SANYO Announces Third Party Allotment of Newly Issued Shares (Preferred Shares)

SANYO Electric Co., Ltd. (SANYO) (NASDAQ:SANYY)announced today the completion of a stock subscription agreement withDaiwa Securities SMBC Principal Investments Co. Ltd. (Daiwa SecuritiesSMBCPI), The Goldman Sachs Group Inc., and Sumitomo Mitsui BankingCorporation (SMBC), based on the basic agreement announced on December21, 2005. Moreover, a resolution was passed at the Board of Directorsmeeting held today, on the issuance of new shares (preferred shares)through third party allotment based on the above agreement, thedetails of which are outlined below. The new shares would be issued onthe condition of approval of all related agenda at SANYO'sExtraordinary Shareholders Meeting scheduled to be held on February24, 2006.

1. Reasons for the issuance of new shares (preferred shares):

In recent years, SANYO has been enveloped by severe managementconditions, with a fall in profitability caused by intensification ofglobal competition, and damage caused by the Niigata earthquake inOctober 2004 etc. In order to overcome the crisis, SANYO embarked on acompany-wide 3-year reform plan called 'SANYO EVOLUTION PROJECT' inJuly 2004, based on which a Mid-Term Business Plan (FY 2005 - FY 2007)was launched in November 2004. In order to achieve the targets set inthe Mid-Term Business Plan and regain the foundation for continuousoperation of its businesses, strengthening the financial conditionthrough reinforcing stockholders' equity and reducing interest-bearingdebts is imperative. Moreover, it is estimated that to enable SANYO toconduct capital investment and research and development investmentsthat are necessary for a growth strategy centered on SANYO's corebusinesses, SANYO would need to make investments to the amount ofapproximately 220 billion Yen in FY 2006, another 230 billion in FY2007, and for the acceleration and implementation of its structuralreforms, an additional 100 billion yen. Taking all these intoconsideration, SANYO decided that it was indispensable to increase itsshare capital by 300 billion yen through the issuance of new shareswithin this fiscal year.

Focusing on the fund raising ability and certainty to underwritethe capital in a very short period of time, SANYO completed a stocksubscription agreement, based on the basic agreement announced onDecember 21, 2005, with the following as capital investors, on thebasis of their high creditworthiness combined with proven underwritingability:

1) Daiwa Securities SMBC Group, SANYO's lead securities firm; 2)Oceans Holdings Co., Ltd., affiliate company of the Goldman SachsGroup Inc., the world's top investment bank, having a deepunderstanding of SANYO; and 3) its main bank, Sumitomo Mitsui BankingCorporation (SMBC).

With the issuance of these new shares, SANYO will stabilize itsfinancial foundation for future growth. From now onwards, SANYO wouldmake optimum use of its strengths to further focus on HVAC (Heating,Ventilating and Air Conditioning) products & Commercial Equipment,Rechargeable Batteries, Digital cameras, Mobile phones etc.,accomplish structural reforms to make a fresh start as a provider ofcutting-edge Environment and Energy products and services, and raisecorporate value so as to meet the expectations of all ourstakeholders.

2. Summary of the Preferred Share:

Please see on the bottom of this release

3. Restricted matters in relation to the conversion of thepreferred shares and the transfer of the shares after the conversionto common shares:

(1) Series 1 Class A preferred Shares are restricted to covert tocommon shares until March 13, 2007.

(2) Series 1 Class B preferred Shares are agreed in this stocksubscription agreement, after the conversion to the common shares, notto be transferred to a third party without having Sanyo's priorconsent.

(3) SANYO recognizes that, each Daiwa Securities SMBC PrincipalInvestments Co. Ltd. and Oceans Holdings Co., Ltd., except thesituation that a party receives consent from other parties to sell itsshares, agreed to hold their voting rights to the degree that they donot fall below 24.5% of the total voting rights in ShareholdersAgreement that was concluded among Daiwa Securities SMBC PrincipalInvestments Co. Ltd., Oceans Holdings Co., Ltd., and Sumitomo MitsuiBanking Corporation.

