August 1, 2002
TOYOTA MOTOR CORPORATION
and
[EMPLOYEE]
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AGREEMENT FOR THE GRANT OF OPTIONS TO
ACQUIRE COMMON SHARES OF
TOYOTA MOTOR CORPORATION
UNITED STATES OF AMERICA
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THIS OPTION AGREEMENT is made with effect from August 1, 2002
BETWEEN
(1) TOYOTA MOTOR CORPORATION a company registered in Japan and whose registered
office is at Xxxxxx-Xxx, Xxxxxx, Xxxxx, 000-0000 XXXXX (the Company); and
(2) [ ] of [ ] (the Grantee) and currently employed by [ ] (the Employing
Company).
WHEREAS the Company intends to grant the Grantee options to acquire common
shares of the Company and set out the exercise conditions thereof.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, the following
words and expressions shall have the following meanings:
Agreement means this Option Agreement;
Board means the board of directors of the Company from time to time or a duly
appointed committee thereof;
Bank Business Day means any day on which the UFJ Bank Limited is open for
business in Japan;
Common Shares means the ordinary shares of the Company from time to time;
Company Business Day means any day on which the Company is open for business in
Japan;
Exercise Period means the period commencing on August 1, 2004 and ending on July
31, 2008, provided that if July 31, 2008 is not a Company Business Day, then the
final day of the Exercise Period shall be the Company Business Day immediately
preceding July 31, 2008;
Grant Date means, August 1, 2002, the date on which the Company grants the
Options to the Grantee;
Group means the Company and its Subsidiaries;
Option means a right to acquire 100 Common Shares under this Agreement (or such
number as may be increased or decreased pursuant to Clause 6) and Options shall
be construed accordingly; and
Reorganization means any capitalization or rights issue, split, consolidation,
or other reorganization or reduction of the share capital of the Company;
Subsidiary means any entity in which the Company owns, directly or indirectly,
at least 50% of the issued share capital thereof; and
Yen means the lawful currency of Japan.
1.2 Any reference herein to the provisions of any statute or subordinate
legislation shall be deemed to refer to the same as in force from time to time
including any modification, amendment or re-enactment thereof.
1.3 Clause headings are inserted for ease of reference only and shall not
affect the construction of this Agreement.
1.4 Where the context permits the singular shall include the plural and vice
versa and the masculine shall include the feminine. Words importing individuals
shall be treated as importing bodies corporate, corporations, unincorporated
associations and partnerships and vice-versa.
1.5 References to Clauses, and Appendices 1, 2 and 3 are to the clauses and the
appendices of this Agreement. Appendices 1, 2 and 3 form part of this Agreement.
2. GRANT OF OPTIONS
2.1 The Company hereby grants to the Grantee on the Grant Date 20 Options
subject to the terms and conditions of this Agreement.
2.2 No consideration shall be payable by the Grantee on the grant of the
Options.
2.3 This Agreement represents the Grantee's right to the Options. The Grantee
shall not request the Company to issue any certificates representing the
Options.
2.4 The Options are personal to the Grantee and may not be transferred,
assigned, pledged, charged to or otherwise alienated or exercised by any other
person and any attempt to do so will result in the Options lapsing.
2.5 The benefit of the Options does not constitute part of the Grantee's base
salary or remuneration and will not be taken into account in determining any
other employment-related rights that the Grantee may have, such as for the
purpose of calculating any pension entitlements, severance pay or notice for
termination of employment.
3. INCENTIVE STOCK OPTIONS
3.1 It is intended that the Options constitute incentive stock options as
defined in Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal Revenue Code of 1986, as
amended and any regulations promulgated thereunder (the Code); provided,
however, that to the extent the Options do not satisfy one or more provisions of
Section 422 of the Code, they shall be treated as non-qualified stock options.
4. EXERCISE, LAPSE AND REFUSAL OF OPTIONS
Exercise
4.1 The Grantee may exercise all or some of the Options during the Exercise
Period in the manner set forth in Clause 5.
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4.2 Each Option must be exercised in full and no Option may be partially
exercised.
