20061110 by girlbanks

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									November 10, 2006 From: Nobuo Miwa President
LAC Co., Ltd.

(JASDAQ Securities Code 4359) Toshio Makino President
A&I System Co., Ltd.

(Hercules Securities Code 4773)

To whom it may concern:

Notice Concerning Management Business Consolidation through Joint Transfer of Stocks
Little eArth Corporation Co., Ltd. (head office: Minato-ku, Tokyo; representative: Nobuo Miwa; hereafter referred to as “LAC”) and A&I System Co., Ltd. (head office: Chuo-ku, Tokyo; representative: Toshio Makino; hereafter referred to as “A&I”), through Board of Directors meetings held respectively on November 10, 2006, agreed fundamentally to a business consolidation based on the spirit of equality, by establishing a holding company that will be the absolute parent company of both companies concerned through the joint transfer of stocks, conditioned on approval at the respective General Stockholders’ Meetings of the companies concerned. We therefore take this opportunity to inform you of the following.

Note 1. Background and Objective of This Business Consolidation LAC has been providing peace of mind and security to government offices, corporations, organizations and other such entities through total solution services for network security (Secure Net Services business) and system integration services. Meanwhile, A&I has been providing information services mainly to government offices, regional governments, corporations and other such entities through its business domain of consulting services, solution services and system development. In the area of services to corporations in particular, in addition to possessing a record of numerous achievements involving the development of systems for basic operations of financial institutions, one of A&I’s fortes is the construction of Web-based systems for businesses in the fields of information services, telecommunications and temporary staffing agency services, among others. The current market environment is one in which society is becoming increasingly information-orientation through the widespread adoption of information technology (IT). The accompanying introduction of the Act for the Protection of Personal Information and the mandating of obligatory reporting on internal

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regulation of future scheduled financial reviews have further heightening societal concern regarding the creation of new information systems and the strengthening of information security measures. Along with demanding the comprehensive and concurrent construction of systems and measures, such as through the implementation of information security measures beginning in the system development stage, society is also asking that the response to their demands be speedy. Furthermore, the user’s critical eye has become increasingly severe as regards factors such as the quality, price and delivery time of services provided. Satisfying these user demands calls for a comprehensive corporate structure that can provide total solution services that are consistent throughout, from system construction to security measure strengthening, and highly reliable and sophisticated as well. Under such conditions, LAC and A&I have received a certain degree of recognition by moving forward with business management through the framework of cooperation that resulted from the capital and business alliance they announced on February 18, 2005, and offering systems that provide security measures for the financial markets and temporary staffing agency services market. However, in order to be equipped with the capabilities to be able to advance into new industrial markets and to handle diverse tasks in an IT industry that is becoming increasingly competitive, LAC and A&I decided that the best course to accelerate growth and enhance the corporate value of both companies was to further strengthen their relationship, that is, realize a business management consolidation. As a result of numerous deliberative meetings, LAC and A&I decided on a consolidation of business management through the establishment of a holding company by a joint transfer of stock. That was considered the best method of consolidation from perspectives such as the smooth realization of the effects and objectives of consolidation and maintaining and enhancing the motivation of the employees of both companies. LAC and A&I reached the basic agreement to implement business management consolidation based on a spirit of equality and will begin concrete examination of the matter hereafter. The current business management consolidation will merge LAC’s forte, information security technology, and A&I’s forte, technologies to build and operate systems for the end user. The objective is to thereby enhance corporate value on an ongoing basis through the profitability boost resulting from creating even higher added value and realizing the maximum synergistic effect and the increased operational efficiency and continued productivity improvement. The specific objectives and effects expected to be produced by the business management consolidation are as listed below. (1) Market Expansion It will be possible to further expand A&I’s strengths, business in the financial and the temporary staffing agency services markets. These markets in particular place great importance on information security measures. Therefore, the comprehensive provision of LAC’s information security technology and A&I’s system building and operation technologies will make it possible to work toward market expansion and deep cultivation. (2) Expansion of the Scale of Projects Handled and the Response to the End User Joint utilization of the human resources of both companies will make it possible to take on projects that are even larger than those tackled heretofore. Furthermore, the increased expertise and human resources throughout, from security to system construction, will make it possible to be equipped with the ability to ascertain user needs fully and the structure for system development; thereby enhancing

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the ability to respond to the end user. Entry into New Markets The fusion of LAC’s information security technology and A&I’s system building and operation technologies will make it possible to provide new services that implement information security measures beginning in the system development stage. This will thereby make it possible to enter new markets. Enhancement of Added Value Added value will be enhanced by providing comprehensive services that make the most of both companies’ strengths, such as LAC’s information security technology and the accompanying consulting expertise in this field and A&I’s system building technology and operational expertise oriented toward the end user. Streamlining Consolidation and streamlining of indirect operations, such as quality control, technological research, project management and general and administrative operations will make it possible to raise the level of the quality of services and enhance productivity.

