is not experts in the evaluations and assessment on the prices of oil, gas and coal and the amount of resources and reserves associated with business fields of the Companies and therefore has not independently verified these assets, but relied on the assumption based on estimates and forecasts by management team of the Company, nor has it considered the possibility of price fluctuations of these assets and the effects of such price fluctuations on the Transaction.

Mizuho Securities has not conducted an independent valuation or appraisal of any assets or liabilities (including derivatives, off-balance sheet assets and liabilities and other contingent liabilities), or the reserves of the Companies and their affiliates including analysis on the appropriateness of appraisal values for accounting and tax purposes or the appropriateness of accounting and tax treatment, and Mizuho Securities has not been independently provided with, nor has it made any request to a third party for, any such valuation or appraisal. Mizuho Securities has not assumed any obligation to conduct any inspection of the properties or facilities of the Companies and their affiliates, nor has it evaluated the capitalization or solvency of the Companies and their affiliates under any law relating to bankruptcy, insolvency or similar matters. External experts retained by the Company have conducted due diligence to Idemitsu Kosan in the matters and scope previously agreed with the Company with respect to due diligence on legal, financial and taxation matters and the evaluation of interests of oil and coal. Mizuho Securities has not independently verified the matters and scope of the above due diligence, nor does assume obligations to do so.

Mizuho Securities has also assumed that the Companies and their affiliates have not entered, and will not enter, into any contract, agreement or other instrument that may materially affect the exchange ratio, nor have made such decision, and that the consummation of the Transaction will not breach, nor give rise to any right to terminate or declare a default or exercise any remedy under, any material agreement of the Companies or any of their affiliates. Mizuho Securities has also assumed that the Transaction will be consummated in accordance with the terms and conditions of all contracts, agreements or other instruments without any waiver, modification or revision to material provisions and agreed matters thereof, and in accordance with the terms and conditions of contracts/agreements and agreed matters in connection with the Transaction without material changes in such agreements executed between the Companies and those whose finial terms were reviewed by Mizuho Securities in connection with the Transaction. Mizuho Securities has assumed that, except as disclosed in the Base Information, there are no litigation, dispute-related contingent liabilities, or environmental, tax or intellectual property-related off-balance sheet liabilities, of the Companies or their affiliates and that current insurance coverage for businesses of the Companies is sufficient to ensure its stable business operations.

The Opinion Letter is based on financial, economic, market and other conditions as they exist and can be evaluated on, and the information available to us as of the date hereof. As for the information 30

provided to us as of the date hereof, or any fact that might be associated with such information, we have not taken into any matter if such underlying information or fact is too uncertain to determine the possible impact on corporate value of each company. We have also assumed that, now and the future, there would be no technological innovation or other major technical changes that would materially affect the financial and business projections currently assumed by each company. Although our opinion may be affected if there occurs any event that would change or impact the assumptions as of the date hereof or any matter that may apparently affect the corporate value of each company, we do not assume any responsibility to modify, update, supplement or reaffirm the Opinion Letter.

Mizuho Securities has acted as financial advisor to the Company in connection with the Transaction and expects to receive from the Company a fee for its services, including a fee contingent on the consummation of the Transaction. In the past, Mizuho Securities and its group companies provided financial advisory services, fundraising support services and other services to the Companies and affiliates of the Companies, for which Mizuho Securities and its group companies have received compensation. the Company has agreed to indemnify Mizuho Securities for certain liabilities arising out of Mizuho Securities’ engagement, including in connection with its provision of the Opinion Letter. In addition, in the ordinary course of business, Mizuho Securities and group companies of Mizuho Financial Group may hold or sell certain equity, bond and other securities and various types of financial instruments, including derivatives, of either company or its affiliates for its own accounts or for the accounts of customers and, accordingly, may at any time hold a long or short position in such financial instruments. Mizuho Securities and its group companies may also from time to time act as a counterparty to either company or its affiliates and receive compensation for such activities.

Mizuho Securities has not been requested to provide an opinion as to, and its opinion does not in any manner address, the Company’s underlying business decision to proceed with or effect the Transaction. The Exchange Ratio should be decided through discussions between the Companies and then approved by the Company Board of Directors. The Opinion Letter is one of factors which may be used to study the Transaction by the Company and thus not constitutes a decisive factor to form an opinion of the Company Board of Directors with respect to the Transaction or the Exchange Ratio. Mizuho Securities has not asked to provide, and has not provided therein, any opinion as to any transaction other than the Transaction or as to the relative merits or demerits of the Transaction in comparison to any other transaction. Mizuho Securities is under no obligation to the Company or its Board of Directors to solicit indications of interest from any third party in connection with the Transaction, nor did it make any such solicitations.

