Document:

securitiesaccountcontrol.htm

SECURITIES ACCOUNT CONTROL AGREEMENT

 

(Toyota Auto Receivables 2010-C Owner Trust Reserve Account)

 

This Securities Account Control Agreement (the “Agreement”) is dated as of September 29, 2010 and entered into between Toyota Auto Finance Receivables LLC (the “Pledgor”), a Delaware limited liability company, Deutsche Bank Trust Company Americas, in its capacity as Indenture Trustee on behalf of the holders of the Notes referred to below (in such capacity, the “Indenture Trustee,” also referred to herein as the “Secured Party”) under the Indenture (the “Indenture”), dated as of September 29, 2010, between Toyota Auto Receivables 2010-C Owner Trust, a statutory trust formed pursuant to the laws of the State of Delaware (the “Issuer”), and Deutsche Bank Trust Company Americas, in its capacity as securities intermediary (in such capacity, the “Securities Intermediary”).  Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Sale and Servicing Agreement dated as of September 29, 2010, between the Issuer, Toyota Auto Finance Receivables LLC, as seller, and Toyota Motor Credit Corporation (“TMCC”), as servicer (the “Sale and Servicing Agreement”).

 

PRELIMINARY STATEMENTS

 

A.           Trust Agreement.  The Issuer was formed as a Delaware statutory trust pursuant to the Trust Agreement, dated as of July 20, 2010, as the same has been amended and restated by the Amended and Restated Trust Agreement, dated as of September 29, 2010 (the “Trust Agreement”), by and between Toyota Auto Finance Receivables LLC and Wells Fargo Delaware Trust Company, N.A., as owner trustee (in such capacity and not individually, the “Owner Trustee”).

 

B.           Administration Agreement.  Concurrently herewith, the Issuer, the Indenture Trustee and TMCC have entered into the Administration Agreement pursuant to which TMCC will perform certain administrative tasks on behalf of the Indenture Trustee and the Issuer (when acting in such capacity, TMCC is referred to herein as the “Administrator”).

 

C.           Indenture.  Concurrently herewith, the Issuer and Indenture Trustee have entered into the Indenture pursuant to which the Issuer will issue asset-backed notes (the “Notes”) in the principal amounts and for purposes specified therein.

 

D.           Intention.  The Pledgor intends to establish the Reserve Account, as described in Section 5.07 of the Sale and Servicing Agreement, and intends to pledge to and to grant “control” thereof (as such term is defined in the Uniform Commercial Code as in effect on the date hereof in New York (the “UCC”)) to the Indenture Trustee (as Secured Party) pursuant to the terms of this Agreement.  It is the intention of the parties hereto that the Securities Intermediary be bound to the terms of this Agreement and be obligated to perform the duties of the Securities Intermediary described herein.

 

NOW, THEREFORE, in consideration of the premises herein contained and in order to induce the Issuer and Indenture Trustee to execute and deliver the Indenture, to induce the Issuer to purchase the Receivables in contemplation of issuing the Notes, to induce the Indenture Trustee to authenticate the Notes and for other good consideration, the receipt and adequacy of

 

  

  

  

which are hereby acknowledged, Pledgor, Securities Intermediary and Secured Party hereby agree as follows:

 

Section 1.     Definitions.

 

(a)           Specific Definitions.  The following terms used in this Agreement shall have the following meanings:

 

“Broker-Dealer” means a person registered as a broker or dealer under the Securities Exchange Act of 1934, as amended.

 

“Collateral” means (i) the Reserve Account, (ii) any amounts held from time to time in the Reserve Account, (iii) all Investments, including all Financial Assets, security entitlements, securities (whether certificated or uncertificated), instruments, accounts, general intangibles and deposits representing or evidencing any Investments, (iv) all interest, dividends, cash, instruments, securities and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Collateral, and (v) to the extent not covered by clauses (i) through (iv) above, all proceeds of any or-all of the foregoing Collateral.

 

“Investments” means any Financial Assets credited to the Reserve Account, and any other property acquired by Securities Intermediary as securities intermediary hereunder in exchange for, with proceeds from or distributions on, or otherwise in respect of any Investments.

 

“Overnight Investments” means Investments of the kind described in clause (h) of the definition of “Eligible Investments.”

 

“Suspension Period” means any period (i) beginning promptly after receipt by Securities Intermediary of written notice from Secured Party, substantially in the form of the Prohibition Notice attached to this Agreement as Attachment 1, suspending Pledgor’s right to direct the investment of funds held for the credit of the Reserve Account, and (ii) ending promptly after receipt by Securities Intermediary of written notice from Secured Party, substantially in the form of the Rescission of Prohibition Notice attached to this Agreement as Attachment 2, rescinding the preceding Prohibition Notice.

 

(b)           General Provisions.  Unless otherwise defined herein or in the Sale and Servicing Agreement, terms used in Articles 8 and 9 of the UCC are used herein as therein defined.  Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

Section 2.     Establishment and Operation of Reserve Account.

 

(a)           Establishment of Reserve Account.  Pledgor and Secured Party hereby authorize and direct Securities Intermediary to establish and maintain in its corporate trust department, a segregated trust account that is an Eligible Deposit Account and that is a “securities account” as

 

  

2

  

that term is defined in Section 8-501(a) of the UCC in the name of Secured Party and under the sole dominion and control of Secured Party, designated as “Toyota Auto Receivables 2010-C Owner Trust Reserve Account.” Securities Intermediary hereby undertakes to treat Secured Party as the person entitled to exercise the rights that comprise any Financial Asset credited to the Reserve Account.  Secured Party and Pledgor agree that this account shall be the Reserve Account.

 

(b)           Acknowledgement of Receipt of Investments.  Securities Intermediary acknowledges the transfer by, or on behalf of, Pledgor, and the acquisition by Securities Intermediary, of cash in the amount of the Reserve Account Initial Deposit for the credit of the Reserve Account.

 

(c)           Operations of the Reserve Account.  The Reserve Account shall be operated, and all Investments shall be acquired and registered or held (as applicable), in accordance with the terms of this Agreement.  No funds shall be withdrawn from or deposited into the Reserve Account, except as provided in the Indenture and the Sale and Servicing Agreement.  To the extent that the Indenture and the Sale and Servicing Agreement require payments into the Reserve Account, the provisions set forth herein shall govern.

 

(d)           Account Statements.  Securities Intermediary shall send Secured Party and Pledgor written account statements with respect to the Reserve Account not less frequently than monthly.  Reports or confirmation of the execution of orders and statements of account shall be conclusive if not objected to in writing within 30 days after delivery.

 

Section 3.     Mechanics of Deposits of Funds or Investments to the Collateral Account.

 

(a)           Transfers to the Reserve Account.  Any transfers of funds to the Reserve Account shall be made by wire transfer (or, if applicable, intra-bank transfer) of immediately available funds addressed as follows:

 

Deutsche Bank Trust Company Americas

ABA No.: 021001033

SWIFT: BKTRUS33

Acct Name:  CTAS Funds Control

Account #: 01419647

Ref: Toyota 2010-C Port TOY10C.2 Reserve AC

 

Transfers of Financial Assets to the Reserve Account shall be permitted by book-entry from securities accounts maintained with Securities Intermediary.

 

(b)           Notice of Transfers.  In the event of any transfer of funds or Financial Assets to the Reserve Account pursuant to any provision of Section 4, Secured Party, or Pledgor, as the case may be, shall promptly, after initiating or sending out written instructions with respect to such transfer, give notice to the other such party by facsimile of the date and amount of such transfer.

 

Section 4.     Eligible Investments and Transfers of Amounts in the Reserve Account.

 

  

3

  

(a)           Strict Compliance.  Funds or credit balances held by Securities Intermediary in the Reserve Account shall not be (i) invested or reinvested, (ii) sold or redeemed, or (iii) transferred from the Reserve Account, in either case except as provided in this Section 4.

 

(b)           Pledgor’s Right to Direct Investment.  Except during any Suspension Period, Securities Intermediary shall, (i) in accordance with Pledgor’s written Entitlement Orders given to Securities Intermediary from time to time, sell or redeem Investments, and apply amounts transferred to or held for the credit of the Reserve Account to make investments for credit to the Reserve Account, in Securities Intermediary’s name and as custodian under this Agreement, in Eligible Investments, or release such amounts to, or to the order of, Pledgor and (ii) on each Payment Date prior to the occurrence of an Event of Default that results in the acceleration of the Notes that has not been rescinded under the Indenture, release all income from the investment of funds in the Reserve Account from the security interest granted to the Indenture Trustee in this Agreement and pay such amounts to, or to the order of, the Pledgor.  During any Suspension Period and on each Payment Date after the occurrence of an Event of Default that results in the acceleration of the Notes which has not been rescinded under the Indenture, Pledgor’s right to direct such investments under this Section 4(b) shall be suspended, and Securities Intermediary shall not accept Entitlement Orders with respect to the Reserve Account from any person other than Secured Party; and any credit balances shall be invested and reinvested only as provided in Section 4(c).

 

(c)           Secured Party’s Right to Direct Investment.  During any Suspension Period and on each Payment Date after the occurrence of an Event of Default that results in the acceleration of the Notes which has not been rescinded under the Indenture, Securities Intermediary shall, in accordance with Secured Party’s written Entitlement Orders (which may be prepared and delivered by the Administrator acting in its capacity as such) given to Securities Intermediary from time to time, sell or redeem Investments, and apply amounts transferred to or held for the credit of the Reserve Account to make investments for credit to the Reserve Account, in Securities Intermediary’s name and as custodian under this Agreement, in Eligible Investments, or release such amounts to or to the order of the Secured Party.

 

(d)           Overnight Investments.  To the extent that, as of 12:00 noon, New York time on any Business Day, there are credit balances expected to remain after settlement of all pending transactions in the Reserve Account, unless otherwise instructed by Secured Party (or by Administrator acting in its capacity as such, or by Pledgor at all times other than during a Suspension Period or a Payment Date after the occurrence of an Event of Default that results in the acceleration of the Notes which has not been rescinded under the Indenture), Securities Intermediary shall apply the expected credit balances to acquire Overnight Investments.  Any Overnight Investments shall be held for the credit of the Reserve Account from which the proceeds for acquisition was derived.

