Legal Basis: Section 80 of the Act on Public Offering, Conditions Governing Introduction of Financial Instruments to Organised Trading, and Public Companies – Position of Management Board of company subject to the tender offer.

Report:
Acting pursuant to Section 80 of the Act on Public Offering, Conditions Governing Introduction of Financial Instruments to Organised Trading, and Public Companies of 29 July 2005 (Journal of Laws No. 184, item 1539, as subsequently amended) (“Act”), the Management Board of OPTOPOL Technology S.A. (“Management Board”) desires to submit its position regarding the public tender offer to subscribe for the sale of shares (“Tender Offer”) in OPTOPOL Technology S.A. (“Company”) made under Section 74(1) of the Act on 22 December 2009 by Canon Inc., a joint-stock company incorporated under the laws of Japan, with its seat in Tokyo, Japan (“Canon”).

I. Position Basis and Qualifications

In order to express its position, the Management Board has reviewed the Tender Offer, examined the information and data available to it regarding the Tender Offer, including without limitation:

• when preparing this position, the Management Board did not commission any third parties to make any additional studies, reports or valuations of the Company with respect to the Tender Offer;
• with the exception of information provided by the Company, the Management Board cannot be held liable for the other information on which this position has been based being true, reliable, complete and relevant;
• this position of the Management Board is not a recommendation for purchasing or selling financial instruments, as laid down under Section 42 of the Act on Trading in Financial Instruments of 29 July 2005;
• the Management Board points out that when taking the investment decision in response to the Tender Offer, each shareholder is required to make its own assessment of the investment risks involved in the sale of shares in the Company based on the entire body of information provided by the Company as part of its disclosure obligations and to the extent to which it remains valid;
• the individuals signing this position of the Company’s Management Board have no confidential information within the meaning of the Act on Trading in Financial Instruments of 29 July 2005 which must be disclosed and, to the best of their knowledge, they are not aware of any facts relating to the Company or its shares that is or could be deemed confidential information material for the assessment of the Tender Offer which was not previously made part of public domain as required by law.

In order to form and express its position, the Company’s Management Board has reviewed:

1. the Tender Offer made by Canon;
2. Canon’s press release relating to the Tender Offer to subscribe for the sale of 14,204,300 shares in the Company of 22 December 2009 published in Gazeta Giełdy “Parkiet” (on 23 December 2009) and in Rzeczpospolita daily (on 24 December 2009);
3. information provided by the Company’s three main shareholders, that is Mr Adam Bogdani, Ms Joanna Bogdani-Wuczyńska, and Mr Marcin Bogdani (“Major Shareholders”), relating to the Share Purchase Agreement with respect to the Company’s shares executed by them with Canon on 22 December 2009;
4. information provided by Mr Adam Bogdani of the Shareholders Agreement executed by him with Canon on 22 December 2009;
5. Stock Exchange quotations for the Company’s shares.

II.Position of Company’s Management Board

Subject to the foregoing, the Management Board represents and evaluates that:

1. The Management Board has no information indicating that as at the date the Tender Offer was made Canon or any of its subsidiaries were the Company’s shareholder. The Tender Offer has been made with the ultimate purpose of Canon attaining 100 percent of votes at the Company’s General Meeting of Shareholders and the Company becoming Canon’s subsidiary.
   The documents reviewed indicate that Canon intends to acquire the interest only if and when upon expiry of the Tender Offer term no fewer than 11,363,440 shares in the Company (corresponding to the same number of votes at the General Meeting of Shareholders) will have been subscribed for, that is upon acquiring no less than 80 percent of the Company’s shares (corresponding to the same percentage of votes at the General Meeting of Shareholders), however this condition may be waived by Canon prior to the expiry of the subscription term.
   Canon is a manufacturer of office equipment, photographic equipment and optical as well as other products. Canon’s strategy is to develop innovative pioneering products based on high technologies. Canon pursues R&D both at a basic and a very advanced level seeking to provide top-grade products to strengthen and expand Canon’s market leadership. Canon relies on digital imaging technology in its products, the application of which for medical purposes is considered by Canon one of its most significant new businesses.
   Canon sees the Company as an attractive long-term investment vehicle and intends to focus on developing the Company further. The Company has a well-developed product line relying on optical spectral tomography for eye examination which will continue to be developed by the Company with Canon’s support.
   Another significant factor of the investment project intended by Canon consists in strong technological synergies between both the companies. The Company is strong in optical tomography technology, offers advanced technological capabilities, as demonstrated by its joint research project with the Mikołaj Kopernik University. In comparison, Canon’s expertise as the leading manufacturer of cameras and lenses, is in the optical segment and imaging technology. Joint R&D efforts of both the companies may produce many innovative solutions to be applied in innovative ophthalmological diagnostic equipment.
   Another advantage is the strong complementariness of the respective product ranges. The Company’s equipment is well-positioned in OCT, ultrasonography, retinal topography and perimetry, whereas Canon is well-known as the manufacturer of retinal cameras, refractometers and tonometers. The amalgamation of the companies will enable offering a much wider and more attractive range of diagnostic products for ophthalmology.
   Upon completion of the Tender Offer, Canon intends to apply to the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego) for its approval to abolish dematerialisation of the shares and delist the Company from the Stock Exchange in Warsaw. If Canon, jointly with Mr Adam Bogdani, holds over 90 percent of votes at the Company’s General Meeting, it intends to launch the squeeze-out procedure under Section 82 of the Act.
   The delisting of the Company from the Stock Exchange in Warsaw will enable protection of the Company’s highly valuable technologies and know-how against competition as well as setting up better conditions for joint R&D efforts. The above strategic plan that Canon intends to apply to the Company will contribute towards continued rapid growth of the Company’s business, and will help Canon reach the top spot as the world leader in the diagnostic ophthalmological equipment segment.
   The town of Zawiercie, Poland, will remain the Company’s seat; it is also there that the manufacturing of ophthalmological equipment will continue to be located and developed.
   The Tender Offer and the implementation of Canon’s strategic plan towards the Company is not likely to result in redundancies at the Company.
2. In the Management Board’s opinion the price per share offered in the Tender Offer (PLN 20.00) has been established in line with Section 79 of the Act and is not below the level required under the Act. The average market prices of the Company’s shares over the last 3 and 6 months prior to the Tender Offer, while still traded in the main market of the Stock Exchange in Warsaw, calculated under Section 79(7) of the Act, were PLN 14.09 (3 months) and PLN 15.56 (6 months). The price of shares in the Tender Offer is higher by 41.9% and 28.5% from the relevant average market price over the last 3 and 6 months preceding the Tender Offer.
   In response to the Tender Offer, the Major Shareholders undertook to sell 7,661,440 of the shares held by them representing 53.94% of votes at the Company’s General Meeting of Shareholders, at PLN 19.00 per share. The price of the shares for Major Shareholders in the Tender Offer is higher by 34.9% and 22.1% from the relevant average market price of the shares over the last 3 and 6 months prior to the Tender Offer.
   Based on the completed market and financial analysis of the Company and the track record of its listings at the Stock Exchange in Warsaw, it is the Management Board’s opinion that the price proposed in the Tender Offer fully reflects the fair value of the Company.
   In the light of the above, it is the Management Board’s view that the price offered in the Tender Offer is attractive.
3. At the same time, on 22 December 2009, Mr Adam Bogdani executed the Shareholders Agreement with Canon and undertook thereunder inter alia to act in agreement, as set forth in Section 87(1)(5) of the Act, and retain 1,420,430 shares in the Company, representing 10 percent of votes at the Company’s General Meeting. The Shareholders Agreement will come into force provided that the Tender Offer turns out to be successful.
4. Concurrently, this position has been distributed among the Company’s entire workforce.

Adam Bogdani
Chairman of Management Board
OPTOPOL Technology S.A.