The Opinion Letter is limited to the fairness, from a financial point of view, of the Exchange Ratio to the Company common shareholders, and it expresses no opinion as to the fairness of the Transaction to the holders of any other class of securities, creditors or other constituencies of the Company. The Opinion Letter is not intended to be and does not constitute a recommendation to the Company 31

common shareholders as to how they should vote or act with respect to any matter relating to the Transaction. Furthermore, it expresses no opinion with respect to transaction schemes, structure and other various terms and conditions of the Transaction (excluding the Exchange Ratio), nor does it express opinions with respect to the amount or nature of any compensation to any directors, executive officers or employees of either Company, or any class of such persons, relative to the Exchange Ratio in the Transaction or with respect to the fairness of any such compensation.

Supporting material 2

Overview of the special committee’s analysis of share exchange ratio

In performing its analysis, Nomura Securities reviewed the financial information of the Company and Idemitsu Kosan, in addition to the terms and conditions of the Share Exchange. Nomura Securities used an average stock price analysis, since the shares of both companies are listed on a securities exchange and market share prices are publicly available. Further, the discounted cash flow analysis (“DCF analysis”) was used to reflect future business operations. As for the average stock price analysis, the following share prices were used: the closing share price on July 9, 2018 (the reference date; hereinafter “Reference Date 1”), which is the business day before the “Announcement Regarding Execution of Business Integration Agreement” was released by the Company and Idemitsu Kosan on July 10, 2018; the average closing share price for the one-week period, one-month period, three-month period, and six-month period preceding the Reference Date 1 were used, and the closing share price on October 15, 2018 (the reference date; hereinafter “Reference Date 2”); and the average closing share price during the one-week period, one-month period, three-month period, and six-month period preceding the Reference Date 2.

The calculated ranges of the Share Exchange Ratio below show the range of the number of shares of Idemitsu Kosan common stock to be allotted for each share of common stock of the Company.

Analysis method Valuation range of share exchange ratio Average stock price analysis 0.38 ～ 0.43 (Reference Date 1) Average stock price analysis 0.39 ～ 0.41 (Reference Date 2) DCF analysis 0.38 ～ 0.47

In conducting its analysis with respect to the share exchange ratio, Nomura Securities has assumed and relied upon the accuracy and completeness of all public information reviewed by Nomura Securities and all financial, legal, regulatory, tax, accounting and other information provided to Nomura Securities. Nomura Securities did not independently verify the accuracy and completeness of such information. In addition, Nomura Securities has not made any independent valuation, appraisal or assessment of any of the assets or liabilities (including derivatives, off-balance sheet assets and liabilities, and other contingent liabilities) of the Company and Idemitsu Kosan and their affiliates, including analyses or valuations of individual assets or liabilities. Moreover, Nomura Securities has not made any request to a third party for such valuation, appraisal or assessment. With respect to the financial projections and other forward-looking information concerning the Company and Idemitsu

Kosan provided to Nomura Securities, Nomura Securities has assumed that such information was reasonably prepared or reviewed by the management of the Company and Idemitsu Kosan based on the best and bona fide estimates and judgments currently available, and that the future financial condition of the post share exchange company will be consistent with such projections. Nomura Securities has relied upon such projections and other forward-looking information without independent verification.

The DCF analysis was based on stand-alone business plan for each of the Company and Idemitsu Kosan, and the synergistic effects of the Business Integration have not been reflected in either of the company’s business plans on which the DCF analysis is based. The business plan of Idemitsu Kosan for the fiscal years ending March 2019 to March 2023, used as the basis for the DCF analysis by Nomura Securities, does not include fiscal years with an expected substantial earnings increase or decrease. On the other hand, the business plan of the Company for the fiscal years ending March 2019 to March 2023, used as the basis for the DCF analysis by Nomura Securities, includes fiscal years with an expected substantial earnings increase or decrease. Specifically, the earnings for the fiscal year ending March 2019 is expected to increase substantially on a year-on-year basis, due to improvement in profitability of the Oil Business, earnings for the fiscal year ending March 2020 is expected to decrease substantially on a year-on-year basis due to, among other things, an unfavorable petroleum products market condition and periodic maintenances of refineries, and earnings for the fiscal year ending March 2021 is expected to increase substantially on a year-on-year basis due to, among other things, profit improvement due to recovery of overseas petroleum products market condition along with changes in regulations and completion of periodic maintenances of refineries.