 

(e)           Actions of Securities Intermediary on Purchase of Investments.  Promptly upon the purchase, acquisition or transfer for credit of the Reserve Account of any Investment, Securities Intermediary shall take all steps that it customarily takes in the ordinary course of its business to ensure that such Investment is credited on its books to the Reserve Account.  Without limiting the generality of the foregoing, Securities Intermediary shall promptly (i) send to Pledgor and Secured Party a written confirmation of the acquisition of such Investment, and

 

  

4

  

(ii) indicate by book entry in its records that such Investment has been credited to, and is held for the credit of, the Reserve Account.  Securities Intermediary agrees with Pledgor and Secured Party that any credit balances or property credited to, or held for the credit of, the Reserve Account shall be treated as “Financial Assets” as that term is defined in Section 8-103(a)(9)(iii) of the UCC.

 

(f)           Grant of Control.  Anything contained herein to the contrary notwithstanding, Securities Intermediary shall, if and as directed in writing by Secured Party, without the consent of Pledgor, whether during a Suspension Period or otherwise, (i) comply with Entitlement Orders originated by Secured Party with respect to the Reserve Account, and any Security Entitlements therein, (ii) transfer, sell or redeem any of the Collateral, (iii) transfer any or all of the Collateral to any account or accounts designated by Secured Party, including an account established in Secured Party’s name (whether at Secured Party or Securities Intermediary or otherwise), (iv) register title to any Collateral in any name specified by Secured Party consistent with the policies or practices of the applicable depository, including the name of Secured Party or any of its nominees or agents, without reference to any interest of Pledgor, or (v) otherwise deal with the Collateral as directed by Secured Party.  Nothing contained in this paragraph shall constitute a waiver by Pledgor of any rights or remedies it may have against Secured Party under this Agreement or any other agreement.

 

(g)           Deposit of Proceeds.  Subject to Section 4(b), any interest, cash dividends or other cash distributions received in respect of any Investments and the net proceeds of any sale or payment of any Investments shall be promptly credited to, and held for the credit of the Reserve Account, and any distribution of property other than cash in respect of any Investment shall be credited to, and held for the credit of, the Reserve Account.

 

(h)           Valuation of Collateral.  Securities Intermediary shall provide view only access to its systems to Secured Party for the purpose of communicating data as to the Reserve Account as of that date.

 

Section 5.     Grant of Security Interest in Reserve Account; Covenant Against Creation of other Interests.

 

(a)           Security Interest.  Pledgor hereby grants to the Indenture Trustee, for the benefit of the Holders of the Notes, all of the Pledgor’s right, title and interest in and to the Reserve Account and all funds and investment property on deposit from time to time in the Reserve Account, in each case whether now or hereafter existing or in which the Pledgor now has or hereafter acquires an interest and wherever the same may be located.  Securities Intermediary hereby acknowledges the security interest granted by the Pledgor in favor of the Indenture Trustee, for the benefit of the Holders of the Notes, in the Reserve Account and funds and investment property on deposit from time to time therein and acknowledges that, on each Payment Date (i) prior to the occurrence of an Event of Default that results in an acceleration of the Notes that has not been rescinded under the Indenture and (ii) for so long as a Suspension Period is not continuing on such Payment Date, all income from the investment of funds in the Reserve Account will be (i) released from the security interest granted to the Indenture Trustee in this Agreement and (ii) paid to, or to the order of, the Pledgor.

 

  

5

  

(b)           Acknowledgement of Securities Intermediary’s Role.  Securities Intermediary hereby further acknowledges that, during any Suspension Period, it holds the Reserve Account, and all Security Entitlements therein, as custodian for, for the benefit of, and subject to the control of, Secured Party.  During any Suspension Period, Securities Intermediary shall, by book entry or otherwise, indicate that the Reserve Account, and all Security Entitlements registered to or held therein, are subject to the control of Secured Party as provided in Sections 4(c) and 4(e).  Securities Intermediary hereby further acknowledges that, at all times other than during a Suspension Period, it shall hold the Reserve Account, and all Security Entitlements therein, as custodian for, for the benefit of, and subject to the direction of, Pledgor at all times other than during a Suspension Period, Securities Intermediary shall, by book entry or otherwise, indicate that the Reserve Account, and all Security Entitlements registered to or held therein, are subject to the direction of Pledgor as provided in Section 4(b).

 

(c)           Securities Intermediary Has No Notice of Adverse Claims.  Securities Intermediary represents and warrants that (i) it has no notice of any Adverse Claim against any of the Collateral other than the claim of Secured Party under this Agreement, the Sale and Servicing Agreement and the Indenture; and (ii) it is not party to any agreement other than this Agreement that governs its rights or duties, or limits or conflicts with the rights of Secured Party, including the exclusive right of Secured Party to control as provided in Section 4(e), with respect to the Reserve Account.

 

(d)           Securities Intermediary Shall Not Acknowledge Other Claims.  Securities Intermediary agrees that, except as expressly provided in this Agreement (including Sections 4(b) and 6(d)) or with the written consent of Secured Party, it shall not agree to or acknowledge (i) any right by any Person other than Secured Party to originate Entitlement Orders or control with respect to the Reserve Account; or (ii) any limitation on the right of Secured Party to originate Entitlement Orders with respect to or direct the transfer of any Investments or cash credited to the Reserve Account.

 

Section 6.     Securities Intermediary Maintenance of the Reserve Account.

 

(a)           Transactions Shall Comply With Rules.  The parties acknowledge that all transactions in Financial Assets under this Agreement shall be in accordance with the rules and customs of the exchange, market or clearing organization, if any, in which the transactions are executed or settled and in conformity with applicable law and regulations of governmental authorities and future amendments or supplements thereto.

 

(b)           Risk of Investments and Transactions.  It is not the intention of the parties that Securities Intermediary should bear any investment risk associated with Eligible Investments or Overnight Investments acquired for the credit of the Reserve Account in accordance with Section 4.  Any losses or gains realized on such Investments shall be charged or credited to the Reserve Account, as appropriate.  On committing to a transaction for the credit of the Reserve Account pursuant to an instruction permitted in accordance with Section 4, Securities Intermediary may, (i) pending settlement, block (A) the Investments to be sold or (B) credit balances sufficient to settle any acquisition, or the Investment the liquidation of which will yield funds sufficient to settle any acquisition and, (ii) at the time of settlement, deliver such Investments or funds in accordance with the rules, custom or practice of the particular market.

 

  

6

  

(c)           Use of Intermediaries and Nominees.  Securities Intermediary is authorized, subject to Secured Party’s written instructions, to register any Financial Assets acquired by Securities Intermediary pursuant to this Agreement in the name of Securities Intermediary or in the name of its nominee, or to cause such securities to be registered in the name of a Federal reserve bank or a recognized securities intermediary or clearing corporation, or any nominee thereof.  Securities Intermediary may at any time and from time to time appoint, and may at any time remove, any bank, trust company, clearing corporation, or Broker-Dealer as its agent to carry out such of the provisions of this Agreement.  The appointment or use of any intermediary, or the appointment of any such agent, shall not relieve Securities Intermediary of any responsibility or liability under this Agreement.

 

(d)           Corporate Actions.  Except as otherwise set forth herein, Pledgor and Secured Party agree that Securities Intermediary shall have no responsibility for ascertaining or acting upon any calls, conversions, exchange offers, tenders, interest rate changes or similar matters relating to any Financial Assets credited to or held for the credit of the Reserve Account (except based on written instructions originated by Pledgor or Secured Party), or for informing Pledgor or Secured Party with respect thereto, whether or not Securities Intermediary has, or is deemed to have, knowledge of any of the aforesaid.  Securities Intermediary is authorized to withdraw securities sold or otherwise disposed of, and to credit the Reserve Account with the proceeds thereof or make such other disposition thereof as may be directed in accordance with this Agreement.  Securities Intermediary is further authorized to collect all income and other payments which may become due on Financial Assets credited to the Reserve Account, to surrender for payment maturing obligations and those called for redemption and to exchange certificates in temporary form for like certificates in definitive form, or, if the par value of any shares is changed, to effect the exchange for new certificates.  It is understood and agreed by Pledgor and Secured Party that, although Securities Intermediary will use reasonable efforts to effect the transactions set forth in the preceding sentence, Securities Intermediary shall incur no liability for its failure to effect the same unless its failure is the result of negligence or willful misconduct.

 

(e)           Disclosure of Account Relationships.  Pledgor and Secured Party acknowledge that Securities Intermediary may be required to disclose to securities issuers the name, address and securities positions with respect to Financial Assets credited to the Reserve Account, and hereby consent to such disclosures.

 

(f)           Forwarding of Documents.  Securities Intermediary shall forward to Pledgor and, if requested, Secured Party, or notify Pledgor and, if requested, Secured Party by telephone of, all written communications received by Securities Intermediary as owner of any Financial Assets credited to the Reserve Account and which are intended to be transmitted to the beneficial owner thereof.

 

(g)           Direction in Disputes.  Pledgor, Securities Intermediary and Secured Party hereby agree that in the event any dispute arises with respect to the payment, ownership or right to possession of the Reserve Account or any other Collateral credited to or held therein Securities Intermediary shall take or refrain from taking such actions with respect to the Reserve Account as may be directed by (a) Secured Party during the Suspension Period and (b) Pledgor other than during the Suspension Period.

 

  

7

  

(h)           No Setoff, etc.  Securities Intermediary shall not exercise on its own behalf any claim, right of set-off, banker’s lien, clearing lien, counterclaim or similar right against any of the Collateral; provided that Securities Intermediary may deduct, from any credit balances, any usual and ordinary transaction and administration fees payable in connection with the administration and operation of the Reserve Account.  Except for claims for deductions permitted in the preceding sentence, Securities Intermediary agrees that any security interest it may have in the Reserve Account or any security entitlement carried therein shall be subordinate and junior to the interest of Secured Party.

 

(i)           Only Agreement.  This Agreement shall govern the actions, rights and obligations of Securities Intermediary, and shall determine the governing law, with respect to the Reserve Account and the Collateral notwithstanding any term or condition in any agreement other than this Agreement as it may be amended, supplemented or otherwise modified in writing.

 

(j)           Care of Financial Assets.  Securities Intermediary shall maintain possession or control of all Financial Assets credited to the Reserve Account by segregating such Financial Assets from its proprietary assets and keeping them free of any lien, charge or claim of any third party granted or created by Securities Intermediary.  Securities Intermediary shall take such other steps to ensure that Financial Assets credited to the Reserve Account are identified as being held for customers of Securities Intermediary as may be required under applicable law or in accordance with custom and practice in the industry.