2. Outline of Stock Transfer (1) Schedule of Stock Transfer
November 10, 2006 December 31, 2006 January 24, 2007 (tentative) February 9, 2007 (tentative) March 28, 2007 (tentative) Conclusion of basic agreement Record date of LAC’s Regular General Meeting of Stockholders Boards of Directors’ approve stock transfer plan Record date of A&I’s Extraordinary General Meeting of Stockholders LAC’s Regular General Meeting of Stockholders to approve stock transfer plan A&I’s Extraordinary General Meeting of Stockholders to approve stock transfer plan A&I’s delisting date LAC’s delisting date Stock transfer date (holding company establishment registration date)

April 29, 2007 (tentative) June 26, 2007 (tentative) July 2, 2007 (tentative)

However, the schedule may change, if compelling circumstances arise as the procedures are advanced hereafter.

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Stock Transfer Ratio The stock transfer ratio will be decided upon consultation between the two companies hereafter, taking into consideration factors such as the result of the due diligence to be executed some date soon and evaluation by an impartial organ. Profile of the Holding Company At the present time the plan is to have Gen Mishiba assume the position of representative director and president of the holding company, as he is the leading stockholder of both companies, LAC’s founder and a member of the company’s Advisory Board and also A&I’s representative director and president. Other details, such as the trade name, will be decided upon consultation between the two companies hereafter. Listing of the Holding Company The holding company plans to apply for new listing on the JASDAC Securities Exchange. As a result of the stock transfer, LAC and A&I will become wholly-owned subsidiaries of the holding company. Therefore, if, attendant upon the listing of the holding company, the schedule above is implemented, LAC will be delisted on June 26, 2007, and A&I on April 29, 2007. It should be noted that those dates are prescribed in accordance with the rules of the JASDAC Securities Exchange in the case of LAC and the Hercules Securities Market of the Osaka Stock Exchange in the

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case of A&I. Handling of Stock Options by LAC and A&I LAC and A&I will be delisted as a result of the stock transfer. Upon consultation hereafter the two companies will issue a notice regarding the handling of stock options they have issued.

3. Business Management Consolidation Committee In order to promote the business management consolidation, a Business Management Consolidation Committee will be established and this committee will handle the preparations required for the consolidation. 4. Profiles of the Companies Involved in the Stock Transfer (1) Profiles of the Companies Involved in the Stock Transfer (as of the date of announcement, unless otherwise noted)
Trade Name Business contents Little eArth Corporation Co., Ltd. Provision of total solution services for network security and system integration services September 3, 1986 3-26-4, Shinbashi, Minato-ku, Tokyo (This is the registered address of the head office and actual operations are carried out at 1-5-2, Shinbashi, Minato-ku, Tokyo) Nobuo Miwa, President ¥1,159 million 64,998.81shares ¥1,960 million •i as of June 30, 2006•j ¥2,726 million •i as of June 30, 2006•j December 31 457 employees Aflac Japan Infosec Corporation IBM Japan, Ltd. Sumitomo Computer Systems Corporation NTT Communications Corporation A&I System Co., Ltd. Provision of solution services, system development services and consulting services May 1, 1987 16-9 Nihonbashi-Hakozakicho, Chuo-ku, Tokyo

Date of establishment Location of head office

Representative Capital Shares issued Net assets

Total assets

Settlement of accounts No. of employees Principal customers

Major stockholders and holding ratios (%)

(As of June 30, 2006) Gen Mishiba 36.3% Mitsubishi Corporation 4.6% Japan Trustee Services Bank, Ltd. (Specified comprehensive trust account) 2.1% LAC Employee Stock Ownership Association 2.0% Nobuo Miwa 1.5% Mizuho Bank, Ltd. The Bank of Tokyo-Mitsubishi UFJ, Ltd. Resona Bank, Limited Sumitomo Mitsui Banking Corporation