Assumption and Disclaimer of Fairness Opinion provided by Nomura Securities

Nomura Securities has assumed and relied upon the accuracy and completeness of all public information reviewed by Nomura Securities and all financial, legal, regulatory, tax, accounting and other information provided to Nomura Securities for the purpose of rendering the fairness opinion (“Fairness Opinion”). Nomura Securities did not independently verify the accuracy and completeness of such information, nor does Nomura Securities assume any responsibility for doing so. Nomura Securities has not made any independent valuation, appraisal or assessment of any of the assets or liabilities (including derivatives, off-balance sheet assets and liabilities, and other contingent liabilities) of the Company and Idemitsu Kosan and their affiliates, including analyses or valuations of individual assets or liabilities. Moreover, Nomura Securities has not made any request to a third party for such valuation, appraisal or assessment. With respect to the financial projections and other forward-looking information concerning the Company and Idemitsu Kosan provided to Nomura Securities, Nomura Securities has assumed that such information was reasonably prepared or reviewed by the management of the Company and Idemitsu Kosan based on the best and bona fide estimates and judgments currently available, and that the future financial condition of the post share exchange 34

company will be consistent with such projections. In preparing Fairness Opinion, Nomura Securities has relied upon such projections and other forward-looking information without independent verification. Nomura Securities provides no assurance whatsoever concerning the achievability of such financial projections. Nomura Securities has assumed, without independent verification and assumption of any responsibility thereof, that the Share Exchange will be carried out lawfully and validly in accordance with the terms set forth in the agreement regarding the Share Exchange (the “Agreement”) and that the Share Exchange will not have any tax consequences different from the assumed consequences provided to Nomura Securities. In addition, Nomura Securities has assumed, without independent verification and assumption of any responsibility thereof, that all governmental, regulatory or other consents and approvals necessary for the consummation of the Share Exchange will be obtained without any adverse effect on the contemplated benefits of the Share Exchange and that the Share Exchange will be consummated in accordance with the terms of the Agreement, without waiver, modification or amendment of any material term or agreement therein. Nomura Securities was not asked to provide, and has not provided, any opinion on any transaction other than the Share Exchange or on the relative merits of the Share Exchange as compared to any other transaction by the Company or the special committee established by the Company for the Share Exchange (the “Special Committee”). Nomura Securities is under no obligation to the Company, its Board of Directors, or the Special Committee to solicit indications of interest from any third party in connection with the Share Exchange, nor did Nomura Securities make any such solicitations.

Nomura Securities has acted as the financial advisor to the Special Committee in connection with the Share Exchange. Nomura Securities expects to receive from the Company fees for such services, including a fee contingent on submission of Fairness Opinion. In addition, Nomura Securities expects to receive from the Company reimbursement of certain expenses incurred by Nomura Securities and its affiliates. The waiver and indemnity clauses specified in the agreement between Nomura Securities and the Company are applicable in connection with the rendering of Fairness Opinion. Nomura Securities and its affiliates may have provided in the past and may in the future provide investment banking, other financial instruments and financing services or other similar services to the Company, Idemitsu Kosan, or their affiliates, for which Nomura Securities and its affiliates would expect to receive compensation. In the ordinary course of business, Nomura Securities and its affiliates may from time to time acquire, hold or sell certain equity, debt and other securities and various types of financial instruments, including derivatives, of the Company, Idemitsu Kosan, or their affiliates for Nomura Securities’ own account or Nomura Securities’ clients’ accounts.

Nomura Securities’ opinion expressed in Fairness Opinion (“Nomura Securities’ Opinion”) is provided for the information and assistance of the Special Committee in connection with its consideration of the share exchange ratio between the Company and Idemitsu Kosan (the “Share Exchange Ratio”). Nomura Securities’ Opinion addresses only the fairness of the Share Exchange Ratio, from a financial

point of view, under the conditions and assumptions set out in Fairness Opinion; Nomura Securities was not asked to provide, and does not provide herein, any opinion on any of the premises or assumptions upon which the determination of the Share Exchange Ratio was based or the underlying business decision of the Company to proceed with the Share Exchange. Nomura Securities’ Opinion does not constitute a recommendation as to how any holder of the shares of the Company common stock should vote or act on any matter relating to the Share Exchange. Furthermore, Fairness Opinion does not purport to provide any opinion on the past, current and future market prices of the common stock of the Company and Idemitsu Kosan. Nomura Securities does not provide independent advice related to legal, regulatory, tax, accounting or environmental matters in connection with the Share Exchange, and has relied upon the judgment of the Company or its third-party advisors concerning such matters.