 

(k)           Further Actions.  Securities Intermediary shall take such further actions as Secured Party shall reasonably request as being necessary or desirable to maintain or achieve perfection or priority of Secured Party’s security interest with respect to the Collateral and to permit Secured Party to exercise its rights with respect to the Collateral.

 

Section 7.     Limitations on Duties, and Exculpation and Indemnification, of Securities Intermediary.

 

(a)           Limitation on Duty of Care; Exculpation.  Securities Intermediary’s duties hereunder are only those specifically provided herein, and Securities Intermediary shall incur no liability whatsoever for any actions or omissions hereunder except for any such liability arising out of or in connection with Securities Intermediary’s negligence or willful misconduct.  Securities Intermediary has no obligation to ensure the sufficiency of this Agreement or the arrangements described hereunder to satisfy any objectives of Secured Party or Pledgor.  Securities Intermediary shall have no duty to supervise or to provide investment counseling or advice to Pledgor or Secured Party with respect to the purchase, sale, retention or other disposition of any Financial Assets held hereunder.  Except as specifically otherwise provided in this Agreement, Securities Intermediary shall not be responsible for enforcing compliance by the other parties to this Agreement with their respective duties and obligations to each other under this or any other Agreement.

 

(b)           Consultation with Counsel.  Securities Intermediary may consult with, and obtain, at the expense of Pledgor, advice from, legal counsel as to the construction of any of the provisions of this Agreement, and shall incur no liability in acting in good faith in accordance with the reasonable advice and opinion of such counsel.

 

  

8

  

(c)           Reasonable Reliance.  Securities Intermediary shall be fully protected and shall suffer no liability in acting in accordance with any written instructions reasonably believed by it to have been given (i) by Secured Party (or from the Administrator purporting to be acting in its capacity as such) with respect to any aspect of the operation of the Reserve Account (including any such instructions relating to any investment or transfer of any amounts held therein) or (ii) by Pledgor, to the extent provided in Section 4(b), with respect to the Reserve Account.

 

(d)           Expenditure of Funds.  No provision of this Agreement shall require the Securities Intermediary to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

(e)           Resignation.  The Securities Intermediary may at any time resign by giving 30 days written notice of resignation to the Secured Party and the Pledgor; provided however that no such resignation of the  Securities Intermediary shall be effective until a successor Securities Intermediary has been appointed and is serving pursuant to the terms hereof.  Upon receiving notice of such resignation, the Pledgor shall promptly appoint a successor, and upon acceptance by the successor of such appointment, release the resigning Successor Intermediary from its obligations hereunder by written instrument, a copy of which instrument shall be delivered to the other parties hereto, the Securities Intermediary and the successor Securities Intermediary.  If no successor shall have been so appointed and have accepted appointment within 45 days after the giving of such notice of resignation, the resigning Securities Intermediary may petition any court of competent jurisdiction on for the appointment of such successor.

 

(f)           Indemnity.  The Pledgor shall indemnify the Securities Intermediary and its officers, directors, employees an agents against any and all loss, liability or expense (including reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of its duties hereunder not resulting from its own willful misconduct, negligence or bad faith.  The Securities Intermediary shall notify the Pledgor promptly of any claim for which it may seek indemnity.  Failure by the Securities Intermediary to so notify the Pledgor shall not relieve the Pledgor of its obligations hereunder.  The Pledgor need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Securities Intermediary through the Securities Intermediary’s own willful misconduct, negligence or bad faith.  The provisions of this Section 7(f) shall survive the termination of this Agreement or the earlier resignation or removal of the Securities Intermediary

 

Section 8.     Representations and Warranties By Securities Intermediary.  Securities Intermediary hereby represents and warrants to Pledgor and Secured Party as follows:

 

(a)           Corporate Power.  Securities Intermediary has all necessary corporate power and authority to enter into and perform this Agreement.

 

(b)           Execution Authorized.  The execution, delivery and performance of this Agreement by Securities Intermediary have been duly authorized by all necessary corporate action on the part of Securities Intermediary.

 

  

9

  

(c)           Securities Intermediary.  Securities Intermediary is a “securities intermediary” (as that term is defined in Section 8-102(a)(14) of the UCC) and is acting in such capacity with respect to the Reserve Account.  Securities Intermediary is not a “clearing corporation” (as that term is defined in Section 8-102(4)(5) of the UCC).

 

Section 9.     Termination.  All rights to the Reserve Account and all other Collateral registered to or held therein shall revert to Pledgor, upon Securities Intermediary’s receipt of written notice, signed by an authorized officer of Secured Party, that the Indenture has terminated.

 

Section 10.   Resignation and Removal of Securities Intermediary.

 

(a)           Removal.  Securities Intermediary may be removed at any time by written notice given by Secured Party to Securities Intermediary and Pledgor, but such removal shall not become effective until a successor Securities Intermediary shall have been appointed by Secured Party and shall have accepted such appointment in writing.

 

(b)           Resignation.  Securities Intermediary may resign at any time by giving not less than thirty days’ written notice to Secured Party and Pledgor, but such .removal shall not become effective until a successor Securities Intermediary shall have, been appointed by Secured Party and shall have accepted such appointment in writing.  If an instrument of acceptance by a successor Securities Intermediary shall not have been delivered to the resigning Securities Intermediary within sixty days after the giving of any such notice of resignation, the resigning Securities Intermediary may, at the expense of Pledgor, petition any court of competent jurisdiction for the appointment of a successor Securities Intermediary.

 

(c)           Successor Securities Intermediary.  Any successor Securities Intermediary shall be a bank or trust company, having capital and surplus of at least $50 million, located in the State of New York.

 

(d)           Process of Succession.  Upon the appointment of a successor Securities Intermediary and its acceptance of such appointment, the resigning or removed Securities Intermediary shall transfer all items of Collateral held by it to such successor (which items of Collateral shall be transferred to new Reserve Account established and maintained by such successor).  Following such appointment all references herein to Securities Intermediary shall be deemed a reference to such successor; provided that the provisions of Section 7 hereof shall continue to inure to the benefit of the resigning or removed Securities Intermediary with respect to any actions taken or omitted to be taken by it under this Agreement while it was Securities Intermediary hereunder.

 

Section 11.     Secured Party as Indenture Trustee.  Secured Party shall at all times be the same Person that is the Indenture Trustee under the Indenture.  Resignation or removal of the Indenture Trustee under the Indenture shall also constitute substitution of a successor Secured Party under this Agreement.  Upon the acceptance of any appointment as successor Indenture Trustee under the Indenture, that successor Indenture Trustee shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Secured Party under this Agreement, and the retiring or removed Secured Party under this

 

  

10

  

Agreement shall promptly (i) transfer to such successor Secured Party all items of Collateral held by Secured Party, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such documents and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such retiring or removed Secured Party shall be discharged from its duties and obligation’s under this Agreement.

 

Section 12.     Choice of Law.  Both this Agreement and the Reserve Account shall be governed by the laws of the State of New York (regardless of its conflict of law provisions (other than Section 5-1401 of the General Obligations Law of the State of New York)).  Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Securities Intermediary’s jurisdiction and the Reserve Account and Securities Entitlements related thereto shall be governed by the laws of the State of New York.

 

Section 13.     Amendments.  This Agreement may be amended from time to time by a written amendment duly executed and delivered by the Pledgor, the Indenture Trustee and the Securities Intermediary, and without the consent of any of the Noteholders or the Certificateholders, to cure any ambiguity, to correct or supplement any provisions in this Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided, that either (i) an Officer’s Certificate shall have been delivered by the Servicer to the Indenture Trustee certifying that such officer reasonably believes that such proposed amendment will not materially and adversely affect the interest of any Noteholder or (ii) the Rating Agency Condition has been satisfied in respect of such proposed amendment.

 

This Agreement may also be amended from time to time by the Pledgor, the Indenture Trustee and the Securities Intermediary and, if the interests of the Noteholders are materially and adversely affected, with the consent of the Holders of the Notes evidencing at least a majority of the outstanding principal amount of the Controlling Class of Notes, acting together as a single Class but excluding for purposes of such calculation and action all Securities held or beneficially owned by TMCC, TAFR LLC or any of their Affiliates, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders or Certificateholders under this Agreement.

 

No amendment otherwise permitted under this Section 13 may (x) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the Receivables or distributions required to be made for the benefit of any Noteholders or Certificateholders without the consent of all Noteholders and Certificateholders adversely affected thereby, or (y) reduce the percentage of the Notes or Certificates which are required to consent to any such amendment without the consent of the Noteholders and Certficateholders adversely affected thereby; provided, that any amendment referred to in clause (x) or (y) above shall be deemed to not adversely affect any Noteholder if the Rating Agency Condition has been satisfied in respect of such proposed amendment.  No amendment referred to in clause (x) in the

 

  

11

  

immediately preceding sentence shall be permitted unless an Officer’s Certificate shall have been delivered by the Servicer to the Indenture Trustee certifying that such officer reasonably believes that such proposed amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder whose consent was not obtained.

 

Promptly after the execution of any such amendment or consent, the Indenture Trustee shall furnish written notification of the substance of such amendment or consent to the Certificateholder and the Administrator and the Administrator shall provide such notification to each of the Rating Agencies.

 

It shall not be necessary for the consent of the Certificateholders, the Noteholders or the Indenture Trustee pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents and of evidencing the authorization of the execution thereof by the Certificateholders shall be subject to such reasonable requirements as the Indenture Trustee may prescribe.

 

Section 14.     Tax Reporting.  All items of income, gain, expense and loss recognized in the Securities Accounts shall be reported to the Internal Revenue Service and all state and local taxing authorities under the name and taxpayer identification number of the Pledgor.

 

Section 15.     Compensation.  Pledgor shall pay to the Securities Intermediary from time to time reasonable compensation for its services hereunder.  Pledgor shall reimburse the Securities Intermediary upon request for all reasonable disbursements, expenses and advances incurred or made by it.  Such expenses shall include the reasonable compensation, disbursements and expenses of the Securities Intermediary’s agents and counsel.

 

Section 16.      Successors.  The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors.

 

Section 17.      Notices.  Any notice, request or other communication required or permitted to be given under this Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.