4.3 Subject to Clause 6, the price to be paid for each Common Share to be
issued or transferred upon exercise of each Option shall be Yen 2,958 (in words,
two thousand, nine hundred and fifty eight) which number was calculated by
multiplying the closing price of the Common Shares listed on the Tokyo Stock
Exchange on the Grant Date by 1.025 (rounded up to the nearest whole Yen) (the
Exercise Price).
Lapse
4.4 Notwithstanding any other provision in this Agreement, the Options shall
lapse automatically and become of no effect on the earlier of:
(a) the expiry of the Exercise Period;
(b) the death of the Grantee;
(c) the Grantee being declared bankrupt or entering into any general
composition with or for the benefit of his creditors;
(d) a shareholders' meeting approving a merger agreement or a share-for-share
agreement (kabushiki kokan) as a result of which the Company decides to
invalidate the Options on the basis that the Company will cease as a legal
entity or it will become a wholly-owned subsidiary of another company; and
(e) the termination of this Agreement in accordance with Clause 14.
4.5 Subject to Clause 4.6, the Options shall lapse automatically and become of
no effect if the Grantee ceases to be a director or employee of a member of the
Group. For the avoidance of doubt, the Grantee shall not be treated for such
purposes as ceasing to be a director or an employee of a member of the Group if
the Grantee remains or simultaneously becomes a director or employee of another
member of the Group.
4.6 Where a Grantee ceases to be a director or an employee of a member of the
Group by reason of:
(f) injury, disability or ill-health (as determined by the Board);
(g) retirement at or after the date on which he is bound or entitled to retire
under his contract of employment or otherwise;
(h) the company of which he is a director or employee ceasing to be a member of
the Group;
(i) the business (or part of a business) in which he is employed or of which he
is a director being transferred to a transferee which is not a member of
the Group; or
(j) any other reason at the Board's absolute discretion,
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the Grantee may, subject always to the provisions of Clause 4.1, exercise the
Options during the period of six (6) months following such cessation of office
or employment, and failing such exercise the Options shall lapse automatically.
4.7 For the purposes of Clauses 4.5 and 4.6, a Grantee shall not be treated as
ceasing to be an employee of a member of the Group if he is absent from work
solely as a result of an authorized leave of absence until such Grantee ceases
to be entitled to exercise any statutory or contractual right to return to work.
Refusal
4.8 The Company may refuse to accept exercise by the Grantee of the Options
within 30 days of the date of the Exercise Notice (as defined in Clause 1.1(a)
below) for any of the following reasons:
(k) the Company determines in good faith that the exercise impedes the intended
issuance of new shares regardless of the type including, without
limitation, shares, bonds with warrants or any other securities to be
issued;
(l) the Company determines that the Options have lapsed pursuant to Clauses
4.4, 4.5 or 4.6;
(m) there has been insufficient time to confirm the Adjusted Exercise Price
stipulated in Appendix 1; or
(n) the Company determines in good faith that the exercise of the Options may
materially impede the business of the Company;
provided, however that the Company shall not refuse to accept exercise by the
Grantee of the Options on the final Company Business Day of the Exercise Period.
4.9 If the Company refuses to accept the exercise by the Grantee of the Options
for any one of Clauses (k) to (n) above:
(o) the Company shall give written notice to the Grantee of such refusal,
provided, however, that the Company is not obliged to disclose the reasons
for such refusal; and
(p) the Options shall remain outstanding until the earlier of:
(i) the Grantee's exercise of such Options pursuant to Clause 5; or
(ii) lapse of the Options pursuant to Clauses 4.4, 4.5 or 4.6.
5. MANNER OF EXERCISE OF OPTIONS
5.1 Subject to Clause 4.2, the Grantee may exercise one or more of the Options
in whole, but not in part, during the Exercise Period in accordance with the
following procedure:
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(a) the Grantee is required to send to the Company a notice of its intention to
exercise the Options (the Exercise Notice) in the form attached as Appendix
2 (or in such other form as prescribed by the Company from time to time);
(b) within five (5) Company Business days the Company shall send to the Grantee
an acknowledgement that such Exercise Notice has been received;
(c) the Grantee shall, within four (4) Bank Business Days from the date the
Company notifies the Grantee that they have received the Exercise Notice,
pay an amount calculated by multiplying the Exercise Price by the number of
Common Shares to be obtained upon exercise of the Option(s) (the Exercising
Purchase Price) to UFJ Bank Limited or such other bank as shall be
appointed by the Company from time to time (the Appointed Bank); provided,
however, that if the last Bank Business Day is not also a Company Business
Day, then the date for payment shall be the next Company Business Day. The
date of exercise shall be the date of receipt by the Company of payment of
the Exercising Purchase Price.
