<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1997
REGISTRATION NO. 333-26717
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
REGISTRATION STATEMENT
ON
FORM S-3
(WITH RESPECT TO TOYOTA MOTOR CREDIT CORPORATION ONLY)
AND FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<TABLE>
<S> <C>
TOYOTA AUTO LEASE TRUST 1997-A TOYOTA MOTOR CREDIT CORPORATION
(Issuer with respect to the Certificates) (Originator of Toyota Lease Trust, transferor of SUBI to
Transferor and Issuer of TMCC Demand Notes)
TOYOTA LEASING, INC. TOYOTA LEASE TRUST
(Originator of, and Transferor of the SUBI to, the (Issuer with respect to the SUBI)
Toyota Auto Lease Trust 1997-A)
</TABLE>
(Exact name of Registrants as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 6146 33-0755530
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
</TABLE>
------------------------------
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(310) 618-4000
(Address, including zip code, and telephone number,
including area code, of Originator's principal executive offices)
------------------------------
ALAN F. COHEN, ESQ.
GENERAL COUNSEL
TOYOTA MOTOR CREDIT CORPORATION
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(310) 787-1310
(Name, address, including zip code, and telephone number,
including area code, of agent for service with respect to the Registrant)
COPIES TO:
DAVID J. JOHNSON, JR., ESQ. RENWICK D. MARTIN, ESQ.
AND DANIEL F. PASSAGE, ESQ. Brown & Wood LLP
Andrews & Kurth L.L.P. One World Trade Center, 58th Floor
601 S. Figueroa, Suite 4200 New York, New York 10048
Los Angeles, California 90017
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plan, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 134,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
PROPOSED TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
Automobile Lease Asset Backed Certificates,
Class A-1................................ 100%
Automobile Lease Asset Backed Certificates,
Class A-2................................ $1,146,000,000 100% $1,146,000,000 $347,272.73
Automobile Lease Asset Backed Certificates,
Class A-3................................ 100%
Special Unit of Beneficial Interest........ (3) (3) (3) (3)
TMCC Demand Notes.......................... (4) (4) (4) (4)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
(2) Previously paid.
(3) The Special Unit of Beneficial Interest (the "SUBI") issued by Toyota Lease
Trust will constitute a beneficial interest in certain specified assets of
Toyota Lease Trust, including certain lease contracts and the automobile and
light-duty trucks relating to such lease contracts. The SUBI is not being
offered to investors hereunder but will be transferred by Toyota Motor
Credit Corporation (the originator of Toyota Lease Trust) to Toyota Leasing,
Inc. (the originator of Toyota Auto Lease Trust 1997-A), and (excluding
certain insurance proceeds) from Toyota Leasing, Inc. to Toyota Auto Lease
Trust 1997-A.
(4) The TMCC Demand Notes represent investments by the Trust of Collections in
demand notes issued from time to time by TMCC.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 28, 1997
PROSPECTUS
TOYOTA AUTO LEASE TRUST 1997-A
$410,000,000 % AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-1
$650,000,000 % AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-2
$72,750,000 % AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-3
TOYOTA LEASING, INC.
(TRANSFEROR)
TOYOTA MOTOR CREDIT CORPORATION
(SERVICER)
------------------------
The Auto Lease Asset Backed Certificates (the "Certificates") will represent
undivided interests in the Toyota Auto Lease Trust 1997-A (the "Trust") formed
pursuant to a securitization trust agreement (the "Agreement") between Toyota
Leasing, Inc. (the "Transferor") and U.S. Bank National Association (formerly
known as First Bank National Association), as trustee (the "Trustee"). The
property of the Trust will consist of a Special Unit of Beneficial Interest (the
"SUBI"), which, in turn, will evidence a beneficial interest in certain
specified assets (the "SUBI Assets") of Toyota Lease Trust, a Delaware business
trust (the "Titling Trust"), monies on deposit in the Reserve Fund and certain
other accounts and certain other assets described more fully herein under "The
Trust and the SUBI". The assets of the Titling Trust (the "Titling Trust
Assets") will consist primarily of retail closed-end lease contracts and the
automobiles and light duty trucks relating thereto and certain other assets
described more fully herein. Toyota Motor Credit Corporation ("TMCC") will
service the lease contracts included in the Titling Trust Assets.
(CONTINUED ON NEXT PAGE)
FOR A DISCUSSION OF MATERIAL RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE CLASS A CERTIFICATES, SEE "RISK FACTORS" ON PAGE
20 HEREIN.
THE CLASS A CERTIFICATES WILL REPRESENT BENEFICIAL INTERESTS IN THE TRUST AND
WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF TOYOTA MOTOR CREDIT
CORPORATION, TOYOTA MOTOR SALES, U.S.A., INC., TOYOTA LEASING, INC.,
TOYOTA LEASE TRUST OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
APPLICATION WILL BE MADE TO LIST THE CLASS A CERTIFICATES ON THE LUXEMBURG STOCK
EXCHANGE AND FOR LISTING AND PERMISSION TO DEAL IN THE CLASS A CERTIFICATES ON
THE STOCK EXCHANGE OF HONG KONG LIMITED.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO THE
PRICE TO PUBLIC(1) DISCOUNTS(2) TRANSFEROR(1)(2)(3)
<S> <C> <C> <C>
Per Class A-1 Certificate.................. % % %
Per Class A-2 Certificate.................. % % %
Per Class A-3 Certificate % % %
Total...................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, calculated at the related Certificate Rate
from the date of initial issuance.
(2) The Underwriting Discount will be % per Class A-3 Certificate sold to
certain noninstitutional investors. Therefore, to the extent of any such
sales to such investors, the actual total Underwriting Discount will be more
than, and the actual Proceeds to the Seller will be less than, the amounts
indicated in this table.
(3) Before deducting expenses payable by the Transferor estimated to be $ .
------------------------
The Class A Certificates are offered subject to prior sale, when, as and if
issued to and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. It is expected that delivery of the Class A
Certificates will be made in book-entry form only through the Same Day Funds
Settlement System of The Depository Trust Company in the United States, and
Cedel Bank, societe anonyme and the Euroclear System in Europe and Asia, on or
about September , 1997, against payment therefor in immediately available
funds.
------------------------
JOINT BOOKRUNNERS
MERRILL LYNCH & CO. LEHMAN BROTHERS MORGAN STANLEY DEAN WITTER
(GLOBAL COORDINATOR)
The date of this Prospectus is , 1997.
<PAGE>
(CONTINUED FROM FRONT COVER)
From time to time until principal is first allocated or distributed to the
holders of Certificates ("Certificateholders"), as described below, Principal
Collections on or in respect of the SUBI Assets will be reinvested in additional
lease contracts originated as described herein and assigned to the Titling
Trust, together with the automobiles and light duty trucks relating thereto,
which at the time of reinvestment will become SUBI Assets. The SUBI will not
evidence a direct interest in the SUBI Assets, nor will it represent a
beneficial interest in any of the Titling Trust Assets other than the SUBI
Assets. Payments made on or in respect of the Titling Trust Assets not
represented by the SUBI will not be available to make payments on the
Certificates.
The Certificates will consist of three classes of senior certificates
(respectively, the "Class A-1 Certificates", the "Class A-2 Certificates" and
the "Class A-3 Certificates", and collectively, the "Class A Certificates") and
one class of subordinated certificates (the "Class B Certificates"). The Class A
Certificates are the only Certificates offered hereby. The Initial Certificate
Balance of the Class B Certificates will be $73,850,000, and the Class B
Certificates will be subordinated to the Class A Certificates to the extent
described herein. The Class A-1, Class A-2, Class A-3 and Class B Certificates
will initially evidence in the aggregate approximately 33%, 53%, 6% and 6%
undivided interests in the Trust, respectively. The Transferor will own the
undivided interest in the Trust not represented by the Certificates (the
"Transferor Interest"). The initial balance of the Transferor Interest will be
$24,631,519.20. SEE "Description of the Certificates".
Interest on the Certificates will accrue at the respective per annum
interest rates specified above and, except upon the occurrence of a Monthly
Payment Event, if any, or in the case of a Class of Certificates that is not
fully paid on its Targeted Maturity Date, will be distributed to holders thereof
semiannually on March 25 and September 25 of each year (or, if such day is not a
Business Day, on the next succeeding Business Day), commencing on March 25,
1998.
The Targeted Maturity Date for the Class A-1 Certificates will be September
27, 1999, for the Class A-2 Certificates will be September 25, 2000, for the
Class A-3 Certificates will be March 26, 2001 and for the Class B Certificates
will be September 25, 2001. In general, the Certificates will be "sequential
pay" certificates meaning that no principal payments will be made on the Class
A-2 Certificates until the Class A-1 Certificates have been paid in full, no
principal payments will be made on the Class A-3 Certificates until the Class
A-2 Certificates have been paid in full and no principal payments will be made
on the Class B Certificates until the Class A-3 Certificates are paid in full.
Except upon the occurrence of a Monthly Payment Event, principal in respect of a
Class of Class A Certificates will not be distributed until its respective
Targeted Maturity Date. Upon the occurrence of certain Monthly Payment Events,
if any, or in the event the full amount of principal of any Class of Class A
Certificates is not available on its Targeted Maturity Date, principal will be
distributed to holders of the related Class of Class A Certificates to the
extent and in the order of priority described herein on Certificate Payment
Dates which will thereafter be monthly on each Monthly Allocation Date. A
"Monthly Allocation Date" is the day on which Collections in respect of the
Contracts and Leased Vehicles represented by the SUBI are allocated, and shall
occur on the twenty-fifth day of each month (or, if such day is not a Business
Day, on the next succeeding Business Day) commencing on September 25, 1997. Each
Class of Class A Certificates will also have a Stated Maturity Date on or before
which payment in full is due.
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Class A
Certificates. Such transactions may include stabilizing and the purchase of
Class A Certificates to cover syndicate short positions. For a description of
these activities, see "Underwriting".
UNTIL DECEMBER , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO
HAS RECEIVED AN ELECTRONIC PROSPECTUS OR A REQUEST BY SUCH INVESTOR'S
REPRESENTATIVE WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY
OBLIGATION, THE TRANSFEROR OR THE UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE
TO BE DELIVERED, WITHOUT CHARGE, A PAPER COPY OF THE PROSPECTUS.
ii
<PAGE>
AVAILABLE INFORMATION
The Transferor, as originator of the Trust, and the Trust, as issuer of the
Certificates, have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with all amendments
and exhibits thereto, the "Registration Statement") of which this Prospectus is
a part, under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Class A Certificates. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and Suite 1300, Seven World Trade Center, New York, New York 10048.
Copies of such information can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, copies of the Registration Statement and all of the
documents incorporated by reference herein (including the Titling Trust
Agreement and the Agreement) may be obtained at no charge at the offices of
Bankers Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg
and at the offices of Merrill Lynch & Co. at Asia Pacific Financial, 3 Garden
Road, Hong Kong. The Servicer, on behalf of the Trust, will also file or cause
to be filed with the Commission such periodic reports as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. Electronic filings made through
the Electronic Data Gathering Analysis and Retrieval System are publicly
available through the Commission's Website at http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
Certain documents with respect to Toyota Motor Credit Corporation ("TMCC")
are incorporated herein. The documents incorporated by reference herein relate
solely to TMCC as a registrant on the Registration Statement on Form S-3 with
respect to the TMCC Demand Notes. The Certificates will represent beneficial
interests in the Trust and will not represent interests in or obligations of
TMCC or any of its affiliates.
TMCC is subject to the informational requirements of the Exchange Act, and
in accordance therewith files reports and other information with the Commission.
Such reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York
10048; and Chicago Regional Office, Citibank Center, Suite 1800, 500 West
Madison Street, Chicago, Illinois 60611-2511. In addition, certain of TMCC's
securities are listed on the New York Stock Exchange and the aforementioned
material may also be inspected at the offices of such exchange.
TMCC's Annual Report on Form 10-K for the year ended September 30, 1996, and
TMCC's Quarterly Reports on Form 10-Q for the quarters ended December 31, 1996,
March 31, 1997, and June 30, 1997, have been filed with the Commission and are
made a part of this Registration Statement. All reports filed by TMCC pursuant
to Sections 13(a) or 15(d) of the Exchange Act subsequent to the date of the
Registration Statement and prior to the termination of the offering of the Class
A Certificates and all supplements to the Registration Statement filed from time
to time shall be deemed to be incorporated by reference into the Registration
Statement to be a part hereof from the date of filing such documents.
Any statement contained herein or made a part hereof, or contained in a
document all or a portion of which is incorporated or deemed to be incorporated
by reference herein, shall be deemed to be modified or superseded for the
purposes of the Registration Statement to the extent that a statement contained
therein (or in any subsequently filed document which is also incorporated or
deemed to be incorporated by
iii
<PAGE>
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement.
REPORTS TO CERTIFICATEHOLDERS
U.S. Bank National Association, as Trustee, will provide to
Certificateholders (which shall be Cede & Co. as the nominee of DTC unless
Definitive Certificates are issued under the limited circumstances described
herein) unaudited monthly and annual reports concerning the Contracts and Leased
Vehicles. SEE "Description of the Certificates--Reports to Certificateholders".
For so long as the Class A Certificates are outstanding, each such report
(including a statement of the Class Certificate Balance of each Class of
Certificates) also shall be delivered to the Luxembourg Stock Exchange and The
Stock Exchange of Hong Kong Limited on the related date for delivery to
Certificateholders. Copies of such reports may be obtained at no charge at the
offices of Bankers Trust Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450,
Luxembourg and at the offices of Merrill Lynch & Co. at Asia Pacific Financial,
3 Garden Road, Hong Kong.
iv
<PAGE>
OVERVIEW OF TRANSACTION
[GRAPH]
v
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. CERTAIN CAPITALIZED
TERMS USED HEREIN ARE DEFINED ELSEWHERE IN THIS PROSPECTUS ON THE PAGES
INDICATED IN THE "INDEX OF TERMS" BEGINNING ON PAGE 102 HEREOF.
<TABLE>
<S> <C>
OVERVIEW.......................... Certain motor vehicle dealers ("Dealers") whose
dealerships are located in California, Florida,
Michigan, Pennsylvania and Ohio (the "Trust States")
have assigned and will assign retail closed- end
automobile and light duty truck leases to the Titling
Trust pursuant to their dealer agreements with the
Titling Trust. The Titling Trust was created in October
1996 to avoid the administrative difficulty and expense
associated with retitling leased vehicles in connection
with the securitization of automobile and light duty
truck leases. The Titling Trust has issued to TMCC an
Undivided Trust Interest (the "UTI") representing the
entire beneficial interest in the unallocated Titling
Trust Assets. SEE "The Trust and the SUBI--The Trust".
TMCC will instruct the trustee of the Titling Trust to
allocate a separate portfolio of leases and leased
vehicles from and among the Titling Trust Assets
represented by the UTI and create a special unit of
beneficial interest (the "SUBI") which will represent
the entire beneficial interest in such portfolio.
Titling Trust Assets allocated to the SUBI will no
longer be represented by the UTI. TMCC will sell the
SUBI to the Transferor and the Transferor will
contribute substantially all of the SUBI (excluding the
related rights to proceeds of the Residual Value Insur-
ance Policy described herein) to the Trust. In return,
the Trust will issue the Class A Certificates offered
hereby and the Class B Certificates, and will create the
Transferor Interest for the benefit of the Transferor.
The "Transferor Interest" is the undivided interest in
the Trust not evidenced by the Certificates and will be
permanently retained by the Transferor.
TMCC, from time to time in the future, may cause the
Titling Trust to allocate additional separate portfolios
of leases and leased vehicles and to create additional
special units of beneficial interest similar to the SUBI
relating to such portfolios ("Other SUBIs") which may be
sold to the Transferor or one or more other entities.
The Trust and the Certificateholders will have no
interest in the UTI, any Other SUBI or any Titling Trust
Assets evidenced by the UTI or any Other SUBI.
THE TRUST......................... The Trust will be formed pursuant to the Agreement
between the Transferor and U.S. Bank National
Association (formerly known as First Bank National
Association, "U.S. Bank"), as Trustee. The property of
the Trust will consist primarily of the SUBI and monies
on deposit in certain accounts established as described
herein.
THE TITLING TRUST................. The Titling Trust is a Delaware business trust formed
pursuant to the Titling Trust Agreement. The primary
business purpose of the Titling Trust is to take
assignments of and serve as holder of
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
title to substantially all of the lease contracts and
the related leased vehicles originated by the Dealers
beginning on dates prior to the execution of the SUBI
Supplement. Pursuant to the Servicing Agreement, TMCC
will service the lease contracts included in the Titling
Trust Assets, including the Contracts. SEE "Additional
Document Provisions--The Trust Agreement" and "--The
Servicing Agreement" and "Certain Legal Aspects of the
Titling Trust--The Titling Trust".
The Titling Trust is governed by an Amended and Restated
Trust and Servicing Agreement (the "Titling Trust
Agreement") among TMCC, as grantor, initial beneficiary
and Servicer, TMTT, Inc., as trustee (the "Titling
Trustee"), and U.S. Bank, as trust agent (the "Trust
Agent"). TMTT, Inc. is a Delaware corporation and a
wholly owned, special purpose subsidiary of U.S. Bank
that was organized solely for the purpose of acting as
Titling Trustee. TMTT, Inc. is not affiliated with TMCC
or any affiliate thereof. SEE "The Titling Trust-- The
Titling Trustee".
TITLING TRUST ASSETS
ALLOCATED AS SUBI ASSETS........ The Titling Trust Assets consist primarily of retail
closed-end lease contracts and the automobiles and light
duty trucks relating thereto. The SUBI will evidence a
beneficial interest in a specified portion of the
Titling Trust Assets allocated to the SUBI. Certain
lease contracts (the "Initial Contracts") originated by
the Dealers, the automobiles and light duty trucks
relating thereto (the "Initial Leased Vehicles") and
certain monies due under or payable in respect of the
Initial Contracts and the Initial Leased Vehicles on or
after August 1, 1997 (the "Cutoff Date") will be
allocated to the SUBI on the Closing Date. During the
Revolving Period, payments made on or in respect of the
SUBI Assets allocable to the Discounted Principal
Balance thereof will be reinvested in additional retail
closed-end lease contracts (the "Subsequent Contracts"
and, together with the Initial Contracts, the
"Contracts") assigned to the Titling Trust by Dealers
and the related automobiles and light duty trucks (the
"Subsequent Leased Vehicles" and, together with the
Initial Leased Vehicles, the "Leased Vehicles"). At the
time of such reinvestment, such Subsequent Contracts and
Subsequent Leased Vehicles will be allocated to the SUBI
and will no longer be UTI Assets. All such assets,
together with certain other assets and rights, are the
"SUBI Assets". SEE "--Principal--The Revolving Period"
and "The Trust and the SUBI--The SUBI".
The SUBI will evidence an indirect beneficial interest,
rather than a direct legal interest, in the SUBI Assets.
The SUBI will not represent a beneficial interest in any
Titling Trust Assets other than the SUBI Assets.
Payments made on or in respect of the Titling Trust
Assets other than the SUBI Assets will not be available
to make payments on the Certificates.
THE TRANSFEROR.................... Toyota Leasing, Inc. is a California corporation which
is a wholly
</TABLE>
2
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<TABLE>
<S> <C>
owned, special purpose subsidiary of TMCC. SEE "The
Transferor".
TMCC.............................. TMCC is a California corporation that has 34 branches in
various locations in the United States and one branch in
the Commonwealth of Puerto Rico. TMCC's primary business
is providing retail leasing, retail and wholesale
financing and certain other financial services to
authorized Toyota and Lexus vehicle and Toyota
industrial equipment dealers and their customers in the
United States (excluding Hawaii) and Puerto Rico. TMCC
is a wholly owned subsidiary of Toyota Motor Sales,
U.S.A., Inc. ("TMS"), which is primarily engaged in the
wholesale distribution of automobiles, light duty
trucks, industrial equipment and related replacement
parts and accessories throughout the United States
(excluding Hawaii). TMS is a wholly-owned subsidiary of
Toyota Motor North America, Inc. ("TMA"). Substantially
all of TMS's products are either manufactured by its
affiliates or are purchased from Toyota Motor
Corporation ("TMC"), which wholly owns TMA, or
affiliates of TMC.
Pursuant to the Agreement and the Series 1997-A SUBI
Servicing Supplement to the Titling Trust Agreement
dated as of September 1, 1997, among TMCC, the Titling
Trustee and the Transferor (the "Servicing Supplement"
and, together with the Titling Trust Agreement, the
"Servicing Agreement"), TMCC will act as the initial
servicer of the Titling Trust Assets, including the SUBI
Assets (in such capacity, the "Servicer"). Pursuant to
the terms of the Servicing Agreement, the Trustee is a
third party beneficiary thereof.
SECURITIES OFFERED
A. GENERAL........................ The Certificates will represent fractional undivided
beneficial interests in the Trust. The Certificates will
consist of three classes of senior certificates (the
Class A-1, Class A-2 and Class A-3 Certificates) and one
class of subordinated certificates (the Class B
Certificates). Only the Class A Certificates are being
offered hereby.
Each Certificate will represent the right to receive
semiannual payments of interest at the related
Certificate Rate and, to the extent described herein,
payments of principal during the Amortization Period. It
is expected that repayment of principal on each Class of
Certificates will be made on the related Targeted
Maturity Date.
Payments on the Certificates will be funded from
payments received by the Trust on or in respect of the
SUBI and, in certain circumstances, from monies on
deposit in the Reserve Fund, from earnings in respect of
monies, if any, on deposit in the Certificateholders'
Account, and monies that otherwise would be
distributable in respect of the Transferor Interest.
Interests in the assets of the Trust will be allocated
among the Class A-1
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Certificateholders, the Class A-2 Certificateholders,
the Class A-3 Certificateholders and the Class B
Certificateholders (collectively, the "Investor
Interest") and the Transferor Interest.
In general, the Certificates will be "sequential pay"
certificates, meaning that no principal payments will be
made on the Class A-2 Certificates until the Class A-1
Certificates have been paid in full, no principal
payments will be made on the Class A-3 Certificates
until the Class A-2 Certificates have been paid in full
and no principal payments will be made on the Class B
Certificates until the Class A-3 Certificates are paid
in full. The Class B Certificates will be subordinated
to the Class A Certificates to the extent described
herein. SEE "Description of the
Certificates--Allocations and Distributions on the
Certificates". The Transferor Interest also will be
subordinated to the Certificates, as described herein.
Payments will be made to Certificateholders of record as
of the day immediately preceding each relevant
Certificate Payment Date or, if Definitive Certificates
are issued, as of the last Business Day of the preceding
month (each, a "Record Date"). A "Business Day" is a day
other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York, Chicago,
Illinois, or Los Angeles, California are authorized or
obligated by law, regulation, executive order or decree
to be closed; provided that, solely for purposes of
identifying any Certificate Payment Date with respect to
the making of payments on the Class A Certificates in
Luxembourg or Hong Kong by a paying agent there located,
"Business Day" shall also exclude any day on which
banking institutions located in that jurisdiction are
authorized by law, regulation, governmental order or
decree to be closed, whether or not payments are made
with respect to such Certificates in any other
jurisdiction on such date, but such definition shall not
be used for making any other calculation.
On the date of initial issuance of the Certificates (the
"Closing Date"), the Trust will issue $410,000,000
aggregate initial Certificate Balance of Class A-1
Certificates (the "Initial Class A-1 Certificate
Balance"), $650,000,000 aggregate initial Certificate
Balance of Class A-2 Certificates (the "Initial Class
A-2 Certificate Balance"), $72,750,000 aggregate initial
Certificate Balance of Class A-3 Certificates (the
"Initial Class A-3 Certificate Balance" and, together
with the Initial Class A-1 Certificate Balance and the
Initial Class A-2 Certificate Balance, the "Initial
Class A Certificate Balance") and $73,850,000 aggregate
initial Certificate Balance of Class B Certificates (the
"Initial Class B Certificate Balance" and, together with
the Initial Class A Certificate Balance, the "Initial
Certificate Balance"). Except as described below, such
Class Certificate Balances will remain fixed at the
indicated Initial Certificate Balances during the
Revolving Period and until the related Targeted Maturity
Date,
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except that such Class Certificate Balances may decline
in connection with the allocation of Loss Amounts
thereto or, commencing upon the occurrence of a Monthly
Payment Event, in connection with distributions thereto
in respect of principal to the extent described herein.
The "Class Certificate Balance" of any Class of
Certificates on any day will equal the Initial
Certificate Balance thereof, reduced by the sum of all
distributions made in respect of principal of such Class
(including any distributions in respect of Loss Amounts
and Certificate Principal Loss Amounts allocable to such
Class) on or prior to such day and any unreimbursed
Certificate Principal Loss Amounts in respect of such
Class (and in the case of the Class B Certificates,
minus the aggregate amount of unreimbursed Class B
Available Principal applied to cover interest shortfalls
and reimburse Loss Amounts and Certificate Principal
Loss Amounts allocated to the Class A Certificates), as
described herein. The "Class A Certificate Balance" will
mean the sum of the Class A-1, Class A-2 and Class A-3
Class Certificate Balances. The "Certificate Balance"
with respect to the Certificates will mean the sum of
the Class A Certificate Balance and the Class B
Certificate Balance. The Transferor Interest will
represent the interest in the Trust not represented by
the Investor Interest. The Transferor Interest will
initially equal $24,631,519.20 (2% of the Aggregate Net
Investment Value as of the Cutoff Date) and on any day
will equal the difference between the Aggregate Net
Investment Value and the Adjusted Certificate Balance,
calculated as described below. SEE "Summary--The
SUBI--1. The Contracts". As more fully described herein,
the Aggregate Net Investment Value can change daily and
the Transferor Interest can decrease daily as the
Aggregate Net Investment Value decreases. The Transferor
Interest may increase on a Monthly Allocation Date as
the Adjusted Certificate Balance declines. SEE
"Description of the Certificates--General".
B. DISTRIBUTIONS.................. INTEREST. Payments of interest on each Class of
Certificates will be made, to the extent funds are
allocated and are available therefor as described
herein, (i) on each Monthly Allocation Date in March and
September, commencing in March 1998, as well as on the
Targeted Maturity Date for such Class and (ii) for any
Class of Certificates not paid in full on the related
Targeted Maturity Date, on any subsequent Certificate
Payment Date until such Class is paid in full. In
addition, after the occurrence of any Monthly Payment
Event, payments of interest on each Class of
Certificates will be made monthly, to the extent funds
are allocated and are available therefor as described
herein, on each Monthly Allocation Date (and each such
subsequent Monthly Allocation Date will be a Certificate
Payment Date).
PRINCIPAL. Principal of each Class of Certificates will
be payable in full on the related Targeted Maturity
Date. If Principal Collections during the Collection
Periods preceding such date (but
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commencing after the end of the Revolving Period) that
are allocable to such Class of Certificates, together
with amounts allocated thereto from amounts on deposit
in the Reserve Fund, through subordination or from any
related Maturity Advance, are insufficient to make such
payment in full, all such amounts available will be paid
to the related Certificateholders on the related
Targeted Maturity Date and, thereafter, payment of all
Principal Collections in respect of the related
Collection Period allocable to the Investor Interest
will be paid on each related Certificate Payment Date on
a monthly basis until such Class of Class A Certificates
has been paid in full. In addition, after the occurrence
of any Monthly Payment Event, payments of principal of
the Certificates will be made monthly, sequentially as
described herein to the extent funds are allocated and
are available therefor as described herein, on each
Certificate Payment Date (and each such subsequent
Monthly Allocation Date will be a Certificate Payment
Date).
Each Monthly Allocation Date on which any such
distribution of interest or principal is required to be
made with respect to any Class of Certificates is a
"Certificate Payment Date" with respect to such Class.
The Targeted Maturity Date for each Class of
Certificates is as follows:
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CLASS TARGETED MATURITY DATE
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Class A-1 September 27, 1999
Class A-2 September 25, 2000
Class A-3 March 26, 2001
Class B September 25, 2001
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The Stated Maturity Date for each Class of Certificates
(the date on which ultimate payment thereof in full is
due) is April 26, 2004.