4. Use of proceeds by the issuance of the Preferred Shares:

Proceeds will be used to the capital expenditures, research anddevelopment investments, and structural reform, etc.

5. Distribution of Profit to shareholders:

SANYO has adopted to distribute profit, considering its operatingperformance and financial situation, and has set the increase ofshareholders' profits as its standard policy. SANYO expects that itwill realize substantial net loss in this fiscal year succeeding thelast fiscal year, and its financial situation is still in challengingshape. With the new increased capital, SANYO, basing on the Mid-TermBusiness Plan, promises to make its maximum effort to further focusonto the core businesses, to improve its financial situation byachieving the structural reform, to increase its corporate value, andto return profits to its shareholders earlier.

6. New management structure accompanied with the issuance of thepreferred share:

For the issuance of preferred shares, accomplishment of structuralreforms based on the Mid-Term Business Plan, and further selection andfocus on SANYO's core businesses by making optimum use of itsstrengths as a provider of cutting-edge Environment and Energyproducts and services, SANYO agreed to conduct the following plans inthe stock subscription agreement.

(1) Resignation of Directors and Executive Director on the Boardof Directors:

SANYO's Executive Director, Satoshi Iue, Directors, Satoshi Inoueand Osamu Kajikawa are scheduled to resign as of the holding of theExtraordinary Shareholders Meeting (scheduled on February 24, 2006).In addition, Outside Directors, Nobuaki Kumagai and Louis E. Lataif,are scheduled to resign as of January 31, 2006. Satoshi Inoue andOsamu Kajikawa will continue to hold office as Executive Officersafter their resignations as Directors.

(2) Change in the Number of Directors and Term of Office ofDirectors

At Sanyo's Extraordinary General Meeting of Shareholders scheduledto be held on February 24, 2006, proposed amendments to Sanyo'sArticles of Incorporation will be presented for the purpose of (i)changing the number of directors of Sanyo to not more than 9 directorsand (ii) changing the term of office of directors such that the termof office of any director shall expire at the conclusion of theordinary general meeting of shareholders held with respect to thefinal closing of accounts falling within one (1) year after suchdirector's assumption of office.

(3) New Candidates for the Board of Directors:

As principal stockholders of SANYO, Daiwa Securities SMBC Group,the Goldman Sachs Group and SMBC will take part in the company'smanagement in order to raise its corporate value. Thus, SANYO wouldaccept the dispatch of board directors from each of these companies.Five persons would be appointed as Directors at the close of theExtraordinary Shareholders Meeting (scheduled on February 24, 2006).Among the candidates for the board directors, Koichi Maeda, KazuhikoSuruta, and Tetsuo Naraha are to be appointed as Director, Vicepresidents.

7. Name of Subscribers and the Number of Shares to be subscribed:

Daiwa Securities SMBC Principal Investments Co. Ltd.
Series 1 Class A preferred Shares: 89,804,900 shares
Series 1 Class B preferred Shares: 88,766,600 shares

Oceans Holdings Co., Ltd.
Series 1 Class A preferred Shares: 89,804,900 shares
Series 1 Class B preferred Shares: 88,766,600 shares

Sumitomo Mitsui Banking Corporation
Series 1 Class A preferred Shares: 2,932,400 shares
Series 1 Class B preferred Shares: 68,496,100 shares


8. Total number of shares issued and the amount of common and
preferred stock after the capital allotment to third party:

As of January 25, 2006 (before the capital increase)
Total number of shares issued:
Common stock 1,872,338,099 shares (172,242 million yen)

As of March 14, 2006 (after the capital increase)
Total number of shares issued:
Common stock 1,872,338,099 shares
Class A preferred Shares 182,542,200 shares
Class B preferred Shares 246,029,300 shares
(total of 322,242 million yen)