Main banks

Toshio Makino, President ¥1,259 million 9,433,700 shares ¥2,440 million (consolidated basis: ¥2,501 million) •i as of June 30, 2006•j ¥6,742 million (consolidated basis: ¥6,845 million) •i as of June 30, 2006•j March 31 568 employees (consolidated basis: 612 employees) IBM Japan, Ltd. Nippon Information and Communication Corporation The Goodwill, Inc. Mizuho Information • Research Institute, Inc. Turf Media System Co., Ltd. (As of September 30, 2006) Gen Mishiba 25.7% The Master Trust Bank of Japan, Ltd. (Specified comprehensive trust account for IBM Japan, Ltd.) 11.0% Fujisoft, Incorporated 7.8% A&I System Employee Stock Ownership Association 4.2% LAC Co., Ltd. 4.0% Mizuho Bank, Ltd. Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ, Ltd. Mitsubishi UFJ Trust and Banking

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Relationships of companies involved

Capital relationship Personnel relationship

Business relationship

Corporation The Sumitomo Trust & Banking Co., Ltd. LAC holds 4.0% of A&I’s stock, and, A&I holds 1.5% of LAC’s stock. A&I’s outside chairperson of its Board of Directors is Gen Mishiba, who is LAC’s founder and also a member of its Advisory Board. In addition, there are personnel exchanges, such as through the temporary transfer of engineers (technical personnel). Mutual business cooperation is carried out in the security business and SI business.

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Business Performance of the Companies Involved in the Stock Transfer for the Past 3 Years

Unit: ¥ million Trade Name Little eArth Corporation Co., Ltd. Month/ year of settlement December 2003 December 2004 December 2005 Sales 3,809 5,200 5,841 Operating profit •¢ 596 223 228 Recurring profit •¢ 630 165 204 Current term net profit •¢ 844 101 154 Per 1 share (¥) Current term net profit •¢ 14,316.33 1,662.87 2,387.89 Dividend 0 0 1,000 Capital stock 15,510.64 31,500.15 34,133.60 ∗ Since LAC does not have any subsidiaries, it does not execute a consolidated settlement of accounts. •y A&I (parent company basis)•z Trade Name Month/ year of settlement Sales Operating profit Recurring profit Current term net profit Per 1 share (¥) Current term net profit Dividend Capital stock Unit: ¥ million March 2004 12,587 519 505 293 40.85 15 356.21 A&I System Co., Ltd. March 2005 14,221 573 558 373 53.38 15 392.56 March 2006 12,802 472 438 •¢ 1,532 •¢ 228.82 7.5 146.15

•y LAC•z

•y A&I (consolidated basis)•z Unit: ¥ million Trade Name A&I System Co., Ltd. Month/ year of settlement March 2004 March 2005 March 2006 Sales 12,645 14,345 12,861 Operating profit 531 603 514 Recurring profit 516 587 477 Current term net profit 298 388 •¢ 1,516 Per 1 share (¥) Current term net 41.64 55.61 •¢ 226.39 profit Capital stock 357.38 396.12 152.13 ∗ A&I’s parent company basis and consolidated basis business performance figures noted are the settlement figures as of the current day. As announced on this day, A&I expects that it will hereafter revise the settlement figures for the past fiscal year.

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5. Outlook Following Business Management Consolidation LAC and A&I will each become wholly-owned subsidiaries of the holding company. company plans to apply for new listing on the JASDAC Securities Exchange.

The holding

Under the holding company•f s strategic plan, LAC’s strength, information security technology, and A&I’s strength, technologies for the construction and operation of systems for the end user, will be merged mutually to make it possible to enhance the added value of services, deeply cultivate current markets and advance into new markets. Furthermore, it should be possible to increase market share and sales by boosting the capacity to handle projects through joint utilization of human resources. In addition, promoting the consolidation and streamlining of indirect operations, such as quality control, technological research, project management and general and administrative operations, will make it possible to enhance profitability through the realization of cost reductions, expense cuts and higher productivity. Through the aforementioned effects of consolidation, we believe that it will be possible to realize business performance advances that could not be achieved singly. We are currently in the process of preparing concrete forecasts of business performance following consolidation for the holding company and the two companies involved, and will be announcing them as they emerge.

Please direct inquiries regarding the matter above to:
Koichi Tsunagawa Section Manager Office Management Division Little eArth Corporation Co., Ltd. Phone: 03-5537-2600 Shuwsei Yamazaki Manager Management Control and Planning Division A&I System Co., Ltd. Phone: 03-5640-6900

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