(d) Upon confirmation by the Company that the Grantee has fully paid the
Exercising Purchase Price pursuant to this Clause 5.1 and any Tax
Liabilities pursuant to Clause 11, the Company shall promptly issue or
transfer (as the case may be) the relevant number of Common Shares to the
Grantee's securities account in accordance with Clause 12. Upon payment of
the Exercising Purchase Price by the Grantee to the Appointed Bank, the
Grantee shall legally own the Common Shares acquired upon the exercise of
the Options.
5.2 The Grantee may withdraw the Exercise Notice up until such time as the
Grantee pays the Exercising Purchase Price by giving written notice to the
Company to that effect; provided, however, that once the Grantee has paid the
Exercising Purchase Price in full, the Grantee cannot withdraw the Exercise
Notice.
5.3 Notwithstanding Clause 5.2 above, following payment by the Grantee of the
Exercising Purchase Price, the Exercise Notice shall be deemed withdrawn if the
Company notifies the Grantee of its refusal to accept the exercise of the
Options pursuant to Clauses 4.8 and 4.9. In such circumstances, the Company
shall repay the Exercising Purchase Price to the Grantee, provided, however,
that the Company shall not pay any interest with respect to any repayment to the
Grantee.
6. ADJUSTMENTS TO THE NUMBER OF COMMON SHARES
6.1 In the event of a Reorganization of the share capital of the Company, the
Exercise Price and the total number of Common Shares underlying an Option may be
adjusted in accordance with the formulae set out in Appendix 1.
7. SECURITIES AND rELEVANT LEGISLATION
7.1 The Options may not be exercised if the exercise of the Options or the
issue of Common Shares thereafter would be contrary to any enactment or
regulation at the time being in force in any country having jurisdiction in
relation thereto. In particular, the Options shall not be exercisable unless the
offer and sale of the
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Common Shares subject to the Options have been registered under the United
States Securities Act of 1933, as amended and qualified under applicable state
"blue sky" laws, or the Company has determined that an exemption from
registration under the Securities Act of 1933 and from qualification under such
state "blue sky" laws is available. Neither the Employing Company nor the
Company shall be bound to take any action or obtain the consent of any
governmental authority to such acquisition, exercise or issue or to take any
action to ensure that any such acquisition, exercise or issue is in accordance
with any such enactment or regulation if such action would, in the opinion of
the Employing Company or the Company (as the case may be), be unduly onerous and
neither the Employing Company nor the Company shall have any liability in
respect thereof to the Grantee.
7.2 The Grantee hereby agrees to abide by the Securities and Exchange Law of
Japan, and all relevant securities laws, xxxxxxx xxxxxxx legislation, commercial
codes, tax laws, any other relevant laws, rules and regulations (including
relevant foreign, state and local laws) and relevant internal rules (including,
without limitation, all insider information and trading prohibition rules and
the rules on, buying and selling Common Shares in relation to the exercise of
any Options and the subsequent sale of the Common Shares acquired upon
exercise). The Company may, at its discretion, impose such conditions on the
exercise of the Options as it shall deem necessary in order for such exercise to
comply with any applicable enactments or regulations, including but not limited
to, the requirement that an investment representation be given by the Grantee or
that certificates for shares of Common Stock be subject to a legend describing
restrictions on transfer. If the Grantee has any questions about the application
of relevant laws and rules, the Grantee shall immediately contact the Company to
discuss them; provided, however, that the Grantee is solely responsible for
obtaining his own legal advice in connection with the exercise of the Options.
8. NO GUARANTEE OF CONTINUING EMPLOYMENT OR OFFICE
8.1 The rights, obligations and status of the Grantee under the terms and
conditions of his office or employment with the Employing Company shall not be
affected by this Agreement. Neither this Agreement nor any action taken or
omitted to be taken hereunder shall be construed as in any way:
(e) guaranteeing the Grantee's continued office or employment with the Company,
Employing Company or any member of the Group; or
(f) giving the Grantee the right to continue or be re-instated in his office or
the employ of the Company, the Employing Company or any member of the Group
whether before during or after the Exercise Period.