Summary of the Preferred Share

Terms of Issuance of the Preferred Shares

1. Terms of the Series 1 Class A Preferred Shares

(1) Terms of the Shares

Series 1 Class A Preferred Shares of Sanyo Electric Co., Ltd.("Sanyo")

(2) Number of the Shares to be Issued

182,542,200 Shares

(3) Issue Price

700 yen per share

(4) Aggregate Issue Price

127,779,540,000 yen

(5) Portion of the issue price not to be incorporated into statedcapital

350 yen per share

(6) Aggregate amount to be incorporated into stated capital

63,889,770,000 yen

(7) Offering Date

March 14, 2006, or such other date as otherwise determined byresolution of the Board of Directors

(8) Payment Date

March 14, 2006, or such other date as otherwise determined byresolution of the Board of Directors

(9) Initial date for dividend accrual

March 14, 2006

(10) Method of allocation

Pursuant to the method of third party allocation, 89,804,900shares shall be allocated to Oceans Holdings Co., Ltd. (or certaingroup companies of in the Goldman Sachs group), 89,804,900 sharesshall be allocated to Daiwa Securities SMBC Principal Investments Co.Ltd. (or a wholly-owned subsidiary thereof) and 2,932,400 shares shallbe allocated to Sumitomo Mitsui Banking Corporation.

(11) Dividends

Whenever Sanyo shall pay dividends pursuant to Article 31 of itsArticles of Incorporation, it shall pay to holders of the Series 1Class A Preferred Shares (the "Series 1 Class A PreferredShareholders") or the registered lien holders of the "Series 1 Class APreferred Shares ("Registered Lien Holders of the Series 1 Class APreferred Shares"), for each share of the Series 1 Class A PreferredShares, the amount of dividend obtained by multiplying the dividendamount per share of the common stock by the conversion rate then ineffect for the Series 1 Class A Preferred Shares (as provided in(15)(i) below) (the "Series 1 Class A Preferred Shares DividendAmount"), in the same priority as to holders of the shares ("CommonStockholders") or registered lien holders of the common stock("Registered Lien Holders of Common Stock"), and the holders of theSeries 1 Class B Preferred Shares (the "Series 1 Class B PreferredShareholders") or registered lien holders of the Series 1 Class BPreferred Shares ("Registered Lien Holders of the Series 1 Class BPreferred Shareholders"); provided that the amount of dividend for thefiscal year ending on the last day of March 2006 shall be accrued fromthe Payment Date.

(12) Interim Dividend

Whenever Sanyo shall pay dividends pursuant to Article 32 of itsArticles of Incorporation, it shall pay to the Series 1 Class APreferred Shareholders or the Registered Lien Holders of the Series 1Class A Preferred Shareholders, for each share of the Series 1 Class APreferred Shares, the amount of interim dividend obtained bymultiplying the interim dividend amount per share of the common stockby the conversion rate then in effect for the Series 1 Class APreferred Shares (the "Series 1 Class A Preferred Shares InterimDividend Amount"), in the same priority as to the common stockholdersor the Registered Lien Holders of common stock and the Series 1 ClassB Preferred Shareholders or the Registered Lien Holders of the Series1 Class B Preferred Shares.

(13) Distribution of Residual Assets

(i) Whenever Sanyo shall engage in a distribution of residualassets, it shall pay to the Series 1 Class A Preferred Shareholders orthe Registered Lien Holders of the Series 1 Class A PreferredShareholders, 700 yen for each share of the Series 1 Class A PreferredShares ("the Series 1 Class A Preferred Distribution Amount ofResidual Assets"), in preference to the common stockholders or theRegistered Lienholders of common stock and in the same priority as tothe Series 1 Class B Preferred Shareholders and the RegisteredLienholders of the Series 1 Class B Preferred Shares.