 

	
Pledgor:

	
Toyota Auto Finance Receivables LLC

19851 Western Avenue NF 10

Torrance, California 90501

Attention:  Treasury Department

Fax: (310) 468-5715

 

	  	
With a copy to:

Toyota Auto Finance Receivables LLC

19851 Western Avenue EF 12

Torrance, California 90501

  

12

  

 

	
 

	

  

Attention:  Treasury Department

Fax: (310) 468-5715

 

	  	
With a copy to:

Toyota Auto Finance Receivables LLC

19851 Western Avenue EF 12

Torrance, California 90501

Attention:  Legal Department

Fax: (310) 468-5715

 

	
Secured Party:

	
Deutsche Bank Trust Company Americas

60 Wall Street, 26th Floor

Mail Stop NYC60-2606

New York, NY 10005

Attention: Asset Backed Securities Unit – Toyota Auto Receivables 2010-C Owner Trust

Fax: (212) 553-2459

 

	  	
With a copy to:

Mark DiGiacomo, CCTS

Assistant Vice President

Deutsche Bank National Trust Company

Alternative Structured Finance Services

100 Plaza One, 6th Floor

Jersey City, NJ 07311-3901

MS: JCY03-0699

 

	
Securities Intermediary:

	
 

Deutsche Bank Trust Company Americas

60 Wall Street, 26th Floor

Mail Stop NYC60-2606

New York, NY 10005

Attention: Asset Backed Securities Unit – Toyota Auto Receivables 2010-C Owner Trust

Fax: (212) 553-2459

 

	  	
With a copy to:

Mark DiGiacomo, CCTS

Assistant Vice President

Deutsche Bank National Trust Company

Alternative Structured Finance Services

100 Plaza One, 6th Floor

Jersey City, NJ 07311-3901

MS: JCY03-0699

 

Any party may change its address for notices in the manner set forth above.

 

Section 18.                      Counterparts.  This Agreement may be executed in any manner of counterparts, all of which shall constitute in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Agreement, by signing and delivering one or more counterparts.

 

Section 19.                      No Petition.  This Each of the parties hereto, by entering into this Agreement, hereby covenants and agrees that it shall not at any time acquiesce, petition or

 

  

13

  

otherwise invoke or cause the Issuer or the Pledgor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer or the Pledgor under any federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or the Pledgor, as the case may be, or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Pledgor, in connection with any obligations relating to the Notes, the Certificates, this Agreement or any of the Basic Documents prior to the date that is one year and one day after the date on which the Indenture is terminated.  This Section 19 shall survive the termination of this Agreement and the termination of the Securities Intermediary under this Agreement.

 

[remainder of page intentionally left blank]

 

  

14

  

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.

 

TOYOTA AUTO FINANCE RECEIVABLES LLC

 

    By:  /s/ Chris Ballinger

    Name:  Chris Ballinger

    Title:    President

 

“Deutsche Bank National Trust Company for”

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, 

as Securities Intermediary

 

By:     /s/ Mark DiGiacomo

Name: Mark DiGiacomo

Title:   Asst. Vice President

By:    /s/ Michele H.Y. Voon

Name: Michele H.Y. Voon

Title:   Vice President

 

“Deutsche Bank National Trust Company for”

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, 

not in its individual capacity but solely as Indenture Trustee

 

By:    /s/ Mark DiGiacomo

Name: Mark DiGiacomo

Title:   Asst. Vice President

By:     /s/ Michele H.Y. Voon

Name: Michele H.Y. Voon

Title:   Vice President

  

  

  

Attachment 1

FORM OF PROHIBITION NOTICE

Date:

 

Deutsche Bank Trust Company Americas

60 Wall Street, 26th Floor

Mail Stop NYC60-2606

New York, NY 10005

Attn:  Asset Backed Securities Unit – Toyota Auto Receivables 2010-C Owner Trust

Fax:  (212) 553-2459

 

Toyota Auto Finance Receivables LLC

19851 Western Avenue NF 10

Torrance, California 90501

Attention:  Treasury Department

 

Toyota Auto Finance Receivables LLC

19851 Western Avenue EF 12

Torrance, California 90501

Attention:  Legal Department

 

	
  

	
 Re:    Prohibition Notice:  Toyota Auto Receivables 2010-C Owner Trust, Reserve Account

 

Ladies and Gentlemen:

 

Pursuant to the Securities Account Control Agreement (the “Agreement”) dated as of September 29, 2010 and entered into between Toyota Auto Finance Receivables LLC, Deutsche Bank Trust Company Americas, in its capacity as Indenture Trustee, and Deutsche Bank Trust Company Americas, in its capacity as Securities Intermediary, we hereby give you this Prohibition Notice and notify you of the commencement of a Suspension Period.  Until further notice from the undersigned substantially in the form of Attachment 2 to the Agreement, the Securities Intermediary shall not accept or follow instructions from Pledgor pursuant to Section 4(b) of the Agreement.

 

Capitalized terms used and not otherwise defined in this notice are used with their respective meanings in the Agreement.

 

	 	
Yours truly,

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Indenture Trustee and Secured Party

 

By: ________________________________________

 

Its: ________________________________________

 

  

  

  

Attachment 2

FORM OF RESCISSION OF PROHIBITION NOTICE

Date:

 

Deutsche Bank Trust Company Americas

60 Wall Street, 26th Floor

Mail Stop NYC60-2606

New York, NY 10005

Attn:  Asset Backed Securities Unit – Toyota Auto Receivables 2010-C Owner Trust

Fax:  (212) 553-2459

 

Toyota Auto Finance Receivables LLC

19851 Western Avenue NF 10

Torrance, California 90501

Attention:  Treasury Department

 

Toyota Auto Finance Receivables LLC

19851 Western Avenue EF 12

Torrance, California 90501

Attention:  Legal Department

 

	
  

	
Re:

	
Rescission of Prohibition Notice:  Toyota Auto Receivables 2010-C Owner Trust, Reserve Account

 

Ladies and Gentlemen:

 

Pursuant to the Securities Account Control Agreement (the “Agreement”) dated as of September 29, 2010, and entered into between Toyota Auto Finance Receivables LLC, Deutsche Bank Trust Company Americas, in its capacity as Indenture Trustee, and Deutsche Bank Trust Company Americas, in its capacity as Securities Intermediary, we hereby notify you of the rescission by Secured Party of the Prohibition Notice dated               , 20__ and the end of the related Suspension Period.  You are hereby instructed that you shall accept and follow written instructions from Pledgor pursuant to Section 4(b) of the Agreement.

 

Capitalized terms used and not otherwise defined in this notice are used with their respective meanings in the Agreement.

 

	 	
Yours truly,

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Indenture Trustee and Secured Party

 

By: ________________________________________

 

Its: ________________________________________-
1 -

         

        Exhibit 4.6

         

      

       

    

    
      DATE:
July 12, 2010

      

      RULES

      OF

      THE
ADVANTEST CORPORATION

      INCENTIVE
STOCK OPTION PLAN 2010

      

      

      
        	
                1

              	
                Definitions

              

      

      

      
        	
                1.1

              	
                In
      these Rules:

              

      

      

      “Advantest
Group” means the Company and its subsidiaries;

      

      “Broker”
means Mizuho Investors Securities Co., Ltd. or such other broker or agent
appointed from time to time by the Company to execute transactions in connection
with the Plan;

      

      “Company”
means Advantest Corporation;

      

      “Date of
Grant” means July 12, 2010;

      

      “Directors”
means the board of directors of the Company;

      

      “Eligible
Officer” means any director, auditor, or officer of the Company;

      

      “Exercise
Period” means a period commencing on April 1, 2011 and expiring at the close of
business on March 31, 2015;

      

      “Exercise
Price” means the price to be paid by a Stock Option Holder for the exercise of
each Stock Option;

      

      “Guidelines”
means Incentive Stock Option Plan 2010 Guidelines for exercising Stock Option
granted to Eligible Officers in accordance with these Rules;

      

      “Plan”
means the plan known as “The Advantest Corporation Incentive Stock Option Plan
2010” in its present form or as from time to time amended in accordance with the
Rules;

      

      “Rules”
means these rules as amended from time to time;

      

      “Shares”
means fully paid common shares of stock of the Company;

      

      “Stock
Option” means the stock options granted by the Company in accordance with the
resolution of the board meeting of the Company held on June 24,
2010;

      

      “Stock
Option Holder” means a person holding a Stock Option;

      

      “Stock
Option Register” means a register which is prepared and maintained by the
Company pursuant to the Japanese Company Law (Law No.86 of 2005) and which lists
information including the names and addresses of Stock Option
Holders;

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 2
-

 

      “Subscription
Price” means the price of a Share to be delivered upon exercise of a Stock
Option, subject to adjustment provided in Rule 3, and the initial Subscription
Price is 2,089 yen;

      

      “Tokyo
Business Day” means a business day in Tokyo, Japan on which both the Company and
the Tokyo Stock Exchange are open for the transaction of business;
and

      

      “Unit”
means 100 Shares or such other amount of Shares to which a voting right at a
shareholders’ meeting is granted pursuant to the Japanese Company Law and the
Articles of Incorporation of the Company.

      

      
        	
                1.2

              	
                Where
      the context permits or requires the singular includes the plural and the
      masculine includes the feminine and vice
versa.

              

      

      

      
        	
                1.3

              	
                Headings
      shall be ignored in construing the
Rules.

              

      

      

      
        	
                2

              	
                Grant
      of Stock Options

              

      

      

      
        	
                2.1

              	
                Grant
      of Stock Options

              

      

      

      The
Company may at its absolute discretion grant to any Eligible Officer such number
of Stock Options as determined by the Company.  Each Eligible Officer
will be informed in writing by the Company of such grant.

      

      
        	
                2.2

              	
                Conditions
      on Exercise

              

      

      

      
        	
              	
                2.2.1 

              	
                A
      Stock Option may be exercised only on a Tokyo Business
  Day.

              

      

      

      
        	
                 
      

              	
                2.2.2

              	
                The
      number of Stock Options exercised at one time shall be 10 or multiples of
      10.  If the number of Stock Options held by a Stock Option
      Holder is not 10 or a multiple of 10 (e.g., the number of Stock Options
      held is 27), the remaining Stock Options (in this example, 7) may be
      exercised only when they are exercised together with 10 or a multiple of
      10 Stock Options (in this example, he or she may exercise 17 or 27 of
      his/her Stock Options).  However, if the number of Stock Options
      held by a Stock Option Holder is less than 10, the Stock Option Holder may
      exercise his/her Stock Options only when he or she exercises all of
      his/her Stock Options.