8.2 The Grantee hereby waives any and all rights to compensation or damages in
consequence of the termination of his office or employment with the Company, the
Employing Company or any member of the Group for any reason whatsoever insofar
as those rights arise, or may arise, from his ceasing to have rights under or
being entitled to exercise the Options pursuant to this Agreement as a result of
such termination or from the loss or diminution in value of such rights or
entitlements. If necessary, the Grantee's terms of employment shall be varied
accordingly.
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9. EMPLOYEE UNDERTAKING
In accordance with the purpose of this Agreement, the Grantee shall devote
himself to his work with integrity as an employee or director of the Employing
Company.
10. DATA PROCESSING CONSENT
10.1 The Company and the Employing Company may hold personal information
relating to the Grantee, including, without limitation, payroll, address,
service period, demographics and similar information in connection with this
Agreement and may at any time process and use such personal information in order
to perform and facilitate the implementation, management and administration of
the matters contemplated and set out in this Agreement provided that such use is
not prohibited by law. Subject to any applicable prohibitions, the Company may,
at any time to the extent required, make the Grantee's personal information
available to other persons within or outside the Group for such purposes,
including, but not limited, in connection with the exercise of the Options. The
Grantee hereby irrevocably consents to the processing, use, transfer and
registration of such personal information within or outside the Group. Before
transferring any data to a person or entity outside the Group, the Company or
the Employing Company (as the case may be) undertakes to inform the Grantee of:
(g) the identity of any recipient or category of recipients of such personal
information, the relevant data categories; and
(h) the Grantee's rights to consult and to the extent necessary rectify and
complete the registered personal information.
11. COSTS AND TAXES
11.1 The Company shall have the right to require the Grantee to remit to the
Company, prior to the delivery of any certificates evidencing Common Shares
acquired upon exercise of an Option, an amount sufficient to satisfy any
applicable income tax, capital gains tax, social security contributions or other
tax charge or duty (the Tax Liabilities) which may be assessed or chargeable in
connection with the grant or exercise of the Options. In addition, prior to the
Company's determination of such Tax Liabilities, the Grantee may make an
irrevocable election to satisfy, in whole or in part, such obligation to remit
taxes, by directing the Company to cause Common Shares to be withheld (but not
in excess of a rate that the Company determines is necessary to avoid
unfavorable accounting treatment) that would otherwise be received by such
Grantee. Such election may be denied by the Board at its discretion, or may be
made subject to certain conditions specified by the Board, including, without
limitation, conditions intended to avoid the imposition of liability against the
individual under applicable laws. The Grantee shall indemnify the Company in
respect of any Tax Liabilities payable in respect of the Options and for which
the Company is liable whether pursuant to any withholding obligations or
otherwise.
11.2 Except as provided for in Clause 11.1, the Grantee is responsible for:
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(i) the cost of opening an account at the Securities Company (as defined in
Clause 12.1 below);
(j) the relevant charges payable in connection with any money transfers;
(k) all other charges of the Appointed Bank and/or Securities Company which may
be imposed from time to time; and
(l) all other expenses that are imposed on the exercise of Options.
11.3 The Company shall have the right to require the Grantee to remit to the
Company an amount sufficient to satisfy any such costs and expenses prior to the
delivery of any certificate evidencing Common Shares acquired upon exercise of
an Option. Such amount may be satisfied by directing the Company to withhold
Common Shares in the manner set forth in Clause 11.1.
12. SECURITIES ACCOUNTS
12.1 Pursuant to Japanese laws and regulations, the Grantee is required to
appoint an agent and maintain a non-resident offshore account in Japan with
respect to the Common Shares to be acquired upon exercise of the Options. The
Grantee hereby agrees that it shall, through the Company, entrust the custody,
management and disposal of such Common Shares (the Services) to a securities
company or bank (the Securities Company); provided, however, that the Grantee
shall retain the right to determine and direct the Securities Company to sell,
transfer or dispose of all or any portion of the Common Shares on the Grantee's
behalf and the Securities Company may not sell, transfer or otherwise dispose of
the Common Shares without the Grantee's prior approval. The Company shall
determine and appoint such Securities Company (or change such appointment) in
its absolute discretion and notify the Grantee of such appointment (or change in
such appointment) in accordance with Clause 16.