C. INTEREST....................... Interest will accrue on the Certificates at the
following rates (the "Certificate Rates"): (i) Class A-1
Certificates, % per annum (the "Class A-1 Rate"),
(ii) Class A-2 Certificates, % per annum (the "Class
A-2 Rate"), (iii) Class A-3 Certificates, % per annum
(the "Class A-3 Rate") and (iv) Class B Certificates
% per annum (the "Class B Rate"). Interest will
accrue on the Class Certificate Balance of each Class of
Certificates and on Certificate Principal Loss Amounts
allocated thereto at the applicable Certificate Rate
during each Interest Period. The "Interest Period" with
respect to each related Certificate Payment Date for a
Class of Certificates will be the period from and
including the preceding Certificate Payment Date, to but
excluding such Certificate Payment Date. However, the
first Interest Period for any Class of Certificates will
be the period from and including the Closing Date, to
but excluding the related first Certificate Payment
Date. Interest will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
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Interest allocations and payments to all Classes of
Class A Certificates will have the same priority. Under
certain circumstances, the amount available for interest
allocations or distributions could be less than the
amount of interest allocable to or distributable on the
Class A Certificates on any Monthly Allocation Date, in
which case each Class of Class A Certificates will be
allocated or paid its ratable share (based upon the
aggregate amount of interest due thereon) of the
aggregate amount available to be allocated or paid in
respect of interest on the Class A Certificates.
D. PRINCIPAL, REVOLVING PERIOD
AND AMORTIZATION PERIOD......... Unless a Monthly Payment Event has occurred, principal
will be paid to the holders of each Class of
Certificates on the related Targeted Maturity Date in an
amount equal to the lesser of (i) the related Class
Certificate Balance, and (ii) the sum of (x) all amounts
allocated for distributions in respect of principal of
the Certificates then on deposit in the
Certificateholders' Account and (y) any Maturity
Advance. SEE "--Maturity Advances".
To the extent that the entire Class Certificate Balance
is not paid on the related Targeted Maturity Date,
distributions of principal in respect of the related
Class of Certificates will be made on each Certificate
Payment Date commencing in the month immediately
following such Targeted Maturity Date, and shall con-
tinue on a monthly basis until such Class is paid in
full. Interest at the related Certificate Rate will
continue to accrue on the outstanding Certificate
Balance of each Class of Certificates (and on
unreimbursed Certificate Principal Loss Amounts allo-
cated thereto) and will be distributable on each such
Certificate Payment Date. SEE "--Interest".
Failure to pay the entire Class Certificate Balance of
any Class of Certificates on its Targeted Maturity Date
because Collections and other amounts allocable thereto
are insufficient therefor will not constitute a Monthly
Payment Event or an Event of Servicing Termination.
However, failure to make any scheduled interest payment
on or within three Business Days of a relevant
Certificate Payment Date, or failure to pay in full any
Class of Certificates on or before its Stated Maturity
Date, will constitute an Event of Servicing Termination.
SEE "Additional Document Provisions--The Servicing
Agreement--Events of Servicing Termination" and
"--Rights Upon Event of Servicing Termination."
THE REVOLVING PERIOD. No principal will be allocable or
distributable on the Certificates until the Monthly
Allocation Date (the "First Principal Monthly Allocation
Date") in the month commencing after the earlier to
occur of October 1, 1998 (the "Amortization Date") or an
Early Amortization Event. From the
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Closing Date and through the Business Day preceding the
commencement of the Amortization Period (I.E., the
earlier of October 1, 1998, or the date of an Early
Amortization Event) (the "Revolving Period"), all
Principal Collections and amounts otherwise
distributable to Certificateholders as reimbursements of
Loss Amounts and Certificate Principal Loss Amounts will
be reinvested in Subsequent Contracts and Subsequent
Leased Vehicles so as to maintain the Certificate
Balance at a constant level during the Revolving Period;
provided that during the Revolving Period the
Certificate Balance of a Class of Certificates will
decrease to the extent Certificate Principal Loss
Amounts are allocated thereto and not reimbursed. Early
Amortization Events are described under "Description of
the Certificates--Early Amortization Events". While any
Early Amortization Event will terminate the Revolving
Period, only certain Early Amortization Events (which
are Monthly Payment Events) will cause monthly
distributions in respect of principal to commence.
During the Revolving Period, on one or more Business
Days selected by the Servicer each month (each, a
"Transfer Date"), the Servicer will direct the Titling
Trustee to reinvest Principal Collections and certain
reimbursed Loss Amounts in Subsequent Contracts and
Subsequent Leased Vehicles. Upon such reinvestment, such
Subsequent Contracts and Subsequent Leased Vehicles will
become SUBI Assets. If on the last Business Day of any
month during the Revolving Period commencing in October
1997 the Servicer determines that the amount of
Principal Collections and reimbursed Loss Amounts and
Certificate Principal Loss Amounts for the preceding
Collection Period not reinvested in Subsequent Contracts
and Subsequent Leased Vehicles as of the first day of
such month exceeds $1,000,000, an Early Amortization
Event will be deemed to have occurred, the Revolving
Period will terminate as of such day and all Principal
Collections and reimbursed Loss Amounts not reinvested
as of such day will then be allocable or distributable
to Certificateholders on the succeeding Monthly
Allocation Date. SEE "Description of the
Certificates--Allocations and Distributions on the
Certificates--Revolving Period".
During the Revolving Period, Subsequent Contracts and
Subsequent Leased Vehicles will be selected from the
Titling Trust's portfolio of lease contracts and related
vehicles not allocated to any Other SUBI, based on the
criteria specified in the Titling Trust Agreement and
SUBI Supplement as described under the "The
Contracts--Representations, Warranties and Covenants".
Reinvestment of Principal Collections and reimbursed
Loss Amounts and Certificate Principal Loss Amounts will
be in the lease contracts having the earliest
origination dates and the related vehicles and Titling
Trust Assets (excluding those previously allocated to
any Other SUBI). If any Other SUBI is created and
allocations are being made in respect of such Other
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SUBI at the same time out of the Titling Trust's general
pool of unallocated lease contracts, reinvestment in
respect of the SUBI will be given priority. SEE "The
Contracts".
"Principal Collections" will mean, with respect to any
Collection Period, all Collections allocable to the
principal component of any Contract (including any
payment in respect of the related Leased Vehicle, other
than any payment as to which a Loss Amount has been
realized and allocated during any prior Collection
Period), discounted to the extent described below, less
the portions of Advances and Nonrecoverable Advances
reimbursable to the Servicer therefrom. With respect to
any Monthly Allocation Date, the related "Collection
Period" will be the preceding calendar month. For
purposes of determining Principal Collections, the
principal component of all payments made on or in
respect of a Contract (or the related Leased Vehicle)
with a Lease Rate less than 9.75% per annum (each, a
"Discounted Contract") will be discounted at a per annum
rate of 9.75%, thereby effectively reallocating a
portion of the payments received in respect of the
principal component of the Contracts to Interest
Collections and providing additional credit enhancement
for the benefit of the Certificateholders. With respect
to any Collection Period, "Collections" will include all
net collections received in respect of the Contracts and
Leased Vehicles during such Collection Period, such as
Monthly Payments (including previously collected
Payments Ahead that represent Monthly Payments due
during such Collection Period), Prepayments, Advances,
Net Matured Leased Vehicle Proceeds, Net Repossessed
Vehicle Proceeds and other Net Liquidation Proceeds,
less (i) amounts representing Payments Ahead with
respect to future Collection Periods, (ii) amounts
retained by or paid to the Servicer in respect of
outstanding Advances and Nonrecoverable Advances and
(iii) Additional Loss Amounts in respect of such
Collection Period. In addition, for each Collection
Period during the Revolving Period, amounts otherwise
allocable or distributable to the Certificateholders on
the related Monthly Allocation Date as reimbursement of
Loss Amounts or Certificate Principal Loss Amounts
allocable to the Investor Interest will be treated as
Principal Collections and reinvested in Subsequent
Contracts and Subsequent Leased Vehicles. SEE
"Description of the Certificates--Allocations and
Distributions on the Certificates--Allocations and
Distributions of Collections".
With respect to any Collection Period "Interest
Collections" generally will equal the amount by which
Collections exceed Principal Collections, less the
portions of Advances and Nonrecoverable Advances
reimbursable to the Servicer therefrom. "Net Repossessed
Vehicle Proceeds" will equal Repossessed Vehicle
Proceeds net of Repossessed Vehicle Expenses, and "Net
Liquidation Proceeds" will equal Liquidation Proceeds
net of Liquidation Expenses.
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AMORTIZATION PERIOD. The "Amortization Period" shall
commence on the earlier of the Amortization Date or the
day on which an Early Amortization Event occurs, and
will end when (i) the Class Certificate Balance of each
Class of Certificates has been reduced to zero, or (ii)
the Trust otherwise terminates. During the Amortization
Period, Principal Collections and reimbursed Loss
Amounts and Certificate Principal Loss Amounts will no
longer be reinvested in Subsequent Contracts and Subse-
quent Leased Vehicles.
During the Amortization Period, the amount of Principal
Collections allocable to the Investor Interest in
respect of a Collection Period (the "Principal
Allocation") generally will mean the Principal
Collections in respect of such Collection Period alloca-
ble to the SUBI multiplied by the Investor Percentage
for such Principal Collections. The "Investor
Percentage" for purposes of the Principal Allocation
will equal the percentage equivalent of a fraction (not
to exceed 100%), the numerator of which is the Adjusted
Certificate Balance and the denominator of which is the
Aggregate Net Investment Value, calculated as of the
last day of the Collection Period (i) preceding the
Amortization Date or (ii) preceding the month, if any,
during which an Early Amortization Event occurs. The
"Adjusted Certificate Balance" for any Class of
Certificates is the Initial Certificate Balance thereof
reduced by the sum of all amounts deposited into the
Certificateholders' Account in respect of principal on
such Class plus the amount of all unreimbursed Loss
Amounts and Certificate Principal Loss Amounts
previously allocated thereto (and in the case of the
Class B Certificates, minus the aggregate amount of
unreimbursed Class B Available Principal applied to
cover interest shortfalls and reimburse Loss Amounts and
Certificate Principal Loss Amounts allocated to the
Class A Certificates). SEE "Description of the
Certificates--Calculation of Investor Percentage and
Transferor Percentage."
Following the occurrence of a Monthly Payment Event, if
any, allocations based upon the Principal Allocation may
result in allocations or distributions to
Certificateholders of Principal Collections in amounts
that are greater relative to the declining Certificate
Balances than would be the case if no fixed Investor
Percentage were used. To the extent that on any Monthly
Allocation Date during the Amortization Period any
portion of the Investor Percentage of Interest
Collections in respect of the related Collection Period
remains after required distributions have been made,
such excess interest will be deposited into the Reserve
Fund until the amount on deposit therein equals the
Specified Reserve Fund Balance. Any remaining excess
interest, up to but not exceeding the product of (i)
one-twelfth of 0.25% and (ii) the Aggregate Net
Investment Value as of the last day of such Collection
Period will constitute the "Accelerated Principal
Distribution Amount". The Accelerated Principal
Distribution
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Amount will be allocable or distributable to the
Certificateholders (or for reimbursements of Maturity
Advances) in addition to (and in the same manner and
priority as) ordinary allocations and distributions of
principal in respect of the Certificates. SEE
"Description of the Certificates--Allocations and
Distributions on the Certificates--Allocations and
Distributions of Collections" and "Assets of the
Trust--The Accounts; Collections--The SUBI Collection
Account" and "--Certain Withdrawals from the SUBI
Collection Account".
The "Aggregate Net Investment Value" as of any date will
equal the sum of (i) the Discounted Principal Balance of
all Contracts other than Charged-off, Liquidated,
Matured and Additional Loss Contracts, (ii) the
aggregate Residual Value of all Leased Vehicles to the
extent that the related Contracts have reached their
scheduled maturities and been terminated (each, a
"Matured Contract") within the three immediately
preceding Collection Periods but which Leased Vehicles
as of the last day of the most recent Collection Period
have remained unsold and not otherwise disposed of by
the Servicer for no more than three full Collection
Periods (the "Matured Leased Vehicle Inventory") plus
certain related charges and (iii) during the Revolving
Period, the amount of unreinvested Principal Collections
and reimbursed Loss Amounts and Certificate Principal
Loss Amounts. The "Discounted Principal Balance" for
each Contract with a Lease Rate less than 9.75% will be
its Outstanding Principal Balance discounted by 9.75%
(each such Contract, a "Discounted Contract"), and for
each Contract with a Lease Rate at least equal to 9.75%
will be its Outstanding Principal Balance. As of the
Cutoff Date, the Aggregate Net Investment Value equaled
the aggregate Discounted Principal Balance of the
Initial Contracts or $1,231,231,519.20.
E. INVESTMENT OF COLLECTIONS PRIOR
TO MONTHLY PAYMENT EVENT........ So long as a Monthly Payment Event has not occurred, and
so long as the Certificates of any Class are
outstanding, amounts allocated to interest on the
Certificates during the Revolving Period, and amounts
allocated to interest or principal in respect of the
Certificates during the Amortization Period, in each
case on Monthly Allocation Dates that are not relevant
Certificate Payment Dates will be deposited into the
Certificateholders' Account and invested in Permitted
Investments maturing prior to the succeeding relevant
Certificate Payment Date or Targeted Maturity Date, as
appropriate, and bearing rates of interest equal to the
related Required Rates. Such Permitted Investments are
expected to include one or more demand obligations
issued by TMCC (each a "TMCC Demand Note"). SEE "Addi-
tional Document Provisions--TMCC Demand Notes". From and
after the occurrence of a Monthly Payment Event,
payments of interest on, and payments of principal of
each Class of Certificates in the sequential order
described herein, will instead
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be made monthly on each subsequent relevant Certificate
Payment Date.
"Monthly Payment Events", the occurrence of which will
terminate the investment of amounts held in the
Certificateholders' Account and will cause payments of
interest on and principal of the Certificates to be made
monthly thereafter, will include (a) the occurrence of
any of the Early Amortization Events described in
clauses (ii) through (vi) and (viii) of the definition
thereof or (b) the downgrade by Standard & Poor's of
TMCC's short-term debt to a rating less than A-1+, or
the downgrade by Moody's of TMCC's short term debt to a
rating less than P-1 or TMCC's long term debt to a
rating less than Aa3, unless within ten Business Days of
such event alternative arrangements satisfactory to the
Rating Agencies are made with respect to the investment
of Collections to be invested. The Trustee is expected
to exercise the demand feature of the TMCC Demand Notes
only upon the occurrence of a Monthly Payment Event and
at the direction of the Certificateholders. The exercise
of such feature by the Trustee will not of itself
constitute a Monthly Payment Event.
F. PRIORITY OF MONTHLY ALLOCATIONS
AND DISTRIBUTIONS................ On each Monthly Allocation Date, the Trustee will make
allocations, payments and distributions with respect to
the related Collection Period in accordance with the
priorities set forth herein. SEE "Description of the
Certificates--Allocations and Distributions on the
Certificates".
G. OPTIONAL PURCHASE.............. The Transferor will have an option to purchase the SUBI
Certificate on any Monthly Allocation Date on or after
the Class A-3 Targeted Maturity Date if, either before
or after giving effect to any payment of principal
required to be made on the related Certificate Payment
Date, the Adjusted Certificate Balance has been reduced
to an amount less than or equal to $123,123,151.92 (10%
of the Aggregate Net Investment Value as of the Cutoff
Date) or amounts sufficient to effectively reduce the
Certificate Balance to such amount have been deposited
in the Collection Account on such date. Such a purchase
would result in the retirement of the Certificates of
each outstanding Class. SEE "Description of the
Certificates--Termination of the Trust; Retirement of
the Certificates".
H. FORM, DENOMINATIONS AND
REGISTRATION OF THE
CLASS A CERTIFICATES............ Except under limited circumstances, the Class A
Certificates will be available only in book-entry form
in minimum denominations of $1,000. Persons acquiring
beneficial ownership interests in the Class A
Certificates ("Certificate Owners") will hold their Cer-
tificates through The Depository Trust Company ("DTC"),
in the United States, or Cedel Bank, societe anonyme
("Cedel Bank") or the Euroclear System ("Euroclear") in
Europe or
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Asia. SEE "Description of the Certificates--Book-Entry
Registration" and "ANNEX I: Global Clearance, Settlement
and Tax Documentation Procedures".
I. LISTING........................ Application will be made for listing of the Class A
Certificates on the Luxembourg Stock Exchange and for
listing of and permission to deal in the Class A
Certificates on The Stock Exchange of Hong Kong Limited.
The Trust has requested that such permission be made
effective on or before September 23, 1997.
THE SUBI.......................... The SUBI will be evidenced by a certificate (the "SUBI
Certificate") evidencing a 100% beneficial interest in
the SUBI Assets and will not evidence an interest in any
Titling Trust Assets other than the SUBI Assets.
Payments made on or in respect of any other Titling
Trust Assets (and proceeds of the Residual Value
Insurance Policy) will not be available to make payments
on the Certificates. The Titling Trust Assets evidenced
by the SUBI will primarily include the Contracts and
Leased Vehicles allocated to the SUBI. SEE "The Trust
and the SUBI" and "The Titling Trust".
1. THE CONTRACTS................ The Contracts will consist of retail closed-end lease
contracts originated by the Dealers in California,
Florida, Michigan, Ohio and Pennsylvania (the "Trust
States") having original terms of not more than 60
months. Each Contract will be a finance lease for
accounting purposes and will have been written for a
"capitalized cost" (which may exceed the manufacturer's
suggested retail price and may include certain
origination fees), plus a lease charge which is based on
an imputed interest rate (the "Lease Rate"). Each
Contract will provide for equal monthly payments (each,
a "Monthly Payment") that when allocated between
principal and the lease charge at the Lease Rate on a
constant yield basis, will be sufficient to amortize the
capitalized cost over the term of the lease to an amount
equal to the Residual Value. A Residual Value is
established at the origination of a lease contract
(based on documentation provided to the Dealers by TMCC)
and represents the estimated wholesale market value at
the end of the lease term, as such estimated value may
be reduced in connection with any extension granted as
described herein ("Residual Value"). The amount to which
the capitalized cost of a Contract has been amortized at
any point in time is referred to herein as its
"Outstanding Principal Balance".
The Initial Contracts consist of 56,340 lease contracts.
As of the Cutoff Date, the Initial Contracts had Lease
Rates ranging from 0.254% to 13.653% and a weighted
average Lease Rate of 7.655%. As of the Cutoff Date, the
Initial Contracts had an aggregate Outstanding Principal
Balance of $1,287,004,969.02, an Aggregate Net
Investment Value of $1,231,231,519.20 (of which amount
approximately 69.35% represented Residual Values), a
weighted average original term of 39.8 months and a
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weighted average remaining term to scheduled maturity of
35.8 months. SEE "The Contracts".
2. THE LEASED VEHICLES.......... The Leased Vehicles will be comprised of automobiles and
light duty trucks. As of the times of origination of the
Contracts, the related Leased Vehicles will include new
vehicles, including dealer demonstrator vehicles driven
fewer than 20,000 miles, or used vehicles up to four
model years old at the time of origination of the
related Contract, including certified used vehicles and
vehicles previously sold under manufacturer's programs.
Certified used vehicles are Toyota or Lexus vehicles
that are purchased by dealers, reconditioned and
certified to meet certain Toyota/Lexus required
standards and sold or leased with an extended warranty
from the manufacturer. Manufacturer's program vehicles
are Toyota or Lexus vehicles that have been sold to
rental car companies, repurchased by the manufacturer
and subsequently purchased by the dealer to sell or
lease as current year and one year old used vehicles
with 20,000 miles or less. SEE "The Contracts--General".
The certificates of title to the Initial Leased Vehicles
are, and the certificates of title to all Leased
Vehicles will be, registered at all times prior to
liquidation in the name of the Titling Trust. The
certificates of title will not reflect the indirect
interest of the Trustee in the Leased Vehicles by virtue
of its beneficial interest in the SUBI. Therefore, if
the Class A Certificates were recharacterized as secured
loans, the Trustee would have a perfected security
interest in the SUBI Certificate (excluding rights to
proceeds of the Residual Value Insurance Policy retained
by the Transferor), Contracts and Contract Rights but
not in the Leased Vehicles. SEE "Certain Legal Aspects
of the Titling Trust--Structural Considerations" and
"--Back-up Security Interests".
THE SUBI COLLECTION ACCOUNT;
COLLECTIONS..................... The Titling Trustee will maintain the SUBI Collection
Account for the benefit of the holders of interests in
the SUBI. Except under certain limited circumstances,
the Servicer will be permitted to deposit amounts
collected in respect of payments made on or in respect
of the Contracts or the Leased Vehicles during each
Collection Period into the SUBI Collection Account on
the Business Day preceding the related Monthly
Allocation Date (the related "Deposit Date") rather than
when received. Such payments will include, but will not
be limited to, (i) Monthly Payments, not including
Monthly Payments (or portions thereof) determined by the
Servicer to be due in one or more future Collection
Periods, (each, a "Payment Ahead") until the Collection
Period during which such Payment Ahead is due, (ii)
Prepayments, (iii) proceeds from the sale or other
disposition of Leased Vehicles under Matured Contracts,
including payments for excess mileage and excess wear
and tear ("Matured Leased Vehicle Proceeds"), (iv)
proceeds received in connection with the sale or other
disposition of Leased Vehicles
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that have been repossessed ("Repossessed Vehicle
Proceeds") and (v) other amounts received in connection
with the realization of the amounts due under any
Contract (together with Matured Leased Vehicle Proceeds
and Repossessed Vehicle Proceeds, "Liquidation
Proceeds").
The Servicer will be entitled to reimbursement for
expenses incurred in connection with the realization of
Matured Leased Vehicle Proceeds ("Matured Leased Vehicle
Expenses"), Repossessed Vehicle Proceeds ("Repossessed
Vehicle Expenses") and other Liquidation Proceeds (such
expenses, together with Matured Leased Vehicle Expenses
and Repossessed Vehicle Expenses, "Liquidation
Expenses"), to be netted from proceeds or Collections in
respect of such payments (including other Liquidation
Proceeds), whether or not on deposit in the SUBI
Collection Account. The Servicer also will be entitled
to reimbursement of certain payments made and expenses
and charges incurred by it in the ordinary course of
servicing the Contracts (including payments it makes on
behalf of the related lessees in connection with the
payment of taxes, vehicle registration, clearance of
parking tickets and similar items) from Collections with
respect to the related Contracts, separate payment
thereof by the related lessees or from amounts realized
upon the final disposition of the related leased
vehicle. To the extent such amounts are reimbursed prior
to or at the final disposition of the related leased
vehicle but remain unpaid by the related lessee, such
unreimbursed amounts (together with any unpaid Monthly
Payments under the related Contract) will be treated as
Matured Leased Vehicle Expenses or Liquidation Expenses,
as the case may be, and will therefore reduce Matured
Leased Vehicle Proceeds or Liquidation Proceeds, as the
case may be.
On each Deposit Date, the following additional amounts
also will be deposited into the SUBI Collection Account:
(i) Advances by the Servicer, (ii) any Maturity Advances
by the Transferor and (iii) Reallocation Payments by
TMCC (together with, under certain circumstances during
the Amortization Period, Reallocation Deposit Amounts)
in respect of certain Contracts as to which an uncured
breach of certain representations and warranties or
certain servicing covenants has occurred. In addition,
to the extent set forth herein, amounts will be
withdrawn from the Reserve Fund and deposited into the
SUBI Collection Account on each Deposit Date to cover
certain Loss Amounts or shortfalls in Collections.
Thereafter, the Interest Collections (and, with respect
to the Deposit Date in any month following the month
during which the Amortization Period commences, the
Principal Collections) on deposit in the SUBI Col-
lection Account in respect of the related Collection
Period will be available for allocation or distribution
of required amounts to Certificateholders and the
Transferor. SEE "Assets of the Trust-- The Accounts;
Collections--The SUBI Collection Account".
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The Certificateholders and the Transferor (as holder of
the Transferor Interest) are entitled on any Monthly
Allocation Date to be allocated or to receive Matured
Leased Vehicle Proceeds up to, but not in excess of, the
aggregate of the Residual Values of Leased Vehicles sold
or otherwise disposed of from Matured Leased Vehicle
Inventory during the related Collection Period. It is
possible that in any Collection Period the Servicer
could incur Matured Lease Vehicle Expenses that, if
reimbursed from collections in respect of Matured Leased
Vehicle Proceeds, would result in Net Matured Leased
Vehicle Proceeds being less than the sum of the Residual
Values of all Leased Vehicles so sold or otherwise
disposed. Any such shortfall will result in the
realization of Residual Value Loss Amounts. On each
Deposit Date on which Matured Leased Vehicle Proceeds
received during the related Collection Period net of
related Matured Leased Vehicle Expenses incurred during
such Collection Period ("Net Matured Leased Vehicle Pro-
ceeds") exceed the aggregate Residual Value of the
related Leased Vehicles (the "Residual Value Surplus"),
such excess will be released to the Transferor and
neither the Trust nor the Certificateholders will have
any further claim thereto or interest therein.
THE RESERVE FUND.................. A Reserve Fund will be maintained with the Trustee for
the benefit of the Certificateholders and the
Transferor. The Reserve Fund is designed to provide
additional funds for the benefit of the
Certificateholders in the event that on any Monthly
Allocation Date Interest and Principal Collections allo-
cable to the Investor Interest for the related
Collection Period are insufficient to allocate for or
make distributions in respect of, among other things,
(i) accrued interest, (ii) overdue interest (with
interest thereon at the applicable Interest Rate, to the
extent lawful) and (iii) Loss Amounts allocable to the
Investor Interest and unreimbursed Certificate Principal
Loss Amounts, together with interest thereon at the
applicable Certificate Rate (the aggregate amount of
such deficiency, the "Required Amount"). A portion of
the amounts on deposit in the Reserve Fund (the Class B
Interest Reserve Amount) will be available only to cover
interest shortfalls with respect to the Class B
Certificates, and will not be available to cover
interest shortfalls, Loss Amounts or Certificate
Principal Loss Amounts allocated to the Class A
Certificates. Monies on deposit in the Reserve Fund also
will be available to Certificateholders should Collec-
tions ultimately be insufficient to pay in full any
Class of Certificates at its Stated Maturity Date. The
Reserve Fund will not be an asset of the Trust. SEE
"Assets of the Trust--The Accounts; Collections-- The
Reserve Fund".
The Reserve Fund will be created with an initial deposit
(the "Initial Deposit") by the Transferor of
$30,780,787.98 (2.50% of the Aggregate Net Investment
Value as of the Cutoff Date). On
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each Monthly Allocation Date, the Reserve Fund will be
supplemented by Interest Collections and Principal
Collections that would otherwise be released to the
Transferor after making all required allocations and
distributions to Certificateholders, until the amount on
deposit therein equals the applicable Specified Reserve
Fund Balance. After giving effect to all payments from
the Reserve Fund on a Monthly Allocation Date, monies on
deposit therein in excess of the Specified Reserve Fund
Balance will be paid to the Transferor, free and clear
of any interest of the Trust. SEE "Description of the
Certificates--Allocations and Distributions on the
Certificates--Allocations and Distributions of
Collections" and "Assets of the Trust--The Accounts;
Collections--The Reserve Fund--The Specified Reserve
Fund Balance".
Under certain circumstances it is possible that, as of
any Monthly Allocation Date, the amount of funds
actually on deposit in the Reserve Fund could be less
than the Specified Reserve Fund Balance. Moreover,
pursuant to the Agreement, the Specified Reserve Fund
Balance may, under certain circumstances, be reduced on
one or more Monthly Allocation Dates to the extent
approved by each Rating Agency.
SUBORDINATION..................... The Class B Certificates will be subordinated to the
Class A Certificates so that on any Certificate Payment
Date (i) interest payments generally will not be made in
respect of the Class B Certificates until interest on
the Class Certificate Balance of each Class of Class A
Certificates and on Certificate Principal Loss Amounts
previously allocated thereto has been paid on such
Certificate Payment Date and (ii) principal payments
generally will not be made in respect of the Class B
Certificates until all of the Class A Certificates have
been paid in full.
To provide additional credit enhancement for the
Certificates, payments will not be made to the
Transferor in respect of the Transferor Interest on any
Monthly Allocation Date until all allocations or
distributions required to be made with respect to the
Certificates on such date have been made as described
under "Description of the Certificates--Allocations and
Distributions on the Certificates--Allocations and
Distributions of Collections" and the amount on deposit
in the Reserve Fund on such Monthly Allocation Date
equals the Specified Reserve Fund Balance. SEE
"Description of the Certificates--Certain Payments to
the Transferor".