Except as otherwise specially permitted under the agreement between the Company and Nomura Securities, Fairness Opinion may not be disclosed to any other person or used for any purpose other than as originally intended. the Company and the Special Committee may not disclose, refer to, transmit or use Fairness Opinion, in whole or in part, without Nomura Securities’ prior consent in writing.

Nomura Securities’ Opinion is based on financial, economic, market, business and other conditions as they exist on the date of Fairness Opinion, and relies upon information that Nomura Securities has as of the date of Fairness Opinion. Although Nomura Securities’ Opinion may be affected by future changes in conditions, Nomura Securities does not assume any responsibility to modify, change or supplement this opinion in the future.

Supporting material 3

ARTICLES OF INCORPORATION

CHAPTER 1. GENERAL PROVISIONS

Article 1. (Corporate Name) The name of this company shall be IDEMITSU KOSAN KABUSHIKI KAISHA, and be written in English as “Idemitsu Kosan Co.,Ltd.”

Article 2. (Purposes) The purposes of this company shall be to engage in the following business: (1) Refining of petroleum and manufacture of other oils and fats, (2) Manufacture of petrochemical products, (3) Exploration for, development and exploitation of petroleum, coal, geothermal energy and other minerals, (4) Manufacture of medicine, agricultural chemicals, agricultural materials and other chemicals, (5) Development, manufacture and sale of electronic materials, (6) Export, import, sale and storage of all kinds of products relating to any of the foregoing and construction related thereto, (7) Manufacture, processing, sale, purchase, transportation, export and import of the following products; a. Petrochemical products including ethylene, propylene, benzene and toluene, synthetic resins, synthetic resins processed products and chemicals, b. Fertilizer, fodder, fodder additives, food and food additives, c. Various materials for construction, building and housing, d. Various materials for agriculture, forestry, animal husbandry and fishery, and e. Various materials used for logistics including loading, transportation and packing, (8) Engineering, construction, manufacture, sale and purchase of equipment and facility used for chemical industry and environment protection, (9) Manufacture, sale, purchase and lease of synthetic resins processing machines, (10) Technology licensing and providing technical services relating to the above-mentioned items, (11) Supply of electricity, (12) Warehouse business, (13) Marine transportation business, (14) Let and charter of vessels, (15) Sale, let and lease and management of real estate, 37

(16) Sale, purchase and exhibition of the works of art and publication of artistic books, (17) Development, sale and consultation related to computer software, and (18) Any business other than the foregoing.

Article 3. (Location of the Head Office) The head office of this company shall be located in Chiyoda-ku, Tokyo, Japan.

Article 4. (Corporate Organs) This company shall have the following organs as well as the General Meetings of Shareholders and Directors: (1) Board of Directors, (2) Audit & Supervisory Board Members (hereinafter "ASB Members"), (3) Audit & Supervisory Board, and (4) Accounting Auditors.

Article 5. (Method of Public Notices) Public notices to be given by this company shall be electronic public notices, provided however that, in the event that this company is unable to give electronic public notice due to accident or any other unavoidable cause, public notices may be placed in the Nihon Keizai Shimbun.

CHAPTER 2. SHARES

Article 6. (Total Number of Shares Authorized to be Issued) The total number of shares authorized to be issued by this company shall be four hundred and thirty- six million (436,000,000) shares.

Article 7. (Number of Shares Constituting One Unit of Shares and Non-issuance of Share Certificates Representing Fractional Unit Shares) The number of shares constituting one unit of shares shall be one hundred (100) shares.

Article 8. (Rights of Shareholders Holding Fractional Unit Shares) A shareholder of this company shall not exercise any rights for its fractional unit of shares other than the rights as shown hereunder: (1) Rights provided in Article 189, Paragraph 2 of the Company Act (Act No. 86 of 2006), (2) Rights to claim as provided in Article 166, Paragraph 1 of the Company Act, (3) Rights to receive allotment of owner invited shares and owner invited stock acquisition rights, and 38

(4) Rights to claim as provided in Article 9 hereof.