12.2 Following the Grant Date and prior to the exercise of the Options the
Grantee is required to open an account in the Grantee's name at the Securities
Company and follow the necessary procedures set out separately by the Company in
order to enable the Securities Company to perform the Services.
13. GENERAL
13.1 The existence of the Options shall not affect in any way the right or power
of the Company or its shareholders to make or authorize any Reorganization or
other adjustment, recapitalization, reorganization or change in the Company's
capital structure, or any merger, corporate split, Common Shares exchange or
consolidation of the Company, or any issue of Common Shares, bonds, debentures,
preferred or prior preference stocks ahead of or convertible into, or otherwise
affecting the Common Shares of the Company or the rights thereof or any other
securities, or the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
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13.2 The grant of options under this Agreement or future agreement is a
voluntary benefit and does not create any entitlement to options or shares in
the future, even in the case of repeated grants of options.
13.3 The Grantee shall have no rights as a stockholder with respect to any
Common Shares issuable upon exercise of an Option until payment of the
Exercising Purchase Price for such Common Shares as provided in Clause 5.1(d),
and no adjustment shall be made for dividends or distributions or other rights
in respect of any Common Share for which the record date is prior to the date on
which the Grantee pays the Exercising Purchase Price therefor. The Grantee
acknowledges that the Group has no duty to disclose confidential information to
the Grantee that is not generally available to holders of Common Shares.
13.4 The Board shall have the right to interpret the provisions of this
Agreement and to make all rules and determinations which it deems necessary or
advisable for the administration of the Agreement. The decisions of the Board
or, in the case of matters requiring shareholder approval, resolutions of the
shareholders meeting (whichever is applicable), including without limitation all
calculations required hereunder, shall be final and binding with respect to all
matters relating to this Agreement and the Options.
14. TERMINATION OF THIS AGREEMENT
14.1 If, by reason of imposition of Taxation Liabilities or a change in the
applicable laws or regulations, this Agreement is rendered illegal or otherwise
unenforceable, the Grantee may, subject to Clause 14.2 below, terminate this
Agreement with retroactive effect to the Grant Date by giving written notice in
the form attached in Appendix 3 (or as otherwise prescribed by the Company from
time to time); provided that Clause 15.1 shall continue and remain in full force
and effect notwithstanding the termination of this Agreement.
14.2 The Grantee may only retroactively terminate this Agreement if he has not
exercised any of the Options. If the Grantee has exercised one or more Options
then the Grantee may at any time during the Exercise Period, in respect of any
outstanding Options, terminate this Agreement without retroactive application by
giving written notice in the form attached in Appendix 3 (or as otherwise
prescribed by the Company from time to time); provided that Clause 15.1 shall
continue and remain in full force and effect notwithstanding the termination of
this Agreement.
15. CLAIMS AGAINST THE COMPANY
15.1 The Grantee shall not make any claim against the Company, the Employing
Company or their respective directors, shareholders, affiliates,
representatives, auditors or employees for any compensation whatsoever in
connection with this Agreement.
15.2 If, following delivery by the Grantee to the Company of an Exercise Notice,
the Company fails or delays, due to its willful or gross negligence, to deliver
the Common Shares to the Grantee within 30 Company Business Days, and as a
direct result of such failure or delay the Grantee suffers damage or loss, the
Grantee may claim compensation limited to the difference between the Exercising
Purchase Price,
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which was paid by the Grantee to the Company, and the aggregate market price of
the Common Shares at the time of acquisition by the Grantee, if the Exercising
Purchase Price is higher than the aggregate market price of the Common Shares.
For the avoidance of doubt, refusal by the Company to accept the exercise by the
Grantee of the Options pursuant to Clause 4 shall not be grounds for
compensation under this Clause 15.
15.3 Nothing in this Clause 15 shall prohibit the Grantee from making a claim
against the Company, the Employing Company or their respective directors,
shareholders, affiliates, representatives, auditors or employees enforcing
rights expressly provided for under the provisions of this Agreement.