              

      

      

      
        	
                2.3

              	
                Acceptance
      of Stock Option

              

      

      

      To be
entitled to the grant of Stock Options, any Eligible Officer must execute a
written acceptance of such Stock Options in the form of Attachment A hereto and
deliver such acceptance form to the Company by July 12, 2010.  The
acceptance form includes the explanation of the terms of Stock Options in
compliance with the Japanese Company Law.  In the event of any
inconsistency between these Rules and the acceptance form, the provisions of
these Rules shall prevail.

      

      
        	
                2.4

              	
                Payment

              

      

      

      The
payment to be made as consideration for the stock options shall be 53,500 yen
per one stock option.  On the date of execution of the allotment, such
payment shall be made by setting off against the monetary compensation the
amount equal to such value and to be paid by the Company.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 3
-

         

      

      

      
        	
                2.5

              	
                Disposal
      Restrictions

              

      

      

      
        	
                 
      

              	
                2.5.1

              	
                Neither
      a Stock Option nor any rights or interests in respect of it may be
      transferred, assigned, pledged or otherwise disposed of by a Stock Option
      Holder to any other person or entity.  If a Stock Option Holder
      purports to transfer, assign, pledge or dispose of any such Stock Option
      or rights or interests, whether voluntarily or involuntarily, then the
      Stock Option may not be exercised and will be automatically transferred by
      the Company pursuant to Rule 5.

              

      

      

      
        	
                 
      

              	
                2.5.2

              	
                A
      Stock Option Holder may not assign, delegate or otherwise transfer any of
      its rights or obligations under these
Rules.

              

      

      

      
        	
                2.6

              	
                Certificates

              

      

      

      No
certificates will be issued for Stock Options.

      

      
        	
                3

              	
                Variations
      In Share Capital

              

      

      

      
        	
                3.1

              	
                Adjustment
      of Stock Option

              

      

      

      
        	
                 
      

              	
                3.1.1

              	
                The
      Exercise Price is 208,900 yen.

              

      

      

      
        	
                 
      

              	
                3.1.2

              	
                The
      number of Shares to be delivered upon exercise of each Stock Option is 100
      Shares (i.e., 1 Unit).  If any adjustment is made to the
      Subscription Price, then the number of Shares to be delivered in relation
      to each Stock Option shall be adjusted in accordance with the following
      formula, with fractions of a Share being rounded
  down:

              

      

      

      
        	
                Number
      of Shares

              	
                =

              	
                Exercise
      Price

              
	
                Subscription
      Price

              

      

      

      
        	
                 
      

              	
                3.1.3

              	
                If
      the Company shall make a stock split or consolidate its Shares into a
      smaller number of shares, then the Subscription Price shall be adjusted by
      the Directors based on the following
formula:

              

      

      

      
        	
                NSP

              	
                =

              	
                OSP
      ×

              	
                1

              
	
                Stock
      Split Ratio or Consolidation Ratio

              

      

      

      where:

      NSP = the
Subscription Price after such adjustment.

      OSP = the
Subscription Price before such adjustment.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
          - 4
-

        

        

          

          
            	
                     
      

                  	
                    3.1.4

                  	
                    If
      the Company shall issue any Shares or dispose of Shares owned by the
      Company (other than Shares issued or delivered upon conversion or exchange
      of any convertible or exchangeable securities issued by the Company or
      upon exercise of any rights or warrants issued, granted or offered by the
      Company) and the consideration per Share receivable by the Company shall
      be less than the current market price per Share, then the Subscription
      Price shall be adjusted by the Directors based on the following
      formula:

                  

          

           

        

      

      
        	
                NSP

              	
                =

              	
                OSP
      ×

              	
                N +
      v

              
	
                N +
      n

              

      

      

      where:

      NSP and
OSP have the meanings ascribed thereto in Rule 3.1.3.

      
        	
                 
      

              	
                N
      =

              	
                the
      number of Shares outstanding after deduction of Shares owned by the
      Company immediately prior to such
adjustment.

              

      

      
        	
                 
      

              	
                n
      =

              	
                the
      number of additional Shares being issued as aforesaid or (in the case of
      disposal of Shares owned by the Company) the number of Shares being
      disposed of.

              

      

      
        	
                 
      

              	
                v
      =

              	
                the
      number of Shares which the aggregate consideration receivable by the
      Company would purchase at such current market price per
    Share.

              

      

      

      
        	
                 
      

              	
                3.1.5

              	
                In
      addition to Rule 3.1.3 and 3.1.4, in any of the following circumstances,
      the Company will adjust the Subscription Price in the manner it considers
      appropriate in its absolute
discretion:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                the
      Company will issue securities convertible into Shares (including shares to
      be acquired by the Company upon request by the shareholder or upon
      occurrence of certain events) at a consideration per Share receivable by
      the Company which is less than the current market price per
      Share;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                the
      Company will issue warrants, or securities with warrants, to subscribe for
      or purchase Shares at a consideration per Share receivable by the Company
      which is less than the current market price per
  Share;

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                adjustment
      of the Subscription Price becomes necessary as a result of merger,
      corporate division or stock-for-stock exchange;
  or

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                in
      addition to the foregoing, adjustment of the Subscription Price becomes
      necessary as a result of change (or possible change) in the number of
      outstanding Shares.

              

      

      

      
        	
                 
      

              	
                3.1.6

              	
                Any
      fractional number resulting from calculations of the Subscription Price
      shall be rounded up to the nearest one
yen.

              

      

      

      
        	
                 
      

              	
                3.1.7

              	
                The
      Subscription Price after the adjustment shall be the sum to be obtained by
      multiplying the Subscription Price per share after the adjustment by the
      number of shares to be issued per Stock Option after the
      adjustment.

              

      

      

      
        	
                3.2

              	
                Notice

              

      

      

      The
Company will notify Stock Option Holders of any adjustment made under this Rule
3.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 5
-

 

      
        	
                4

              	
                Exercise
      and Cancellation - General Rules

              

      

      

      
        	
                4.1

              	
                Exercise

              

      

      

      Unless
otherwise specified in these Rules, a Stock Option shall only be
exercisable:

      

      
        	
                 
      

              	
                4.1.1

              	
                within
      the Exercise Period; and

              

      

      

      
        	
                 
      

              	
                4.1.2

              	
                subject
      to the conditions imposed under Rule
2.2.

              

      

      

      5           Automatic Transfer
of Stock Options:

      

      
        	
                5.1

              	
                Events
      of automatic transfer

              

      

      

      A Stock
Option owned by Stock Option Holder shall be automatically transferred to the
Company for no consideration if any of the following events occurs:

      

      
        	
                 
      

              	
                5.1.1

              	
                the
      general meeting of the shareholders or, if approval by the shareholders’
      meeting is not legally required, then the board of directors resolves to
      approve (i) any merger agreement pursuant to which the Company shall
      dissolve, (ii) any agreement or a plan pursuant to which the Company shall
      split all or part of its business or (iii) any stock-for-stock exchange
      agreement or stock-transfer plan pursuant to which the Company shall
      become a wholly-owned subsidiary of another
  company.

              

      

      

      
        	
                 
      

              	
                5.1.2

              	
                a
      Stock Option Holder becomes a person who does not hold any position as a
      director, corporate auditor, officer, employee or any other similar
      position of the Company or its subsidiaries; except where the Company
      deems that it is appropriate to allow him/her to exercise his/her Stock
      Options and notifies him/her.

              

      

      

      
        	
                 
      

              	
                5.1.3

              	
                a
      Stock Option Holder dies.

              

      

      

      
        	
                 
      

              	
                5.1.4

              	
                a
      Stock Option Holder waives all or part of his/her stock options by
      submitting to the Company the form specified by the
    Company.

              

      

      

      
        	
                 
      

              	
                5.1.5

              	
                a
      Stock Option Holder becomes for any reason a director, officer, auditor or
      employee of a company which is a competitor with the Company and the
      Company notifies the Stock Option Holder that his/her stock options are
      non-exercisable.

              

      

      

      
        	
                 
      

              	
                5.1.6

              	
                a
      Stock Option Holder is in breach of laws, internal rules of the Company or
      the Rules, and the Company notifies the Stock Option Holder that his/her
      stock options are non-exercisable.

              

      

      

      
        	
                6

              	
                Exercise
      of Stock Option

              

      

      

      
        	
                6.1

              	
                Manner
      of Exercise

              

      

      

      
        	
                 
      

              	
                6.1.1

              	
                To
      exercise a Stock Option, a Stock Option Holder must deliver on a Tokyo
      Business Day, an exercise notice to the Company, in the prescribed form
      (Attachment B), duly completed and signed by the Stock Option
      Holder.  The
      Stock Option Holder may not withdraw the exercise notice for any
      reason.

              

      

      
        
 

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          - 6
-

        

         

         

      

      
        	
                 
      

              	
                6.1.2

              	
                A
      Stock Option Holder shall pay the total amount of the Exercise Price
      relating to the number of Stock Options that he or she exercised (the
      “Total Exercise Price”) and the related expenses and taxes (if any), by
      transfer to the account designated by the Company.  The
      commission for such transfer shall be incurred by the Stock Option
      Holder.  After the Company confirms its receipt of the Total
      Exercise Price and the related expenses and taxes (if any), the Shares
      shall be delivered by crediting the number of Shares, through the Japan
      Securities Depository Center, Inc. (the “JASDEC”), to the Stock Option
      Holder’s account opened pursuant to Rule
6.6.2.

              

      

      

      
        	
                6.2

              	
                Sale
      of Shares

              

      

      

      
        	
                 
      

              	
                6.2.1

              	
                A
      Stock Option Holder may request, through the Company, that the Broker sell
      all the Shares resulting from his/her exercise of Stock
      Options.  Any such request shall be made in a notice as referred
      to in Rule 6.1.1.