ADVANCES.......................... On each Deposit Date, the Servicer will be obligated to
make an advance with respect to each outstanding
delinquent Contract and certain Contracts as to which
payments have been deferred that have not been
reallocated to the UTI with an accompanying Reallocation
Payment as described herein, provided that the Servicer
will not be required to make any Advance to the extent
that it determines such Advance may not be ultimately
recoverable from Net Liquidation Proceeds or otherwise.
Each such
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advance will be made by deposit into the SUBI Collection
Account of an amount equal to the aggregate amount of
Monthly Payments due but not received during the related
Collection Period (each, an "Advance"). SEE "Additional
Document Provisions--The Servicing
Agreement--Collections" and "--Advances".
MATURITY ADVANCES................. Pursuant to the Agreement, on the Targeted Maturity Date
for any Class of Class A Certificates on which the
aggregate of amounts available to be paid as principal
thereof (including any amount of Interest Collections or
net investment income applied to cover such shortfall on
such date) are insufficient to pay in full the related
Certificate Principal Balance, the Transferor will have
the option to make an advance (a "Maturity Advance") in
any amount up to the amount of such shortfall. All such
amounts advanced by the Transferor will be reimbursable
to the Transferor from the Investor Percentage of
Principal Collections on subsequent Monthly Allocation
Dates as described herein.
SERVICING COMPENSATION............ The Servicer will be entitled to receive a monthly fee
with respect to the SUBI Assets (the "Servicing Fee"),
payable on each Monthly Allocation Date, equal to
one-twelfth of 1% of the Aggregate Net Investment Value
as of the first day of the related Collection Period
(or, in the case of the first Monthly Allocation Date,
as of the Cutoff Date). The Servicer also will be
entitled to additional servicing compensation in the
form of, among other things, late fees, Deferral Fees
and other administrative fees or similar charges under
the Contracts. SEE "Additional Document Provisions--The
Servicing Agreement--Servicing Compensation".
TAX STATUS........................ Andrews & Kurth L.L.P., special federal income tax
counsel to the Transferor, is of the opinion that the
Class A Certificates will be characterized as
indebtedness for federal income tax purposes. Each Class
A Certificateholder, by its acceptance of a Class A
Certificate, and each Certificate Owner by its acquisi-
tion of an interest in the Class A Certificates, will
agree to treat the Class A Certificates as indebtedness
for federal, state and local income tax purposes. SEE
"Material Federal Income Tax Considerations".
ERISA CONSIDERATIONS.............. Subject to considerations described below, the Class
A-1, Class A-2 and Class A-3 Certificates are eligible
for purchase by employee benefit plan investors as of
the Closing Date. Under a regulation issued by the
Department of Labor, the Trust's assets would not be
deemed "plan assets" of an employee benefit plan holding
Class A Certificates if certain conditions are met,
including that Certificates of each such Class must be
held, upon completion of the public offering made
hereby, by at least 100 investors who are independent of
the Transferor and of one another and that such
Certificates are registered under the Exchange Act.
Although no assurances can be given, and no monitoring
or other measures will be taken to ensure, that such
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condition will be met, the Underwriters expect that the
Class A-1, Class A-2 and Class A-3 Certificates will be
held by at least 100 independent investors at the
conclusion of the offering. The Transferor anticipates
that the other conditions of the regulation will be met.
The Transferor has applied to the DOL for the Requested
Exemption described herein pursuant to which the Class
A-1, Class A-2 and Class A-3 Certificates would be
eligible to be held by employee benefit plan investors
meeting the conditions specified therein as of the
effective date of the Requested Exemption. In the event
the Requested Exemption is granted substantially in the
form for which such application was made, the Transferor
intends to deregister the Class A Certificates under the
Exchange Act as soon as permitted by law. As a result,
the Class A Certificates may no longer be eligible to be
held by Benefit Plans that did not meet the eligibility
criteria for the Requested Exemption, even if more than
100 other qualified investors continued to hold
securities of each such Class. The Transferor
anticipates that all of the conditions of the Requested
Exemption that are within its control will be satisfied
if and when the Requested Exemption is granted. There
can be no assurance that the Requested Exemption will be
granted, or the date on which the Requested Exemption
might be granted.
If the Trust's assets were deemed to be "plan assets" of
an employee benefit plan investor (e.g., if the 100
independent investor criterion is not satisfied and any
of the conditions upon which the Requested Exemption is
contingent are not satisfied), violations of the
"prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), could result and generate excise tax and
other liabilities under ERISA and section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"),
unless another statutory, regulatory or administrative
exemption is available. It is uncertain whether existing
exemptions from the "prohibited transaction" rules of
ERISA would apply to all transactions involving the
Trust's assets if such assets were treated for ERISA
purposes as "plan assets" of employee benefit plan
investors. SEE "ERISA Considerations".
RATINGS........................... It is a condition of issuance that each of Moody's
Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's" and, together with
Moody's, the "Rating Agencies") rate each Class of Class
A Certificates in its highest rating category. The
ratings of the Class A Certificates should be evaluated
independently from similar ratings on other types of
securities. A security rating is not a recommendation to
buy, sell or hold a security. The ratings of each Class
of Class A Certificates address the likelihood of the
payment of principal of and interest on such
Certificates in accordance with their terms and may be
subject to revision or withdrawal at any time by the
assigning Rating Agency. SEE "Ratings of the Class A
Certificates".
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RISK FACTORS
RISK OF LIMITED LIQUIDITY FOR THE CLASS A CERTIFICATES; ABSENCE OF SECONDARY
MARKET FOR THE CLASS A CERTIFICATES
There is currently no market for the Class A Certificates. The Underwriters
currently intend to make a market in each Class of Class A Certificates but are
under no obligation to do so. There can be no assurance that a secondary market
for any Class of Class A Certificates will develop or, if one does develop, that
it will provide the related Certificateholders with liquidity of investment or
will continue for the life of the related Class of Class A Certificates.
RISK OF ABSENCE OF FUNDS FOR REIMBURSEMENT OF CERTAIN LOSSES
In the event that Loss Amounts are incurred in respect of the Contracts and
the Leased Vehicles during a Collection Period relating to a Monthly Allocation
Date during the Revolving Period, an amount equal to the Investor Percentage of
such Loss Amounts, to the extent reimbursed out of Collections available
therefor or otherwise, will be treated as Principal Collections received during
the succeeding Collection Period and will be available for reinvestment in
Subsequent Contracts and Subsequent Leased Vehicles. If the related Monthly
Allocation Date occurs during the Amortization Period, reimbursements of Loss
Amounts will be distributed or allocated to the Class A Certificateholders (pro
rata, based on their Certificate Principal Balances as of the last day of the
related Collection Period, in an amount equal to the Investor Percentage of such
Loss Amounts), as a distribution or allocation of principal from, to the extent
available therefor, the Investor Percentage of Interest Collections remaining
after certain other applications thereof, amounts on deposit in the Reserve Fund
available therefor, Transferor Amounts and Class B Available Principal. Loss
Amounts (including Certificate Principal Loss Amounts) will be allocated first
to the Class B Certificates and then to the Class A Certificates on a pro rata
basis as described above. Reimbursements of Loss Amounts realized during the
Amortization Period may accelerate the rate of return of principal on the
Certificates. To the extent that Principal Collections and reimbursements of
Loss Amounts are reinvested in Subsequent Contracts during the Revolving Period,
the aggregate Residual Value of the Leased Vehicles as a percentage of the
Aggregate Net Investment Value may increase, thereby increasing the exposure of
the Certificates of each Class to the risk of being allocated Residual Value
Loss Amounts. Furthermore, to the extent that Loss Amounts (including Residual
Value Loss Amounts) ultimately exceed the sources available for repayment
thereof, such Loss Amounts will be allocated to the Certificates as Certificate
Principal Loss Amounts, temporarily or permanently reducing the Class
Certificate Balances of each Class to which they are allocated. Because Loss
Amounts and Certificate Principal Loss Amounts will not be reimbursable to Class
A Certificates after the related Certificate Principal Balance is reduced to
zero, investors in the Class A Certificates of any Class may ultimately incur a
loss on their investment.
"Loss Amounts" will include Charged-off Amounts, Residual Value Loss Amounts
and Additional Loss Amounts. The "Residual Value Loss Amount" for any Collection
Period generally will represent the aggregate net losses on dispositions of
Matured Leased Vehicle Inventory, and will be equal to the sum of (a) the
aggregate of the Residual Values of all those Leased Vehicles that were included
in Matured Leased Vehicle Inventory but that had remained unsold and not
otherwise disposed of by the Servicer for at least three full Collection Periods
as of the last day of such Collection Period and (b) the excess, if any, of (i)
the aggregate of the Residual Values of all Leased Vehicles previously included
in Matured Leased Vehicle Inventory that were sold or otherwise disposed of
during such Collection Period over (ii) Net Matured Vehicle Proceeds for such
Collection Period. SEE "TMCC--Delinquency, Repossession and Loss Data". Residual
Value Loss Amounts experienced will depend on a variety of factors, including
the effect of TMCC's active encouragement of lessees under lease contracts with
remaining terms of less than one year to buy, trade in or refinance the related
vehicles, and the supply of, and demand for, vehicles similar to the Leased
Vehicles in the used car market. Uncollected payments for excess mileage or
excess wear and
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use also could affect the related proceeds. No assurance can be given as to the
likely Residual Value Loss Amounts allocated to the Investor Interest over the
life of the Certificates.
MATURITY AND PREPAYMENT CONSIDERATIONS
No principal will be paid to the Certificateholders until the first
Certificate Payment Date that is a Targeted Maturity Date or, following the
occurrence of a Monthly Payment Event, each subsequent Certificate Payment Date.
During the Revolving Period, Principal Collections will be reinvested in
Subsequent Contracts and Subsequent Leased Vehicles. The continuation of the
Revolving Period will be dependent upon, among other things, the continued
origination and assignment to the Titling Trust of lease contracts and leased
vehicles meeting the eligibility criteria described herein in amounts
corresponding to Principal Collections and reimbursed Loss Amounts and
Certificate Principal Loss Amounts to be reinvested. An unexpectedly high rate
of Principal Collections (including Prepayments) received during any Collection
Period or a significant decline in the number of qualifying lease contracts
available to be assigned to the Titling Trust could result in the occurrence of
an Early Amortization Event and the commencement of the Amortization Period
prior to the Amortization Date. The retail automobile and light duty truck
leasing business in the United States or in one or more of the Trust States may
be affected by a variety of social, economic and geographic factors. Economic
factors include interest rates, unemployment levels, the rate of inflation and
consumer perception of economic conditions. However, it is not possible to
determine or predict whether or to what extent economic, geographic or social
factors will affect retail automobile and light duty truck leasing in general,
or that of the Dealers in particular. As a result, there can be no assurance
that the Revolving Period will not terminate prior to the Amortization Date,
possibly shortening the final maturities and weighted average lives of and
affecting the yields on one or more Classes of Certificates. SEE "Description of
the Certificates--Early Amortization Events".
The payment, prepayment, loss and liquidation experience with respect to the
Contracts, which cannot be predicted, will affect the weighted average lives of
each Class of Certificates then outstanding if a Monthly Payment Event occurs,
and will affect the weighted average life of any Class of Certificates as to
which the related Certificate Principal Balance is not reduced to zero on the
related Targeted Maturity Date. If on any Monthly Allocation Date during the
Amortization Period the amount on deposit in the Reserve Fund is at least equal
to the Specified Reserve Fund Balance and the Investor Percentage of Collections
exceeds the aggregate of amounts required to be allocated or distributed to
Certificateholders as described herein, the related Accelerated Principal
Distribution Amount will be allocated or distributed as additional principal to
Certificateholders. SEE "Description of the Certificates--Allocations and
Distributions on the Certificates--Allocations and Distributions of
Collections". A substantial increase in the rate of payments on or in respect of
the Contracts and Leased Vehicles (including prepayments and liquidations of the
Contracts) after the occurrence of a Monthly Payment Event may shorten the final
maturity and weighted average lives of, and may significantly affect the yields
on, each then-outstanding Class of Certificates. The rate of payment of
principal of the Certificates may also be affected (i) during such period by
payment by TMCC of Reallocation Payments (and under certain circumstances during
the Amortization Period, Reallocation Deposit Amounts) in respect of Contracts
as to which an uncured breach of certain representations and warranties or
certain servicing covenants has occurred and (ii) by the exercise by the
Transferor of its right to purchase the SUBI Certificate under certain
circumstances, thereby retiring the Certificates. SEE "Description of the
Certificates--Termination of the Trust; Retirement of the Certificates", "The
Contracts--Representations, Warranties and Covenants" and "Additional Document
Provisions--The Servicing Agreement--Collections".
Each of the Contracts may be prepaid by the related lessee without penalty
in full or in part at any time. TMCC actively encourages lessees under lease
contracts with remaining terms of less than one year to either buy, trade in or
refinance the related leased vehicles prior to their scheduled maturities. TMCC
estimates that, of the retail automobile and light duty truck lease contracts in
its portfolio that were scheduled to mature during fiscal year 1996 or during
the nine-month period ended June 30, 1997,
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approximately 52% and 49%, respectively, were purchased by the related lessee or
a dealer prior to the scheduled maturity date specified in the related lease
contract. Such early terminations primarily were due to voluntary prepayments.
No assurance can be given that the Contracts will experience the same rate of
prepayment or default or any greater or lesser rate than TMCC's historical rate
for the retail automobile and light duty truck lease contracts in its portfolio.
SEE "Maturity, Prepayment and Yield Considerations".
Because the Certificates have Targeted Maturity Dates prior to which
principal thereof will not be paid unless a Monthly Payment Event occurs or the
Transferor exercises its option to repurchase the SUBI, the weighted average
life of any such Class of Certificates will not be reduced by prepayments prior
to the occurrence of a Monthly Payment Event. Moreover, there can be no
assurance as to whether a Maturity Advance will be made or, if made, will be
sufficient to pay in full the related Class Certificate Balance on the Targeted
Maturity Date with respect to any Class of Certificates and, therefore, any such
Class may mature significantly later than its Targeted Maturity Date. In
addition, earlier collections in respect of interest on, or the Discounted
Principal Balance of, the Contracts due to full or partial prepayments may
result in increased amounts of collections being held in the Certificateholder's
Account, and then invested in Permitted Investments at any given time than would
otherwise be the case. Irrespective of the rate of payments on the Contracts,
because the Certificateholders generally will receive payments only on
Certificate Payment Dates, more collections will be invested in Permitted
Investments at any given time than would be the case in a securitization in
which all securities are entitled to monthly distributions of interest and
principal. Because it is anticipated that such investments will include one or
more TMCC Demand Notes, the effect of an increased rate of prepayment will be to
expose significant portions of the amounts allocable, payable and distributable
to Certificateholders to risk of default by TMCC on such obligations.
RISKS ASSOCIATED WITH SEQUENTIAL PAYMENT OF PRINCIPAL ON THE CERTIFICATES
In general, the Certificates will be "sequential pay" certificates meaning
that no principal payments will be made on the Class A-2 Certificates until the
Class A-1 Certificates have been paid in full, no principal payments will be
made on the Class A-3 Certificates until the Class A-2 Certificates have been
paid in full and no principal payments will be made on the Class B Certificates
until the Class A-3 Certificates are paid in full.
During the Amortization Period, reimbursements of Loss Amounts will be
distributed or allocated to the Certificateholders (first to the Class A
Certificates pro rata, based on their Class Certificate Balances as of the last
day of the related Collection Period, and then to the Class B Certificates up to
the Investor Percentage of such Loss Amounts), as a distribution or allocation
of principal from, to the extent available therefor, the Investor Percentage of
Interest Collections remaining after certain other applications thereof, amounts
on deposit in the Reserve Fund available therefor and Transferor Amounts (and,
in the case of the Class A Certificates, from Class B Available Principal). SEE
"Description of the Certificates-- Allocations and Distributions on the
Certificates--Allocations and Distributions of Collections". Certificate
Principal Loss Amounts will be allocated first to the Class B Certificates and
then to the Class A Certificates on a pro rata basis as described above. To the
extent net proceeds of any sale or other disposition of the SUBI, the SUBI
Certificate or other property of the Trust constitute Principal Collections,
which may occur under certain circumstances involving an Insolvency Event of the
Transferor (as described under "Description of the Certificates--Early
Amortization Events"), they will be distributed first, on a pro rata basis, to
the Class A Certificateholders based on their respective Class Certificate
Balances until the Class A Certificates have been paid in full, and second, to
the Class B Certificateholders until the Class B Certificates have been paid in
full.
Sequential payment of the Certificates is also likely to cause Classes of
Certificates that pay later than other Classes to be outstanding during periods
when an increasingly large percentage of the Aggregate Net Investment Value will
be represented by Residual Values as opposed to unpaid Monthly Payments, thereby
increasing the exposure of such Certificates to the risk of being allocated
Residual Value Loss Amounts.
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As a result, Class A Certificates that have lower sequential principal payment
priority may be allocated more Loss Amounts (including Residual Value Loss
Amounts) and Certificate Principal Loss Amounts than Class A Certificates with
higher payment priority as a relative percentage of their respective Initial
Certificate Balances, primarily because Loss Amounts and Certificate Principal
Loss Amounts will be allocated thereto on each Monthly Allocation Date based on
the outstanding Class Certificate Balances thereof as of the last day of the
related Collection period, which will be relatively higher as the Class
Certificate Balances of the higher priority Class A Certificates decrease during
the Amortization Period.
However, any portion of Principal Collections comprised of the Investor
Percentage of the net proceeds of any sale or other disposition of the SUBI
Interest, the SUBI Certificate or other property of the Trust (which may occur
under certain circumstances involving an Insolvency Event with respect to the
Transferor as described under "Description of the Certificates--Early
Amortization Events") will not be distributed to the Class A Certificateholders
sequentially, but instead will be distributed to the holders of each Class of
Class A Certificates pro rata, based on the respective Class A Certificate
Balances, until all Class A Certificates have been paid in full, and then to the
Class B Certificateholders.
RISKS ASSOCIATED WITH GEOGRAPHIC, ECONOMIC AND OTHER FACTORS
The Dealers which originated and will originate the Contracts are located in
California, Florida, Michigan, Ohio and Pennsylvania (the "Trust States") and
the Contracts and Leased Vehicles generally are and will be located in the Trust
States. However, a significant number of lessees may live in or relocate to
other states and may register and/or operate Leased Vehicles in other states.
For a breakdown of the percentage of Initial Contracts originated in each of the
Trust States, see "The Contracts--Characteristics of Contracts--Distribution of
the Initial Contracts by State". Due to the geographic concentration of
Contracts in the Trust States, adverse economic conditions in one or more of the
Trust States may have a significant impact on the performance of the SUBI
Assets.
Approximately 58% of the Initial Contracts, based on outstanding Principal
Balance as of the Cutoff Date, were originated in the State of California.
TMCC's loss experience for retail automobile and light-duty truck lease
contracts originated by branches serving California has been an average of
approximately 60% higher than TMCC's loss experience with respect to its entire
lease contract portfolio over the past five years. However, TMCC's loss
experience for lease contracts originated through branches serving all of the
Trust States considered as one pool over the same period has been only slightly
higher than its loss experience with respect to its entire lease contract
portfolio. Branches serving each Trust State also serve other states that are
not Trust States, and therefore information available and provided herein with
respect to loss experience for the Trust States is influenced by the inclusion
of contracts originated in states other than the Trust States, but serviced by a
branch that also serves the Trust States (although such contracts represent a
relatively small percentage of total contracts serviced by such branches).
Economic factors such as unemployment, interest rates, the rate of inflation
and consumer perceptions of the economy may affect the rate of prepayment and
defaults on the Contracts and the ability to sell or otherwise dispose of Leased
Vehicles relating to Matured Contracts for an amount at least equal to their
respective Residual Values. These economic factors, as well as other factors
such as consumer perceptions of used vehicle values, also may affect the ability
to realize the Residual Values of Leased Vehicles upon sale.
RISKS ASSOCIATED WITH VEHICLES RETURNED AT THE TERMINATION OF THE LEASE
The number of leased vehicles returned to TMCC (as opposed to the number
being purchased by the related lessee or a dealer) at the termination of the
related lease contracts as a percentage of the number of leased vehicles
scheduled to terminate during the related period (the "Full Term Ratio") can be
affected by a variety of factors including new and used car markets which may
influence the related vehicles' market values at the related termination date
relative to their contractual residual values, the duration of the lease
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(leased vehicles that have shorter term leases have a greater likelihood of
being returned rather than purchased) and other factors. TMCC's Full Term Ratio
has generally increased during the year ended September 30, 1996 as compared to
the same period for the previous year and again for the nine month period ended
June 30, 1997, and is expected to increase in the future. SEE "TMCC's Leasing
Operations-- Delinquency, Repossession and Loss Data". A higher rate of return
at the termination of a lease exposes the lessor to a higher risk of loss on
such vehicles since the related vehicle will not be purchased by the lessee or a
dealer and must be disposed of through means that may result in a purchase price
which may be lower than the related residual value.
RISKS ASSOCIATED WITH CONCENTRATIONS OF VEHICLE TYPES
The Full Term Ratio for Lexus vehicles has increased for each of the past
five years, and has historically been significantly higher than the Full Term
Ratio for Toyota leased vehicles. Of the Lexus leased vehicles scheduled to
terminate during the nine months ended June 30, 1997, 41.4% were returned to
TMCC. The Full Term Ratio for Toyota leased vehicles has generally decreased for
each of the past five years, but increased to 10.3% for the nine months ended
June 30, 1997. SEE "TMCC's Leasing Operations-- Delinquency, Repossession and
Loss Data". A higher Full Term Ratio exposes the lessor to a higher risk of loss
on such vehicles since the related vehicles will not have been purchased by the
related lessees or dealers and must be disposed of through means that may result
in purchase prices which may be lower than the related residual value. Although
approximately 19.27% of the leased vehicles in TMCC's entire portfolio as of
June 30, 1997 were Lexus vehicles, only approximately 12.47% of the Initial
Contracts relate to Lexus leased vehicles, based on number of vehicles.
The used car market for any particular model type could be adversely
affected by factors not affecting other model types, such as changes in consumer
tastes or discovery of defects in respect of such model type. TMCC tracks
twenty-five model types in its lease portfolio, of which twenty-one model types
initially will be included as SUBI Assets. By number of vehicles, the Camry,
Corolla, 4Runner and Tacoma pick-up represent approximately 26.4%, 15.6%, 11.1%
and 8.2%, respectively, of the Initial Leased Vehicles as compared to
approximately 27.1%, 16.2%, 8.4% and 3.6%, respectively, of leased vehicles
included in TMCC's entire lease portfolio as of June 30, 1997. Any such adverse
change with respect to a specific model type could result in less proceeds upon
the liquidation or other disposition of Leased Vehicles of such model type, and
therefore could result in increased Residual Value Losses.
RISKS ASSOCIATED WITH CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws, including the federal
Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of
Governors of the Federal Reserve System, impose requirements upon lessors and
servicers of retail lease contracts such as the Contracts. Each of California
and Florida have enacted comprehensive vehicle leasing statutes that, among
other things, regulate the disclosures to be made at the time a vehicle is
leased. These laws apply to the Titling Trust as the lessor under the Contracts
and may also apply to the Trust as owner of the SUBI Certificate. Failure by the
Titling Trust or the Servicer to comply with such requirements may give rise to
liabilities on the part of the Titling Trust, and enforcement of the Contracts
by the Titling Trust may be subject to set-off as a result of such
noncompliance. Many states, including each of the Trust States, have adopted
Lemon Laws that provide vehicle users certain rights in respect of substandard
vehicles. A successful claim under a Lemon Law could result in, among other
things, the termination of the Contract relating to a substandard Leased Vehicle
and/or require the refund of all or a portion of payments previously paid
thereon. TMCC will make representations and warranties that each Contract
complies with all requirements of law in all material respects. If any such
representation and warranty proves incorrect, has certain material adverse
effects and is not timely cured, TMCC will be required to make a Reallocation
Payment (together with, under certain circumstances during the Amortization
Period, Reallocation Deposit Amounts) into the SUBI Collection Account and
reallocate the related Contract and Leased Vehicle out of the SUBI, as
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described under "The Contracts--Representations, Warranties and Covenants" and
"Description of the Certificates--Reallocation Payments and Reallocation Deposit
Amounts". SEE "Certain Legal Aspects of the Contracts and the Leased
Vehicles--Consumer Protection Laws".
RISKS ASSOCIATED WITH ERISA LIABILITIES
It is possible that the Titling Trust Assets, including the SUBI Assets,
could become subject to liens in favor of the Pension Benefit Guaranty
Corporation to satisfy unpaid ERISA obligations of any member of an "affiliated
group" that includes TMCC, TMS, Toyota Leasing, Inc. and their respective
affiliates. However, the Transferor believes that the likelihood of any such
liability being asserted against the Titling Trust Assets, including the SUBI
Assets, or being successfully pursued is remote. In particular, the Transferor
believes that the Titling Trust should, as a legal matter, be treated as a
distinct entity separate and apart from such affiliated group, under ERISA's
"common control" provisions. All such plans maintained by such affiliated group
historically have had assets that significantly exceeded their liabilities.
However, no assurance can be given that any of these conditions will continue in
the future.
RISKS ASSOCIATED WITH VICARIOUS TORT LIABILITY WITH RESPECT TO LEASED VEHICLES
Although the Titling Trust will own the Leased Vehicles and the Trust will
have an interest therein, they will be controlled and operated by the related
lessees and their invitees. State laws differ as to whether anyone suffering
injury to person or property involving a leased vehicle may bring an action
against the owner of the vehicle merely by virtue of that ownership. To the
extent that applicable state law permits such an action, the Titling Trust and
the Titling Trust Assets, including the SUBI Assets, may be subject to liability
to such an injured party. However, the laws of most states, including the Trust
States, either do not permit such suits or limit the lessor's liability to the
amount of any liability insurance that the lessee was required under applicable
law to maintain (or in the case of Florida, the lessor was permitted to
maintain), but failed to maintain. Notwithstanding the foregoing, in the event
that vicarious liability is imposed on the Titling Trust as owner of a Leased
Vehicle and the coverage provided by the Contingent and Excess Liability
Insurance Policies is insufficient to cover such loss, including in certain
circumstances with respect to a leased vehicle that is an Other SUBI Asset or a
UTI Asset, investors in the Class A Certificates could incur a loss on their
investments. SEE "Certain Legal Aspects of the Contracts and the Leased
Vehicles-- Vicarious Tort Liability", "Certain Legal Aspects of the Titling
Trust--Structural Considerations--Allocation of Titling Trust Liabilities",
"--Third-Party Liens on SUBI Assets" and "Assets of the Trust--The Contingent
and Excess Liability Insurance Policies".
All of the Contracts will contain provisions requiring the lessees to
maintain levels of insurance satisfying applicable state law. Such policies may
lapse, be terminated or otherwise not be maintained properly by a lessee. It is
the practice of TMCC not to obtain insurance on behalf of and at the expense of
the related lessee. TMCC's central insurance tracking unit, which monitors
compliance with such lease contract provisions, will initiate follow-up
procedures, including the telephone and mail contact with the related lessee,
upon being alerted by the tracking system that any lessee has not obtained or is
not maintaining required insurance. Typically, if such default is not cured
within 70 days from the date TMCC's central insurance tracking unit becomes
aware of such default, the related lease contract is forwarded to the
appropriate TMCC branch for follow-up handling, including possible repossession
of the related Leased Vehicles if the related lessee does not timely obtain a
satisfactory replacement policy. Moreover, the policies issued with respect to a
significant number of the Initial Contracts name TMCC rather than the Titling
Trust as additional loss payee. If a primary insurer makes payment under such a
policy to TMCC, TMCC will apply such amounts or forward such amounts to the
Titling Trust for application as appropriate. If a primary insurer failed to
make payments under a policy to the lessee and also to TMCC and the Titling
Trust, losses could be experienced by the Certificateholders. However, the
Transferor has been advised by the primary provider of the Contingent and Excess
Liability Policies described herein that such provider will not refuse any claim
under the Contingent and Excess Liability
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Policies solely because a primary policy names TMCC or an approved TMCC
affiliate, rather than the Titling Trust, as additional loss payee (although
under such circumstances, if the primary insurer denies a claim on such basis, a
deductible of $250,000 (rather than the standard deductible of $125,000) will be
payable by TMCC, as to which TMCC will indemnify the Trust).