15.4 If the Grantee exercises Options or disposes of Common Shares in breach of
any provisions of this Agreement, the Grantee shall, upon the Company's request,
refund the greater of:
(m) the difference between the Exercising Purchase Price, which was paid by the
Grantee to the Company, and the aggregate market price of the Common Shares
at the time of acquisition by the Grantee; or
(n) the entire profit which the Grantee makes by the disposal of the Common
Shares.
In either (a) or (b), the Grantee shall make such refund promptly in accordance
with the Company's instructions.
16. NOTICES
To the Grantee
16.1 Any communication or notice to be given under or in connection with this
Agreement shall be in the English language and may be communicated by letter,
telex, facsimile transmission or email to the home address set out as first
written above or to such other address, telex or facsimile number or email
address as the Grantee may from time to time have notified (in accordance with
this Clause 16.1) to the Company.
To the Company
16.2 Any communication or notice to be given under or in connection with this
Agreement shall be in the English language and may be communicated by letter,
telex, facsimile transmission or email to the business address set out as first
written above or to such other address, telex or facsimile number or email
address as the Company may from time to time have notified (in accordance with
this Clause 16.2) to the Grantee.
Receipt of Notice
16.3 Any notice so served by letter, telex, facsimile transmission or email
shall be deemed to have been received:
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(o) in the case of telex, facsimile transmission or email, twelve (12) hours
after the time of dispatch; and
(p) in the case of post, special delivery or registered post, twelve (12)
Company Business Days from the date of posting.
17. AMENDMENTS AND WAIVERS
17.1 No amendment to the provisions of this Agreement shall be effective unless
such amendments are:
(q) consistent with the terms of the resolution of the Company's general
shareholders meeting and Board meeting dated June 26, 2002, to grant
options, as such resolutions may be modified or amended from time to time;
and
(r) made in writing and signed by the parties hereto or their duly authorized
representatives.
17.2 All rights, remedies and powers conferred upon the parties hereto are
cumulative and shall not be deemed or construed to be exclusive of any other
rights, remedies or powers now or hereafter conferred upon the parties hereto or
either of them by law or otherwise.
17.3 Any failure at any time to insist upon or enforce any such right, remedy or
power shall not be construed as a waiver thereof.
18. GOVERNING LAW
18.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of Japan.
18.2 Each of the parties hereto hereby irrevocably submits to the jurisdiction
of the courts of Japan.
19. ENTIRE AGREEMENT
19.1 This Agreement constitutes the entire Agreement between the parties
relating to the subject matter of this Agreement and supersedes all prior
representations, writings, negotiations and understandings with respect hereto.
19.2 The parties acting in good faith will determine any matter not set out
herein.
20. SEVERABILITY
Any provision of this Agreement that is invalid, illegal or unenforceable in any
jurisdiction shall as to that jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction.
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IN WITNESS whereof this Agreement has been executed on the day and year first
above written in two originals, each party acknowledging receipt of one duly
executed original.
By: TOYOTA MOTOR CORPORATION
---------------------------------
By: XXXXX XXX
Title: President
By: [ ]
---------------------------------
[ ]
Date:
APPENDIX 1
ADJUSTMENTS (ENGLISH TRANSLATION)
Note: The following English translation is not a literal translation but is
provided for convenience only and the original terms and conditions of the
Options in Japanese will prevail in all circumstances. All references to dates
in the following translation are to Tokyo time.
1. SHARE SPLIT OR SHARE CONSOLIDATION
1.1 If the Company splits or consolidates its shares from and including August
1, 2002, the Exercise Price shall be adjusted in accordance with the following
formula:
Adjusted Exercise = Pre-adjusted Exercise Price X 1
Price ----------------------
Ratio of share
split/consolidation
The Adjusted Exercise Price shall be rounded up to the nearest whole Yen.
1.2 The "Pre-adjusted Exercise Price" used in the formula in Clause 1.1 above
shall be the Exercise Price effective on the day prior to the date on which the
Adjusted Exercise Price is applied pursuant to 1.3 below.
