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Morito Co., Ltd. (hereinafter "Morito") and Kuraray Fastening Co., Ltd. (a 100% subsidiary of Kuraray Co., Ltd., hereinafter "KFS") jointly operate a business for the sale of hook and loop fasteners MAGIC TAPE and MAGILOCK manufactured by KFS. With the goal of further reinforcing the existing business partnership and forging an even closer capital partnership framework, these two companies and Kuraray have reached an agreement. Brief details are as follows.

1. Background and Objective of Business and Capital Partnership

KFS hook and loop fasteners have received wide support in Japan for their high quality and wide brand recognition. As Japan distributor for these products, Morito is cooperating with KFS in sales and marketing. In recent years, however, with the globalization of the market, the offshore transfer of production, the diversification of needs and other factors, the environment surrounding the business has changed dramatically. In light of these changes, both companies see a need to construct a new business model.

Morito, a specialized trading company that handles a wide range of commercial materials, such as grommet setters and hooks in the garment and industrial material (including automobile-related) fields, possesses an extensive marketing network and a strong sales force in Japan. KFS, on the other hand, as a specialized producer of hook and loop fasteners, boasts a unique product line coupled with advanced technological and development capabilities.

In order to generate greater synergistic effects and effectively respond to market needs, both companies have decided to forge a business and capital partnership agreement that leverages their individual strengths.

Practically speaking, Morito, which desires to strengthen its manufacturing capabilities, and KFS, which seeks to expand its sales network, wish to forge a business and capital partnership in order to deepen their partnership in the development, production, sales and distribution of hook and loop fasteners, a core commercial material. The goal is to develop new business fields through a partnership with the Kuraray Group, with its advanced technological capabilities and wide range of materials.

• (1) Provide service from a customer point of view
• (2) Strengthen the competitiveness of hook and loop fasteners
• (3) Streamline operations
• (4) New business creation

2. Business Partnership

An outline of the business partnership is described below, with details of the partnership still under discussion between both parties.

• (1) Leveraging the powerful sales force and customer base of Morito and the advanced technological capabilities of KFS in hook and loop fasteners, we will rapidly develop products that effectively meet customer needs and supply them in a timely manner.
• (2) We will fulfill our corporate social responsibilities through a range of measures, including marketing products that are eco-friendly and reducing CO2 emissions. (Product Name: NEW ECO MAGIC)
• (3) We will expand sales of molded hook and loop fasteners for industrial material-related fields, especially transportation equipment (automobiles, railroads, aircraft and ships). (Product: MAGILOCK)
• (4) We seek to create new business domains by linking the powerful sales force of Morito with the advanced technological capabilities and extensive range of materials possessed by the Kuraray Group.
• (5) By concentrating our materials distribution and processing operations at KFS's Maruoka plant in Fukui Prefecture, we will be able to lower delivery costs, determine the most efficient inventory management approach, reduce delivery time and increase customer satisfaction.

3. Capital Partnership

To create a stronger business partnership and deepen the relationship of trust, we will conclude a capital partnership as described below between Morito, Kuraray and KFS.

• (1) Morito will acquire a portion of KFS shares (30% of total outstanding shares) from Kuraray.
• (2) Kuraray will underwrite 700,000 shares of treasury shares held by Morito.

Please refer to the Morito announcement "Notification Regarding Disposal of Treasury Shares" regarding the disposal of Morito treasury shares.

4. Outlook

As a result of the aforementioned capital partnership, KFS will become an equity-method affiliate of Morito; however, if it is determined that this will have any impact on the performance of the Kuraray Group in the fiscal period ending November 30, 2008 (consolidated/nonconsolidated), an immediate disclosure will be made. Impact on Kuraray performance in the fiscal period ending March 31, 2008 will be immaterial.

Products

• (1) MAGIC TAPE woven hook and loop fastener
• (2) NEW ECO MAGIC, an eco-friendly woven hook a loop fastener that does not use back coating material (polyurethane resin)
• (3) MAGILOCK plastic/extrusion hook and loop fastener

• * MAGIC TAPE, MAGILOCK are registered trademarks of Kuraray.

Kuraray Fastening Co., Ltd.

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