Guided by a corporate philosophy of "Happiness and Harmony in our Community," LAWSON's ambition is to create stores that are supported by a wide customer base. Drawing on the CVS infrastructure it has built up over the past three decades, LAWSON is delivering new value in various forms that match regional preferences and characteristics as well as customer needs. Increasing the base of customers to include housewives and older people, in particular, is a key theme for corporate growth in the CVS industry in the context of a shrinking and aging population. Targeting this goal, LAWSON is developing new format "LAWSON STORE100" stores and "LAWSON PLUS" concept stores, which offer a more expansive lineup of perishable and daily foods. Using this approach, LAWSON believes that it can increase store sales.

Meanwhile, Ninety-nine Plus operates a chain of "SHOP99" stores. As the pioneer in Japan of a new store format that provides everything from daily food items, including perishable foods, to sundry goods at a single price, it created the concept of an everyday low price of 99 yen. It also opened up this market by providing products of value with an emphasis on reliability and health. "SHOP99" has won strong acceptance from housewives and older shoppers, just the customer categories the CVS industry is trying to attract.

Both companies share the belief that the provision of products needed by people in their daily lives, such as high-quality, perishable foods, at stores that are convenient and close, will help create a more livable society. Both LAWSON and Ninety-nine Plus are convinced that an alliance between the two companies will enable them to increase sales and earnings at individual stores by complementing each other's know-how and strengths, including in the area of perishable foods, to improve the quality of products sold in suitably sized small portions.

Looking ahead, the two companies aim to contribute to the creation of more livable communities that benefit from greater convenience from having stores closer nearby, against the backdrop of a social environment where there is an increasing number of elderly and households with fewer people.

2.Outline of the Business Alliance
(1)Joint Development and Purchasing of Products
a)Between LAWSON STORE100 and SHOP99
Jointly develop private brand products using each other's know-how
Develop original products sold in small portions based on national brands with the cooperation of major manufacturersCapture economies of scale through joint purchasing
Supplement one another's product ranges

b)Extend to LAWSON PLUS and other stores
Supply the abovementioned joint products to and use sales know-how in LAWSON PLUS and other stores.

(2)Rationalize Distribution
Leverage LAWSON's distribution infrastructure and know-how to rationalize distribution at Ninety-nine Plus.

(3)Full-scale Franchising
Leverage LAWSON's franchise-related know-how and systems to begin franchise development trials at SHOP99 stores. Conduct full-scale franchising based on the results of these trials. Existing LAWSON franchise owners would be given first option to take up franchise agreements.

(4)Strengthen Perishable Foods Lineups
Utilize SHOP99's knowledge of perishable and daily foods and jointly developed private brand products, including frozen foods, in LAWSON PLUS and LAWSON STORE100 stores to offer a wider range of perishable and fresh products.

(5)Consultation Before Opening Stores
Competition to open stores remains intense in the Japanese CVS industry to the extent that it could be called a war of attrition. This is placing a heavy burden on franchise owners. To limit the damage this causes and open stores that are expected to be highly profitable, the two companies will provide information to each other prior to opening stores and at the same time do their best to avoid opening stores in the vicinity of existing stores. The two companies will offer information of the site proposed for stores each other and will avoid opening new stores right next to our existing stores.

(6)Integration of LAWSON STORE 100 and SHOP99
Consider the integration of two store-brands in the future.

(7) Formation of a Business Alliance Promotion Committee
A Business Alliance Promotion Committee will be established. This committee, made up of the presidents of both companies, heads of product departments and their subordinates, will set alliance targets and schedules and work toward ensuring the speedy realization of alliance themes.

3.Details of the Capital Alliance
Ninety-nine Plus and LAWSON have agreed that the former will allot 31,500 shares of common stock to LAWSON through an increase in capital by a private placement of shares. The funds procured by Ninety-nine Plus will be earmarked for new store openings and investment in the development of systems. LAWSON will hold 20% of all Ninety-nine Plus shares with voting rights following the increase in capital via private placement.

Total no. of shares to be allotted: 31,500 shares

Purchase price: 121,700 yen per share

Total purchase price: 3,833,550,000 yen

Matters concerning increase in capital and additional paid-in capital:
Amount of increase in capital: 1,916,775,000 yen (60,850 yen per share)
Amount of increase in additional paid-in capital: 1,916,775,000yen (60,850 yen per share)

Application date: March 16, 2007

Payment date: March 16, 2007

Allottee and no. of shares: LAWSON, INC. 31,500 shares

4.About Both Companies
LAWSON, INC.
(1)Main businesses: Operation of a franchised chain of LAWSON convenience stores
(2)Established: April 15, 1975
(3)Head Office Locations:
Tokyo Headquarters:East Tower, Gate City Osaki
11-2, Osaki 1-chome, Shinagawa-ku
Tokyo 141-8643, Japan

Osaka Headquarters:
9-1, Toyotsu-cho, Suita-shi
Osaka 564-0051, Japan
(4)Representative: Takeshi Niinami, President and Chief Executive Officer
(5)Capital: 58,506 million yen
(6)No. of employees: 3,585 (As of February 28, 2006)
(7)Net sales of all stores: 1,361.7 billion yen(Year ended February 28, 2006)

Ninety-nine Plus Inc.
(1) Main businesses: Direct operation and franchise chain development of SHOP99 single-price stores
(2) Established: October 16, 2000
(3) Head Office Location:
4-39, Gakuenhigashimachi 1-chome, Kodaira
Tokyo 187-0043, Japan
(4) Representative: Takahiro Fukahori, President
(5) Capital: 2,751 million yen
(6) No. of employees: 1,043 (As of March 31, 2006)
(7) Net sales of all stores: 126.4 billion yen(Year ended March 31, 2006)

5.Effect on Both Companies' Operating Results
This equity-based business alliance aims to maximize synergies in the businesses of both companies. The effect on each company's operating results for the next fiscal year will be examined by looking at the activities and results of the Business Alliance Promotion Committee to be established by both companies and will be announced as soon as the outlook becomes clear.