              

      

      

      
        	
                 
      

              	
                6.2.2

              	
                After
      the receipt of a notice as referred to in Rule 6.2.1, the Company shall
      procure funds to be paid as the Total Exercise Price on behalf of the
      Stock Option Holder, and deliver the resulting Shares to the Stock Option
      Holder in the manner specified in Rule 6.1.2.  The Shares shall
      be sold without delay after the Broker confirms receipt of the Shares by
      the Stock Option Holder.  Subject to Rule 6.5, the Broker shall
      transfer, to the Stock Option Holder’s account with Mizuho Bank, Ltd.
      (“Mizuho Bank”) opened pursuant to Rule 6.6.3, the proceeds of the sale of
      the Shares less (i) the commission for the sale, (ii) the related expenses
      and taxes (if any) and (iii) the commission for such transfer, within 30
      days of the sale.  The Stock Option Holder shall transfer, to
      the bank account designated by the Company, an amount equal to (i) the
      Total Exercise Price plus (ii) the related expenses and taxes paid or to
      be paid by the Company in connection with the exercise of the Stock
      Options or the sale of the Shares.  However, if the Stock Option
      Holder is a director, auditor or officer of the Company at the time of
      request as referred to in Rule 6.2.1, the Company will not procure funds
      to be paid as the Total Exercise Price on behalf of the Stock Option
      Holder.

              

      

      

      
        	
                 
      

              	
                6.2.3

              	
                If
      the Company deems that the proceeds of a sale of the Shares will not be
      enough to cover (i) the Total Exercise Price plus (ii) all expenses and
      taxes paid or to be paid by the Broker or the Company in connection with
      the exercise of the Stock Options or the sale of the Shares, the Company
      may either (a) sell the Shares in accordance with Rule 6.2.2 or (b) reject
      the request of the Stock Option Holder to sell the Shares and deem that he
      or she has withdrawn the exercise of his/her Stock Options, provided that
      if the request to sell the Shares has been made to the Broker in
      accordance with Rule 6.2.1, the Company may so deem only when such
      withdrawal can be made under the rules of the JASDEC and the internal
      rules of the Broker.  If the Stock Options are deemed to have
      not been exercised, the Stock Option Holder may exercise the relevant
      Stock Options in accordance with these Rules after he or she receives a
      notice from the Company to the effect that his/her Stock Options have been
      so deemed.  The Company shall not
      be liable to the Stock Option Holder for any result of any decision made
      under this Rule 6.2.3.

              

      

      
        
 

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          - 7
-

        

         

         

      

      
        	
                6.3

              	
                When
      the number of Shares deliverable upon exercise of the Stock Options
      includes less than one Unit, the exercising Stock Option Holder shall be
      deemed to request the Company to purchase such Shares pursuant to the
      Japanese Company Law.  The determination of whether the number
      of Shares deliverable upon exercise includes less than one Unit shall be
      made separately with respect to each exercise (regardless of the number of
      Stock Options included therein).

              

      

      

      
        	
                6.4

              	
                No
      Partial Exercise

              

      

      

      A Stock
Option may be exercised with respect only to each Stock Option, and no Stock
Option may be exercised in part.

      

      
        	
                6.5

              	
                Withholding

              

      

      

      The
Company and the Broker shall be entitled to withhold, and the Stock Option
Holder shall be obligated to pay, the amount of any tax attributable to or
payable by and any social security or similar payments attributable to or
payable by the Stock Option Holder in connection with the exercise or receipt of
his/her Stock Option or the sale of the Shares.  The Company and the
Broker may establish appropriate procedures to provide for any such payments and
to ensure that the relevant company receives prompt advice concerning the
occurrence of any event which may create, or effect the timing or amount of any
obligation to pay or withhold any such taxes or which may make available to the
relevant company any tax deduction with respect to the payment.

      

      
        	
                6.6

              	
                Broker

              

      

      

      
        	
                 
      

              	
                6.6.1

              	
                The
      Broker will assist the Company in connection with the exercise of the
      Stock Options and the sale of the resulting
  Shares.

              

      

      

      
        	
                 
      

              	
                6.6.2

              	
                Prior
      to the exercise of the Stock Options, a Stock Option Holder shall open and
      maintain an account in his/her name with the Broker for the purpose of the
      delivery of the Shares to be delivered upon the exercise.  Such
      account shall be opened through the
Company.

              

      

      

      
        	
                 
      

              	
                6.6.3

              	
                Prior
      to the sale of the Shares pursuant to Rule 6.2, a Stock Option Holder
      shall open and maintain an account in his/her name with Mizuho Bank for
      the purpose of the payment of the proceeds of a sale of
      Shares.  Such account shall be opened through the
      Company.

              

      

      

      
        	
                7

              	
                General

              

      

      

      
        	
                7.1

              	
                Notices

              

      

      

      Any
notice or other document required to be given under or in connection with the
Plan may be delivered to a Stock Option Holder or sent by post or facsimile with
confirmation in writing to him/her at his/her address which appears on the Stock
Option Register.  Notices sent by post shall be deemed to have been
given on the day following the date of posting.  Any notice or other
document required to be given to the Company under or in connection with the
Plan may be delivered or sent by post or facsimile with confirmation in writing
to it at its registered office (or such other place or places as the Company may
from time to time determine and provide Stock Option Holders with notification
of).

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 8
-

      

       

      

      
        	
                7.2

              	
                Directors’
      Decisions Final and Binding

              

      

      

      The
decision of the Directors in connection with any interpretation of the Rules or
in any dispute relating to a Stock Option or other matter relating to the Plan
shall be final and conclusive and binding on the relevant parties.

      

      
        	
                7.3

              	
                Costs

              

      

      

      The costs
of introducing and administering the Plan shall be borne by the
Company.

      

      
        	
                7.4

              	
                Regulations

              

      

      

      The
Company shall have power from time to time to make or vary regulations for the
administration and operation of the Plan, provided that the same are not
inconsistent with these Rules.

      

      
        	
                7.5

              	
                Limitation
      of Liability

              

      

      

      The
rights and obligations of a Stock Option Holder under the terms and conditions
of his/her office or employment shall not be affected by his/her participation
in the Plan or any right he or she may have to participate in the
Plan.  An individual who participates in the Plan waives all and any
rights to compensation or damages in connection with rights under the Plan
arising from the termination of his/her office or employment with any company
for any reason whatsoever relating to any Stock Option under the Plan as a
result of such termination or from the loss or diminution in value of such
rights or entitlements.

      

      
        	
                7.6

              	
                Personal
      Information

              

      

      

      A Stock
Option Holder hereby consents and agrees that the Company may collect, store,
process, use, transfer and modify his/her personal information regarding
identity, place of employment and other pertinent information needed to
effectuate his/her participation in the Plan with other parties within the
Advantest Group, or with third parties to the extent necessary or helpful in the
implementation of the Plan.

      

      
        	
                7.7 

              	
                No
      Entitlements

              

      

      

      
        	
                 
      

              	
                7.7.1

              	
                Nothing
      in the Plan, these Rules or any document related thereto shall be
      construed as guaranteeing any Stock Option Holder’s continued employment
      or engagement with any member of the Advantest Group, or as giving any
      Stock Option Holder any right to continued employment or engagement with
      any member of the Advantest Group, during any
  period.

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 9
-

      

       

       

      
        	
                 
      

              	
                7.7.2

              	
                Awards
      of Stock Options are discretionary.  No award of Stock Options
      shall confer on the Stock Option Holder any right or entitlement to
      receive another award of stock options at any time in the
      future.

              

      

      

      
        	
                8

              	
                Amendments

              

      

      

      Subject
to Rule 7.4, the Company may at any time modify these Rules in any
respect.  The Company may at any time amend these Rules so that the
Company may issue new shares upon exercise of Stock Options instead of
transferring its treasury stock.

      

      
        	
                9

              	
                Governing
      Law and Jurisdiction

              

      

      

      These
Rules and all Stock Options shall be governed by and construed in accordance
with Japanese law.  Any dispute arising out of, or in connection with,
these Rules shall be subject to the exclusive jurisdiction of the Tokyo District
Court.

      

      10           Local
Law Appendix

      

      The Local
Law Appendix attached hereto shall be an integral part of these
Rules.  In the event of any inconsistency between these Rules and the
Local Law Appendix, the provisions of the Local Law Appendix shall
prevail.

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 10
-

      

       

      
 

      Attachment
A

      

      
        	
                Acceptance
      Form: 

              	
                delivered
      on June 24, 2010

              

      

      

      

      

      

      Attachment
B

      

      
        	
                Exercise
      Notice: 

              	
                to
      be delivered separately

              

      

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 11
-

      

      
 

      Local
Law Appendix

      for
Germany

      

      

      
        	
                1.

              	
                Definitions

              

      

      

      Definitions
as set out in 1.1 of the Rules are applicable to this Appendix.

      

      
        	
                2.

              	
                Eligible
      Officers

              

      

      

      The
Company’s discretion with respect to 2.1 will be exercised in a way complying
with German law, in particular with the labour law principle of equal treatment
(arbeitsrechtlicher
Gleichbehandlungsgrundsatz) and with the prohibition of discrimination
(Diskriminierungsverbot).

      

      
        	
                3.

              	
                Ex-gratia
      benefit

              

      

      

      The grant
of the Stock Option is an ex-gratia benefit (freiwillige Leistung). It is
granted without any obligation and even repeated granting will not create a
legal claim.

      

      
        	
                4.

              	
                Vesting

              

      

      

      The Stock
Options shall vest in Eligible Officers at the time of exercise of such Stock
Options.

      

      
        	
                5.

              	
                Deemed
      Exercise

              

      

      

      If Stock
Options held by a Stock Option Holder become automatically transferable pursuant
to Rule 5.1.2, those Stock Options shall be deemed to be exercised immediately
prior to the time the respective Stock Option Holder becomes a person who does
not hold any position as a director, corporate auditor, officer, employee or any
other similar position of the Company or its subsidiaries.  If the
Company deems that the proceeds of the sale of the resulting Shares will not be
enough to cover (i) the Total Exercise Price plus (ii) all costs, expenses and
taxes referred to in Rule 6.2.3, then the Stock Options are deemed to be waived
by the Stock Option Holder.  This clause 5 applies to Rules 5.1.5 and
5.1.6 mutatis mutandis.

      

      
        	
                6.

              	
                Adjustment
      of the Subscription Price

              

      

      

      The
Company’s discretion with respect to the Adjustment of the Subscription Price
will be exercised taking into fair consideration the circumstances where such
adjustment is deemed appropriate.