Article 9. (Additional Purchase of Fractional Unit Shares) A shareholder holding a fractional unit of shares of this company, pursuant to the procedures provided in the regulations of share handling, may request this company for sale of a fractional unit of the number of shares which, in combination with the fractional unit of shares held by said shareholder holding a fractional unit of shares, would result in the number of shares per unit.

Article10. (Transfer Agent) 1. This company shall appoint a Transfer Agent. 2. The Transfer Agent and its handling office shall be designated by a resolution of the Board of Directors and shall be announced by public notices. 3. The administration issues and custody of the Register of Shareholders, the Register of Stock Acquisition Rights of this company and any other issues relating thereto shall be entrusted to the Transfer Agent and this company itself shall not implement these issues.

Article 11. (Regulations of Share Handling) The business pertaining to shares of this company and fees therefor shall be governed by, in addition to the provisions of law and the provisions provided herein, the regulations of share handling adopted by a resolution of the Board of Directors.

CHAPTER 3. GENERAL MEETINGS OF SHAREHOLDERS

Article 12. (Convocation) 1. An ordinary general meeting of shareholders shall be convened in the month of June each year, and an extraordinary general meeting of shareholders may be convened from time to time whenever necessary. 2. General meetings of shareholders of this company shall be held within the special wards of Tokyo.

Article 13. (Record Date of Ordinary General Meeting of Shareholders) This company shall deem any shareholder having voting rights as appearing on the Register of Shareholders as of 31 March each year to be a shareholder who is entitled to exercise voting rights at the ordinary general meeting of shareholders for that particular year.

Article 14. (Convening of Meetings and Chairperson) 1. The Chief Executive Officer (hereinafter "CEO") of this company shall convene and act as chairperson at all general meetings of shareholders. 39

2. In the event that the CEO is unable to convene or act, another director shall convene or act as chairperson at the relevant general meeting of shareholders in accordance with the order predetermined by the Board of Directors, as the case may be.

Article 15. (Internet Disclosure and Deemed Delivery of Reference Documents, etc. for General Meetings of Shareholders) In convening a general meeting of shareholders, this company may deem to have delivered to its shareholders reference documents for general meetings, business reports, financial statements, and consolidated financial statements by way of disclosure of information to be stated or indicated in such documents through the internet pursuant to the Ordinance of the Ministry of Justice.

Article 16. (Method of Resolution) 1. Except as otherwise provided for in laws or ordinances or this Articles of Incorporation, all resolutions at a general meeting of shareholders shall be adopted by a majority of all the voting rights held by the shareholders who are present thereat having voting rights therefor. 2. The resolutions set forth in Article 309, Paragraph 2 of the Company Act shall be adopted by two- thirds (2/3) or more of the voting rights held by the shareholders present. The quorum of such general meeting of shareholders shall be constituted by one-thirds (1/3) or more of the voting rights held by all the shareholders which have voting rights therefor.

Article 17. (Exercise of Voting Right by Proxy) 1. A shareholder may exercise his or her voting rights by one (1) proxy who shall be a shareholder of this company. 2. The shareholder or the proxy thereof shall submit to this company a document certifying the authority of the proxy to act as such at each general meeting of shareholders.

CHAPTER 4. DIRECTORS AND BOARD OF DIRECTORS

Article 18. (Number of Directors) The number of directors of this company shall not be more than twenty (20).

Article 19. (Method of Appointment) 1. Directors shall be appointed by a resolution at a general meeting of shareholders which shall be adopted by a majority of all the voting rights of the shareholders who are present thereat having voting rights therefor. The quorum of such general meeting of shareholders shall be constituted by one-thirds (1/3) or more of the voting rights held by all the shareholders. 2. No director shall be appointed by cumulative voting. 40

Article 20. (Term of Office) The term of office of a director shall expire upon conclusion of the ordinary general meeting of shareholders to be held for the last business year ending within one (1) year after his or her appointment.

Article 21. (Representative Directors and Titled Directors) 1. Representative Directors of this company shall be elected by a resolution of the Board of Directors. 2. One (1) each of Chairman and CEO, one or more Executive Vice-Presidents, Senior Managing Directors and Managing Directors may be elected by a resolution of the Board of Directors.