Actions by third parties might exceed the limits of the policies maintained
by lessees or claims might arise based on legal theories other than negligence,
such as a product defect or improper vehicle preparation prior to the
origination of the related lease contract that are not covered thereby. The
Titling Trust will be the beneficiary of the Contingent and Excess Liability
Insurance Policies which will cover certain claims in excess of the limits of
the lessees' policies. Such Contingent and Excess Liability Insurance Policy
will be subject to significant per occurrence deductibles in respect of which
TMCC will indemnify the Trust. SEE "Assets of the Trust--The Contingent and
Excess Liability Insurance Policies". Although the Titling Trust's insurance
coverage is for $100 million per claim, with an allowance for multiple claims in
any policy period, in the event that all such insurance coverage were exhausted
and/or TMCC did not satisfy its indemnity obligations such that damages were
assessed against the Titling Trust, various claims could be imposed against the
Titling Trust Assets, including the SUBI Assets. If any such claims are imposed
against any SUBI Assets or, in certain limited circumstances, any Other SUBI
Assets or UTI Assets, investors in the Class A Certificates could incur a loss
on their investment. SEE "Certain Legal Aspects of the Titling Trust--Structural
Considerations--Allocation of Titling Trust Liabilities", "--Third-Party Liens
on SUBI Assets" and "Certain Legal Aspects of the Contracts and the Leased
Vehicles--Vicarious Tort Liability".
RISKS ASSOCIATED WITH POSSIBLE FUTURE INSOLVENCY OF TMCC; SUBSTANTIVE
CONSOLIDATION WITH TMCC
The Transferor has taken steps in structuring the transactions contemplated
hereby intended to ensure that the voluntary or involuntary application for
relief under the United States Bankruptcy Code or similar applicable state laws
("Insolvency Laws") by TMCC will not result in the consolidation of the assets
and liabilities of the Transferor, the Titling Trust or the Trust with those of
TMCC. With respect to the Transferor, these steps include its creation as a
separate, special purpose finance subsidiary of TMCC pursuant to articles of
incorporation containing certain limitations (including the requirement that it
must have at all times at least one "independent director" and restrictions on
the nature of its businesses and on its ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of a majority
of its directors including the independent director).
Reallocation Payments or deposits of Reallocation Deposit Amounts made by
TMCC and unreimbursed Advances made by TMCC, as Servicer, may be recoverable by
TMCC as debtor-in-possession or by a creditor or a trustee in bankruptcy of TMCC
as a preferential transfer from TMCC if such payments were made within one year
prior to the filing of a bankruptcy case in respect of TMCC. In addition, the
insolvency of TMCC could result in the replacement of TMCC as Servicer, which
could result in a temporary interruption of payments on the Certificates.
If prior to the Amortization Date a conservator, receiver or bankruptcy
trustee were appointed by the Transferor, or if certain other events relating to
the bankruptcy or insolvency of the Transferor were to occur (each, an
"Insolvency Event"), the Amortization Period would commence and the Trustee may,
and upon receipt of written instructions from holders of Certificates evidencing
Voting Interests of not less than 51% of the Class A Certificates (voting
together as a single class) or 51% of the Class A Certificates and the Class B
Certificates (voting together as a single class) will, attempt to sell the SUBI,
the SUBI Certificate and the other property of the Trust. The consummation of
such sale would result in an early termination of the Trust and a pro rata loss
to the Class A Certificateholders if the Investor Percentage of the net proceeds
of such sale were insufficient to pay in full the Class A Certificate Balance,
together with any unreimbursed Certificate Principal Loss Amounts, with accrued
and unpaid interest thereon at the related Certificate Rates, respectively.
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On the Closing Date, Andrews & Kurth L.L.P., special counsel to the
Transferor and TMCC, will render an opinion based on a reasoned analysis of
analogous case law (although there is no precedent based on directly similar
facts) subject to certain facts, assumptions and qualifications specified
therein, that, under applicable statutes and precedent, if TMCC were to become a
debtor in a case under the Bankruptcy Code, it would not be a proper exercise by
a federal bankruptcy court of its equitable discretion to disregard the separate
legal forms so as to substantively consolidate the assets and liabilities of the
Transferor, the Titling Trust or the Trust with those of TMCC. In addition, on
the Closing Date, Andrews & Kurth L.L.P. will render an opinion to the effect
that (i) the transfer of the SUBI Certificate by the Transferor to the Trust
constitutes a sale of the SUBI Certificate and the SUBI Assets evidenced
thereby, subject in each case to the rights of the Transferor as the holder of
the Transferor Interest, or (ii) if such transfer does not constitute a sale,
then the Agreement creates a valid perfected security interest, for the benefit
of Certificateholders, in the Transferor's right, title and interest in the SUBI
Certificate. SEE "Certain Legal Aspects of the Titling Trust--Insolvency Related
Matters".
The Titling Trust may be subject to the Insolvency Laws, and claims against
the Titling Trust Assets could have priority over the beneficial interest
therein represented by the SUBI. In addition, claims of a third party against
the Titling Trust Assets, including the SUBI Assets, to the extent such claims
are not covered by insurance, would take priority over the holders of beneficial
interests in the Titling Trust, such as the Trustee. SEE "Assets of the
Trust--The Contingent and Excess Liability Insurance Policies" and "Certain
Legal Aspects of the Contracts and Leased Vehicles--Vicarious Tort Liability".
RISKS ASSOCIATED WITH LEGAL PROCEEDINGS RELATING TO LEASED VEHICLES
The Transferor is not a party to any legal proceeding. Neither the Titling
Trust, nor the Titling Trustee on behalf of the Titling Trust, has been named as
a defendant in any material legal proceeding. TMCC is a party to, and is
vigorously defending, several legal proceedings, all of which it believes
constitute ordinary routine litigation incidental to the business and activities
conducted by TMCC. Certain of the actions naming TMCC are or purport to be class
action suits. The amount of liability on pending claims and actions as of the
date of this Prospectus were not determinable; however, in the opinion of
management of TMCC, the ultimate liability resulting therefrom should not have a
material adverse effect on TMCC's consolidated financial position or results of
operations, or on the Titling Trust Assets, the SUBI or on the Dealers' or the
Titling Trust's ability to originate sufficient new leases to satisfy
reinvestment obligations under the Titling Trust Agreements, the SUBI Supplement
and the Servicing Supplement. However, there can be no assurance in this regard.
THE TRUST AND THE SUBI
GENERAL
The Trust and the Certificateholders will have no interest in the UTI, any
Other SUBI or any Titling Trust Assets evidenced by the UTI or any Other SUBI.
Payments made on or in respect of the Titling Trust Assets not represented by
the SUBI will not be available to make payments on the Certificates. SEE "The
Titling Trust".
THE TRUST
Pursuant to the Agreement, the Transferor will establish the Trust by
transferring and assigning the SUBI and the SUBI Certificate (excluding proceeds
of the Residual Value Insurance Policy) to the Trustee in exchange for the
Certificates and a certificate evidencing the Transferor Interest. The property
of the Trust will primarily include (i) the SUBI, which evidences a beneficial
interest in certain specified Titling Trust Assets (i.e., the SUBI Assets), (ii)
such amounts as from time to time may be held in the SUBI Collection Account and
the Certificateholders' Account, and investments of amounts on deposit in the
SUBI Collection Account and (iii) the Trustee's rights as a third-party
beneficiary to the Servicing
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Agreement and the SUBI Supplement. The Trust also will have a beneficial
interest in such amounts as from time to time may be held in the SUBI Collection
Account and investments of such amounts. Because of the administrative
difficulty and expense associated with retitling leased vehicles, including
federal and state regulatory requirements to obtain odometer readings and to pay
vehicle transfer fees and taxes, the Trust will only have an interest in the
portion of the SUBI transferred to it by the Transferor, and will not have a
direct ownership interest in any Leased Vehicles.
Except for the protection provided to the Class A Certificateholders by the
Reserve Fund, the Class A Certificateholders ultimately will have to look to
payments made on or in respect of the Contracts and the Leased Vehicles
(including under certain related insurance policies) to make distributions on
the SUBI Certificate, which in turn will be distributed to the
Certificateholders. In such event, certain factors, such as the fact that the
Trust will not have a direct ownership interest in the Contracts or the Leased
Vehicles or a perfected security interest in the Leased Vehicles (which will be
titled in the name of the Titling Trust) may limit the amount realized to less
than the amount due from the related lessees. Investors in the Class A
Certificates may thus be subject to delays in payment and may incur losses on
their investment in the Class A Certificates as a result of defaults or
delinquencies by lessees and because of depreciation in the value of the related
Leased Vehicles. SEE "Certain Legal Aspects of the Titling Trust--Structural
Considerations", "Assets of the Trust--The Accounts; Collections--The Reserve
Fund", "Additional Document Provisions--The Servicing Agreement--Insurance on
Leased Vehicles" and "Certain Legal Aspects of the Contracts and the Leased
Vehicles".
THE SUBI
The SUBI will be issued pursuant to the Series 1997-A Supplement to the
Titling Trust Agreement (the "SUBI Supplement") and will evidence a beneficial
interest in certain specified Titling Trust Assets allocated to the SUBI
consisting of (i) the Contracts, the Leased Vehicles and all proceeds or
payments related thereto received or due on or after the related Cutoff Date;
(ii) certain monies in the Reserve Fund, and (iii) all other related Titling
Trust Assets allocated to the SUBI, including (A) the SUBI Collection Account
(to the extent of funds therein relating to the Contracts and Leased Vehicles),
(B) the right to receive payments made to TMCC, the Titling Trust or the Titling
Trustee under certain insurance policies relating to the Contracts, the related
lessees or the Leased Vehicles, (C) the right to receive the proceeds of any
Dealer repurchase obligations in respect of the Contracts or Leased Vehicles,
and (D) all proceeds of the foregoing. During the Revolving Period, Principal
Collections and reimbursement of Loss Amounts will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles which will become SUBI Assets at the
time of such reinvestment.
Pursuant to the SUBI Supplement, on the Closing Date the Titling Trustee
will issue the SUBI Certificate, which will evidence the SUBI, to the
Transferor, and the Transferor will transfer and assign the SUBI Certificate to
the Trustee pursuant to the Agreement.
THE TITLING TRUST
GENERAL
The Titling Trust is a Delaware business trust formed pursuant to the
Titling Trust Agreement. The primary business purpose of the Titling Trust is to
take assignments of and serve as holder of title to substantially all of the
lease contracts and the related leased vehicles originated by the Dealers
beginning on dates prior to the execution of the SUBI Supplement. Pursuant to
the Servicing Agreement, TMCC will service the lease contracts included in the
Titling Trust Assets, including the Contracts. SEE "Additional Document
Provisions--The Trust Agreement" and "--The Servicing Agreement" and "Certain
Legal Aspects of the Titling Trust--The Titling Trust".
Except as otherwise described under "Additional Document Provisions--The
Titling Trust Agreement", pursuant to the Titling Trust Agreement the Titling
Trust has not and will not (i) issue interests
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therein or securities thereof other than the SUBI, the SUBI Certificate, Other
SUBIs representing divided interests in Other SUBI Assets and certificates (the
"Other SUBI Certificates") representing Other SUBIs or portions thereof, and one
or more certificates (the "UTI Certificates") representing the UTI or portions
thereof; (ii) borrow money (except from TMCC or as described in (vi) below) in
connection with funds used to acquire lease contracts and the related leased
vehicles; (iii) make loans; (iv) invest in or underwrite securities, other than
Permitted Investments or as otherwise permitted by the Titling Trust Agreement
or the SUBI Supplement; (v) offer securities in exchange for property (other
than the SUBI Certificate, the Other SUBI Certificates and the UTI
Certificates); or (vi) repurchase or otherwise reacquire its securities except
in connection with financing or refinancing the acquisition of lease contracts
and the related leased vehicles or as otherwise permitted by each such financing
or refinancing. The Titling Trust will not be permitted to acquire lease
contracts other than through the Dealers. The Titling Trust Agreement will
permit the Titling Trust, in the course of its activities, to incur certain
liabilities relating to its assets other than the SUBI Assets, or relating to
its assets generally, and to which, in certain circumstances, the SUBI Assets
may be subject. SEE "Certain Legal Aspects of the Titling Trust--Structural
Considerations", "-- Allocation of Titling Trust Liabilities" and "--Third-Party
Liens on SUBI Assets". However, the Titling Trust Agreement will require the
holders of Other SUBI Certificates and UTI Certificates to waive any claim that
they might otherwise have with respect to the SUBI Assets and to fully
subordinate any claims to the SUBI Assets in the event that this waiver is not
given effect. Similarly, by virtue of holding Certificates or a beneficial
interest in the Certificates, Certificateholders and Certificate Owners will be
deemed to have waived any claim that they might otherwise have with respect to
Other SUBI Assets and the UTI Assets and to subordinate their interests therein.
ALLOCATION OF TITLING TRUST LIABILITIES
The Titling Trust Assets may be comprised of several portfolios of assets
other than the SUBI Assets, including portfolios of Other SUBI Assets and the
remaining portfolio of UTI Assets. The Titling Trust Agreement permits the
Titling Trust, in the course of its activities, to incur certain liabilities
relating to its assets other than the SUBI Assets, or relating to its assets
generally, and to which, in certain circumstances, the SUBI Assets may be
subject. Pursuant to the Titling Trust Agreement, as among the beneficiaries of
the Titling Trust, liabilities relating to a particular Titling Trust Asset will
be allocated to and charged against the allocated portfolio of Titling Trust
Assets to which it belongs. Titling Trust liabilities that are incurred with
respect to the Titling Trust Assets generally will be borne pro rata among all
portfolios of Titling Trust Assets in proportion to the value of the lease
contracts and vehicles in each portfolio. The Titling Trustee and the
beneficiaries of the Titling Trust (including the Trustee and the
Certificateholders) will be bound by this allocation. In particular, the Titling
Trust Agreement will require the holders from time to time of Other SUBI
Certificates and any UTI Certificates to waive any claim that they might
otherwise have with respect to the SUBI Assets and to fully subordinate any
claims to the SUBI Assets in the event that this waiver is not given effect.
Similarly, by virtue of holding Certificates or a beneficial interest in the
Certificates, Certificateholders and Certificate Owners will be bound by this
allocation. Similarly, by virtue of holding Certificates or a beneficial
interest in the Certificates, Certificateholders and Certificate Owners will be
deemed to have waived any claim that they might otherwise have with respect to
Other SUBI Assets and the UTI Assets.
THE TITLING TRUSTEE
The Titling Trustee is a wholly owned, special purpose subsidiary of U.S.
Bank that was organized in 1996 solely for the purpose of acting as Titling
Trustee. U.S. Bank, as Trust Agent, serves as agent for the Titling Trustee to
perform certain functions of the Titling Trustee pursuant to the Titling Trust
Agreement. The Titling Trust Agreement provides that in the event that U.S. Bank
no longer can be the Trust Agent, a designee of TMCC (which may not be TMCC or
any affiliate thereof) will have the option to purchase the stock of the Titling
Trustee for a nominal amount. If TMCC's designee does not timely exercise this
option, then the Titling Trustee will appoint a new trust agent, and that new
trust agent (or its designee) will next
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have the option to purchase the stock of the Titling Trustee. If none of these
options is timely exercised, U.S. Bank may sell the stock of the Titling Trustee
to another party.
PROPERTY OF THE TITLING TRUST
The property of the Titling Trust consists of (i) fixed rate retail
closed-end lease contracts originated in the Trust States and assigned to the
Titling Trust by the Dealers since November 1996, all rights thereunder
including the right to receive proceeds of Dealer repurchase obligations under
the related Dealer agreement, and all monies due from lessees thereunder; (ii)
the automobiles and light duty trucks leased pursuant thereto and all proceeds
thereof; (iii) the rights to proceeds from physical damage, credit life,
disability and all other insurance policies, if any, covering the lease
contracts, the related lessees or the leased vehicles, including, but not
limited to, the Contingent and Excess Liability Insurance Policies; (v) all
security deposits with respect to such lease contracts (to the extent applied to
cover excess wear and tear charges or treated as Liquidation Proceeds as
described herein and as provided in the contracts), and (vi) all proceeds of the
foregoing (collectively, the "Titling Trust Assets"). From time to time after
the date of this Prospectus, TMCC will cause Dealers to originate additional
retail closed-end lease contracts and assign them to the Titling Trust and, as
described below, title the related leased vehicles in the name of the Titling
Trust.
CONTRACT ORIGINATION; TITLING OF LEASED VEHICLES
All lease contracts originated by the Dealers and assigned to the Titling
Trust have been, or will be, underwritten by TMCC personnel using the
underwriting criteria described under "TMCC--Lease Contract Underwriting
Procedures". In connection with the origination of each lease contract, the
Titling Trust will be listed as the owner of the related leased vehicle on the
related certificate of title. Liens will not be placed on such certificates of
title, and new certificates of title will not be issued, to reflect the interest
of the Trustee, as holder of the SUBI Certificate, in the Leased Vehicles.
Pursuant to agreements between the Titling Trust and the Dealers, each
Dealer is obligated, after origination of lease contracts of the Titling Trust,
to repurchase such lease contracts which do not meet certain representations and
warranties made by such Dealer. These representations and warranties relate
primarily to the origination of the lease contracts and the titling of the
related leased vehicles, and do not typically relate to the creditworthiness of
the related lessees or the collectibility of such lease contracts. The Dealer
agreements do not generally provide for recourse to the Dealer for unpaid
amounts in respect of a defaulted lease contract, other than in connection with
the breach of such representations and warranties. The rights of the Titling
Trust to receive proceeds of such Dealer repurchase obligations will constitute
Titling Trust Assets (and SUBI Assets, to the extent they relate to the
Contracts and Leased Vehicles), although the related Dealer agreements will not
constitute Titling Trust Assets.
USE OF PROCEEDS
The net proceeds from the sale of the Class A Certificates (i.e., the
proceeds of the public offering of the Class A Certificates minus expenses
relating thereto) will be applied by the Transferor to purchase the SUBI
Certificate and to make the Initial Deposit into the Reserve Fund.
THE TRANSFEROR
The Transferor is a wholly owned, special purpose finance subsidiary of TMCC
and was incorporated under the laws of California in April 1997. TMCC may not
transfer its ownership interest in the Transferor except to an affiliate of TMCC
so long as any financings involving interests in the Titling Trust (including
the transaction described herein) are outstanding. TMCC is the sole shareholder
of the Transferor. The principal office of the Transferor is located at 19001
South Western Avenue, Torrance, California 90509 and its telephone number is
(310) 787-1310.
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The Transferor was organized solely for the purpose of acquiring interests
in the SUBI and the Other SUBIs, causing the issuance of certificates similar to
the Certificates and engaging in related transactions. The certificate of
incorporation of the Transferor limits its activities to the foregoing purposes
and to any activities incidental to and necessary for such purposes.
TMCC
Toyota Motor Credit Corporation ("TMCC") was incorporated in California on
October 4, 1982, and commenced operations in May 1983. At December 31, 1996,
TMCC had 34 branches in various locations in the United States and one branch in
the Commonwealth of Puerto Rico. In addition to the Transferor, TMCC has four
wholly owned subsidiaries engaged in the insurance business, a wholly owned
subsidiary that provides retail and wholesale financing and certain other
financial services to authorized Toyota and Lexus vehicle dealers and their
customers in Puerto Rico and a wholly owned subsidiary through which TMCC
securitizes retail installment sales contracts.
TMCC's primary business is providing retail leasing, retail and wholesale
financing and certain other financial services to authorized Toyota and Lexus
vehicle and Toyota industrial equipment dealers and their customers in the
United States (excluding Hawaii) and Puerto Rico. TMCC is a wholly owned
subsidiary of TMS, which is primarily engaged in the wholesale distribution of
automobiles, light duty trucks, industrial equipment and related replacement
parts and accessories throughout the United States (excluding Hawaii).
Substantially all of TMS's products are either manufactured by its affiliates or
are purchased from TMC or its affiliates.
As of September 30, 1996, September 30, 1995 and September 30, 1994, TMCC
had approximately 624,000, 438,000 and 387,000 retail lease contracts
outstanding (including retail lease contracts that were assigned to the Titling
Trust and are still being serviced by TMCC), respectively. Aggregate net
outstanding principal balances of retail lease contracts at such dates, were
approximately $12.0 billion, $9.4 billion and $7.6 billion, respectively.
The principal executive offices of TMCC are located at 19001 South Western
Avenue, Torrance, California and its telephone number is (310) 787-1310.
TMCC'S LEASING OPERATIONS
LEASE CONTRACT UNDERWRITING PROCEDURES
TMCC's underwriting standards are intended to evaluate a prospective
lessee's credit standing and ability to make payments. Each prospective lessee
is required by the Dealer to complete a credit application on a form prepared or
approved by TMCC. As part of the description of the applicant's financial
condition, the applicant is required to provide information demonstrating, among
other things, employment history, residential status, bank account information,
annual income and credit references. The Dealer then transmits the completed
application to the appropriate branch office. Upon receipt, income and
employment data generally are verified by a credit investigator within the
branch office and certain data is obtained through an independent credit bureau
report that is combined with data from the application and certain calculations
made by a credit analyst within the branch office. Such data is entered into a
centralized computer network (owned and maintained by TMCC) and weighted by a
statistically validated credit scoring process which "scores" the application
with the use of a scorecard. The scorecard enables TMCC to review an application
and establish the probability that the proposed lease contract will be paid in
accordance with its terms. The credit scores rank-order applications according
to credit risk, which is the likelihood that the lessee will make all payments
when due. TMCC actively monitors and regulates the volume of lease contracts
that it acquires of any given credit grade in its efforts to maintain a
portfolio it deems to contain an appropriate mix.
31
<PAGE>
INSURANCE
Each lease contract requires the lessee to maintain automobile bodily injury
and property damage liability insurance which must name TMCC or, with respect to
the Contracts, the Titling Trust, as an additional insured. Each lease contract
further requires the lessee to maintain (all risks) comprehensive and collision
insurance covering damage to the leased vehicle and naming TMCC or, with respect
to the Contracts, the Titling Trust, as loss payee.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
Collection efforts are performed through the applicable branch office. TMCC
considers a lease to be past due when a borrower fails to make at least 90% of a
scheduled monthly payment by the due date. TMCC automatically reviews all past
due accounts for action every three working days. The account is placed in an
on-line collection system for branch office follow up (prioritized by degree of
delinquency) if payment is not received by the date such payment is 26 days past
due.
Occasionally, situations occur in the collection process when a lessee has
become delinquent and is willing but unable to bring the related account current
(i.e., where a deferred payment is deemed reasonably likely to be followed by
subsequent performance). In this situation, at the discretion of collection
department management, but subject to extensive guidelines, one or more payments
under the lease contract may be deferred, provided that the lessee pays a
deferral fee (each, a "Deferral Fee"). Deferral Fees relating to the Contracts
will not be deposited into the SUBI Collection Account, but will be treated as
additional servicing compensation. The Servicing Agreement will provide that a
Contract may not be deferred more than four times in the aggregate, and that the
Servicer will be required to make Advances with respect to the related Contracts
as set forth herein. Deferral of payments has the practical effect of extending
the maturity date of a lease contract. The Servicing Agreement will provide that
Advances be made with respect to Contracts as to which payments are deferred to
the extent such deferrals would diminish the amount of Collections received in
connection therewith relative to the originally scheduled Monthly Payments. The
Servicing Agreement will also provide for the reallocation to the UTI from the
SUBI (accompanied by an appropriate Reallocation Payment by TMCC) of each
Contract as to which more than four deferrals are made or as to which, through
deferrals or extensions, the maturity date is extended beyond the last day of
the Collection Period relating to the Stated Maturity Date in respect of the
Class B Certificates. Upon any such reallocation, such Contract and the related
Leased Vehicle and other related assets and rights will be UTI Assets and will
no longer constitute SUBI Assets. SEE "Additional Document Provisions--The
Servicing Agreement--Collections".
Occasionally a lessee requests an extension of a lease contract for one or
more months during the period of time between the original specified maturity of
such lease and the time such lessee negotiates a new lease contract or sales
contract with respect to a different vehicle. Any such extension is effected by
the modification of the related lease contract to provide for an additional
number of Monthly Payments with a continuation of the appropriate lease charge
and a corresponding reduction in the related Residual Value to reflect receipt
of additional amortizing payments. The Servicing Agreement will require that
Contracts not be extended by more than twelve months in the aggregate or to a
date later than the last day of the month immediately preceding the month in
which the Stated Maturity Date in respect of the Class B Certificates occurs.
Generally, TMCC collectors make every effort to preserve a lease as a
performing lease. However, if a delinquency cannot be satisfactorily resolved
through deferrals or otherwise, the decision to repossess a leased vehicle will
be made before a payment is more than 60 days past due. Lessees are typically
notified on the day of or within two days after repossession of any right they
may have under applicable state law to redeem their vehicles. TMCC attempts to
sell all repossessed vehicles within 30 days of repossession. TMCC disposes of
off-lease and repossessed vehicles not purchased by the related lessee or the
dealer to whom the vehicle is returned through regional automobile auctions.
32
<PAGE>
DELINQUENCY, REPOSSESSION AND LOSS DATA
The following tables set forth certain delinquency, repossession and loss
data with respect to TMCC's entire retail automobile and light duty truck lease
contract portfolio, including those Contracts originated in the Trust States
during the periods shown, as of and for the periods shown.
The data presented in the following tables are for illustrative purposes
only. Delinquency, repossession and loss experience may be influenced by a
variety of economic, social, geographic and other factors. There is no assurance
that the Trust's delinquency, repossession and loss experience with respect to
its retail automobile and light duty truck lease contracts and the related
leased vehicles in the future, or the experience with respect to the Contracts
and the Leased Vehicles, will be similar to that set forth below.
ENTIRE PORTFOLIO
RETAIL VEHICLE LEASE CONTRACT DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT OR FOR
THE NINE
MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------- -----------------------------------------------------------------------
JUNE 30, 1997 1996 1995 1994
-------------------------- ----------------------- ---------------------- ----------------------
UNITS % UNITS % UNITS % UNITS %
--------------- --------- ------------ --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1)............. $ 12,579,533 100.0% $ 12,358,716 100.0% $ 9,692,671 100.0% $ 7,934,817 100.0%
Ending Number of Lease
Contracts................ 637,966 100.0% 624,184 100.0% 483,178 100.0% 387,066 100.0%
Number of Delinquent Lease
Contracts(2)(3)
0-59 Days................ 7,870 1.23% 7,000 1.12% 3,865 0.80% 1,880 0.49%
60-89 Days............... 635 0.10% 497 0.08% 199 0.04% 113 0.03%
90 Days or More.......... 182 0.03% 134 0.02% 66 0.01% 41 0.01%
--------------- --------- ------------ --------- ----------- --------- ----------- ---------
TOTAL.................. 8,687 1.36% 7,631 1.22% 4,130 0.85% 2,034 0.53%
--------------- --------- ------------ --------- ----------- --------- ----------- ---------
--------------- --------- ------------ --------- ----------- --------- ----------- ---------
<CAPTION>
1993 1992
---------------------- ----------------------
UNITS % UNITS %
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1)............. $ 5,017,258 100.0% $ 3,542,506 100.0%
Ending Number of Lease
Contracts................ 243,742 100.0% 173,667 100.0%
Number of Delinquent Lease
Contracts(2)(3)
0-59 Days................ 1,238 0.51% 883 0.51%
60-89 Days............... 75 0.03% 78 0.04%
90 Days or More.......... 29 0.01% 20 0.01%
----------- --------- ----------- ---------
TOTAL.................. 1,342 0.55% 981 0.56%
----------- --------- ----------- ---------
----------- --------- ----------- ---------
</TABLE>
- ------------------------------
(1) Based on the sum of all principal amounts outstanding under finance lease
contracts and net investment in leased assets under operating lease
contracts originated by TMCC in the United States (inclusive of the residual
values of the related leased vehicles).