(ii) Whenever Sanyo shall have remaining any residual assets aftera distribution of residual assets in accordance with the precedingitem (i), it shall pay to the Series 1 Class A Preferred Shareholdersor the Registered Lien Holders of the Series 1 Class A PreferredShareholders, for each share of the Series 1 Class A Preferred Shares,residual assets in an amount obtained by multiplying the amount ofresidual assets per share of common stock by the conversion rate thenin effect for the Series 1 Class A Preferred Shares, in the samepriority as to the common stockholders or the Registered Lien Holdersand the Series 1 Class B Preferred Shareholders or the Registered LienHolders of the Series 1 Class B Preferred Shares.

(14) Voting Rights

The Series 1 Class A Preferred Shares shall have voting rights ata Shareholders Meetings.

(15) Conversion Right into Common Stock:

(i) During the period from (and including) March 14, 2007 to March13, 2026 (the "Series 1 Class A Preferred Shares Conversion RightExercise Period"), the Series 1 Class A Preferred Shareholders mayrequest conversion of the Series 1 Class A Preferred Shares intocommon stock at the ratio of 10 shares of common stock per share ofthe Series 1 Class A Preferred Shares ("Conversion Rate for the Series1 Class A Preferred Shares"; provided that if such conversion ratio isreset pursuant to the succeeding item (ii) hereunder, the "ConversionRate for the Series 1 Class A Preferred Shares" shall refer to suchconversion ratio as so reset).

(ii) In the event of a Statutory Merger, Share Exchange, ShareTransfer, Corporate Division, Capital Decrease or other eventresulting in a change in the number of shares of common stock issued,the Conversion Rate for the Series 1 Class A Preferred Shares shall beadjusted to a conversion ratio determined by the Board of Directors ofSanyo to be appropriate, if such adjustment is deemed necessary inview of equitable fairness for the rights and interests of the Series1 Class A Preferred Shareholders.

If the calculation of the number of shares of common stock to beissued upon conversion of the Series 1 Class A Preferred Shares basedon the Conversion Rate for the Series 1 Class A Preferred Shares asadjusted would result in a fractional share of less than one share,such fractional share shall be handled in accordance with Article 220of the Commercial Code of Japan.

(16) Mandatory Conversion

At any time on or after March 14, 2026, shares of the Series 1Class A Preferred Shares for which the Conversion Right into commonstock has not been exercised during the period in which the ConversionRight into common stock is available, will be mandatorily convertedinto common stock pursuant to the Conversion Rate for the Series 1Class A Preferred Shares then in effect, as of the effective date ofconversion pursuant to Article 229-2 of the Commercial Code.

(17) Consolidation and Split of Shares, Stock Subscription Rightsetc.

(i) Whenever Sanyo shall engage in any consolidation or split ofshares, it will also do so simultaneously and with the same ratio foreach of the common stock, the Series 1 Class A Preferred Shares andthe Series 1 Class B Preferred Shares. Whenever Sanyo shall grantsubscription rights for shares, or subscription rights for shareacquisition rights or bonds with share acquisition rights for attached("Stock Subscription Rights etc."), in each such case Sanyo shall alsogrant the Stock Subscription Rights etc. relating to the common stockto the common stockholders, Stock Subscription Rights etc. relating tothe Series 1 Class A Preferred Shares to the Series 1 Class APreferred Shareholders and Stock Subscription Rights etc. relating tothe Series 1 Class B Preferred Shares to the Series 1 Class BPreferred Shareholders, simultaneously time and with the same ratio,pursuant to such conditions, including allocation price and exerciseprice, which are equitably fair in view of the rights and interests ofthe Series 1 Class A Preferred Shareholders.

(ii) In the case of a split of the shares, the Series 1 Class APreferred Distribution Amount of Residual Assets shall be adjusted tothe residual assets distribution amount calculated in accordance withthe following formula:

Adjusted Series 1 Series 1 Class A Number of Series 1 Class A
Class A Preferred Preferred Preferred Shares prior to
Distribution Distribution the split
Amount of = Amount of X -------------------------
Residual Assets Residual Assets Number of Series 1 Class A
After Adjustment before adjustment Preferred Shares after
the split

