Common use of Material Tax Consequences Clause in Contracts

Material Tax Consequences. for Employees Who are Tax Residents in ---------------------------------------------------------------- Japan. ----- The following is a general summary of the tax consequences of the exchange of options under the offer for Japanese tax residents. This discussion is based on Japanese tax law as of the date of the offer, which is subject to change, possibly on a retroactive basis. This summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to be applicable in all respects to all categories of option holders. You should be sure to consult with your personal tax advisor to discuss the tax consequences which may be particular to you. You will not be subject to tax when the new option is granted. When you exercise the option, you will be subject to income tax on the difference between the fair market value of the shares on the date of exercise and the exercise price. Your income will likely be treated as "remuneration income" and will be taxed at your marginal tax rate. When you sell the shares, you will be subject to tax at a flat rate of 26% (i.e., a 20% national income tax and a 6% local inhabitants tax). If you sell your shares through an authorized stockbroker or bank in Japan and submit an election return form, you may elect to have the broker withhold 1.05% of the total amount received (regardless of the gain) from selling your shares. If you make this election, the deemed gain will be 5.25% of the proceeds from the sale of the shares. The deemed gain will only be subject to the 20% national income tax; the 6% local inhabitants tax would not apply. Please note that, although this 1.05% taxation method was scheduled to be abolished as of April 1, 2001 under the 2000 tax legislation, it was extended until April 1, 2003. Therefore, you may elect to be taxed at 1.05% of the total proceeds until March 31, 2003. Please consult with your personal tax advisor for additional information regarding the tax treatment of options in Japan.