(2) Excludes lease contracts the related lessees of which are bankrupt or have
commenced bankruptcy proceedings. As of July 24, 1997, approximately 184
lease contracts involving bankrupt lessees were delinquent for at least 60
days.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
33
<PAGE>
ENTIRE PORTFOLIO
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
(DOLLARS IN THOUSANDS, EXCEPT AS NOTED)
<TABLE>
<CAPTION>
AT OR FOR
THE NINE
MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
JUNE 30, ------------------------------------------------------
1997 1996 1995 1994 1993 1992
------------ ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ending Number of Lease Contracts
Outstanding......................... 637,966 624,184 483,178 387,066 243,742 173,667
Average Number of Lease Contracts
Outstanding......................... 631,075 553,681 435,122 315,404 208,705 146,092
Repossessions:
Number of Repossessions............. 8,968 8,440 6,149 3,758 3,236 2,683
Number of Repossessions as a
Percentage of Lease Contracts
Outstanding....................... 1.87%(4) 1.35% 1.27% 0.97% 1.33% 1.54%
Number of Repossessions as a
Percentage of Average Lease
Contracts Outstanding............... 1.89%(4) 1.52% 1.41% 1.19% 1.55% 1.84%
Losses:
Dollar Amount of Net Receivables
Outstanding(1).................... $12,579,533 $12,023,192 $9,382,655 $7,597,071 $4,616,064 $3,145,687
Average Dollar Amount of Net
Receivables Outstanding(2)........ $12,301,363 $10,702,924 $8,489,863 $6,106,568 $3,880,876 $2,515,159
Net Repossession Losses(3).......... $ 41,246 $ 34,389 $ 23,592 $ 13,103 $ 11,132 $ 10,118
Average Net Repossession Loss per
Liquidated Contract(1)(4)......... $ 4,599 $ 4,075 $ 3,837 $ 3,487 $ 3,440 $ 3,771
Net Repossession Losses as a
Percentage of Average Net
Receivables Outstanding(2)........ 0.45%(5) 0.32% 0.28% 0.21% 0.29% 0.40%
</TABLE>
- ------------------------------
(1) Based on the sum of all principal amounts outstanding under finance lease
contracts and net investment in leased assets under operating lease
contracts originated by TMCC in the United States (inclusive of the residual
values of the related leased vehicles) as of period end.
(2) Average Net Receivables Outstanding is calculated as the average of the sum
of all principal amounts outstanding under finance lease contracts and net
investment in operating leases as of the beginning and the end of the
indicated period.
(3) Losses include expenses incurred to dispose of vehicles.
(4) Dollars not in thousands.
(5) Annualized.
ENTIRE PORTFOLIO
RESIDUAL VALUE LOSS EXPERIENCE(1)
(DOLLARS IN THOUSANDS, EXCEPT AS NOTED)
<TABLE>
<CAPTION>
AT OR FOR
THE NINE
MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
JUNE 30, -----------------------------------------------------
1997 1996 1995 1994 1993 1992
------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Number of Leased Vehicles Scheduled to
Terminate.......................................... 180,643 95,401 54,258 34,298 27,762 13,785
Number of Leased Vehicles Returned to TMCC........... 28,900 13,162 5,787 3,950 4,086 2,229
Full Term Ratio(2)................................... 16.0% 13.8% 10.7% 11.5% 14.7% 16.2%
Total Losses on Vehicles that Reached Scheduled
Term(3)............................................ $ 53,461 $ 29,368 $ 9,492 $ 2,005 $ 2,137 $ 1,526
Average Loss Per Returned Unit(4).................... $ 1,850 $ 2,231 $ 1,640 $ 508 $ 523 $ 685
</TABLE>
- ------------------------------
(1) Because the terms of the retail closed-end lease contracts originated by
TMCC have gradually shifted from five years to three years since 1991, the
residual value loss experience for the periods in the table may not be fully
comparable.
(2) The ratio of line 2 over line 1 expressed as a percentage.
(3) Losses include expenses incurred to dispose of vehicles.
(4) Dollars not in thousands.
34
<PAGE>
THE CONTRACTS
GENERAL
The Initial Contracts will consist of a pool of 56,340 closed-end retail
lease contracts, having an aggregate Outstanding Principal Balance as of the
Cutoff Date of $1,287,004,969.02, and an aggregate Discounted Principal Balance
as of such date of $1,231,231,519.20, selected from the Titling Trust's
portfolio of retail closed-end automobile and light duty truck lease contracts.
During the Revolving Period, Principal Collections (and reimbursements of Loss
Amounts) will be reinvested in Subsequent Contracts and Subsequent Leased
Vehicles, which at the time of such reinvestment will become SUBI Assets. SEE
"Description of the Certificates--Allocations and Distributions on the
Certificates--Revolving Period". The Initial Contracts were, and the Subsequent
Contracts will be, originated by the Dealers in the Trust States and assigned to
the Titling Trust in accordance with TMCC's underwriting procedures and
underwriting criteria. The Initial Contracts have been selected, and the
Subsequent Contracts will be selected, based upon the criteria specified in the
Titling Trust Agreement and SUBI Supplement. SEE "The Contracts--Characteristics
of the Contracts--General" and "--Representations, Warranties and Covenants".
Subsequent Contracts may be originated by TMCC using different underwriting
criteria than those which were applied to the Initial Contracts (but which
criteria will be those that TMCC then applies to the origination of lease
contracts for its own account) which may cause the characteristics of the
Subsequent Contracts to vary from those of the Initial Contracts, and will be
selected from among Titling Trust Assets not allocated or reserved for
allocation to any Other SUBI. Principal Collections (and reimbursements of Loss
Amounts) will first be reinvested in the eligible lease contract with the
earliest origination date, then with the eligible lease contract with the next
earliest origination date and so forth. To the extent that reinvestment of such
amounts from the SUBI are being made out of the Titling Trust's general pool of
available lease contracts at any time after the creation of one or more Other
SUBIs, such reinvestment will first be made with respect to the SUBI. TMCC will
represent and warrant that no adverse selection procedures were employed or will
be employed in selecting the Initial Contracts or the Subsequent Contracts for
inclusion in the SUBI Assets and that it is not aware of any bias in the
selection of such Contracts that would cause the delinquencies or losses on such
Contracts to be worse than other retail closed-end automobile and light duty
truck lease contracts held in the Titling Trust's portfolio, although there can
be no assurance in this regard.
Each Contract will have been written for an original term of not more than
60 months, and will have been written for a "capitalized cost" (which may exceed
the manufacturer's suggested retail price), plus a lease charge which is based
on the imputed Lease Rate. Each Contract will provide for equal monthly payments
that when allocated between principal and the lease charge at the Lease Rate on
a constant yield basis, will be sufficient to amortize the capitalized cost over
the term of the lease to an amount equal to the Residual Value. Each Residual
Value is established at the origination of the lease (based on documentation
provided to the Dealers by TMCC) and represents the estimated wholesale market
value at the end of the lease term.
At the times of origination of the related Contracts, the Leased Vehicles
were, in the case of the Initial Contracts, or will be, in the case of the
Subsequent Contracts, new vehicles, including dealer demonstrator vehicles
driven fewer than 20,000 miles, or used vehicles up to four model years old at
the time of origination of the related Contract, including certified used
vehicles and vehicles previously sold under manufacturer's programs. Certified
used vehicles are Toyota or Lexus vehicles that are purchased by dealers,
reconditioned and certified to meet certain Toyota/Lexus required standards and
sold or leased with an extended warranty from the manufacturer. Manufacturer's
program vehicles are Toyota or Lexus vehicles that have been sold to rental car
companies, repurchased by the manufacturer and subsequently purchased by the
dealer to sell or lease as current year and one year old used vehicles with
20,000 miles or less. Although there will be no limit on the number of used
Leased Vehicles included as SUBI Assets, TMCC will represent and warrant that no
adverse selection procedures were employed or will be employed in selecting the
Initial Contracts or the Subsequent Contracts for inclusion in the SUBI Assets
and that it is
35
<PAGE>
not aware of any bias in the selection of such Contracts that would cause the
delinquencies or losses on such Contracts to be worse than other retail
closed-end automobile and light duty truck lease contracts held in the Titling
Trust's portfolio, although there can be no assurance in this regard.
All of the Contracts will be closed-end leases. Under a "closed-end lease",
at the end of its term, if the lessee does not elect to purchase the related
leased vehicle by exercise of the purchase option contained in such lease
contract, the lessee is required to return the leased vehicle to or upon the
order of the lessor, at which time the lessee will then owe only incidental
charges for excess mileage, excessive wear and use and other items as may be due
under such lease. In contrast, under an "open-end lease", the lessee is also
obligated to pay at the end of the lease term any deficit between the fair
market value of the leased vehicle at that time and the residual value
established at the time of origination of such lease.
Each lessee will be permitted to purchase the Leased Vehicle at the end of
the term of the related Contract. The purchase price will be a fixed dollar
amount equal to the Residual Value plus any applicable taxes and all other
incidental charges which may be due under the Contract. In addition, each
Contract will allow the related lessee voluntarily to terminate such Contract by
paying certain miscellaneous charges and the Payoff Amount described below.
Each Contract will provide that the lessor may terminate such Contract and
repossess the Leased Vehicle in the event of a default by the lessee. Events of
default under the Contracts will include, but will not be limited to, failure to
make payment when due, certain events of bankruptcy or insolvency, failure to
maintain the insurance required by the Contract, failure to maintain or repair
the Leased Vehicle as required or to comply with any other term or condition of
the Contract and the making of a material misrepresentation by the lessee in the
lease application. TMCC regularly tracks lessees' compliance with their payment
obligations and monitors the related leases for noncompliance. SEE
"TMCC--Insurance" and "--Collection, Repossession and Disposition Procedures".
In the forms of contract used to originate Contracts, upon termination at or
before maturity where the lessee is not in default and does not exercise its
option to purchase the Leased Vehicle, the amount owed by the lessee (the
"Payoff Amount") will be determined by adding (i) unpaid Monthly Payments and
any incidental charges owing under the Contract, less unearned lease charges and
(ii) the Residual Value, subtracting the "Realized Value" (as described below),
from the sale or other disposition of the related Leased Vehicle and applying
the Security Deposit, if any, to reduce any deficiency. In calculating the
amount of unearned lease charges under clause (i) above, the Contracts will
provide that the constant yield method will be used, in which lease charges are
earned on a daily basis through the payment date immediately following the date
of early termination. If, instead, there is an early termination and the lessee
is in default, the amount owed by a lessee in default will be determined by
adding (i) the Payoff Amount, (ii) payments accrued under the Contract through
the date of termination, (iii) collection, repossession, storage, preparation
and sale expenses and (iv) attorneys' fees and disbursements incurred after
default.
The "Realized Value" of a Leased Vehicle is the actual wholesale price or
the wholesale price otherwise determined by TMCC in a commercially reasonable
manner. However, each Contract provides that the lessee has the right to obtain
from an independent third party acceptable to the lessor a professional
appraisal of the wholesale value of the Leased Vehicle that could be realized at
sale. This appraised value then would be used as the wholesale value for
purposes of calculating sums due from the lessee.
In the event of early termination of a Contract where the lessee is in
default, the amounts collected with respect to such Contract and the related
Leased Vehicle (after deducting the costs and other sums retained by the
Servicer in connection therewith) may be less than the Outstanding Principal
Balance (and therefore less than the outstanding Discounted Principal Balance)
of such Contract. In the event that a Contract reaches the date on which the
last Monthly Payment is due, as such date may have been extended (the "Maturity
Date"), but the related Leased Vehicle cannot be sold or otherwise disposed of
for a net amount at least equal to its Residual Value, there may be an
additional shortfall in amounts otherwise
36
<PAGE>
expected to be received in respect of the SUBI. In the event that any such
shortfalls allocable to the Certificates are not covered by the Investor
Percentage of certain excess Interest Collections, available monies on deposit
in the Reserve Fund available therefor, Net Insurance Proceeds or Net
Liquidation Proceeds, amounts otherwise payable to the Transferor in respect of
the Transferor Interest (or as Excess Amounts) and the subordination of amounts
otherwise payable to the Class B Certificateholders, in each case to the extent
described herein, investors in the Class A Certificates could suffer a loss on
their investments.
CHARACTERISTICS OF THE CONTRACTS
GENERAL
The Initial Contracts were, and the Subsequent Contracts will be, selected
by reference to several criteria, including, as of the related Cutoff Date, that
each Contract (i) is written with respect to a Leased Vehicle that was at the
time of the origination of the related lease contract a new or used vehicle,
(ii) was originated in the United States, after October 31, 1996 in the case of
the Initial Contracts, and on or before October 1, 1998 in the case of the
Subsequent Contracts; (iii) has a Maturity Date on or after January 1, 1998 and
no later than July 31, 2002 in the case of the Initial Contracts, and no later
than October 1, 2003 in the case of the Subsequent Contracts; (iv) fully
amortizes to an amount equal to the Residual Value of the related Leased Vehicle
based on a fixed Lease Rate calculated on a constant yield basis and provides
for level payments over its term (except for payment of the Residual Value); (v)
was not more than 60 days past due as of the Cutoff Date or the related Transfer
Date, as the case may be; and (vi) has not been deferred more than four times or
extended by more than twelve months in the aggregate.
37
<PAGE>
COMPOSITION OF INITIAL CONTRACTS
<TABLE>
<S> <C>
Aggregate Outstanding Principal Balance as of Cutoff Date........... $1,287,004,969.02
Aggregate Discounted Principal Balance as of Cutoff Date............ $1,231,231,519.20
Aggregate Net Investment Value as of Cutoff Date.................... $1,231,231,519.20
Number of Initial Contracts......................................... 56,340
Average Outstanding Principal Balance as of Cutoff Date(2).......... $22,843.54
Average Discounted Principal Balance as of Cutoff Date.............. $21,853.59
$8,339.00 to
Range of Original Principal Balances of Initial Contracts(2)........ $69,476.03
Weighted Average Lease Rate(1)...................................... 7.655%
Range of Lease Rates(2)............................................. 0.254% to 13.653%
Weighted Average Original Number of Monthly Payments(1)............. 39.8 months
Range of Original Number of Monthly Payments........................ 12 months to 60 months
Weighted Average Remaining Number of Monthly Payments(1)............ 35.8 months
Range of Remaining Number of Monthly Payments....................... 5 months to 59 months
Average Original Residual Value(2).................................. $15,155.98
$1,277.25 to
Range of Original Residual Values(2)................................ $42,382.00
Aggregate of Residual Values as a Percentage of Aggregate Net
Investment Value as of Cutoff Date................................ 69.35%
Percentage of Lease Contracts for Lexus Vehicles (by Discounted
Principal Balance as of the Cutoff Date).......................... 20.52%
Percentage of Lease Contracts for Toyota Vehicles (by Discounted
Principal Balance as of the Cutoff Date).......................... 79.48%
Percentage of Lease Contracts for New Vehicles (by Outstanding
Principal Balance)(2)............................................. 96.95%
Percentage of Lease Contracts for Used Vehicles (by Outstanding
Principal Balance)(2)............................................. 3.05%
</TABLE>
- ------------------------
(1) Weighted by Outstanding Principal Balance as of the Cutoff Date.
(2) Without giving effect to discounting for calculation of Discounted Principal
Balances.
INITIAL CONTRACTS
<TABLE>
<CAPTION>
AVERAGE MINIMUM MAXIMUM
------------- ------------ -------------
<S> <C> <C> <C>
Original Principal Balance........................................... $ 23,608.29 $ 8,339.00 $ 69,476.03
Outstanding Principal Balance(1)..................................... $ 22,843.54 $ 8,157.24 $ 66,296.80
Residual Value(1)(2)................................................. $ 15,155.98 $ 1,277.25 $ 42,382.00
Lease Rate(1)(2)..................................................... 7.655% 0.254% 13.653%
Seasoning (months)(1)(3)............................................. 3.96 0 9
Remaining Term (months)(1)(3)........................................ 35.79 5 59
</TABLE>
- ------------------------
(1) As of the Cutoff Date.
(2) Without giving effect to discounting for calculation of Discounted Principal
Balances.
(3) Weighted by Outstanding Principal Balance as of the Cutoff Date.
38
<PAGE>
DISTRIBUTION OF THE INITIAL CONTRACTS BY LEASE RATE
The distribution of the Initial Contracts as of the Cutoff Date by Lease
Rate was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF AGGREGATE
NUMBER OF NUMBER OF INITIAL CUTOFF DATE CUTOFF DATE
INITIAL INITIAL OUTSTANDING OUTSTANDING
LEASE RATE RANGE CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------------------------------ ------------ --------------- ------------------- -----------------
<S> <C> <C> <C> <C>
less than 2.00%........................... 21 0.04% $ 732,294.45 0.06%
2.00% to 2.99%............................ 189 0.34 4,652,479.21 0.36
3.00% to 3.99%............................ 735 1.30 20,041,121.32 1.56
4.00% to 4.99%............................ 3,792 6.73 66,575,084.03 5.17
5.00% to 5.99%............................ 6,036 10.71 132,994,786.81 10.33
6.00% to 6.99%............................ 1,880 3.34 50,446,770.99 3.92
7.00% to 7.99%............................ 12,621 22.40 329,367,995.06 25.59
8.00% to 8.99%............................ 27,744 49.24 607,537,073.77 47.21
9.00% to 9.99%............................ 1,432 2.54 32,998,762.77 2.56
10.00% to 10.99%.......................... 750 1.33 16,878,442.99 1.31
11.00% to 11.99%.......................... 451 0.80 10,114,477.40 0.79
12.00% to 12.99%.......................... 387 0.69 8,189,007.78 0.64
13.00% to 13.99%.......................... 302 0.54 6,476,672.44 0.50
------------ ------ ------------------- ------
Total................................. 56,340 100.00% $ 1,287,004,969.02 100.00%
------------ ------ ------------------- ------
------------ ------ ------------------- ------
</TABLE>
DISTRIBUTION OF THE INITIAL CONTRACTS BY MATURITY
The distribution of the Initial Contracts as of the Cutoff Date by year of
maturity was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF AGGREGATE CUTOFF
NUMBER OF NUMBER OF CUTOFF DATE DATE
INITIAL INITIAL OUTSTANDING OUTSTANDING
YEARS OF MATURITY CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------------------------------- ----------- --------------- ------------------- -----------------
<S> <C> <C> <C> <C>
1998........................................ 323 0.57% $ 6,136,293.06 0.48%
1999........................................ 9,145 16.23 178,137,161.35 13.84
2000........................................ 33,927 60.22 778,534,934.93 60.49
2001........................................ 5,073 9.00 129,203,254.65 10.04
2002........................................ 7,872 13.97 194,993,325.03 15.15
----------- ------ ------------------- ------
Total(1)................................ 56,340 100.00% $ 1,287,004,969.02 100.00%
----------- ------ ------------------- ------
----------- ------ ------------------- ------
</TABLE>
- ------------------------
(1) Percentages may not add to 100% due to rounding.
39
<PAGE>
DISTRIBUTION OF THE INITIAL CONTRACTS BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF NUMBER OF CUTOFF DATE AGGREGATE CUTOFF
INITIAL INITIAL OUTSTANDING DATE OUTSTANDING
STATE OF ORIGINATION(1) CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------------------------------- ----------- --------------- ------------------- -----------------
<S> <C> <C> <C> <C>
California.................................. 32,422 57.55% $ 751,267,173.73 58.37%
Ohio........................................ 9,128 16.20 185,627,593.15 14.42
Pennsylvania................................ 6,874 12.20 145,319,401.76 11.29
Michigan.................................... 5,875 10.43 125,963,096.95 9.79
Florida..................................... 2,041 3.62 78,827,703.43 6.12
----------- ------ ------------------- ------
Total(2)................................ 56,340 100.00% $ 1,287,004,969.02 100.00%
----------- ------ ------------------- ------
----------- ------ ------------------- ------
</TABLE>
- ------------------------
(1) by Dealer location.
(2) Percentages may not add to 100% due to rounding.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Initial Contracts and Initial Leased Vehicles will be described in a
schedule appearing as an exhibit to the SUBI Supplement, which schedule will be
amended from time to time as Subsequent Contracts and Subsequent Leased Vehicles
become SUBI Assets during the Revolving Period (collectively, the "Schedule of
Contracts and Leased Vehicles").
The Schedule of Contracts and Leased Vehicles will identify each Contract by
identification number, will identify each Leased Vehicle by its vehicle
identification number and will set forth as to each such Contract, among other
things, its: (i) date of origination; (ii) Maturity Date; (iii) Monthly Payment;
(iv) original capitalized cost; (v) Outstanding Principal Balance and Discounted
Principal Balance as of the related Cutoff Date; and (vi) Residual Value. In the
Servicing Agreement, representations and warranties will be made with respect to
each Contract and Leased Vehicle to the effect described under "The
Contracts--Characteristics of the Contracts--General", and that, among other
things, each such Contract, and, to the extent applicable, the related Leased
Vehicle or lessee: (a) was originated by a Dealer located in the United States
in the ordinary course of its business and in compliance with TMCC's normal
credit and underwriting policies and practices; (b) is owned by the Titling
Trust, free of all liens, encumbrances or rights of others; (c) was originated
in compliance with, and complies with, all material applicable legal
requirements; (d) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any governmental authority required
to be obtained, effected or given by the originator of such Contract and the
Titling Trustee in connection with (i) the origination of such Contract, (ii)
the execution, delivery and performance by such originator of the Contract and
(iii) the acquisition by the Titling Trust of such Contract and Leased Vehicle,
have been duly obtained, effected or given and are in full force and effect as
of such date of creation or acquisition; (e) is the legal, valid and binding
obligation of the lessee; (f) to the knowledge of TMCC, is not subject to any
right of rescission, setoff, counterclaim or any other defense of the related
lessee to pay the Outstanding Principal Balance due under such Contract and no
such right of rescission, setoff, counterclaim or other defense has been
asserted or threatened; (g) the related Dealer, the Servicer and the Titling
Trust have each satisfied all obligations required to be fulfilled on its part
with respect thereto; (h) is payable solely in United States dollars in the
United States; (i) the lessee thereunder is located in the United States and is
not TMCC, the Transferor or any of their respective affiliates; (j) requires the
lessee to maintain insurance against loss or damage to the related Leased
Vehicle under an insurance policy that names the Titling Trust as loss payee;
(k) the related certificate of title is registered in the name of the Titling
Trust (or a properly completed application for such title has been submitted to
the appropriate titling authority); (l) is a closed-end lease that requires
equal monthly payments to be made within 60 months of the date of origination of
such Contract; (m) is fully assignable and does not require the consent of the
lessee as a condition to any transfer, sale or
40
<PAGE>
assignment of the rights of the originator; (n) has a Residual Value that does
not exceed an amount reasonably established by the Servicer consistent with its
policies and practices; (o) has not been deferred more than four times or
extended by more than twelve months in the aggregate or otherwise modified
except in accordance with TMCC's normal credit and collection policies and
practices; (p) is not an Other SUBI Asset; (q) to the knowledge of TMCC, the
lessee thereunder is not bankrupt or currently the subject of a bankruptcy
proceeding; (r) is not more than 60 days past due; (s) is a finance lease for
accounting purposes; and (t) is a "true lease" for applicable state law purposes
relating to the perfection of security interests.
The Servicing Agreement will provide that the reinvestment of Principal
Collections (and Loss Amounts otherwise reimbursable to Certificateholders) in
Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period
will be subject to the satisfaction of certain conditions precedent including,
among other things, that after giving effect to such reinvestment, (i) each
Subsequent Contract will be allocated as a SUBI Asset based upon its Discounted
Principal Balance as of the relevant Transfer Date, (ii) the weighted average
remaining term of the Contracts (including the Subsequent Contracts) is not
greater than 39 months and (iii) the weighted average Residual Value of the
Leased Vehicles relating to the Contracts (including the Subsequent Contracts),
as a percentage of the aggregate Outstanding Principal Balance of the Contracts
(including the Subsequent Contracts), in each case as of the related dates of
origination, is not greater than 68%. The foregoing criteria may be changed
without the consent of any Certificateholder if the Trustee receives notice from
each Rating Agency to the effect that the use of such changed criteria will not
result in the reduction, withdrawal or qualification of its then current rating
of any Certificates.
The Servicing Agreement will provide that upon the discovery by the Titling
Trustee, TMCC, the Trustee or the Transferor of a breach of any representation,
warranty or covenant referred to in the second preceding paragraph that
materially and adversely affects the owners of interests in the SUBI or the
Certificateholders in the related Contract or Leased Vehicle, which breach is
not cured in all material respects within 60 days after TMCC discovers such
breach or is given notice thereof, such Contract and Leased Vehicle (and the
related SUBI Assets) will be reallocated to the UTI and TMCC will be required to
deposit (or cause to be deposited) into the SUBI Collection Account an amount
(the "Reallocation Payment") equal to the Discounted Principal Balance of such
Contract as of the last day of the Collection Period during which the related
cure period ended, plus an amount equal to any imputed lease charge on such
Contract at the related Lease Rate that was delinquent as of the end of such
Collection Period. The foregoing payment obligation will survive any termination
of TMCC as Servicer under the Servicing Agreement.
41
<PAGE>
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
All of the Contracts will be prepayable, in whole or in part, at any time
without penalty. The prepayment experience with respect to the Contracts will
affect the weighted average lives of each Class of Certificates then outstanding
if a Monthly Payment Event occurs, and will affect the weighted average life of
any Class of Certificates as to which the related Class Certificate Balance is
not reduced to zero on the related Targeted Maturity Date.
In general, the rate of prepayments on the Contracts may be influenced by a
variety of economic, social, geographic and other factors. The Titling Trust was
formed and began to accept assignments of lease contracts in November 1996. All
of the lease contracts assigned to the Titling Trust since that time have been,
and all of the lease contracts to be assigned to the Titling Trust will be,
assigned by Dealers using TMCC's underwriting standards. TMCC actively
encourages lessees under lease contracts with remaining terms of less than one
year to either buy, trade in or refinance the related leased vehicles prior to
the related scheduled maturities of such lease contracts. TMCC estimates that,
of the retail automobile and light duty truck lease contracts in its portfolio
that were scheduled to mature during fiscal year 1996 or during the nine-month
period ended June 30, 1997, approximately 52% and 49%, terminated prior to
maturity, either because of voluntary prepayments or repossession of the leased
vehicles due to default by the lessees under the related lease contracts. No
assurance can be given that the Contracts will experience the same rate of
prepayment or default or any greater or lesser rate than TMCC's historical rate,
or that the Residual Value experience of Leased Vehicles related to Contracts
that have reached their Maturity Dates will be the same as or higher or lower
than from TMCC's historical residual value loss experience with respect to lease
contracts in its portfolio. Moreover, there can be no assurance as to whether a
Maturity Advance will be made or, if made, will be sufficient to reduce the
Class Certificate Balance of any Class to zero on the related Targeted Maturity
Date and, therefore, any Class may mature significantly later than its Targeted
Maturity Date.
The effective yield on, and weighted average life of, each Class of
Certificates will depend upon, among other things, whether or not an Early
Amortization Event occurs, whether or not a Monthly Payment Event occurs,
whether or not a Maturity Advance sufficient to pay in full the related Class
Certificate Balance on the related Targeted Maturity Date is made, the amount of
scheduled and unscheduled payments on or in respect of the Contracts and the
Leased Vehicles and the rate at which such payments are paid through to the
Certificateholders pursuant to the payment priorities described herein. In the
event of prepayments of the Contracts (including liquidations of the Contracts
and payment of the Residual Value of the related Leased Vehicles) or payment of
any Accelerated Principal Distribution Amount during the Amortization Period,
Certificateholders who receive such amounts may not be able to reinvest the
related payments of principal received on the Certificates at yields as high as
the related Certificate Rate. Under such circumstances, the timing of changes in
the rate of prepayments on the Contracts and payments in respect of the Leased
Vehicles may also affect significantly an investor's actual yield to maturity
and the weighted average life of the related Class of Certificates. In the event
of a Monthly Payment Event, a substantial increase in the rate of payments on or
in respect of the Contracts and Leased Vehicles during the Amortization Period
may shorten the final maturity and weighted average lives of the Certificates.
In the case of Certificates purchased at a discount to their principal amounts,
a slower than anticipated rate of principal payments is likely to result in a
lower than anticipated yield to the investor. In the case of Certificates
purchased at a premium to their principal amounts, a faster than anticipated
rate of principal payments is likely to result in a lower than anticipated yield
to the investor.