(iii) In the case of a consolidation of shares, the Series 1 ClassA Preferred Distribution Amount of Residual Assets shall be adjustedto the residual assets distribution amount calculated pursuant to thefollowing formula:

Number of Series 1 Class
Adjusted Series 1 Series 1 Class A A Preferred Shares
Class A Preferred Preferred prior to the
Distribution Distribution consolidation
Amount of = Amount of X ------------------------
Residual Assets Residual Assets Number of Series 1 Class
After Adjustment before adjustment A Preferred Shares
after the consolidation

(iv) In the case of new shares pursuant to subscription rightsgranted to shareholders of Sanyo, the Series 1 Class A PreferredDistribution Amount of Residual Assets shall be adjusted to theResidual Assets distribution amount calculated in accordance with thefollowing formula; provided that reasonable adjustment shall be madeto the "Issue Price per Share of the Series 1 Class A Preferred Sharesas provided in (3) above" or "Issue Price per Share of the Series 1Class A Preferred Shares before adjustment" as used in the followingformula, upon the occurrence of any consolidation, split of the Series1 Class A Preferred Shares or any similar events.



Adjusted Series 1
Series 1 Class A
Class A Preferred
Preferred Distribution
Distribution = Amount of X
Amount of Residual
Residual Assets
Assets After before
Adjustment adjustment


Issue
price per
share of Number of Issue price
the the Series per share
Series 1 1 Class A of the
Class A X Preferred + newly X Number of
Preferred Shares issued newly issued
Shares before the Series 1 Series 1
provided issuance Class A Class A
in the of new Preferred Preferred
above (3) shares Shares Shares
---------------------------------------------------------
Issue price per share Number of the Series 1
of the Series 1 Class X Class A Preferred Shares
A Preferred Shares as after the issuance of new
provided in (3) above shares

Provided that, with respect to the second and subsequent issuancesof new shares, the "Issue price per share of the Series 1 Class APreferred Shares provided in the above (3)" as used in the foregoingformula shall be deemed to be replaced with the "Issue price per shareof the Series 1 Class A Preferred Shares after adjustment" ascalculated in accordance with the following formula.




Issue price
per share
of the
Series 1 =
Class A
Preferred
Shares
After
Adjustment


Issue price
per share
of the
Number of the Series 1
Issue price Series 1 Class A
per share of X Class A + Preferred X Number of the
the Series 1 Preferred Shares Series 1 Class
Class A Shares issued in A Preferred
Preferred before the the Shares newly
Shares preceding preceding issued in the
before issuance of issuance of preceding
adjustment new shares new shares issuance
----------------------------------------------------------------
Number of the Series 1 Class A Preferred Shares after the
preceding issuance of new shares

(v) In the case of the issuance of share acquisition rights orbonds with share acquisition rights attached pursuant to subscriptionrights in respect thereto granted to shareholders of Sanyo, the Series1 Class A Preferred Distribution Amount of Residual Assets shall beadjusted in an analogous manner in accordance with the provision ofitem (iv) above.

(vi) The calculation of an adjustment amount pursuant to items(ii) through (v) above shall be made to the third decimal place in Yen(rounded up if the number in the third decimal place is five orgreater, and rounded down if such number is less than five).

2. Terms of the Series 1 Class B Preferred Shares

(1) Terms of the Shares

Series 1 Class B Preferred Shares of Sanyo Electric Co., Ltd.("Sanyo")

(2) Number of the Shares to be Issued

246,029,300 shares

(3) Issue Price

700 yen per share

(4) Aggregate Issue Price

172,220,510,000 yen

(5) Portion of the issue price not to be incorporated into statedcapital

350 yen per share

(6) Aggregate amount to be incorporated into stated capital

86,110,255,000 yen

(7) Offering Date

March 14, 2006, or such other date as otherwise determined byresolution of the Board of Directors

(8) Payment Date

March 14, 2006, or such other date as otherwise determined byresolution of the Board of Directors

(9) Initial date for dividend accrual

March 14, 2006

(10) Method of allocation

Pursuant to the method of third party allocation, 88,766,600shares shall be allocated to Daiwa Securities SMBC PrincipalInvestments Co. Ltd. (or a wholly-owned subsidiary thereof) 88,766,600shares shall be allocated to Oceans Holdings Co., Ltd. (or certaingroup companies of in the Goldman Sachs group), and 68,496,100 sharesshall be allocated to Sumitomo Mitsui Banking Corporation.