1.3 The Adjusted Exercise Price shall be applied as follows:
(a) if the Company splits its shares, the Adjusted Exercise Price shall be
applied from the date following the allotment date (wariate-bi) of the
split shares; or
(b) if the Company consolidates its shares, the Adjusted Exercise Price shall
be applied from the date following the expiry of the period provided for in
Clause 1 of Article 215 of the Commercial Code (Law No. 48 of 1899).
1.4 Where the Board decides that Common Shares will be issued pursuant to a
share split in exchange for a capitalization of distributable profit on the
condition that the allotment date of the split shares is specified as a date
prior to the date of the shareholders' meeting in which such capitalization is
approved, the Adjusted Number of Shares calculated in accordance with the
following formula shall be issued/transferred to any Grantee who exercises the
whole of the Option during the period between the date following the allotment
date of the split shares and the date of the shareholders' meeting in which such
capitalization is approved:
Number of shares
which should have
( ) been issued or
( Adjusted Pre-Adjusted ) Adjusted transferred upon the
( Number of = Exercise Price ) - Exercise Price X exercise of the Option
( Shares ) without the adjustment
( ) of the Exercise Price
----------------------------------------------------------------
Adjusted Exercise Price
The Adjusted Number of Shares shall be rounded down to the nearest whole Yen.
2. ISSUE OF NEW SHARES OR DISPOSAL OF TREASURY SHARES
2.1 If the Company disposes of its treasury shares or issues new Common Shares
for an amount which is less than the then current market price from and
including August 1, 2002 (excluding all instances where options, warrants or
other rights to acquire shares of the Company are exercised or where the Company
transfers its treasury shares in accordance with a resolution of a shareholders'
meeting pursuant to paragraph 2 of Article 5 of the Supplementary Provisions for
the Commercial Code and paragraph 2 of Article 210-2 of the former Commercial
Code), the Exercise Price shall be adjusted in accordance with the following
formula:
Number
of new
Number of Common Amount to be
issued and Shares to paid per new
outstanding be issued Common
Common + or X Share to be
Adjusted Pre-adjusted Shares disposed issued
Exercise Price = Exercise price X --------------------------
Current market price per
Common Share
-------------------------------------------
Number of issued and + Number of new
outstanding Common Common Shares to be
Shares issued
The Adjusted Exercise Price shall be rounded down to one decimal place.
2.2 The "Pre-adjusted Exercise Price" used in the formula in Clause 2.1 above
shall be the Exercise Price on the day prior to the date on which the Adjusted
Exercise Price is applied.
2.3 The "Number of issued and outstanding Common Shares" used in the formula in
Clause 2.1 above shall be the total number of issued and outstanding Common
Shares on the allotment date of the new shares being issued or the date on which
the treasure shares are disposed, whichever is applicable. If such date is not
specified, the "Number of issued and outstanding Common Shares" shall be the
total number of issued and outstanding Common Shares on the date one month prior
to the date on which the Adjusted Exercise Price is applied; provided that where
two or more events, which require the adjustment of the Exercise Price, occur
within a short period of time of each other and the number of issued and
outstanding Common Shares which is used in calculating the Adjusted Exercise
Price triggered by one of those events can be calculated appropriately, such
number of issued and outstanding shares shall be used.
2.4 The "Current market price per Common Share" used in the formula in Clause
2.1 above shall be the average daily closing price (including the trend
quotations) of
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the Company's Common Shares on the Tokyo Stock Exchange for the 30 day period
starting on the 45th dealing day before the date on which the Adjusted Exercise
Price is applied, excluding any days on which the closing price is not reported.
The average daily closing price shall be calculated to two decimal places and
rounded down to one decimal place.
2.5 The Adjusted Exercise Price calculated in accordance with the formula in
Clause 2.1 above shall be applied from the date following the date of disposal
of treasury shares or the allotment date of the Common Shares to be issued if
such date is specified, or from the date following the payment date for the
Common Shares to be issued or disposed of.
3. GENERAL
3.1 If the difference between the Adjusted Exercise Price and the Pre-adjusted
Exercise Price is less than one Yen, the Exercise Price shall not be adjusted on
that occasion; provided, however, that the exact Adjusted Exercise Price
originally calculated in accordance with the formula set out in Clause 1 or 2
above shall be used as the Pre-adjusted Exercise Price on the subsequent
occasion that an adjustment occurs.