Additionally, although monies on deposit in the Accounts and Principal
Collections (and reimbursed Loss Amounts) that have not been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period
will be invested in Permitted Investments, and all gain or other income from
such investments will be available for making distributions on the Certificates,
no assurance can be made as to the rate of return that will be realized on such
Permitted Investments. Any reinvestment risk resulting
42
<PAGE>
from the rate of prepayment of the Contracts (and payment of the Residual Value
of the related Leased Vehicles) and the making of the foregoing investments will
be borne by the Certificateholders.
The Investor Percentage of Loss Amounts as to which no funds are available
for reimbursement on any Monthly Allocation Date (I.E. Certificate Principal
Loss Amounts) will be allocated first to the Class B Certificates and then among
the Class A Certificateholders on a pro rata basis, based on the outstanding
Class A Certificate Balances thereof as of the last day of the related
Collection Period, and then reimbursed out of funds available therefor, if any,
until the date on which the related Class Certificate Balance is reduced to zero
in the amounts and order of priority described in "Description of the
Certificates--Allocations and Distributions on the Certificates--Allocations and
Distributions of Collections". In addition, the Investor Percentage of the net
proceeds of any sale or other disposition of the SUBI, the SUBI Certificate and
other property of the Trust, which may occur under certain circumstances
involving an Insolvency Event with respect to the Transferor, to the extent
constituting Principal Collections, will be distributed first, on a pro rata
basis, to the Class A Certificateholders based on their respective Class
Certificate Balances until the Class A Certificates have been paid in full, and
second, to the Class B Certificateholders.
CLASS A CERTIFICATE FACTORS AND TRADING INFORMATION;
REPORTS TO CLASS A CERTIFICATEHOLDERS
The "Certificate Factor" for each Class of Certificates will be a
seven-digit decimal that the Servicer will compute each month indicating the
related Class Certificate Balance, as the case may be, as of the close of
business on the Monthly Allocation Date in such month as a fraction of the
Initial Certificate Balance of the related Class of Class A Certificates. Each
Certificate Factor will initially be 1.0000000 and will remain unchanged during
the Revolving Period, except in certain limited circumstances where there are
unreimbursed Certificate Principal Loss Amounts allocated to such Class, and
during the Amortization Period until the related Targeted Maturity Date or the
occurrence of a Monthly Payment Event, after which each Certificate Factor will
decline to reflect reductions in the related Certificate Balance resulting from
distributions of principal and such previously unreimbursed Certificate
Principal Loss Amounts, if any. A Class A Certificateholder can determine the
outstanding balance of the Certificate held thereby by multiplying the original
denomination of the holder's Class A Certificate by the related Certificate
Factor for such month.
Pursuant to the Agreement, U.S. Bank, as Trustee, will provide to the Class
A Certificateholders (which shall be Cede & Co. as the nominee of DTC unless
Definitive Certificates are issued under the limited circumstances described
herein) unaudited monthly reports concerning payments received on or in respect
of the Contracts and the Leased Vehicles, the Aggregate Net Investment Value,
the Investor Percentage, the Certificate Factors for each Class and various
other items of information. Certificate Owners may obtain copies of such reports
upon a request in writing to the Trustee. In addition, Class A
Certificateholders during each calendar year will be furnished information for
tax reporting purposes not later than the latest date permitted by law. SEE
"Description of the Certificates--Statements to Certificateholders" and
"--Book-Entry Registration".
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement which, together
with the Titling Trust Agreement, the SUBI Supplement and the Servicing
Supplement, has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The following summaries of material provisions of the
foregoing documents as well as the summaries included elsewhere in this
Prospectus do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the actual provisions of such documents.
43
<PAGE>
GENERAL
The Class A Certificates will be issued in minimum denominations of $1,000
and integral multiples thereof in book-entry form. The Class A Certificates will
initially be represented by global certificates registered in the name of Cede &
Co., the nominee of DTC. No Certificate Owner will be entitled to receive a
certificate representing such owner's Certificate, except as set forth below.
Unless and until Definitive Class A Certificates are issued under the limited
circumstances described below, all references herein to distributions, notices,
reports and statements to Class A Certificateholders will refer to the same
actions made with respect to DTC or Cede & Co., as the case may be, for the
benefit of Certificate Owners in accordance with DTC procedures. SEE
"Description of the Certificates--Book-Entry Registration" and "--Definitive
Certificates".
Each Certificate will represent the right to receive semi-annual payments of
interest at the related Interest Rate and, to the extent described herein,
payments in respect of principal thereof during the Amortization Period funded
from Available Interest, Principal Collections allocable to the SUBI,
Accelerated Principal Distribution Amounts, amounts on deposit in the Reserve
Fund available therefor, amounts otherwise payable to the Transferor in respect
of the Transferor Interest and, in the case of the Class A Certificates, Class B
Available Principal, in each case to the extent described herein. Distributions
of interest and principal on the Class B Certificates will be subordinated to
the right of the Class A Certificates to receive such payments to the extent
provided herein. SEE "Description of the Certificates-- Allocations and
Distributions on the Certificates".
The Transferor will permanently retain the Transferor Interest, which will
represent the interest in the Trust not represented by the Certificates,
including the right to receive the Transferor Percentage of Interest Collections
and Principal Collections. SEE "Description of the Certificates--Calculation of
Investor Percentage and Transferor Percentage". The Transferor Interest will be
subordinated to the Certificates to the extent described herein, and on any day
will equal the difference between the Aggregate Net Investment Value and the
Adjusted Certificate Balance. SEE "Description of the Certificates--Certain
Payments to the Transferor".
The Class Certificate Balances of the Certificates of each Class will remain
constant, except to the extent there are unreimbursed Certificate Principal Loss
Amounts or unreimbursed Class B Available Principal Amounts previously applied
to fund interest shortfalls, Loss Amounts or Certificate Principal Loss Amounts
with respect to the Class A Certificates, until the earlier of its Targeted
Maturity Date or the occurrence, if any, of a Monthly Payment Event. However,
during the Amortization Period, the Adjusted Certificate Balance will decline,
to the extent described herein, as the Investor Percentage of Principal
Collections allocable to the SUBI and Accelerated Principal Distribution Amounts
are deposited into the Certificateholders' Account and the Certificate Balance
and Adjusted Certificate Balance will decline as (a) Certificate Principal Loss
Amounts are incurred and not reimbursed or (b) Class B Available Principal
Amounts are applied to cover interest shortfalls, Loss Amounts and Certificate
Principal Loss Amounts allocable to the Class A Certificates and not reimbursed.
TRANSFER OF THE SUBI
On the Closing Date, the Transferor will deliver the SUBI Certificate to the
Trustee and transfer and assign to the Trustee, without recourse, all of its
right, title and interest in and to the SUBI (excluding the right to proceeds of
any residual value insurance policy represented thereby). Concurrently
therewith, the Trustee will execute, authenticate and deliver the Certificates
to or upon the order of the Transferor. Pursuant to the Agreement, the
Transferor will represent and warrant that, immediately prior to the transfer
and assignment of the SUBI Certificate to the Trustee, it had good title to and
was the sole legal and beneficial owner of the SUBI Certificate, free and clear
of liens and claims.
44
<PAGE>
REALLOCATION PAYMENTS AND REALLOCATION DEPOSIT AMOUNTS
Under certain circumstances TMCC will be required to make Reallocation
Payments in respect of certain Contracts (and the related Leased Vehicles)
discovered not to be in compliance with TMCC's representations or warranties or
Contracts as to which certain servicing procedures have not been followed, in
either case that materially and adversely affects the interests of the
Transferor or the Certificateholders in the related Contract or Leased Vehicle.
Upon any such payment during the Amortization Period (but not during the
Revolving Period), the Aggregate Net Investment Value will decline by an amount
equal to the Discounted Principal Balance of such Contract, and such Contract
and the related Leased Vehicle will no longer constitute SUBI Assets as they
will be reallocated and become UTI Assets. If such deduction would cause the
Transferor Interest to become less than zero, TMCC will be required to deposit
(or cause to be deposited) in the SUBI Collection Account the amount (the
"Reallocation Deposit Amount") by which the Transferor Interest would be reduced
to less than zero. Notwithstanding the foregoing, in the event a Reallocation
Deposit Amount is required to be made, reallocation of the related Contract (and
the related Leased Vehicle) will not be considered to have occurred unless such
deposit is actually made. SEE "The Contracts--Representations, Warranties and
Covenants" and "Additional Document Provisions--The Servicing
Agreement--Collections"
CALCULATION OF INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
Pursuant to the Servicing Agreement, to the extent allocable to the SUBI,
the Servicer will allocate between the Investor Interest and the Transferor
Interest, based on the applicable Investor Percentage and the Transferor
Percentage for the related Collection Period, all Interest Collections and
Principal Collections collected or received in respect of the related Collection
Period. In addition, similar allocations will be made by the Servicer at the end
of each Collection Period in respect of (i) an amount equal to the Discounted
Principal Balance of any Contract that became a Charged-off Contract during such
Collection Period (the aggregate of such amounts in any Collection Period, the
"Charged-off Amount"), (ii) the Residual Value Loss Amount for such Collection
Period and (iii) any Additional Loss Amounts incurred during such Collection
Period. A "Charged-off Contract" will be a Contract (a) with respect to which
the related Leased Vehicle has been repossessed and sold or otherwise disposed
of or (b) which has been written off by the Servicer in accordance with its
normal policies for writing off lease contracts other than with respect to
repossession.
The Investor Percentage in respect of any Collection Period will mean, with
respect to (i) Charged-off Amounts, Residual Value Loss Amounts and Additional
Loss Amounts (collectively, "Loss Amounts") and Interest Collections, in each
case that are allocable to the SUBI, the percentage equivalent of a fraction
(not to exceed 100%) the numerator of which is the Adjusted Certificate Balance
on the last day of the immediately preceding Collection Period (or, in the case
of the first Collection Period, the Initial Certificate Balance) and the
denominator of which is the Aggregate Net Investment Value on the last day of
the immediately preceding Collection Period (or, in the case of the first
Collection Period, as of the Cutoff Date) and (ii) Principal Collections, the
percentage equivalent of a fraction (not to exceed 100%) the numerator of which
is the Adjusted Certificate Balance and the denominator of which is the
Aggregate Net Investment Value, in each case as of the last day of the last
Collection Period preceding (a) the Amortization Date or (b) the date on which
an Early Amortization Event occurs. The "Transferor Percentage" will in all
cases, be equal to 100% minus the applicable Investor Percentage.
As a result of the calculations described above, Interest Collections
allocable to the SUBI in each Collection Period will be allocated to the
Certificateholders based on the relationship of the Adjusted Certificate Balance
to the Aggregate Net Investment Value (which may change from Collection Period
to Collection Period). As described above, the Investor Percentage applied when
allocating Principal Collections allocable to the SUBI may vary monthly during
the Revolving Period, because the Adjusted Certificate Balance as a percentage
of the Aggregate Net Investment Value may fluctuate monthly. During the
Amortization Period, however, the Principal Allocation will be determined by
reference to a fixed
45
<PAGE>
percentage which will equal the Investor Percentage with respect to Principal
Collections allocable to the SUBI as of the last day of the Revolving Period.
CERTAIN PAYMENTS TO THE TRANSFEROR
On each Monthly Allocation Date, the Trustee will pay to the Transferor,
from amounts on deposit in the SUBI Collection Account in respect of the related
Collection Period that are allocable to the SUBI, the following amounts (the
"Transferor Amounts"): (i) if such Monthly Allocation Date is prior to the First
Principal Monthly Allocation Date, the Transferor Percentage of Interest
Collections and (ii) if such Monthly Allocation Date is on or after the First
Principal Monthly Allocation Date, the Transferor Percentage of Interest
Collections and, to the extent that the Transferor Interest is equal to or
greater than zero, the Transferor Percentage of Principal Collections. Amounts
to be released to the Transferor pursuant to clause (13) under "--Allocations
and Distributions on the Certificates--Allocations and Distributions of
Collections" will also be considered Transferor Amounts, but will not offset or
reduce amounts allocable to the Transferor Interest as described in the
preceding sentence.
Notwithstanding the foregoing, no Transferor Amounts will be paid to the
Transferor on a Monthly Allocation Date unless (i) the amounts required to be
allocated or distributed to Certificateholders as described under "Description
of the Certificates--Allocations and Distributions on the Certificates" have
been allocated or distributed in full and (ii) the amount on deposit in the
Reserve Fund, after giving effect to all withdrawals therefrom and other
deposits thereto on such Monthly Allocation Date, is at least equal to the
Specified Reserve Fund Balance. The principal portion of any Transferor Amounts
not paid to the Transferor because the Transferor Interest is less than or equal
to zero ("Unallocated Principal Collections") will be retained in the SUBI
Collection Account until (a) applied to cover interest shortfalls, Loss Amounts
or Certificate Principal Loss Amounts allocable to the Certificates, (b) the
Certificates are paid in full (in which case such amounts will be released to
the Transferor) or (c) the Transferor Interest again exceeds zero (in which case
such amounts will again be releasable as Transferor Amounts).
ALLOCATIONS AND DISTRIBUTIONS ON THE CERTIFICATES
GENERAL
On the second Business Day prior to each Monthly Allocation Date (each, a
"Determination Date"), the Servicer will inform the Trustee of, among other
things, the amount of Interest Collections and Principal Collections allocable
to the SUBI, the Investor Percentage, the Transferor Percentage, the Certificate
Factor for each Class, the amount of Advances and Maturity Advances, if any, to
be made by or reimbursed to the Servicer, the aggregate amount, if any, to be
withdrawn from the Reserve Fund and the Servicing Fee and other servicing
compensation payable to the Servicer with respect to the related Collection
Period. On or prior to each Determination Date, the Servicer shall also
determine the Specified Reserve Fund Balance and the amounts to be distributed
to the Certificateholders and to the Transferor in respect of the Transferor
Interest and in respect of other amounts released from the Trust.
ALLOCATIONS AND DISTRIBUTIONS OF COLLECTIONS
On each Monthly Allocation Date, the Trustee will make the following
allocations, payments and distributions in accordance with the following
priorities from Available Interest (to the extent sufficient therefor):
(1) in the event of an Early Amortization Event involving an Insolvency
Event as a result of the Trustee having received written instructions from
holders of Certificates evidencing Voting Interests of not less than 51% of
the Class A Certificates (voting together as a single class) or 51% of the
Class A Certificates and Class B Certificates (voting together as a single
class) to sell or dispose of the SUBI, to the Trustee, the Investor
Percentage of Capped Trust Administrative Expenses;
46
<PAGE>
(2) to or for the benefit of the Class A Certificateholders, the amount
of interest accrued on the Class Certificate Balances of the Class A
Certificates and unreimbursed Certificate Principal Loss Amounts previously
allocated thereto during the period from and including the immediately
preceding Monthly Allocation Date to but excluding the related Monthly
Allocation Date at the related Class A Rates, plus any Class A Interest
Carryover Shortfall;
(3) to or for the benefit of the Class B Certificateholders, the amount
of interest accrued on the Class B Certificate Balance during the period
from and including the immediately preceding Monthly Allocation Date to but
excluding the related Monthly Allocation Date, plus any Class B Interest
Carryover Shortfall;
(4) to the Servicer, the Investor Percentage of the Servicing Fee for
such Collection Period and the aggregate of the Investor Percentage of
accrued but unpaid Servicing Fees in respect of prior Collection Periods;
(5) to the Servicer, the Investor Percentage of Capped Contingent and
Excess Liability Premiums that have not yet been reimbursed to the Servicer;
(6) to the Titling Trustee, the Investor Percentage of Capped Titling
Trust Administration Expenses;
(7) in circumstances other than as set forth in clause (1) above, to the
Trustee, the Investor Percentage of Capped Trust Administration Expenses;
(8) to or for the benefit of the Class A Certificateholders the
aggregate amount of Loss Amounts allocable to the Class A Certificateholders
on such Monthly Allocation Date as described below plus the aggregate amount
of Certificate Principal Loss Amounts allocated thereto on any prior Monthly
Allocation Date (pro rata, based on the Loss Amounts and Certificate
Principal Loss Amounts so allocated to each such Class), in each case to the
extent not previously reimbursed pursuant to this clause or through the
application of amounts withdrawn from the Reserve Fund, Transferor Amounts
and Class B Available Principal;
(9) to or for the benefit of the Class B Certificateholders, (a) the
amount, if any, of (i) interest accrued during the period from and including
the immediately preceding Monthly Allocation Date to but excluding the
related Monthly Allocation Date at the Class B Rate on any Certificate
Principal Loss Amounts previously allocated thereto and then (ii) to
reimburse the aggregate amount of Loss Amounts allocable to the Class B
Certificateholders on such Monthly Allocation Date as described below plus
the aggregate amount of Certificate Principal Loss Amounts allocated thereto
on any prior Monthly Allocation Date, in each case to the extent not
previously reimbursed pursuant to this clause or through the application of
amounts withdrawn from the Reserve Fund and Transferor Amounts, and (b) the
amount, if any, of Class B Available Principal applied to fund interest
shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocated to
the Class A Certificates on any Monthly Allocation Date and not previously
reimbursed pursuant to this clause;
(10) for deposit into the Reserve Fund, until the amount on deposit
therein equals the Specified Reserve Fund Balance;
(11) to the Titling Trustee, the Investor Percentage of Uncapped Titling
Trust Administration Expenses;
(12) to the Trustee, the Investor Percentage of Uncapped Trust
Administration Expenses; and
(13) except as described below, to the Transferor, all remaining
Interest Collections, which shall for all purposes thereupon be deemed to
have been released from the Trust.
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<PAGE>
Payments of interest on each Class of Certificates will be made, to the
extent funds are allocated and are available therefor as described above, (i) on
each Monthly Allocation Date in March and September, commencing in March 1998,
as well as on the Targeted Maturity Date for such Class and (ii) for any Class
of Certificates not paid in full on the related Targeted Maturity Date, on any
subsequent Certificate Payment Date until the related Class Certificate Balance
is reduced to zero. In addition, after the occurrence of any Monthly Payment
Event, payments of interest on each Class of Certificates will be made monthly,
to the extent funds are allocated and are available therefor as described above,
on each Monthly Allocation Date (and each such subsequent Monthly Allocation
Date will be a Certificate Payment Date). Interest amounts allocable or
distributable to Holders of Class A Certificates will be allocated or
distributed on a pro rata basis, based on the interest accrued thereon during
the related Interest Period plus the aggregate amount of unreimbursed Class A
Interest Carryover Shortfalls allocated thereto on all prior Monthly Allocation
Dates.
To the extent Available Interest is insufficient therefor, the amount of any
deficiency in amounts allocable or distributable pursuant to clauses (1) through
(9) will be covered, first, from amounts withdrawn from the Reserve Fund that
are available therefor and, second, from Transferor Amounts. If any Transferor
Amounts are required to be applied to make any of the allocations or
distributions described in clauses (1) through (10) above, the Interest
Collections that are part of the Transferor Amounts will be applied before any
Principal Collections that are part of the Transferor Amounts are so applied. To
the extent a deficiency in the amounts to be allocated or distributed pursuant
to clause (2) or clause (8) remains after application of all of the foregoing
amounts, such deficiency will be covered by application of Class B Available
Principal, if any.
The amount of funds to be withdrawn from the Reserve Fund on a Monthly
Allocation Date and applied to payments to be made as described above will equal
the lesser of (i) the amount on deposit in the Reserve Fund on the related
Deposit Date and available therefor and (ii) the amount, if any, by which the
aggregate of amounts allocable or distributable pursuant to clauses (2), (3),
(8) or (9) exceeds the amount of Available Interest available to make such
allocation or distribution based on the foregoing priorities. SEE "Assets of the
Trust--The Accounts; Collections--The Reserve Fund".
Notwithstanding the foregoing, Available Interest and Class B Available
Principal allocated to Certificateholders to reimburse Loss Amounts or
Certificate Principal Loss Amounts pursuant to clauses (8) and (9) above on a
Monthly Allocation Date that is during the Revolving Period will be treated as
Principal Collections for the Collection Period in which such Monthly Allocation
Date occurs and, unless an Early Amortization Event happens prior to the related
Transfer Date, will be available to be reinvested in Subsequent Contracts and
Subsequent Leased Vehicles.
The Investor Percentage of Loss Amounts will be allocable to the
Certificates. Loss Amounts allocated to the Certificates on any Monthly
Allocation Date will be allocated first to the Class B Certificates and then, on
any Monthly Allocation Date on which the Class B Certificate Balance is reduced
to zero, to the Class A Certificates. A "Certificate Principal Loss Amount" with
respect to any Monthly Allocation Date and Class of Certificates will equal the
Loss Amounts allocated to such Class of Certificates on such date less any
reimbursement thereof from Available Interest, amounts withdrawn from the
Reserve Fund that are available therefor, Transferor Amounts and Class B
Available Principal (in the case of the Class A Certificates only). Loss Amounts
allocated to the Class A Certificates will be allocated thereto on a pro rata
basis, based on their respective outstanding Class Certificate Balances as of
the end of the related Collection Period. Loss Amounts and Certificate Principal
Loss Amounts allocated to the Class A Certificates will be reimbursable thereto
on a pro rata basis, based on the aggregate amount of all unreimbursed Loss
Amounts and Certificate Principal Loss Amounts allocated thereto on such Monthly
Allocation Date and all prior Monthly Allocation Dates; provided, however, that
no such reimbursements will be made to any Class of Class A Certificates after
the Certificate Payment Date on which the related Class Certificate Balance is
reduced to zero. Loss Amounts and Certificate Principal Loss Amounts allocated
to the Class B Certificates will be reimbursable as described above until the
Monthly Allocation
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Date on which the Class B Certificate Balance has been reduced to zero.
Certificate Principal Loss Amounts allocable to a Class of Certificates which
are not reimbursed as provided herein will reduce the Certificate Balance of
such Class of Certificates, but will bear interest at the related Certificate
Rate until reimbursed or until the related Class Certificate Balance is reduced
to zero.
On each Monthly Allocation Date, Principal Collections (and if Principal
Collections are insufficient therefor, Interest Collections) will be applied to
reimburse the Servicer for the principal portion of unreimbursed Advances and
Nonrecoverable Advances. Thereafter, the Investor Percentage of remaining
Principal Collections plus any Accelerated Principal Distribution Amount will be
applied first to reimburse the Transferor for unreimbursed Maturity Advances and
second, for deposit into the Certificateholders' Account in respect of principal
on the Certificates or, on any Monthly Allocation Date on which principal is
distributable to the Holders of any Class of Certificates, as described below,
for distribution to such Holders until the related Class Certificate Balance has
been reduced to zero.
On each Monthly Allocation Date that coincides with or follows a Targeted
Maturity Date for a Class of Class A Certificates, the Trustee will distribute
all amounts on deposit in the Collection Account and the Certificateholders'
Account in respect of principal (after giving effect to any application of
amounts withdrawn from the Reserve Fund and available for such application and
Transferor Amounts described above) to the Holders of such Class of Class A
Certificates until the Class Certificate Balance thereof is reduced to zero. To
the extent such amounts are insufficient to reduce the related Class Certificate
Balance to zero, the Transferor will have the option to make a Maturity Advance
in any amount up to the amount of such deficiency. On each Monthly Allocation
Date that follows a Monthly Payment Event, the Trustee will distribute all
amounts on deposit in the Collection Account and the Certificateholders' Account
in respect of principal (after giving effect to any application of amounts
withdrawn from the Reserve Fund and available for such application and
Transferor Amounts described above) to the Holders of each outstanding Class of
Class A Certificates sequentially until the related Class Certificate Balance is
reduced to zero, and then to the Class B Certificateholders until the Class B
Certificate Balance is reduced to zero.
"Available Interest" with respect to any Monthly Allocation Date is an
amount equal to the sum of (i) the Investor Percentage of Interest Collections
for the related Collection Period less any portion of such Interest Collections
used to reimburse Advances and any Nonrecoverable Advances plus (ii) investment
income (net of investment losses) on Permitted Investments of amounts in the
Certificateholders' Account from the prior Monthly Allocation Date to, but not
including, the current Monthly Allocation Date.
The "Class A Interest Carryover Shortfall" with respect to any Monthly
Allocation Date will equal the excess, if any, of (x) the aggregate amount of
interest accrued on the Class A Certificate Balances and unreimbursed
Certificate Principal Loss Amounts previously allocated thereto at the related
Certificate Rates during the period from the prior Monthly Allocation Date to
but not including the current Monthly Allocation Date, plus any outstanding
Class A Interest Carryover Shortfall from the immediately preceding Monthly
Allocation Date, plus interest on such outstanding Class A Interest Carryover
Shortfall, to the extent permitted by law, at the weighted average of the Class
A Certificate Rates for such period, over (y) Available Interest allocated or
distributed to Class A Certificateholders in respect of interest on such Monthly
Allocation Date.
The "Class B Interest Carryover Shortfall" with respect to any Monthly
Allocation Date will equal the excess, if any, of (x) the aggregate amount of
interest accrued on the Class B Certificates at the Class B Rate during the
period from the prior Monthly Allocation Date to but not including the current
Monthly Allocation Date, plus any outstanding Class B Interest Carryover
Shortfall from the immediately preceding Monthly Allocation Date, plus interest
on such outstanding Class B Interest Carryover Shortfall, to the extent
permitted by law, at the Class B Rate for such period, over (y) Available
Interest allocated or distributed to Class B Certificateholders in respect of
interest on such Monthly Allocation Date.
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"Capped Titling Trust Administrative Expenses" with respect to any Monthly
Allocation Date will equal one twelfth of the aggregate amounts sufficient to
pay specified administrative costs and expenses of the Titling Trust that are
allocable to the SUBI up to but not exceeding $100,000 in any calendar year.
"Uncapped Titling Trust Administrative Expenses" with respect to any Monthly
Allocation Date will equal one twelfth of the aggregate amounts sufficient to
pay specified administrative costs and expenses of the Titling Trust that are
allocable to the SUBI not subject to the limitations set forth in the preceding
sentence.
"Capped Trust Administrative Expenses" will equal the amounts sufficient to
pay specified administrative costs and expenses associated with the Certificates
such as the Trustee's compensation, the reasonable fees and disbursements of the
Transferor's accountants and attorneys up to but not exceeding $75,000 in any
calendar year (or $125,000 in a calendar year in which an Early Amortization
Event occurs with respect to which the Trustee sells or otherwise disposes of
the SUBI). "Uncapped Trust Administrative Expenses" will equal the amounts
sufficient to pay specified administrative costs and expenses associated with
the Certificates such as the Trustee's compensation, the reasonable fees and
disbursements of the Transferor's accountants and attorneys not subject to the
limitations set forth in the preceding sentence.
"Capped Contingent and Excess Liability Premiums" with respect to any
Monthly Allocation Date will equal the amounts sufficient to pay or reserve for
payment one-twelfth of the portion of the annual premium payable on the
Contingent and Excess Liability Insurance Policies allocable to the SUBI, up to
but not exceeding $300,000 in any calendar year.
"Class B Available Principal" with respect to any Monthly Allocation Date
means the portion of Principal Collections derived by multiplying (i) a
fraction, the numerator of which is the Class B Adjusted Certificate Balance,
and the denominator of which is the Adjusted Certificate Balance as of such
Monthly Allocation Date, by (ii) the Investor Percentage, and by (iii) Principal
Collections plus any Accelerated Principal Distribution Amount for such Monthly
Allocation Date.
"Excess Amounts" with respect to any Monthly Allocation Date are the sum of
the Interest Collections distributable to the Transferor pursuant to clause (13)
above.
REVOLVING PERIOD
No principal will be allocable or distributable on the Certificates until
the First Principal Monthly Allocation Date. On each Transfer Date, the Servicer
will identify lease contracts and the related leased vehicles of the Titling
Trust that meet the eligibility criteria described under "The Contracts" and are
not evidenced by the SUBI or any Other SUBI and, on behalf of the Titling
Trustee, will allocate lease contracts and related leased vehicles having an
aggregate Discounted Principal Balance as of the related Transfer Date
approximately equal to, but not greater than, all Principal Collections
collected or received since the Cutoff Date (together with amounts used to fund
or reimburse Loss Amounts allocated to any Certificates) that have not yet been
so reinvested. Upon such allocation, the related lease contracts and leased
vehicles will become Subsequent Contracts and Subsequent Leased Vehicles and
accordingly will become SUBI Assets. No partial interest in lease contracts (and
the related leased vehicles) will be so allocated. Coincident with such
allocation, the Servicer, acting on behalf of the Titling Trustee, will withdraw
from the SUBI Collection Account (or apply from its own funds if the Servicer is
not then subject to the requirement to make deposits therein prior to the
Deposit Date) an amount of unreinvested Principal Collections (together with
amounts applied to reimburse Loss Amounts) equal to the aggregate Discounted
Principal Balance of such Subsequent Contracts to make such reinvestment.