(11) Dividends

Whenever Sanyo shall pay dividends pursuant to Article 31 of itsArticles of Incorporation, it shall pay to the Series 1 Class BPreferred Shareholders or the Registered Lien Holders of the Series 1Class B Preferred Shares, for each share of the Series 1 Class BPreferred Shares, the amount of dividends obtained by multiplying thedividend amount per share of the common stock by the conversion ratethen in effect for the Series 1 Class B Preferred Shares (as providedin (15)(i) below) (the "Series 1 Class B Preferred Shares DividendAmount"), in the same priority as to Common Stockholders or RegisteredLien Holders of Common Stock and the Series 1 Class A PreferredShareholders or Registered Lien Holders of the Series 1 Class APreferred Shareholders; provided that the amount of dividend for thefiscal year ending on the last day of March 2006 shall be accrued fromthe Payment Date as provided in clause (8) above.

(12) Interim Dividend

Whenever Sanyo shall pay dividends pursuant to Article 32 of itsArticles of Incorporation, it shall pay to the Series 1 Class BPreferred Shareholders or the Registered Lien Holders of the Series 1Class B Preferred Shareholders, for each share of the Series 1 Class BPreferred Shares, the amount of interim dividend obtained bymultiplying the interim dividend amount per share of the common stockby the conversion rate then in effect for the Series 1 Class BPreferred Shares (the "Series 1 Class B Preferred Shares InterimDividend Amount"), in the same priority as to the Common Stockholdersor the Registered Lien Holders of Common Stock and the Series 1 ClassA Preferred Shareholders or the Registered Lien Holders of the Series1 Class A Preferred Shares.

(13) Distribution of Residual Assets

(i) Whenever Sanyo shall engage in a distribution of residualassets, it shall pay to the Series 1 Class B Preferred Shareholders orthe Registered Lien Holders of the Series 1 Class B PreferredShareholders, 700 yen for each share of the Series 1 Class B PreferredShares ("the Series 1 Class B Preferred Distribution Amount ofResidual Assets"), in preference to the Common Stockholders or theRegistered Lienholders of Common Stock and in the same priority as tothe Series 1 Class A Preferred Shareholders and the RegisteredLienholders of the Series 1 Class A Preferred Shares.

(ii) Whenever Sanyo shall have remaining any residual assets aftera distribution of residual assets in accordance with the precedingitem (i), it shall pay to the Series 1 Class B Preferred Shareholdersor the Registered Lien Holders of the Series 1 Class B PreferredShareholders, for each share of the Series 1 Class B Preferred Shares,residual assets in an amount obtained by multiplying the amount ofresidual assets per share of common stock by the conversion rate thenin effect for the Series 1 Class B Preferred Shares, in the samepriority as to the Common Stockholders or the Registered Lien Holdersand the Series 1 Class A Preferred Shareholders or the Registered LienHolders of the Series 1 Class A Preferred Shares.

(14) Voting Rights

The Series 1 Class B Preferred Shares shall not have voting rightsat Shareholders Meetings, unless otherwise prescribed by applicablelaw.

(15) Conversion Right into Common Stock

(i) During the period from (and including) the day immediatelysucceeding the Payment Date as provided in clause (8) above to March13, 2026, the Series 1 Class B Preferred Shareholders may requestconversion of the Series 1 Class B Preferred Shares into common stockat the ratio of 10 shares of common stock per share of the Series 1Class B Preferred Shares ("Conversion Rate for the Series 1 Class BPreferred Shares"; provided that if such conversion ratio is resetpursuant to the succeeding item (ii) hereunder, the "Conversion Ratefor the Series 1 Class B Preferred Shares" shall refer to suchconversion ratio as so reset).