Article 22. (Convening of Meetings and Chairperson) 1. Except as otherwise provided for by laws or ordinances, the CEO of this company shall convene and act as chairperson at the meetings of the Board of Directors. 2. In the event that the CEO is unable to convene or act, another director shall convene or act as chairperson at the relevant meeting of the Board of Directors in accordance with the order predetermined by the Board of Directors, as the case may be.

Article 23. (Notice of Convocation) 1. Notice of convening a meeting of the Board of Directors shall be given to each director and each ASB Member at least three (3) days prior to the day of such meeting, provided however that in case of emergency such period may be shortened. 2. In case all directors and ASB Members shall have consented, a meeting of the Board of Directors may be held without the convocation procedure stipulated herein.

Article 24. (Deemed Resolution of the Board of Directors) This company shall deem that a resolution of the Board of Directors has been adopted where the requirements stipulated in Article 370 of the Company Act are satisfied.

Article 25. (Regulations of the Board of Directors) All matters concerning the Board of Directors shall be governed by laws or ordinances, this Articles of Incorporation or the Regulations of the Board of Directors adopted by the Board of Directors.

Article 26. (Remuneration, etc.) Remuneration, bonuses or any other benefit of a proprietary nature to be received by the director from this company as a compensation for his or her performance of duties (hereinafter referred to as “Remuneration, etc.”) shall be determined by a resolution of a general meeting of shareholders. 41

Article 27. (Limitation of Liability of Directors) 1. According to Article 426, Paragraph 1 of the Company Act, this company may exempt a director (including a person used to be a director) from his or her liability regarding damages arising from the negligence in performing his or her duties as a director up to the amount that may be exempted pursuant to laws or ordinances by a resolution of the Board of Directors. 2. According to Article 427, Paragraph 1 of the Company Act, this company may make an agreement with outside director(s) to exempt the director from his or her liability regarding damages arising from the negligence in performing his or her duties as a director, provided however that the limitation of the liability thereof shall be up to the amount that is prescribed in laws or ordinances.

CHAPTER 5. ASB MEMBERS AND AUDIT & SUPERVISORY BOARD

Article 28. (Number of ASB Members) The number of ASB Members of this company shall not be more than six (6).

Article 29. (Method of Appointment) ASB Members shall be appointed by a resolution at a general meeting of shareholders which shall be adopted by a majority of all the voting rights of the shareholders who are present having voting rights therefor. The quorum of such general meeting of shareholders shall be constituted by one-thirds (1/3) or more of the voting rights held by all the shareholders.

Article 30. (Term of Office) 1. The term of office of a ASB Member shall expire upon conclusion of the ordinary general meeting of shareholders to be held for the last business year ending within four (4) years after his or her appointment . 2. The term of office of a ASB Member appointed to fill the vacancy of the ASB Member who has retired from office prior to expiration of his or her term of office shall be up to the time of expiration of the term of office of the retiring ASB Member.

Article 31. (Full-time ASB Members) One or more full-time ASB Members shall be elected by a resolution of the Audit & Supervisory Board.

Article 32. (Notice of Convocation) 1. Notice of convening a meeting of the Audit & Supervisory Board shall be given to each ASB Members at least three (3) days prior to the day of such meeting, provided however that in case of emergency such period may be shortened. 42

2. In case that all ASB Members shall have consented, a meeting of the Audit & Supervisory Board may be held without the convocation procedure provided herein.

Article 33. (Regulations of the Audit & Supervisory Board) All matters concerning the Audit & Supervisory Board shall be governed by laws or ordinances, this Articles of Incorporation or the Regulations of the Audit & Supervisory Board adopted by the Audit & Supervisory Board.

Article 34. (Remuneration, etc.) Remuneration, etc. to a ASB Member shall be determined by a resolution of a general meeting of shareholders.

Article 35. (Limitation of Liability of ASB Members) 1. According to Article 426, Paragraph 1 of the Company Act, this company may exempt a ASB Member (including a person used to be a ASB Member) from his or her liability regarding damages arising from the negligence in performing his or her duties as a ASB Member up to the amount that may be exempted pursuant to laws or ordinances by a resolution of the Board of Directors. 2. According to Article 427, Paragraph 1 of the Company Act, this company may make an agreement with outside ASB Member(s) to exempt the outside ASB Member from his or her liability regarding damages arising from the negligence in performing his or her duties as a ASB Member, provided however that the limitation of the liability thereof shall be up to the amount that is prescribed in laws or ordinances.

CHAPTER 6. ACCOUNTING

Article 36. (Business Year) The business year of this company shall be one (1) year commencing on 1 April and ending on 31 March next year.