Principal Collections and reimbursements of Loss Amounts allocated to
Certificates and not previously reinvested may be reinvested in additional
Subsequent Contracts and Subsequent Leased Vehicles on one or more subsequent
Transfer Dates each month prior to the end of the Revolving Period. During the
Revolving Period, if the Servicer determines on the last day of any calendar
month commencing in October
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1997 that the amount of Principal Collections and reimbursed Loss Amounts and
Certificate Principal Loss Amounts for the preceding Collection Period that have
not been reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of
the first day of such month exceeds $1,000,000, an Early Amortization Event will
occur, the Revolving Period will terminate and all unreinvested Principal
Collections and reimbursements of Loss Amounts will be allocated or distributed
as principal to the Trust and then to Certificateholders on succeeding Monthly
Allocation Dates. SEE "--Early Amortization Events" below.
AMORTIZATION PERIOD
On each Monthly Allocation Date beginning with the First Principal Monthly
Allocation Date and ending on the Monthly Allocation Date on which the
Certificate Principal Balances of all Certificates have been reduced to zero (or
monies sufficient to pay each outstanding Class of Certificates in full and
reimburse Certificate Principal Loss Amounts have been allocated as principal
and deposited into the Certificateholders' Account), the Trustee will deposit
into the Certificateholders' Account and/or distribute to the Certificateholders
then entitled to receive distributions in respect of principal, an amount equal
to the Investor Percentage of all Principal Collections collected or received in
respect of the related Collection Period, less amounts applied in reimbursement
of Advances, Nonrecoverable Advances or Maturity Advances, together with any
portion of Available Interest, amounts withdrawn from the Reserve Fund and
available therefor, Transferor Amounts or Class B Available Principal allocable
or distributable in respect of principal on such Monthly Allocation Date, rather
than reinvesting such amounts in Subsequent Contracts and Subsequent Leased
Vehicles. On the First Principal Monthly Allocation Date, the Trustee will also
allocate or distribute to Certificateholders as a portion of Principal
Collections, following the priorities described above, the Investor Percentage
of any Principal Collections and reimbursements of Loss Amounts allocable to the
SUBI that were not reinvested in Subsequent Contracts and Subsequent Leased
Vehicles as of the end of the Revolving Period. The aggregate distributions of
principal to the Holders of Certificates of any Class will not exceed the
related Initial Certificate Balance thereof.
The Class Certificate Balance of each Class of Certificates will be payable
in full on the related Targeted Maturity Date. If the aggregate of amounts
allocated to cover such principal payment during the Collection Periods from the
end of the Revolving Period through such date (whether from Principal
Collections, Transferor Amounts, Available Interest or a Maturity Advance) are
insufficient to make such payment in full, all such amounts available will be
paid to the related Certificateholders on the related Targeted Maturity Date
and, thereafter, payments of principal and interest will be made to the related
Holders to the extent described below on a monthly basis on each subsequent
Monthly Allocation Date until the related Class Certificate Balance of such
Class of Certificates has been reduced to zero. In addition, after the
occurrence of any Monthly Payment Event, payments of principal will be made
monthly to the Holders of each Class of Certificates sequentially, to the extent
funds are allocated and are available therefor as described above, on each
Monthly Allocation Date (and each such subsequent Monthly Allocation Date will
be a Certificate Payment Date).
The Investor Percentage of the net proceeds of any sale or other disposition
of the SUBI, the SUBI Certificate or other property of the Trust, to the extent
such net proceeds constitute Principal Collections, will be distributed first,
to the Class A Certificateholders on a pro rata basis, based on their respective
Class Certificate Balances as of the last day of the preceding Collection
Period, until the Class A Certificates have been paid in full and, second, to
the Class B Certificateholders.
INVESTMENT OF AVAILABLE AMOUNTS
During the Revolving Period, Available Interest not paid out to the Trustee
or Servicer and not released to the Transferor or distributed to
Certificateholders will be deposited into the Certificateholders' Account on
such Monthly Allocation Date and invested in Permitted Investments maturing
prior to the succeeding relevant Certificate Payment Date and bearing interest
at the related Required Rates. Following the termination of the Revolving
Period, so long as any Certificates are outstanding, such amounts of
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unreleased and undistributed Available Interest and the Investor Percentage of
Principal Collections with respect to any Monthly Allocation Date that is not a
Certificate Payment Date will be deposited into the Certificateholders' Account
on such Monthly Allocation Date and invested in Permitted Investments maturing
prior to the succeeding relevant Certificate Payment Date or Targeted Maturity
Date, as appropriate, and bearing interest at the related Required Rates. Such
Permitted Investments are expected to include one or more TMCC Demand Notes.
TMCC Demand Notes will be unsecured general obligations of TMCC and will rank
pari passu with all other unsecured and unsubordinated indebtedness of TMCC
outstanding from time to time. Each Demand Note will mature on the earlier of
the Deposit Date prior to the next succeeding Certificate Payment Date or
Targeted Maturity Date, as the case may be, and the Certificate Payment Date
following the occurrence of a Monthly Payment Event. Pursuant to the terms of
the TMCC Demand Notes, the Trustee will be entitled to demand payment of the
principal amount of the TMCC Demand Notes, together with accrued interest
thereon, on any Deposit Date.
EARLY AMORTIZATION EVENTS
As described above, the Amortization Period will commence on the earlier of
the Amortization Date or the occurrence of an Early Amortization Event and
continue until the Class Certificate Balances of each Class of Certificates is
reduced to zero. An "Early Amortization Event" will mean any of the following
events:
(i) failure by the Servicer (a) to make any payment or deposit required
with respect to the SUBI, the SUBI or the Certificates under the Agreement
or the Servicing Agreement, within five Business Days after the date the
payment or deposit is required to be made, or (b) to deliver a Servicer's
Certificate within ten Business Days after any Determination Date which
failure continues unremedied for three Business Days;
(ii) failure by the Transferor or the Servicer duly to observe or
perform in any material respect any other of its covenants or agreements in
the Agreement (other than those described in clause (i) above) or the
Servicing Agreement, which failure materially and adversely affects the
rights of holders of the SUBI or Certificateholders and which continues
unremedied for 60 days after the giving of written notice of such failure
(a) to the Transferor or the Servicer, as the case may be, by the Trustee or
the Titling Trustee or (b) to the Transferor or the Servicer, as the case
may be, and to the Trustee by holders of Certificates evidencing not less
than 25% of the Voting Interests of the Class A Certificates and the Class B
Certificates, voting together as a single class;
(iii) failure to cure the inaccuracy of certain representations,
warranties and certificates of the Transferor or the Servicer in the
Agreement or the Servicing Agreement, which failure materially and adversely
affects the rights of holders of the Transferor or Certificateholders and
which continues uncured for 60 days after notice is given as described in
clause (ii) above; provided that an Early Amortization Event pursuant to
this subparagraph (iii) will not be deemed to occur if a related
Reallocation Payment is due in connection with such breach and has been paid
by the Servicer in accordance with the Servicing Agreement;
(iv) the occurrence of certain Insolvency Events relating to the
Transferor;
(v) creation of any lien or encumbrance not otherwise permitted by the
Agreement or the Servicing Agreement on the SUBI Assets, which lien or
encumbrance is not released within 60 days of its creation;
(vi) the Transferor, the Trust or the Titling Trust becomes subject to
registration as an "investment company" for purposes of the Investment
Company Act of 1940, as amended;
(vii) if the Servicer determines on the last day of any calendar month
commencing in October 1997 that the amount of Principal Collections and
reimbursed Loss Amounts and Certificate Principal
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Loss Amounts for the preceding Collection Period that have not been
reinvested in Subsequent Contracts and Subsequent Leased Vehicles as of the
first day of such month exceeds $1,000,000;
(viii) an Event of Servicing Termination occurs; or
(ix) if on any Monthly Allocation Date the aggregate amount withdrawn
from the Reserve Fund and deposited into the SUBI Collection Account or the
Certificateholders' Account on or prior to such Monthly Allocation Date
(without giving effect to any deposits into the Reserve Fund) exceeds
$3,078,079 (i.e., 0.25% of the Aggregate Net Investment Value as of the
Cutoff Date).
If, because of the occurrence of an Early Amortization Event, the
Amortization Period begins earlier than the Amortization Date,
Certificateholders may (and if a Monthly Payment Event occurs, will) begin
receiving distributions of principal earlier than they would otherwise have
under the Agreement, which may shorten the final maturity and the weighted
average life of any such Class of Certificates.
In addition, if an Insolvency Event with respect to the Transferor were to
occur during the Revolving Period, the Agreement will require the Transferor
promptly to give notice of such Insolvency Event to the Trustee. Pursuant to the
Agreement, within 15 days of such notice, the Trustee may, and upon receipt of
written instructions from holders of Certificates evidencing Voting Interests of
not less than 51% of the Class A Certificates (voting together as a single
class) or 51% of the Class A Certificates and Class B Certificates (voting
together as a single class) shall, publish a notice of the Insolvency Event
stating that the Trustee intends to sell or dispose of the SUBI and the SUBI
Certificate and the other property of the Trust in a commercially reasonable
manner. Following such publication, unless otherwise prohibited by applicable
law, the Trustee will sell or otherwise dispose of the SUBI, the SUBI
Certificate and such other property in a commercially reasonable manner and on
commercially reasonable terms; provided that such sale shall not be made without
the consent of all the Certificateholders if a net loss would be realized as a
result of such sale. Proceeds of the sale or disposition of the SUBI, the SUBI
Certificate and such other property, net of related Trust Administrative
Expenses, will be deposited into the SUBI Collection Account and treated as
Collections on or in respect of the SUBI Assets. The interest portion of the
Investor Percentage of such proceeds will be distributed to the
Certificateholders in the priority provided for herein, and the principal
portion of the Investor Percentage of such proceeds will be distributed first,
on a pro rata basis, to the Class A Certificateholders based on their respective
Class Certificate Balances until each such Class of Certificates has been paid
in full, and second, to the Class B Certificateholders. If such proceeds,
together with all amounts on deposit in the Accounts and on deposit in the
Reserve Fund and available therefor, amounts otherwise payable to the Transferor
in respect of the Transferor Interest and certain amounts otherwise
distributable in respect of the Class B Certificates, are insufficient to pay in
full the Certificate Balance of a Class of Class A Certificates and any accrued
and unpaid interest thereon, the related Class A Certificateholders will suffer
a corresponding loss.
The "VOTING INTERESTS" of the (i) Class A Certificates will be allocated
among the Class A Certificateholders or Certificate Owners, as the case may be,
in accordance with their respective Class Certificate Balances, and (ii) Class B
Certificates will be allocated among the Class B Certificateholders in
accordance with the Class B Certificate Balance represented thereby.
Notwithstanding the foregoing, in certain circumstances, any Class A
Certificates or Class B Certificates held or beneficially owned by the
Transferor, TMCC or any of their respective affiliates shall be excluded from
such determination.
STATEMENTS TO CERTIFICATEHOLDERS
On each Monthly Allocation Date, the Trustee will include with each
distribution to each Certificateholder a statement, setting forth with respect
to such Monthly Allocation Date or the related Collection Period, among other
things, the following:
(i) the Investor Percentage and Transferor Percentage in effect with
respect to the related Collection Period;
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(ii) the amount being allocated or distributed to each Class of
Certificateholders (the "Certificate Distribution Amount");
(iii) the amount of the Certificate Distribution Amount allocable to
interest on and principal of each Class of Certificates, separately
identifying any Maturity Advances;
(iv) the amount of the Certificate Distribution Amount allocable to any
Class A or Class B Interest Carryover Shortfall;
(v) the amount, if any, of any unpaid Class A or Class B Interest
Carryover Shortfall, after giving effect to distribution of the Certificate
Distribution Amount;
(vi) the Certificate Balance, the Class Certificate Balance of each
Class and the Certificate Factor with respect to each Class , in each case
as of such Monthly Allocation Date and after giving effect to the allocation
and/or distribution of the Certificate Distribution Amount;
(vii) the aggregate amount, if any, of the reimbursement of Loss Amounts
included in distribution of the Certificate Distribution Amount and the
amount thereof allocated to each Class of Certificateholders;
(viii) the amount of the Certificate Distribution Amount allocable to
reimbursement of previous Certificate Principal Loss Amounts for each Class,
in each case together with the amount of accrued interest thereon included
in such distribution;
(ix) the amount, if any, of the aggregate unreimbursed Certificate
Principal Loss Amounts for each Class, after giving effect to distribution
of the Certificate Distribution Amount;
(x) the amount of any Class B Available Principal and unreimbursed Class
B Available Principal, after giving effect to distribution of the
Certificate Distribution Amount;
(xi) the Investor Percentage of the Servicing Fee;
(xii) the amount of any Required Amount included in the Certificate
Distribution Amount and the balance on deposit in the Reserve Fund and the
Class B Interest Reserve Amount on such Monthly Allocation Date, after
giving effect to withdrawals therefrom and deposits thereto on such Monthly
Allocation Date, the change in such balance from the immediately preceding
Monthly Allocation Date and the Specified Reserve Fund Balance;
(xiii) the amount of Transferor Amounts, if any, included in the
Certificate Distribution Amount;
(xiv) the Aggregate Net Investment Value as of the end of such Collection
Period;
(xv) the aggregate amount of Payments Ahead received by the Servicer and
being held thereby or on deposit in the SUBI Collection Account in respect
of future Collection Periods and the change in such amount from the
immediately preceding Monthly Allocation Date;
(xvi) the amount of Advances and Maturity Advances made, and the amount
of unreimbursed Advances and Maturity Advances outstanding after giving
effect to distribution of the Certificate Distribution Amount; and
(xvii) certain information used in determining the Specified Reserve Fund
Balance.
Copies of such statements may be obtained by Certificateholders or
Certificate Owners by a request in writing addressed to the Trustee. In
addition, within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Agreement, the Trustee will
mail to each person who at any time during such calendar year shall have been a
Class A or Class B Certificateholder or a Certificate Owner, a statement
containing the sum of the amounts described in clauses (ii) through (xi) above
for the purpose of preparing such person's federal income tax return.
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TERMINATION OF THE TRUST; RETIREMENT OF THE CERTIFICATES
The respective obligations and responsibilities of the Transferor and the
Trustee created by the Agreement will terminate upon the earliest to occur of
(i) the maturity, sale or other liquidation, as the case may be, of the last
outstanding Contract and Leased Vehicle evidenced by the SUBI and the
distribution of all proceeds thereof, together with all amounts on deposit in
the Accounts and the Reserve Fund, in the manner to be prescribed in the
Agreement, (ii) the day following the Monthly Allocation Date on which the Class
Certificate Balance of each Class of Certificates has been reduced to zero and
(iii) the Transferor's optional repurchase of the SUBI Certificate as described
below. In order to avoid excessive administrative expenses, the Transferor will
be permitted at its option to purchase the SUBI Certificate from the Trust on
any Monthly Allocation Date on or after the Class A-3 Targeted Maturity Date if,
either before or after giving effect to any payment of principal required to be
made on such Monthly Allocation Date, the Certificate Balance is less than or
equal to $123,123,151.92 (10% of the Aggregate Net Investment Value as of the
Cutoff Date) or amounts sufficient to effectively reduce the Certificate Balance
to such amount have been deposited in the Collection Account on such date. The
purchase price will be equal to the greater of (i) the sum of the Class A
Certificate Balance and the Class B Certificate Balance, in each case plus
accrued and unpaid interest thereon and on all unreimbursed Certificate
Principal Loss Amounts at the related Certificate Rate, plus certain other
accrued and unpaid amounts, if any, due to the Investor Certificateholders or
the Servicer, and (ii) the Aggregate Net Investment Value as of the last day of
the preceding Collection Period. The Trustee will give written notice of
termination of the Trust to each Certificateholder. In connection with any such
termination, except as otherwise provided in the Agreement, the Transferor will
be deemed to relinquish all claims it may have against the assets of the Trust
in respect of Transferor Amounts that were not paid to the Transferor.
The final distribution to any Certificateholder will be made only upon
surrender and cancellation of such Certificateholder's Certificate at an office
or agency of the Trustee specified in the notice of termination.
PRESCRIPTION
In the event that any Certificateholder shall not surrender its Certificates
for retirement within six months after the date specified in written notice
given by the Trustee of the date for final payment thereof, the Trustee shall
give a second written notice to the remaining Certificateholders to surrender
their Certificates for retirement and receive the final distribution with
respect thereto. If within one year after such second notice any Certificates
shall not have been surrendered, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain subject to
this Agreement. Any funds remaining in the Trust after exhaustion of such
remedies shall be distributed by the Trustee to a charity specified in the
Agreement.
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BOOK-ENTRY REGISTRATION
Unless and until Definitive Certificates are issued with respect to the
Certificates or any Class of Certificates, each Class of Certificates offered
hereby will be represented by one or more certificates registered in the name of
Cede & Co., as nominee of DTC. Until then, Certificate Owners will hold
beneficial interests in Certificates through DTC (in the United States) or Cedel
Bank or Euroclear (in Europe or Asia) directly if they are participants of such
systems, or indirectly through organizations which are participants in such
systems. All references herein to actions by Certificateholders shall refer to
actions taken by DTC upon instructions from DTC Participants, and all references
herein to distributions, notices, reports and statements to Certificateholders
shall refer to distributions, notices, reports and statements to Cede & Co., as
the registered holder of the Securities, for distribution to Certificateholders
in accordance with DTC procedures. As such, it is anticipated that the only
Certificateholder will be Cede & Co., as nominee of DTC. Certificate Owners will
not be recognized by the Trustee as Certificateholders as such term is used in
the Agreement or Servicing Supplement, and Certificate Owners will only be
permitted to exercise their rights as such indirectly through DTC and DTC
Participants, as further described below.
Cedel Bank and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective Depositaries which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Bank Participants and Euroclear Participants will occur
in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel Bank or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant international clearing system by its
Depositary. However, each such cross-market transaction will require delivery of
instructions to the relevant international clearing system by the counterparty
in such system in accordance with its rules and procedures and within its
established deadlines. The relevant international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Bank Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of Certificates received in Cedel
Bank or Euroclear as a result of a transaction with a DTC Participant will be
made during subsequent securities settlement processing and dated the Business
Day following the DTC settlement date. Such credits or any transactions in such
Certificates settled during such processing will be reported to the relevant
Euroclear or Cedel Bank Participant on such Business Day. Cash received in Cedel
Bank or Euroclear as a result of sales of Certificates by or through a Cedel
Bank Participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel Bank or Euroclear cash account only as of the Business Day
following settlement in DTC. As used in this paragraph, "Business Day" means a
Business Day on which Cedel Bank and Euroclear are also transacting settlements
in securities.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York UCC and a "clearing agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participating members ("DTC Participants") and to facilitate the clearance and
settlement of securities transactions between DTC Participants through
electronic book-entries, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers, banks,
trust
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companies and clearing corporations which may include underwriters, agents or
dealers with respect to the Certificates of any class or series. Indirect access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant, either directly or indirectly (the "Indirect DTC
Participants"). The rules applicable to DTC and DTC Participants are on file
with the Commission.
Certificate Owners that are not DTC Participants or Indirect DTC
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Certificates may do so only through DTC Participants and
Indirect DTC Participants. DTC Participants will receive a credit for the
Certificates on DTC's records. The ownership interest of each Certificate Owner
will in turn be recorded on respective records of the DTC Participants and
Indirect DTC Participants. Certificate Owners will not receive written
confirmation from DTC of their purchase, but Certificate Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the DTC Participant or Indirect DTC
Participant through which the Certificate Owner entered into the transaction.
Transfers of ownership interests in the Certificates of any Class will be
accomplished by entries made on the books of DTC Participants acting on behalf
of Certificate Owners.
The deposit of Certificates with DTC and their registration in the name of
Cede & Co. will effect no change in Certificate ownership. DTC will have no
knowledge of the identities of Certificate Owners and its records will reflect
only the identity of the DTC Participants to whose accounts such Certificates
are credited, which may or may not be the Certificate Owners. DTC Participants
and Indirect DTC Participants will remain responsible for keeping account of
their holdings on behalf of their customers. While the Certificates are held in
book-entry form, Certificate Owners will not have access to the list of
Certificate Owners, which may impede the ability of Certificate Owners to
communicate with each other.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect DTC Participants and by DTC Participants and
Indirect DTC Participants to Certificate Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among DTC
Participants on whose behalf it acts with respect to the Certificates and is
required to receive and transmit distributions of principal of and interest on
the Certificates. DTC Participants and Indirect DTC Participants with which
Certificate Owners have accounts with respect to the Certificates similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Certificate Owners.
DTC's practice is to credit DTC Participants' accounts on each Certificate
Payment Date in accordance with their respective holdings shown on its records,
unless DTC has reason to believe that it will not receive payment on such
Certificate Payment Date. Payments by DTC Participants and Indirect DTC
Participants to Certificate Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such DTC Participant and not of DTC, the Trustee or Titling
Trustee (or any paying agent appointed thereby), the Transferor or the Servicer,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal of and interest on each class of Certificates
to DTC will be the responsibility of the Trustee, disbursement of such payments
to DTC Participants will be the responsibility of DTC and disbursement of such
payments to the related Certificate Owners will be the responsibility of DTC
Participants and Indirect DTC Participants. As a result, under the book-entry
format, Certificate Owners may experience some delay in their receipt of
payments. DTC will forward such payments to its DTC Participants which
thereafter will forward them to Indirect DTC Participants or Certificate Owners.
The ability of a Certificate Owner to pledge Certificates to persons or
entities that do not participate in the DTC system, or otherwise take actions
with respect to such Certificates, may be limited due to the lack of a physical
certificate for such Certificates.
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DTC has advised the Transferor that it will take any action permitted to be
taken by a Certificateholder only at the direction of one or more DTC
Participants to whose account with DTC the Certificates are credited.
Additionally, DTC has advised the Transferor that it will take such actions with
respect to specified percentages of the Certificateholders' interest only at the
direction of and on behalf of DTC Participants whose holdings include undivided
interests that satisfy such specified percentages. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of DTC Participants whose holdings include such
undivided interests.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Certificates. Under its usual procedures, DTC will mail an "Omnibus Proxy" to
the Trustee as soon as possible after any applicable Record Date for such a
consent or vote. The Omnibus Proxy will assign Cede & Co.'s consenting or voting
rights to those DTC Participants to whose accounts the related Certificates are
credited on that record date (which record date will be identified in a listing
attached to the Omnibus Proxy).
Cedel Bank is incorporated under the laws of Luxembourg as a professional
depository. Cedel Bank holds securities for its participating organizations
("Cedel Bank Participants") and facilitates the clearance and settlement of
securities transactions between Cedel Bank Participants through electronic book
entry changes in accounts of Cedel Bank Participants, thereby eliminating the
need for physical movement of certificates. Transactions may be settled in Cedel
Bank in any of 28 currencies, including United States dollars. Cedel Bank
provides to Cedel Bank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel Bank interfaces with
domestic markets in several countries. As a professional depository, Cedel Bank
is subject to regulation by the Luxembourg Monetary Institute. Cedel Bank
Participants are recognized financial institutions around the world including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include any underwriters,
agents or dealers with respect to any Class A Certificates offered hereby.
Indirect access to Cedel Bank is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Bank Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 27 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing, and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator"), under contract with Euroclear Clearance System S.C.,
a Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for the Euroclear System
on behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include any underwriters, agents or dealers
with respect to any Class A Certificates offered hereby. Indirect access to the
Euroclear System is also available to other firms that clear through or maintain
a custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member Bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
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Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel Bank or
Euroclear will be credited to the cash accounts of Cedel Bank Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax withholding in accordance with relevant United States tax laws
and regulations. SEE "Material Income Tax Considerations" and "Annex I--Global
Clearance, Settlement and Tax Documentation Procedures-- Certain U.S. Federal
Tax Documentation Requirements". Cedel Bank or the Euroclear Operator, as the
case may be, will take any other action permitted to be taken by a
Certificateholder on behalf of a Cedel Bank Participant or Euroclear Participant
only in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among participants
of DTC, Cedel Bank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificate Owners rather than to
DTC only if (i) DTC is no longer willing or able to discharge its
responsibilities with respect to the Class A Certificates, and neither the
Trustee nor the Transferor is able to locate a qualified successor, (ii) the
Transferor, at its option, elects to terminate the book-entry system through DTC
or (iii) after an Early Amortization Event, Certificate Owners representing in
the aggregate not less than 51% of the Voting Interests of the Class A
Certificates (voting together as a single class) advise the Trustee through DTC
or its successor in writing that the continuation of a book-entry system through
DTC or its successor is no longer in the best interest of Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all Certificate
Owners, through Participants, of the availability through DTC of Definitive
Certificates. Upon surrender by DTC of the certificates representing the related
Class A Certificates and the receipt of instructions for re-registration, the
Trustee will issue Definitive Certificates to Certificate Owners, who thereupon
will become Certificateholders for all purposes of the Agreement.
Payments on the related Class A Certificates will thereafter be made by the
Trustee directly to holders of such Class A Certificates in accordance with the
procedures set forth herein and to be set forth in the Agreement. Interest
payments and any principal payments on the Definitive Certificates on each
Certificate Payment Date will be made to holders in whose names the Definitive
Certificates were registered at the close of business on the related Record
Date. Payments will be made by check mailed to the address of such holders as
they appear on the Certificate Register or, under the circumstances to be
provided by the Agreement, by wire transfer to a bank or depository institution
located in the United States and having appropriate facilities therefor. The
final payment on any Class A Certificates, however, will be made only upon
presentation and surrender of such Definitive Certificates or global
certificates at the office or agency specified in the notice of final
distribution to Class A Certificateholders.
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Definitive Certificates will be transferable and exchangeable at the offices
of the Trustee or the Certificate Registrar to be set forth in the Agreement. No
service charge will be imposed for any registration of transfer or exchange, but
the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
ASSETS OF THE TRUST
GENERAL
The property of the Trust will primarily consist of the SUBI evidenced by
the SUBI Certificate, excluding the right to proceeds of the Residual Value
Insurance Policy retained by the Transferor pursuant to the Agreement. The
property of the Trust will also include such amounts as from time to time are
held in the SUBI Collection Account and the Certificateholders' Account. The
Trust will also have the collateral benefit of the Contingent and Excess
Liability Insurance Policies described below (and indemnification by TMCC of the
related deductibles) and the Trustee's rights as a third-party beneficiary of
the Servicing Supplement and SUBI Supplement.
As registered holder of the SUBI Certificate, the Trustee will be deemed to
have ownership of the SUBI Certificate and, through such ownership, an indirect
beneficial ownership interest in the Contracts and Leased Vehicles. If a court
of competent jurisdiction recharacterizes the transfer of the SUBI to the Trust
as a transfer for security, the Trustee may instead be deemed to have a
perfected security interest in the SUBI Certificate, the Contracts and Contract
Rights susceptible of perfection under the UCC, but in no event will the Trustee
be deemed to have a perfected security interest in the Leased Vehicles. SEE
"Material Legal Aspects of the Titling Trust--Structural Considerations".
THE ACCOUNTS; COLLECTIONS
THE SUBI COLLECTION ACCOUNT
On or prior to the Closing Date, the Titling Trustee will establish an
account maintained at the Trust Agent in the name of the Titling Trustee as the
SUBI Collection Account (the "SUBI Collection Account" and, together with the
Certificateholders' Account and the Reserve Fund, the "Accounts") as a trust
account for the exclusive benefit of the holders of interests in the SUBI into
which collections on or in respect of the Contracts and the Leased Vehicles with
respect to each Collection Period generally will be deposited on the Deposit
Date.