(ii) In the event of a Statutory Merger, Share Exchange, ShareTransfer, Corporate Division, Capital Decrease or other eventresulting in a change in the number of shares of common stock issued,the Conversion Rate for the Series 1 Class B Preferred Shares shall beadjusted to a conversion ratio determined by the Board of Directors ofSanyo to be appropriate, if such adjustment is deemed necessary inview of equitable fairness for the rights and interests of the Series1 Class B Preferred Shareholders.

If the calculation of the number of shares of common stock to beissued upon conversion of the Series 1 Class B Preferred Shares basedon the Conversion Rate for the Series 1 Class B Preferred Shares asadjusted would result in a fractional share of less than one share,such fractional share shall be handled in accordance with Article 220of the Commercial Code of Japan.

(16) Mandatory Conversion

At any time on or after March 14, 2026, shares of the Series 1Class B Preferred Shares for which the Conversion Right into commonstock has not been exercised during the period in which the ConversionRight into common stock is available, will be mandatorily convertedinto common stock pursuant to the Conversion Rate for the Series 1Class B Preferred Shares then in effect, as of the effective date ofconversion pursuant to Article 229-2 of the Commercial Code of Japan.

(17) Handling of Conversion before the Last Day of March 2006

If a request for conversion with respect to the Series 1 Class BPreferred Shares is made on or before the last day of March 2006, therequested conversion will be deemed to have been made on March 14,2006 with respect to the calculation of dividends for the fiscal yearending on the last day of March 2006 in respect of issued shares ofcommon stock.

(18) Consolidation and Split of Shares, Stock Subscription Rightsetc.

(i) Whenever Sanyo shall engage in any consolidation or split ofshares, it will also do so simultaneously and with the same ratio foreach of the common stock, the Series 1 Class A Preferred Shares andthe Series 1 Class B Preferred Shares. Whenever Sanyo shall grantStock Subscription Rights etc., in each such case Sanyo shall alsogrant the Stock Subscription Rights etc. relating to the common stockto the common stockholders, Stock Subscription Rights etc. relating tothe Series 1 Class A Preferred Shares to the Series 1 Class APreferred Shareholders and Stock Subscription Rights etc. relating tothe Series 1 Class B Preferred Shares to the Series 1 Class BPreferred Shareholders, simultaneously time and with the same ratio,pursuant to such conditions, including allocation price and exerciseprice, which are equitably fair in view of the rights and interests ofthe Series 1 Class B Preferred Shareholders.

(ii) With respect to the adjustment of the Series 1 Class BPreferred Shares Distribution Amount of Residual Assets in the case ofshare split or consolidation, the issuance of new shares pursuant tosubscription rights granted to the shareholders of Sanyo, or theissuance of share acquisition rights or bonds with share acquisitionrights attached pursuant to subscription rights in respect theretogranted to shareholders of Sanyo, the terms "Series 1 Class APreferred Shares" and "Series 1 Class A Preferred Shares DistributionAmount of Residual Assets" should be deemed to be replaced by theterms "Series 1 Class B Preferred Shares" and "Series 1 Class BPreferred Shares Distribution Amount of Residual Assets",respectively, for the application of items (ii) through (vi) of clause(17) in the Terms of the Series 1 Class A Preferred Shares.

Notes: These materials are being provided for the purpose ofpublicly announcing the Company's newly issued shares (preferredshares) and have not been prepared for the purpose of solicitinginvestment in the shares. These materials are not an offer for sale ofsecurities in the United States. Securities may not be offered or soldin the United States absent registration or an exemption fromregistration under the U.S. Securities Act of 1933, as amended. Anypublic offering of securities to be made in the United States will bemade by means of a prospectus that may be obtained from the issuer orselling security holder and that will contain detailed informationabout the company and management, as well as financial statements. TheCompany currently does not intend to register securities for sale inthe United States. Not for distribution in the United States.