3.2 Except as otherwise provided in Clauses 1 or 2 above, the Company shall
adjust the Exercise Price, as the Company considers appropriate:
(c) in the event of capital decrease, merger or demerger of the Company; or
(d) if an event occurs which otherwise causes a change (or potential change) in
the number of issued shares of the Company.
If the Exercise Price is adjusted, the Company shall issue an individual notice
to the Grantee prior to the date that the Adjusted Exercise Price is applied as
specified in Clause 1 or 2 above; provided, however, that in the event of a
share split as set out in Clause 1.4 above or where the Company is unable to
issue an individual notice prior to the date that the Adjusted Exercise Price is
applied, the Company shall issue an individual notice to the Grantee promptly
after such date.
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Appendix 2
FORM OF Exercise Notice - 2002 STOCK OPTION
[Date]
To: Toyota Motor Corporation (the Company)
From: [Employee name] (the Grantee)
Pursuant to Clauses 4 and 5 of the Agreement for the Grant of Options to Acquire
Common Shares of Toyota Motor Corporation, executed with effect from August 1,
2002 (the Agreement), I warrant and claim for the issue or transfer (at the
Company's discretion) of the Common Shares as follows:
1. WARRANT
I warrant that, as of June 26, 2002, the date on which the general shareholders'
meeting resolved to grant options, I was neither:
(a) a "major shareholder" (oguchi kabunusi); nor
(b) a "special related person" (tokubetsu kankeisya) to any "major
shareholder",
as those terms are defined under Japanese laws and regulations.1
2. EXERCISE OF STOCK OPTIONS
I hereby exercise the following Options in accordance with the terms of the
Agreement:
------------------------------------------------------------------------------------------------
Address
The Grantee ---------------------------------------------------------------------------
Name and
position
------------------------------------------------------------------------------------------------
Date of the general
shareholder June, 26 2002 From: August 1, 2004
meeting Exercise To: July 31, 2008
------------------------------------------- Period (inclusive)
Grant Date August 1, 2002
------------------------------------------------------------------------------------------------
Right Classification Relative shares Exercise Price
Terms of the per share
Option ---------------------------------------------------------------------------
Option Common shares [insert number] [insert price]
shares Yen
------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 Special Taxation Measures Law (Law No. 26 of 1957) Paragraph 1 of Article
29-2; and Enforcement Regulation of the Special Taxation Measures Law
Paragraphs 1 and 2 of Article 19-3.
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------------------------------------------------------------------------------------------------
Exercise Date Number of Total Exercise
shares to be Price
acquired by
exercise of the
Details of the Option
exercise ------------------------------------------------------------------------------
[yyyy/mm/dd] [insert number] [insert price]
shares Yen
------------------------------------------------------------------------------------------------
Address 1 Toyota-machi, Toyota-shi, Aichi-xxx
Company
(Granting ------------------------------------------------------------------------------
Company) Name Toyota Motor Corporation
------------------------------------------------------------------------------------------------
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APPENDIX 3
FORM OF NOTICE OF TERMINATION OF
2002 STOCK OPTION AGREEMENT
[Date]
To: Toyota Motor Corporation (the Company)
From: [Employee's name] (the Grantee)
Termination of Agreement pursuant to Clause 14.1 above
Pursuant to Clause 14.1 of the Agreement for the Grant of Options to Acquire
Common Shares of Toyota Motor Corporation, executed with effect from August 1,
2002 (the Agreement), I notify you that I hereby retroactively terminate the
Agreement, such termination to be effective from the date of execution of the
Agreement.
I hereby acknowledge and agree that I have no claim under Clause 15 of the
Agreement, whether present or future against the Company, the Employing Company
or any of their subsidiaries arising in connection with the Agreement or the
termination thereof.
Termination of Agreement pursuant to Clause 14.2
Pursuant to Clause 14.2 of the Agreement for the Grant of Options to Acquire
Common Shares of Toyota Motor Corporation, executed with effect from August 1,
2002, I notify you that I hereby terminate the Agreement effective as of the
date of this notice.
I hereby acknowledge and agree that I have no claim under Clause 15 of the
Agreement, whether present or future against the Company, the Employing Company
or any of their subsidiaries arising in connection with the Agreement or the
termination thereof.
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