Article 37. (Organ to Determine Dividends from Surplus) Unless otherwise prescribed in laws or ordinances, this company may determine the matters provided for in the items of Article 459, Paragraph 1 of the Company Act by a resolution of the Board of Directors.

Article 38. (Record Date of Dividends from Surplus) 1. The record date for the year end dividends shall be 31 March each year. 2. The record date for the interim dividends shall be 30 September each year. 43

3. In addition to the above 2 paragraphs, this company may determine a record date and distribute dividends from surplus.

Article 39. (Prescription Period for Payment of Dividends) In case that the dividends form surplus are to be distributed in monetary payments, this company shall be released from its obligation to distribute the dividends from surplus if such distribution has not been received for a period of more than three (3) years from the date of the commencement thereof. End.

Supporting material 4

Proposal for Partial Amendment to the Articles of Incorporation of Idemitsu Kosan Co., Ltd.

Idemitsu Kosan Co., Ltd.’s current Articles of Incorporation and proposed amendments thereof are as follows. The articles which will not be amended are omitted.

(Underlined parts are amended.) Current Articles of Incorporation Proposed Amendments Article 14. (Convening of Meetings and Article 14. (Convening of Meetings and Chairperson) Chairperson) 1. The Chief Executive Officer (hereinafter 1. The director appointed by the Board of “CEO”) of this company shall convene and Directors, shall convene and act as act as chairperson at all general meetings of chairperson at all general meetings of shareholders. shareholders. 2. In the event that the CEO is unable to convene 2. In the event that the director prescribed in the or act, another director shall convene or act as preceding paragraph, is unable to convene or act, chairperson at the relevant general meeting of another director shall convene or act as shareholders in accordance with the order chairperson at the relevant general meeting of predetermined by the Board of Directors, as the shareholders in accordance with the order case may be. predetermined by the Board of Directors, as the case may be.

Article 21. (Representative Directors and Article 21. (Representative Directors and Titled Directors) Titled Directors) 1. (Text omitted) 1. (No change) 2. One (1) each of Chairman and CEO, one or 2. One (1) each of Chairman and CEO, one or more Executive Vice-Presidents, Senior more Executive Vice-Presidents, Senior Managing Directors and Managing Directors Managing Directors, Managing Directors and may be elected by a resolution of the Board other executive directors may be elected by a of Directors. resolution of the Board of Directors.

Article 22. (Convening of Meetings and Article 22. (Convening of Meetings and Chairperson) Chairperson) 1. Except as otherwise provided for by laws or 1. The director appointed by the Board of ordinances, the CEO of this company shall Directors, shall convene and act as convene and act as chairperson at the chairperson at the meetings of the Board of meetings of the Board of Directors. Directors. 2. In the event that the CEO is unable to convene 2. In the event that the director prescribed in the or act, another director shall convene or act as preceding paragraph, is unable to convene or chairperson at the relevant meeting of the act, another director shall convene or act as Board of Directors in accordance with the chairperson at the relevant meeting of the order predetermined by the Board of Board of Directors in accordance with the Directors, as the case may be. order predetermined by the Board of Directors, as the case may be.

Article 27. (Limitation of Liability of Article 27. (Limitation of Liability of Directors) Directors) 1. (Text omitted) 1. (No change) 2. According to Article 427, Paragraph 1 of the 2. According to Article 427, Paragraph 1 of the Company Act, this company may make an Company Act, this company may make an

agreement with outside director(s) to exempt agreement with director(s) (excluding those the director from his or her liability regarding who are Executive Directors, etc.), to exempt damages arising from the negligence in the director from his or her liability regarding performing his or her duties as a director, damages arising from the negligence in provided however that the limitation of the performing his or her duties as a director, liability thereof shall be up to the amount that provided however that the limitation of the is prescribed in laws or ordinances. liability thereof shall be up to the amount that is prescribed in laws or ordinances.

Article 35. (Limitation of Liability of ASB Article 35. (Limitation of Liability of ASB Members) Members) 1. (Text omitted) 1. (No change) 2. According to Article 427, Paragraph 1 of the 2. According to Article 427, Paragraph 1 of the Company Act, this company may make an Company Act, this company may make an agreement with outside ASB Member(s) to agreement with ASB Member(s) to exempt exempt the outside ASB Member from his or the ASB Member from his or her liability her liability regarding damages arising from regarding damages arising from the the negligence in performing his or her duties negligence in performing his or her duties as as an ASB Member, provided however that an ASB Member, provided however that the the limitation of the liability thereof shall be limitation of the liability thereof shall be up up to the amount that is prescribed in laws or to the amount that is prescribed in laws or ordinances. ordinances.