      

      
        	
                7.

              	
                Taxes/Withholding

              

      

      

      The
following summary of certain German income tax considerations for German
Employees is based on the tax law effective at the date of this Appendix which
may be changed, even with retroactive effect.  The summary does not
describe all tax considerations that may be relevant to a Eligible Officer’s
decision to accept or exercise any of the rights under the Plan.  It
is not a substitute for tax advice.

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 12
-

      

       

       

      There are
income tax charges on the exercise of an option at a rate of between 14 % and 45
% (as of 2010) depending on the taxable income of the Stock Option Holder to be
increased by a 5.5 % “solidarity” surcharge on the income tax due (plus church
tax, if applicable).  The tax charge is determined by the difference
between the market value of the shares at the date the shares are booked into
(Einbuchung) the
account of the employee (for wage tax purposes the tax authorities currently
allow to use the date the shares are booked out (Ausbuchung) of the account of
the Company or of any transfer agent of the Company instead) and the option
exercise price.  The market value is defined on the basis of the
quoted prices on the respective stock exchange.  The Advantest Europe
GmbH (the “Employing Company”) is entitled to deduct the taxes from the gross
salary of the Stock Option Holder.  Additionally, the usual social
security contributions (to the extent the wage base for social security
contributions are not exceeded) have to be paid on the difference between the
exercise price and the market value at the date the shares are booked into
(Einbuchung) the
account of the employee (as regards the wage tax simplification rule granted by
the tax authorities see above).  If the regular salary of the Stock
Option Holder is not sufficient for the Employing Company to deduct wage tax and
pay such tax to the competent tax office, the Employing Company will request the
Stock Option Holder to pay the tax to the Employing Company enabling the
Employing Company to withhold wage tax.  The Employing Company will
inform the tax office of such request if the Stock Option Holder does not meet
his/her obligations.

      

      If a
Stock Option Holder selling the shares owns 1 % or more of the stated
capital of the Company (or has owned 1 % or more at any time in the last
five years) or holds the shares as business assets, he or she will be subject to
income tax (plus solidarity surcharge and, if applicable, church tax) on
60 % of the difference between the sales prices and the market value
relevant for determining the income upon exercise.  If the Stock
Option Holder selling the shares does not own 1 % or more of the stated
capital of the Company (and has not owned 1 % or more at any time in the
last five years) and does not hold the shares as business assets (i.e. holds
them as private assets), any capital gains derived from the sale of shares will
be subject to income tax at a uniform 25 per cent tax rate (plus solidarity
surcharge and, if applicable, church tax).

      

      For
dividends, the following principles will apply:

      

      If the
shares are held as business assets 60 % of the gross dividends received by
Stock Option Holders will, in principle, be subject to income tax at the
progressive tax rate plus solidarity surcharge (and church tax, if
applicable).

      Dividend
income received on shares held as private assets will be subject to a uniform 25
per cent tax (plus solidarity surcharge and, if applicable, church
tax).

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 13
-

      

       

       

      For the
collection of the uniform 25 per cent tax, a definite withholding tax
regime (Abgeltungsteuer) is
applicable. Generally, if the shares are held through a domestic bank or a
domestic branch of a foreign bank (a “Bank”) the Bank will levy the tax on the
dividend or the capital gain by way of withholding. However, in case of capital
gains additional rules may become relevant: Since the purchase price of the
shares may not be verified for withholding purposes, the Bank might be obliged
to levy the 25% tax (plus solidarity surcharge and, if applicable, church tax)
on 30% of the sales price of the shares from which parts may possibly be
recovered later by the shareholder by way of filing an income tax
return.  There will also be a joint lump-sum deduction for capital
income on private assets (i.e., interest and dividend
income as well as capital gains) of €801 (€1,602 for married couples filing tax
returns jointly) per annum, whereby higher expenses directly attributable to a
capital investment will not be deductible as expenses.

      

      Please
note that a taxpayer is able to apply for a tax assessment if
his/her  personal tax rate is lower than the 25 per cent flat-rate
(Günstigerprüfung) or
if the taxpayer can claim a tax credit for tax imposed by foreign Tax
Authorities that has not been recognized yet by way of withholding.

      

      
        	
                8. 

              	
                Insider
      Dealings

              

      

      

      Please
note that Germany has adopted the EC-Directive on Insider
Dealings.  Insiders are, among others, persons who by virtue of their
position as members of managing or supervisory boards of the issuing company or
its subsidiaries or by their profession or work, have knowledge of not publicly
known facts which may influence the market value of the securities issued.
Insiders are subject to certain restrictions in selling or purchasing such
securities or otherwise making use of their insider knowledge.  Anyone
in breach of those provisions will be liable to imprisonment or
fine.

      

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 14
-

      

      
 

      Local
Law Appendix

      for
Korea

      

      

      This
Appendix has been prepared to provide you with a summary of information
regarding your stock options granted by the Company under the Incentive Stock
Option Plan 2010 (the “Plan”) specific to Korea.

      

      This
supplement is based on the tax laws and other laws concerning stock options in
effect in Korea as of June 2010.  These laws are often complex and
change frequently.  As a result, the information contained in this
summary may be out-of-date at the time you exercise your option or sell shares
you acquire under the Plan.

      

      In
addition, this supplement is general in nature.  It may not apply to
your particular tax or financial situation, and the Company is not in a position
to assure you of any particular tax result.  Accordingly, you are
advised to seek appropriate professional advice as to how the tax or other laws
in your country apply to your specific situation.

      

      If you
are a citizen or resident of a country other than Korea, the information
contained in this supplement may not be applicable to you.

      

      TAX
INFORMATION

      

      Grant

      

      You will
not be subject to tax when a stock option is granted to you under the
Plan.

      

      Date
of Vesting

      

      You will
not be subject to tax when your stock options vest.

      

      Exercise

      

      You will
be subject to income tax when you exercise your stock option.  You
will be taxed on the difference between the fair market value of the shares at
exercise and the option price (i.e., the
spread).  This difference is treated as salary and taxed at your
marginal rate.  If the Advantest Korea Co., Ltd. for which you are
employed bears the cost of the spread, your employer will withhold from the
spread at exercise the appropriate income tax and any social insurance
contributions associated with the realized income and pay it to the Korean tax
authorities and social insurance funds.

      

      Sale
of Shares

      

      When you
subsequently sell the shares that you acquire under the Plan, you will be
subject to capital gains tax on any gain that you realize above the fair market
value at the time the option is exercised.  The capital gains tax on
stock is currently 22%, including residence surtax. There is an annual personal
exemption from tax for the first 2,500,000 won of capital gains that you make in
any tax year.  However, if your capital gains exceed this limit, then
you will be required to declare the gains and tax will be due on the excess
amount.  No securities transaction tax will apply to either Company’s
sale to you or your subsequent disposition of shares acquired pursuant to the
Plan.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 15
-

      

       

       

      Dividends

      

      Income
from receipt of dividends from shares is subject to tax at ordinary income tax
rates, which range from 6.6% to 38.5%.  Your employer is not required
to withhold or report such income.  It is your responsibility to
report this income on your annual tax return and to pay all taxes
owed.

      

      Labor
Law Acknowledgment

      

      By
accepting this stock option, you acknowledge that the Plan is discretionary in
nature and may be unilaterally suspended or terminated by the Company at any
time.

      

      

      RELATED
CONSENTS

      

      Personal
Information

      

      Through
accepting the invitation extended to you to receive Stock Options offered under
the Plan, you effectively consent and agree that your employer and the Company
may use personal information regarding your identity, place of employment, and
other pertinent information needed to effectuate your participation in the Plan
with other parties within the Advantest Group or third parties to the extent
necessary or helpful to implement the Plan.

      

      Treatment
and Management of Purchased Stock

      

      Through
accepting the invitation extended to you to receive Stock Options offered under
the Plan, you effectively consent and agree that upon subscribing to Shares
under the Plan, the Company is authorized to take action regarding the stocks
and proceeds derived therefrom and participate in the management of the stocks
and proceeds derived therefrom as outlined in the Rules of the Advantest
Corporation Incentive Stock Option Plan 2010, as described in Section 6.2, 6.4,
6.5, and all other Sections describing such actions and/or
participation.

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 16
-

      

      Local
Law Appendix

      for
USA

      

      Purpose

      

      This Appendix sets forth certain terms
and conditions applicable to residents of the United States who are awarded
Stock Options (each, a “U.S. Stock Option Holder”) under the Plan and
supplements the terms and conditions set forth in the Rules of the
Plan.  IN THE EVENT
OF ANY CONFLICT AMONG THE TERMS OF THIS APPENDIX, THE RULES OR A STOCK OPTION
ACCEPTANCE FORM, THE TERMS OF THIS APPENDIX SHALL
GOVERN.  Capitalized terms used in this Appendix without
definition have the meaning assigned to such terms in the Rules.

      

      

      Administration of Stock
Options Granted to U.S. Stock Option Holders

      

      The
Company, or its authorized U.S. representative, shall (i) administer the terms
of this Appendix, (ii) establish from time to time such rules and procedures as
it may deem appropriate for the proper administration of this Appendix and (iii)
make such determinations under and such interpretations of and take such steps
in connection with this Appendix or the Stock Options granted to U.S. Stock
Option Holders as it may deem necessary or advisable.

      

      

      Right to American Depository
Shares (“ADSs”)

      

      The
Company may arrange, in its sole discretion, for U.S. Stock Option Holders to
receive ADSs rather than Shares upon the exercise of their Stock Options, in
which case, all references to “Shares” in the Rules, this Appendix, a Stock
Option Acceptance Form or any other document related to the Plan shall be deemed
to be a reference to one (1) ADS per Share, as the context may
require.  100 ADSs will be deemed to constitute a
“Unit.”  ADSs will be evidenced by American Depository Receipts of the
Company, which are currently traded on the New York Stock Exchange.

      

      In the
event that the Company elects to issue ADSs upon the exercise of Stock Options
by U.S. Stock Option Holders, 100 ADSs will be issued upon the exercise of each
Stock Option.  The number of ADSs so issued will be adjusted
accordingly when the number of Shares to be issued upon the exercise of each
Stock Option is adjusted pursuant to the Rules.