Item 2: To approve amendment of the Company’s Articles of Association

(1) Reason for proposal Once the “Item 1: To approve Share Exchange Agreement between the Company and Idemitsu Kosan Co., Ltd.” is approved as proposed, and the Share Exchange takes effect on April 1, 2019, Idemitsu Kosan is the only shareholder who holds the common shares of the Company.

Therefore, the Company no longer needs to establish record date system for annual general meetings of shareholders as such system presuppose the existence of a number of shareholders. Consequently, we will abolish the record date system for annual general meetings of shareholders, and delete Article 15 of the current Articles of Incorporation, as well as renumber and amend the relevant provisions thereof, as necessary.

These amendments to the Articles of Association shall take effect on March 30, 2019 subject to the approval of the “Item 1: To approve Share Exchange Agreement between the Company and Idemitsu Kosan Co., Ltd.”, and the fact that such Share Exchange Agreement has not ceased to be effective by the date immediately prior to March 30, 2019.

(2) Proposed amendment The proposed amendment are as follows. The articles which will not be amended are omitted. (Changes are underlined) Existing Proposed Article 15 (Specific Date for Rights concerning (Deleted) Annual General Meeting of Shareholders) Shareholders recorded in the Register of Shareholders as of 31st March each year shall be the shareholders having rights exercisable in the annual general meeting of shareholders held in relation to the corresponding business year.

Article 16 to Article 39 (Text omitted) Article 15 to Article 38 (No change)

Supplementary provisions Supplementary provisions Article 1 The amendment to Article 14 shall (Deleted) take effect as of 1st July 2018.

Article 2 The amendment to Article 15 and 37 (Deleted) shall take effect as of 1st April 2018.

Article 4 Regardless of Article 36, the 107th Article 2 Regardless of Article 35, the 107th business year of the Company shall be 15 months business year of the Company shall be 15 months commencing on 1st January 2018 and ending on commencing on 1st January 2018 and ending on 31st March 2019. 31st March 2019.

Article 5 The amendment to Article 38 shall (Deleted) take effect as of 1st October 2018.

Article 6 to Article 7 (Text omitted) Article 3 to Article 4 (No change)

Item 3: To approve the Appropriation of Profit

In the Mid-Term Business Strategy formulated in 2017, the Company stated that further enhance “additional shareholder return” and “strategic investment for the future growth” as our basic policy of cash allocation.

We expect a record-high profit for this accounting period with free cash flow far exceeding the original estimate. Given such circumstances and taking into account additional shareholder return policy based on the Mid-Term Business Strategy above, the dividend for the end of the 107th period, the record date for which is March 31, 2019, is proposed 85 yen per share as described below. The year-end dividend for the 107th period will correspond to the dividend for 15 months (from January 1, 2018 to March 31, 2019) as the change of the fiscal term was approved at the 106th Annual General Meeting of Shareholders held on March 28, 2018.

For your information, the total dividend for the 107th period, when this proposal is approved, is 106 yen per share (66 yen increase compared with the previous period) with 21 yen per share interim dividend paid in September 2018. The total return payout ratio is expected to be around 50% for the fiscal year ending March 31, 2019, given the repurchase of shares carried out in accordance with the resolution of the Company’s Board of Directors meeting held on August 9, 2018.

(1) Asset distributed as Dividend: Cash (2) Distribution of Dividend and Total amount distributed: 85 yen per share Total amount: ¥31,656,154,665 (scheduled)* (3) Effective Date for the Dividend: June 28, 2019

*Total amount of the dividend will be finalized when the number of shares as of the end of March 2019 is fixed as it will be calculated by the total number of issued shares with deduction of the number of treasury shares multiplied by 85 yen. For the reference, we calculated the total amount of the dividend by subtracting 4,425,051 treasury shares (including 4,254,400 shares acquired by the Company by October 12, 2018 in accordance with the resolution of the Board of Directors on August 9, 2018) as of the end of October 2018 from 376,850,400 issued shares as of the end of October 2018 and multiplying the result of 372,425,349 shares by 85 yen.

The dividend is withdrawn from retained earnings.

End