      

      

      Limitation on Number of
Shares or ADSs Available for Issuance

      

      Notwithstanding
anything to the contrary in the Rules or this Appendix, the maximum aggregate
number of Shares (or ADSs) that may be issued under the Plan as incentive stock
options within the meaning of Section 422 of the Code (:ISOs”)  is
12,000 Shares (or 12,000 ADSs), subject to any equitable adjustments to the
number and kind of Shares or ADSs under the Rules to the extent permitted under
Section 422 of the United States Internal Revenue Code of 1986, as amended and
the regulations and guidance promulgated thereunder (the “Code”).  To
the extent permitted under Section 422 of the Code, any Shares or ADSs subject
to a Stock Option that lapses, expires or is otherwise terminated without the
issuance of such Shares or ADSs may again be available for purposes of this
limit.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 17
-

         

      

       

      

      ISO
Qualification.

      

      Stock
Options awarded to Eligible Officers resident in the United States are intended
to qualify ISOs .  Pursuant to the requirements of the Code, only
those Stock Options awarded to Eligible Officers who are employees of an
Employing Company (and which is a “parent corporation” or “subsidiary
corporation” within the meaning of Section 424 of the Code) may be considered
ISOs.  Stock Options awarded to non-employee directors of an Employing
Company shall be nonqualified stock options.  “Employing Company”
means, individually or collectively, Advantest America Corporation (Holding
Co.), Advantest America, Inc. and Advantest America R&D Center,
Inc.

      

      Vesting and
Exercise

      

      By way of
clarification, if a U.S. Stock Option Holder ceases to be a director, auditor,
officer or employee of any Employing Company under circumstances as a result of
which such U.S. Stock Option Holder’s Stock Options “shall become
non-exercisable” in accordance with Rule 5.1, as applicable, it is understood
that:

      

      
        	
                 
      

              	
                (1)

              	
                If
      such cessation occurs prior to the start of the Exercise Period (April 1,
      2011), such U.S. Stock Option Holder’s Stock Options shall never become
      exercisable, but shall be cancelled without any payment being made to the
      U.S. Stock Option Holder in respect thereof;
and

              

      

      

      
        	
                 
      

              	
                (2)

              	
                If
      such cessation occurs on or after the start of the Exercise Period, such
      U.S. Stock Option Holder’s Stock Options shall no longer be exercisable as
      of the date of such cessation, and shall be cancelled without any payment
      being made to the U.S. Stock Option Holder in respect
    thereof.

              

      

      

      In no
event will a U.S. Stock Option Holder be permitted to exercise Stock Options
either before the start of the Exercise Period or after the end of the Exercise
Period.

      

      Due to
the prohibition on loans to directors and executive officers of the Company set
forth under Section 402 of the Sarbanes-Oxley Act of 2002, the cashless exercise
feature of the Plan, as set forth in Rule 6.2, is not available for U.S. Stock
Option Holders who are directors and executive officers of the Company at the
present time.  The Company will inform those who are subject to this
prohibition if such feature does become available in the
future.  Until such time, such U.S. Stock Option Holder must exercise
his or her Stock Options in the manner set forth in Rule 6.1.

      

      ISO
Conditions

      

      A U.S.
Stock Option Holder must comply with each of the following conditions to ensure
that his or her Stock Options qualify as ISOs.  Except where otherwise
noted, responsibility for complying with the following conditions will be the
responsibility of the individual U.S. Stock Option Holder:

      

      
        	
                 
      

              	
                (1)

              	
                Employee
      Status.  At all times during the period commencing on the
      relevant Date of Grant and ending on the date three months prior to the
      date of exercise, the U.S. Stock Option Holder must be an employee of the
      Company
      or another member of the Advantest Group (except in the case of an
      employee who is disabled within the meaning of Section 22(e)(3) of the
      Code, in which case such three-month period is extended to one
      year).

              

      

      
         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          - 18
-

        

         

         

      

      
        	
                 
      

              	
                (2)

              	
                10%
      Shareholders.  No Stock Option shall qualify as an ISO if
      the U.S. Stock Option Holder is a 10% Shareholder, unless (a) the Exercise
      Price, as of the Date of Grant, is at least 110% of the fair market value
      of the Shares or ADSs subject to the Stock Option and (b) such Stock
      Option, by its terms, is not exercisable after the expiration of five
      years from the Date of Grant.  A “10% Shareholder” means that,
      as of the relevant Date of Grant, an individual owns stock possessing more
      than 10% of the total combined voting power of all classes of stock of the
      Company or any of its subsidiaries.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                Holding
      Period.  A Stock Option will qualify for ISO treatment
      only if the U.S. Stock Option Holder makes no disposition of the Shares or
      ADSs acquired upon exercise of the Stock Option within two years from the
      Date of Grant or within one year from the date of
  exercise.

              

      

      

      (4)           Restrictions on
Exercise.

      

      
        	
                 
      

              	
                (a)

              	
                The
      Stock Option may only be exercised by the U.S. Stock Option Holder during
      his or her lifetime.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                To
      the extent that the aggregate fair market value of Shares or ADSs with
      respect to which any stock options held by the U.S. Stock Option Holder
      are exercisable for the first time by a U.S. Stock Option Holder during
      any calendar year exceeds $100,000, such Stock Options shall not qualify
      for treatment as ISOs.  The foregoing sentence shall be applied
      by taking Stock Options into account in the order in which they were
      granted.

              

      

      

      
        	
                 
      

              	
                (5)

              	
                Conditions Otherwise
      Satisfied by Plan.  The Plan was approved by the Board of
      Directors of the Company on June 24, 2010.  No Stock Option
      shall be granted under the Plan later than ten years from the date on
      which the Plan was approved by the Board of Directors of the Company (the
      “Board”).

              

      

      

      Any Stock
Option granted under the Plan that fails to satisfy conditions (1) through (5)
above shall be deemed to be a nonqualified stock option.  Any
ambiguities in the terms of a Stock Option granted under the Plan shall, to the
extent possible, be construed in favor of a finding that such Stock Option
qualifies as an ISO.

      

      The
Company shall have the right, in its sole discretion, to elect to have any
rights granted to Stock Option Holders by operation of any non-U.S. law, not
apply to U.S. Stock Option Holders where such law (i) is not required to apply
to U.S. Stock Option Holders and (ii) would jeopardize or prevent such U.S.
Stock Option Holders’ Stock Options from qualifying as ISOs. Notwithstanding any
provision of the Plan or applicable laws, U.S. Stock Option Holders shall have
no rights to receive dividends with respect to the Stock Options prior to
exercise.

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      - 19
-

    

     

    
      

      Cessation of
Employment

       

      This
Appendix shall not be construed to limit the period of time, if any, following a
U.S. Stock Option Holder’s termination of employment during which the U.S. Stock
Option Holder may exercise his or her Stock Options pursuant to Rule
5.  Nevertheless, a U.S. Stock Option Holder who intends for his or
her Stock Options to be treated as ISOs will be required to exercise such Stock
Options upon the earlier of (i) such time specified in the applicable provision
of Rule 5 and (ii) three months following his or her termination of employment
(except in the case of an employee who is disabled within the meaning of Section
22(e)(3) of the Code, in which case such three-month period is extended to one
year) provided, however, that in no event may the Stock Option be exercised
beyond the last date of the Exercise Period.

      

      Not Part of
Wages

      

      Awards of
Stock Options are not part of a U.S. Stock Option Holder’s base salary or wages
and will not be taken into account in determining any other employment-related
rights the U.S. Stock Option Holder may have, such as rights to pension or
severance pay,   provided, however, that in no event may the
Stock Option be exercised beyond the last date of the Exercise
Period.

      

      Securities Law
Restrictions.

      

      The
Company may require each U.S. Stock Option Holder purchasing or acquiring Shares
or ADSs pursuant to a Stock Option under the Plan to represent to and agree with
the Advantest Group in writing that such U.S. Stock Option Holder is acquiring
the Shares or ADSs for investment and not with a view to the distribution
thereof.  All certificates for Shares or ADSs delivered under the
Plan, upon exercise of a Stock Option, shall be subject to such stock-transfer
orders and other restrictions as the Company may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any exchange upon which the Shares or ADSs are then listed, and any applicable
federal or state securities law, and the Company may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.  No Shares or ADSs shall be issued hereunder unless the
Advantest Group shall have determined that such issuance is in compliance with,
or pursuant to an exemption from, all applicable federal and state securities
laws.

      

      Bank and
Broker

      

      Notwithstanding
anything to the contrary in the Rules, including, without limitation, Rules 1.1
or 6.6.3, or your Stock Option Acceptance Form:

      

      
        	
                 
      

              	
                (1)

              	
                “Broker” means
      JPMorgan Chase Bank or such other broker or agent appointed from time to
      time by the Company to execute transactions in connection with the Plan;
      and

              

      

      

      
        	
                 
      

              	
                (2)

              	
                A
      U.S. Stock Option Holder shall open and maintain an account in his or her
      name with JPMorgan Chase Bank for the purpose of the payment of the
      proceeds of a sale of Shares or ADSs.  Such account shall be
      opened through the Company.

              

      

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        - 20
-

         

         

        
          Adjustment

           

        

      

      Unless
the Company determines otherwise, notwithstanding Rule 3.1 to the contrary, no
adjustments shall be effective if the result of the adjustment is a reduction in
the aggregate Exercise Price or the aggregate Subscription Price of a stock
option grant.  Any adjustments shall be made in accordance with
Section 1.422 of the Code.

      

      Section 409A of the US
Internal Revenue Code

      

      As the
Option Price is equal to the fair market value of a Share, the Stock Options are
intended to be exempt from Section 409A of the Code (“Section
409A”).  Notwithstanding the foregoing or any provision of the Plan,
if any provision of the Plan contravenes Section 409A or could cause the Stock
Option Holder to incur any tax, interest or penalties under Section 409A, the
Company may, in its sole discretion and without the Stock Option Holder’s
consent, modify such provision to (i) comply with, or avoid being subject to,
Section 409A, or to avoid the incurrence of taxes, interest and penalties under
Section 409A, and/or (ii) maintain, to the maximum extent practicable, the
original intent and economic benefit to the Stock Option Holder of the
applicable provision without materially increasing the cost to the Company or
contravening the provisions of Section 409A.  This provision does not
create an obligation on the part of the Company to modify the Plan and does not
guarantee that the Stock Options will not be subject to taxes, interest and
penalties under Section 409A.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]