DEPOSITS INTO THE SUBI COLLECTION ACCOUNT. Deposits into the SUBI
Collection Account will include, but will not be limited to, the following
payments made in respect of the SUBI Assets: (i) Monthly Payments; (ii) early
payments in full of any Contract, including an amount equal to the Residual
Value of the related Leased Vehicle (each, a "Prepayment"); (iii) Matured Leased
Vehicle Proceeds, Repossessed Vehicle Proceeds and other Liquidation Proceeds;
(iv) Payments Ahead; (v) Advances made by the Servicer and Maturity Advances
made by the Transferor; and (vi) Reallocation Payments by TMCC (together with,
under certain circumstances during the Amortization Period, Reallocation Deposit
Amounts) in respect of certain Contracts as to which an uncured breach of
certain representations and warranties or certain servicing covenants has
occurred. Pursuant to the Agreement and the Servicing Agreement, in the event
that TMCC, as Servicer, ceases to satisfy certain tests with respect to its
credit ratings, the Servicer will thereafter be required to commence depositing
Interest and Principal Collections and other proceeds in respect of the
Contracts and Leased Vehicles into the SUBI Collection Account within two
Business Days of receipt thereof, and will cease to have the right, described
below, to make such deposits net of amounts payable, reimbursable or
distributable to TMCC, as Servicer. SEE "Assets of the Trust-- The Accounts;
Collections". Deposits also will be made to the SUBI Collection Account from,
among other sources, (i) monies on deposit in the Reserve Fund and (ii) the
Transferor, in the event it purchases the SUBI Certificate on or after the Class
A-3 Targeted Maturity Date when the Certificate Balance is less than or equal to
$123,123,151.92 (10% of the Aggregate Net Investment Value as of the
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Cutoff Date) or amounts sufficient to effectively reduce the Certificate Balance
to such amount have been deposited in the Collection Account on such date.
"Net Insurance Proceeds" will include recoveries pursuant to the Contingent
and Excess Liability Insurance Policies and the comprehensive, collision, public
liability and property damage insurance policy required to be obtained and
maintained by the lessee pursuant to each Contract (or payment by TMCC of the
deductibles as to which it has indemnified the Trust as described in "Additional
Document Provisions-- The Servicing Agreement--Insurance on Leased Vehicles"),
and amounts paid by any insurer under any other insurance policies relating to
the Contracts, the related lessees or the Leased Vehicles (excluding any
Residual Value insurance policy the proceeds of which will be a SUBI Asset but
will not be transferred by the Transferor to the Trust), in each case net of
certain sums applied to the repair of the related Leased Vehicles.
NET DEPOSITS. So long as TMCC is the Servicer, the Servicer will be
permitted to deposit in the SUBI Collection Account only the net amount
distributable to the Trustee, as holder of the SUBI Certificate, and the
Transferor on the related Deposit Date. The Servicer, however, will account to
the Trustee, the Titling Trustee, the Certificateholders and the Transferor as
if all of the deposits and distributions described herein were made
individually. This "net deposit" provision will be for the administrative
convenience of the parties involved and will not affect amounts required to be
deposited into the Accounts.
CERTAIN WITHDRAWALS FROM THE SUBI COLLECTION ACCOUNT. To the extent not
already netted against Collections, Matured Leased Vehicle Proceeds or
Liquidation Proceeds, as the case may be, the Titling Trustee shall remit to the
Servicer, without interest and prior to any other distribution from the SUBI
Collection Account on such date, monies from the SUBI Collection Account
representing (i) unreimbursed Matured Leased Vehicle Expenses, Repossessed
Vehicle Expenses and other Liquidation Expenses; (ii) delinquent Monthly
Payments with respect to which the Servicer has made an unreimbursed Advance;
and (iii) an amount equal to any unreimbursed Advances that the Servicer has
concluded are Nonrecoverable Advances. SEE "Additional Document Provisions--The
Servicing Agreement--Advances" regarding "Nonrecoverable Advances".
THE CERTIFICATEHOLDERS' ACCOUNT
On or prior to the Closing Date, the Trustee will establish an account
maintained at the Trust Agent in the name of the Trustee as the
Certificateholders' Account (the "Certificateholders' Account") as a trust
account for the exclusive benefit of the Certificateholders into which the
Investor Percentage of Interest Collections and Principal Collections will be
deposited on each Monthly Allocation Date to the extent allocated for
distribution on subsequent Certificate Payment Dates in the amounts described
above under "Description of the Certificates--Allocations and Distributions on
the Certificates". Amounts so deposited will be invested in Permitted
Investments (which are expected to include one or more TMCC Demand Notes)
meeting the criteria and bearing a rate of interest satisfactory to the Rating
Agencies that mature on or before the next relevant Certificate Payment Date.
Upon the occurrence of a Monthly Payment Event, however, no further deposits
will be made to the Certificateholders' Account, but instead all such
investments will be liquidated and amounts on deposit therein will be
distributed to Certificateholders on the next Monthly Allocation Date (which
will be a relevant Certificate Payment Date with respect to interest on all
Classes of Certificates and with respect to principal on the outstanding Classes
of Certificates to the extent described above under "Description of the
Certificates--Allocations and Distributions on the Certificates"). Thereafter,
Collections will simply be deposited into the SUBI Collection Account for
distribution to Certificateholders on a monthly basis on each Certificate
Payment Date as described under "Description of the Certificates--Allocations
and Distributions on the Certificates".
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THE RESERVE FUND
On or prior to the Closing Date, pursuant to the Agreement, the Transferor
will establish the Reserve Fund as a trust account with the Trustee for the
benefit of the Certificateholders and the Transferor. The Reserve Fund will not
be an asset of the Trust. On each Monthly Allocation Date, to the extent
described herein, monies on deposit in the Reserve Fund will be applied to pay
certain Loss Amounts and shortfalls in respect of amounts collected with respect
to the related Collection Period. In addition, to the extent not otherwise
required to make any of the payments specified under "Description of the
Certificates-- Allocations and Distributions on the Certificates--Allocations
and Distributions of Collections", monies on deposit in the Reserve Fund will be
available to make payments to the Certificateholders should Collections
ultimately be insufficient to reduce the Class A Certificate Balances or the
Class B Certificate Balance to zero on the related Stated Maturity Date.
A portion of the amounts on deposit in the Reserve Fund equal to the Class B
Interest Reserve Amount will be available only to cover interest shortfalls with
respect to the Class B Certificates, and will not be available to cover interest
shortfalls, Loss Amounts or Certificate Principal Loss Amounts allocated to the
Class A Certificates. The "Class B Interest Reserve Amount" with respect to any
Monthly Allocation Date, means the lesser of (i) $ less all amounts
previously withdrawn from the Reserve Fund and applied to make allocations or
distributions in respect of interest accrued on the Class B Certificates or
Certificate Principal Loss Amounts allocated thereto or (ii) % of the Class B
Certificate Balance as of the day prior to such Monthly Allocation Date;
provided that the Class B Interest Reserve Amount will be zero on and after any
date on which any Rating Agency reduces its rating of the Class A Certificates
to less than "A" or its equivalent or withdraws its rating of any Class of Class
A Certificates (unless such rating is restored). Amounts on deposit in the
Reserve Fund not allocated to the Class B Interest Reserve Amount will be
available for application for all of the purposes described above.
THE SPECIFIED RESERVE FUND BALANCE. The Reserve Fund will be created on or
prior to the Closing Date with the deposit by the Transferor of the Initial
Deposit. On each Monthly Allocation Date, the Reserve Fund will be supplemented
by certain Collections in excess of those amounts required to be allocated or
distributed to the Certificateholders and certain monies that otherwise would be
distributed as Transferor Amounts, until the amount on deposit therein equals
the applicable Specified Reserve Fund Balance. Except as described below, the
"Specified Reserve Fund Balance" with respect to any Monthly Allocation Date
will equal $30,780,787.98 (2.5% of the Aggregate Net Investment Value as of the
Cutoff Date), except that, if on any Monthly Allocation Date (i) the average of
the Charge-off Rates for the three preceding Collection Periods exceeds 1.25%,
(ii) the average of the Delinquency Percentages for the three preceding
Collection Periods exceeds 1.25%, or (iii) the Residual Value Test is not
satisfied as of the related Determination Date, then the Specified Reserve Fund
Balance will equal $61,561,575.96 (5.0% of the Aggregate Net Investment Value as
of the Cutoff Date); provided, however, that the Specified Reserve Fund Balance
shall in no event be more than the sum of the outstanding principal amounts of
each Class of Certificates.
The "Charge-off Rate" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Contracts expressed, on an annualized
basis, as a percentage of the average of (i) the Aggregate Net Investment Value
on the last day of the immediately preceding Collection Period and (ii) the
Aggregate Net Investment Value on the last day of such Collection Period. The
"Aggregate Net Losses" with respect to a Collection Period will equal the
Discounted Principal Balance of all Contracts newly designated during such
Collection Period as Charged-off Contracts minus the sum of (x) Net Liquidation
Proceeds collected during such Collection Period with respect to all Charged-off
Contracts and (y) the portion of amounts subsequently received in respect of
Contracts liquidated in prior Collection Periods specified in the SUBI
Supplement.
The "Delinquency Percentage" with respect to a Collection Period will equal
(a) the number of all outstanding Contracts 60 days or more delinquent (after
taking into account permitted deferrals) as of the
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last day of such Collection Period, determined in accordance with the Servicer's
normal practices, plus (b) the number of repossessed Leased Vehicles that have
not been liquidated (to the extent the related Contract is not otherwise
reflected in clause (a) above), expressed as a percentage of the aggregate
number of Current Contracts on the last day of such Collection Period.
The "Residual Value Test" will not be satisfied as of any Determination Date
if (i) with respect to the related Collection Period the number of Leased
Vehicles returned to the Servicer during such period relating to Contracts that
became Matured Contracts during such period is greater than 25% of all Contracts
that, as of their respective origination dates, had been scheduled to become
Matured Contracts during such period (provided that at least 500 such Contracts
had been scheduled to become Matured Contracts during such Collection Period),
and (ii) the average Net Matured Leased Vehicle Proceeds during the three
immediately preceding calendar months (or the months of August and September
1997 in the case of the October 1997 Determination Date) is less than 75% of the
average Residual Values of Leased Vehicles disposed of or liquidated during such
period.
A "Current Contract" will be a Contract that is not a Charged-off Contract,
a Liquidated Contract, a Matured Contract or an Additional Loss Contract. A
"Liquidated Contract" will be a Contract that has been the subject of a
Prepayment in full or otherwise has been paid in full or, in the case of a
Charged-off Contract, a Contract as to which the Servicer has determined that
the final amounts in respect thereof have been paid. An "Additional Loss
Contract" will be a Contract as to which the related SUBI Assets have been sold
or otherwise disposed of by the Servicer, acting on behalf of the Titling Trust,
to pay an Additional Loss Amount.
The Transferor may, from time to time after the date of this Prospectus,
request each Rating Agency to (a) approve a formula for determining the
Specified Reserve Fund Balance that is different from the one described above
that would result in a decrease in the amount of the Specified Reserve Fund
Balance or (b) a change in the manner by which the Reserve Fund is funded or to
meet the Specified Reserve Fund Balance. If each Rating Agency delivers a letter
to the Trustee to the effect that the use of any such new formula or change will
not result in a qualification, reduction or withdrawal of its then-current
rating of any Class of Certificates, then such new formula or change will be
implemented and, to the extent necessary, the Agreement will be amended, without
the consent of any Certificateholder or Certificate Owner.
WITHDRAWALS FROM THE RESERVE FUND. On each Deposit Date the Trustee shall
withdraw from the Reserve Fund, to the extent available, and deposit in the SUBI
Collection Account or Certificateholders' Account, as appropriate, an aggregate
amount equal to the Required Amount. Amounts on deposit in the Reserve Fund will
also be available to make certain other payments to Certificateholders and the
Transferor. Monies on deposit in the Reserve Fund on a Monthly Allocation Date
in excess of the Specified Reserve Fund Balance will be released to the
Transferor. Income on investment of amounts held in the Reserve Fund will belong
to the Transferor and will be distributed thereto on each Monthly Allocation
Date. Any such amounts received by the Transferor shall be free of any claim of
the Trust, the Trustee or the Certificateholders and shall not be available to
the Trustee or the Trust for the purpose of making deposits to the Reserve Fund
or making payments to the Investor Certificateholders, nor shall the Transferor
be required to refund any amount properly received by it.
MAINTENANCE OF THE ACCOUNTS
The Accounts will be maintained with the Trustee so long as either (i) the
short-term unsecured debt obligations of the Trustee are rated at least P-1 by
Moody's and A-1+ by Standard & Poor's or (ii) the Trustee is a depository
institution or trust company having a long-term unsecured debt rating from
Moody's of at least Baa3 and corporate trust powers and the related Account is
maintained in a segregated trust account in the corporate trust department of
the Trustee. If the Trustee at any time does not qualify under either of these
criteria, the Servicer shall, with the assistance of the Trustee, as necessary,
cause the
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related Account to be moved to a depository institution organized under the laws
of the United States or any state thereof that does so qualify, or moved to a
segregated trust account located in a corporate trust department of a depository
institution or trust company as described above.
PERMITTED INVESTMENTS
At the direction of the Servicer, the Trustee or the Trust Agent, as the
case may be, shall invest funds on deposit in the SUBI Collection Account and
the Reserve Fund in one or more Permitted Investments maturing no later than the
Deposit Date succeeding the date of such investment. Additionally, at the
direction of the Servicer, the Trustee or the Trust Agent, as the case may be,
shall invest funds on deposit in the Certificateholders' Account in one or more
Permitted Investments maturing no later than the Deposit Date preceding the next
relevant Certificate Payment Date or the Target Maturity Date, as appropriate
and bearing interest at the Required Rate. It is expected that all or
substantially all Permitted Investments identified by the Servicer with respect
to amounts on deposit in the Certificateholders' Account will be TMCC Demand
Notes.
"Permitted Investments" will be specified in the SUBI Supplement and will
include, among other things, U.S. treasury securities, certificates of deposit
issued by highly rated U.S. depository institutions or trust companies
(including the Trustee), demand or time deposits of, bankers acceptances issued
by, or federal funds sold by highly rated U.S. depository institutions or trust
companies or other savings institutions that are fully insured by the FDIC,
certain repurchase obligations held by any Securitization Trustee backed by
similar securities, certain highly rated mutual funds, certain debt securities
issued by highly rated U.S. corporations, certain highly rated money market
funds for which the Trustee or an Affiliate of the Trustee serves as an
investment advisor, administrator, shareholder servicing agent and/or custodian
and the TMCC Demand Notes. Notwithstanding the foregoing, (a) investments on
which the obligor is the entity at which the related Account is located may
mature on the related Deposit Date or Monthly Allocation Date, as the case may
be, and (b) investments during the Revolving Period of Principal Collections and
reimbursements of Loss Amounts and Certificate Principal Loss Amounts on deposit
in the SUBI Collection Account may mature on such dates as in the Servicer's
discretion will maintain sufficient cash to acquire Subsequent Contracts and
Subsequent Leased Vehicles on the related Transfer Dates.
All income or other gain from the foregoing investments generally shall be
retained in the related Account with such gain in respect of funds in the SUBI
Collection Account generally being treated as Interest Collections received in
respect of the related Collection Period. Any loss resulting from such
investments shall be charged to the related Account.
The "Required Rate" with respect to any Permitted Investment of amounts held
in the Certificateholders' Account in respect of principal for any Class of
Certificates will be the related Certificate Rate, and with respect to amounts
held in the Certificateholders' Account in respect of interest for any Class of
Certificates will be the one month commercial paper rate, which rate will reset
monthly.
THE CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES
In addition to the physical damage and liability insurance coverage required
to be obtained and maintained by the lessees pursuant to the Contracts, and as
additional protection in the event that any lessee fails to maintain all such
required insurance, TMCC maintains contingent liability insurance with third
party insurers for bodily injury and property damage suffered by third persons
caused by any vehicle owned by any insured. TMCC also maintains with such
insurers substantial amounts of excess insurance coverage for which the Titling
Trust is an additional named insured (together with the aforementioned primary
contingent liability insurance policy, the "Contingent and Excess Liability
Insurance Policies"). These insurance policies collectively provide insurance
coverage of $100 million per occurrence, and permit multiple claims in any
policy period (with no annual or aggregate cap on the number of claims
thereunder). Such Contingent and Excess Liability Insurance Policies are subject
to significant per occurrence deductibles (generally $125,000, but $250,000 if
the related lessees primary insurance policy has
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lapsed or the related insurer denies coverage on the basis that TMCC or an
approved TMCC affiliate is named as loss payee instead of the Titling Trust) in
respect of which TMCC will indemnify the Trust. However, in the event that all
such insurance coverage were exhausted and/or TMCC did not satisfy its indemnity
obligations such that damages were assessed against the Titling Trust, various
claims could be imposed against the Titling Trust Assets, including the SUBI
Assets. In such event, investors in the Class A Certificates could incur a loss
on their investment. However, the Titling Trust will be an additional named
insured under the Contingent and Excess Liability Insurance Policies and
payments made thereunder in respect of Leased Vehicles comprising SUBI Assets,
and indemnity payments made by TMCC in respect of related deductibles, will
constitute SUBI Assets. To the extent that payments under the Contingent and
Excess Liability Insurance Policies are made to third party claimants, they will
reduce the Additional Loss Amounts that otherwise would be required to be paid
out of the SUBI Assets. SEE "Risk Factors--Risks Associated with Vicarious Tort
Liability with Respect to Leased Vehicles", "--Structural Considerations--
Allocation of Titling Trust Liabilities" and "--Third-Party Liens on SUBI
Assets" and "Certain Legal Aspects of the Contracts and the Leased
Vehicles--Vicarious Tort Liability".
The Servicing Agreement will provide that so long as any Certificates are
outstanding, the Titling Trustee and TMCC will maintain one or more Contingent
and Excess Liability Insurance Policies with coverages specified in the
Servicing Supplement unless each Rating Agency has delivered notice to the
Trustee to the effect that failure to maintain any such insurance policy will
not cause it to qualify, reduce or withdraw its then-current rating of any Class
of Certificates. The foregoing obligations of TMCC will survive any termination
of TMCC as Servicer under the Servicing Agreement.
SUBORDINATION
The rights of the Class B Certificateholders will be subordinated to the
rights of the Class A Certificateholders to the extent described herein. This
subordination is intended to enhance the likelihood of timely receipt by Class A
Certificateholders of the full amount of interest and principal required to be
paid to them, and to afford such Certificateholders limited protection against
losses in respect of the Contracts.
The Class B Certificateholders will not receive any distributions of
interest with respect to a Certificate Payment Date until the full amount of
interest accrued on the Class A Certificate Balances and on unreimbursed
Certificate Principal Loss Amounts previously allocated thereto has been
distributed to the Class A Certificateholders. The Class B Certificateholders
will not receive any distributions of principal with respect to any Certificate
Payment Date until the Class Certificate Principal Balance and each Class of
Class A Certificates has been reduced to zero. Distributions of interest on the
Class B Certificates, to the extent of collections on Contracts allocable to
interest and the amount on deposit in the Reserve Fund, will not be subordinated
to the payment of principal of or reimbursement of Loss Amounts allocated to the
Class A Certificates.
In addition, the rights of the Certificateholders to receive certain
distributions with respect to the Contracts will be subordinated to the rights
of the Servicer (to the extent that the Servicer is paid the Servicing Fee with
respect to the related Collection Period, including any unpaid Servicing Fees
with respect to one or more prior Collection Periods and any additional
servicing compensation as described herein, and to the extent the Servicer is
reimbursed for certain unreimbursed Advances).
ADDITIONAL DOCUMENT PROVISIONS
The following summaries of certain provisions of the Agreement, the Titling
Trust Agreement, the Servicing Agreement, TMCC Demand Notes and of the Indenture
do not purport to be complete and are qualified in their entirety by reference
to such agreements, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part. Capitalized terms
used but not defined in such summaries have the meanings given to them in the
respective agreements.
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ADDITIONAL AGREEMENT PROVISIONS
Certain additional provisions of the Agreement are summarized below.
NO PETITION
The Trustee will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Transferor, TMCC, the Titling Trust or the
Titling Trustee until one year and one day after the later of (i) payment of the
Certificates in full and (ii) final payment of all other financings involving
interests in the Titling Trust (including the transaction described herein and
all other transactions involving the UTI and each Other SUBI).
AMENDMENT
The Agreement may be amended by the Transferor and the Trustee, without the
consent of the Certificateholders, to cure any ambiguity, to correct or
supplement any provision therein which may be inconsistent with any other
provision therein, to add any other provisions with respect to matters or
questions arising under the Agreement which are not inconsistent with the
provisions of the Agreement or to add or amend any provision therein in
connection with permitting transfers of the Class B Certificates; provided that
any such action will not, in the good faith judgment of the parties, materially
and adversely affect the interest of any Certificateholder and the Trustee shall
have been furnished with an opinion of counsel to the effect that such amendment
will not materially and adversely affect the interest of any Certificateholder.
The Agreement may also be amended from time to time by the Transferor and
the Trustee (including with respect to changing the formula for determining the
Specified Reserve Fund Balance, the manner in which the Reserve Fund is funded,
changing the remittance schedule for collection deposits in the SUBI Collection
Account or changing the definition of Permitted Investments) if (a) the Trustee
has been furnished with a letter from each Rating Agency to the effect that such
amendment would not cause its then-current rating on any Class of Certificates
to be qualified, reduced or withdrawn or (b) the Trustee has received the
consent of the holders of Certificates evidencing not less than 51% of the
Voting Interests of the Class A Certificates and the Class B Certificates,
voting together as a single class, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Agreement
or of modifying in any manner the rights of each Class of Certificateholders;
provided, however, that no such amendment shall increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments on
the SUBI or the SUBI Certificate or distributions that shall be required to be
made on any Class of Certificates or the applicable Certificate Rate and no
amendment of any type shall reduce the percentage of the aggregate Voting
Interests of the Certificates of any Class required to consent to any such
amendment, in each case without the consent of all Certificateholders and
Certificate Owners.
Any amendment eliminating the Reserve Fund or reducing the Specified Reserve
Fund Balance shall also require the Transferor to deliver to the Trustee an
opinion of counsel to the effect that after such amendment, for federal income
tax purposes, the Trust will not be treated as an association taxable as a
corporation, and the Class A Certificates will, and the Class B Certificates
should, properly be characterized as indebtedness that is secured by the assets
of the Trust.
LIST OF CERTIFICATEHOLDERS
Upon a written request of the Servicer, the Trustee, as Certificate
Registrar, will provide to the Servicer within 15 days after receipt thereof a
list of the names and addresses of all Certificateholders. In addition, three or
more Certificateholders or holders of Certificates evidencing not less than 25%
of the Voting Interests of any Class of Certificates, upon compliance by such
Certificateholders with certain
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provisions of the Agreement, may request that the Trustee, as Certificate
Registrar, afford such Certificateholders access during business hours to the
current list of Certificateholders for purposes of communicating with other
Certificateholders with respect to their rights under the Agreement. SEE
"Description of the Certificates--Book-Entry Registration" and "--Definitive
Certificates".
The Agreement will not provide for the holding of any annual or other
meetings of Certificateholders.
THE TRUSTEE
U.S. Bank will be the Trustee under the Agreement. The Corporate Trust
Office of the Trustee is located at One Illinois Center, 111 E. Wacker Drive,
Suite 3000, Chicago, Illinois 60601. U.S. Bank is not affiliated with TMCC,
although it does act as a service provider to TMCC.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement, becomes legally unable to act or becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by such successor
Trustee.
The Trustee must be a bank or trust company organized under the laws of the
United States, any state of the United States, the District of Columbia or the
Commonwealth of Puerto Rico, authorized to exercise corporate trust powers under
those laws, and subject to supervision or examination by federal or state laws,
with a combined capital and surplus of at least $50,000,000 and a long-term
deposit rating no lower than Baa3 by Moody's, or must be otherwise acceptable to
each Rating Agency. A co-trustee or separate trustee appointed as described
above need not meet these eligibility requirements.
Holders of Certificates evidencing not less than 25% of the Voting Interests
of the Class A Certificates and the Class B Certificates, voting together as a
single class, generally will have the power to direct any proceeding for any
remedy available to the Trustee under the Agreement, and the exercise of any
trust or power conferred on the Trustee by the Agreement (including actions by
the Trustee in its capacity as a party to, or a third-party beneficiary of, the
SUBI Supplement or the Servicing Supplement). However, the Trustee will not be
required to follow such a direction if, after being advised by counsel, it
concludes that the action is unlawful, or if it in good faith determines that
the proceedings directed would be illegal, would subject it to personal
liability or would be unduly prejudicial to the rights of other
Certificateholders.
A Certificateholder may institute proceedings under the Agreement, but only
if (i) such holder previously has given to the Trustee written notice of
default, (ii) holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, have made written request upon the Trustee to
institute such proceeding in its own name as Trustee and have offered to the
Trustee reasonable indemnity and (iii) the Trustee for 30 days has neglected or
refused to institute any such proceeding. The Trustee will be under no
obligation to exercise any of the trusts or powers vested in it by the Agreement
or to make any investigation of matters arising thereunder or to institute,
conduct or defend any litigation thereunder or in relation thereto at the
request, order or direction of any of the Certificateholders, unless such
holders have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
Certificateholders will have no express right to institute a proceeding directly
under the Titling Trust Agreement or the Servicing Agreement.
GOVERNING LAW
The Agreement will be governed by the laws of the State of California.
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THE TITLING TRUST AGREEMENT
THE SUBI, THE OTHER SUBIS AND THE UTI
TMCC is the grantor and (as holder of the UTI) a beneficiary of the Titling
Trust. In its capacity as grantor, TMCC will from time to time assign, transfer,
grant and convey (or cause to be assigned, transferred, granted and conveyed) to
the Titling Trustee in trust the Titling Trust Assets. TMCC will hold the UTI,
which represents a beneficial interest in all Titling Trust Assets other than
the SUBI Assets and the Other SUBI Assets. TMCC may pledge the UTI as security
for obligations to third-party lenders and may create and sell or pledge Other
SUBIs in connection with financings similar to the transaction described herein.
Each holder or pledgee of the UTI and any Other SUBI will be required expressly
to disclaim any interest in the Titling Trust Assets other than the UTI Assets
or the Other SUBI Assets, respectively, and to subordinate fully any claims to
such other Titling Trust Assets in the event that this disclaimer is not given
effect. Except under the limited circumstances described under "Certain Legal
Aspects of the Titling Trust--Structural Considerations--Allocation of Titling
Trust Liabilities", the SUBI Assets will not be available to make payments in
respect of, or pay expenses relating to, the UTI or any Other SUBIs, and the
Other SUBI Assets evidenced by any Other SUBIs will not be available to make
payments on, or pay expenses relating to, the SUBI, the UTI or any other SUBI.
Each Other SUBI will be created pursuant to a supplement to the Titling
Trust Agreement (each, an "Other SUBI Supplement") which will amend the Titling
Trust Agreement only with respect to the Other SUBI to which it relates. The
SUBI Supplement will amend the Titling Trust Agreement only as it relates to the
SUBI, and no Other SUBI Supplement will amend the Titling Trust Agreement as it
relates to the SUBI.
All Titling Trust Assets, including the SUBI Assets, will be owned by the
Titling Trust on behalf of the beneficiaries of the Titling Trust. The SUBI
Assets will be segregated from the rest of the Titling Trust Assets on the books
and records of the Titling Trustee and the Servicer and the holders of other
beneficial interests in the Titling Trust (including the UTI and any Other
SUBIs) will have no rights to the SUBI Assets. Liabilities of the Titling Trust
shall be allocated to the SUBI Assets, the UTI Assets or Other SUBI Assets,
respectively, if incurred with respect thereto, or will be allocated pro rata
among all Titling Trust Assets if incurred with respect to the Titling Trust
Assets generally.
TMCC has obtained an insurance policy naming the Titling Trust as an
additional loss payee and providing coverage with respect to shortfalls in
amounts collected in respect of the Residual Values of lease contracts and
related leased vehicles that are Titling Trust Assets and that are or become
SUBI Assets. The proceeds of such policy with respect to Contracts and Leased
Vehicles that are SUBI Assets will also be SUBI Assets, but will be retained by
the Transferor and not transferred to the Trust with the SUBI Certificate and
will therefore not be available as Collections, Net Insurance Proceeds or
otherwise for the benefit of the Certificateholders.
Additional Loss Amounts will be incurred in the event that any uninsured
liability to third parties (i.e., litigation risk) on the part of the Titling
Trust is ultimately borne by the SUBI Assets, whether such liability is incurred
(i) with respect to the SUBI Assets and is therefore allocated to the SUBI
Assets pursuant to the SUBI Supplement, (ii) with respect to the Titling Trust
Assets generally and a pro rata portion of such liability is allocated to the
SUBI Assets pursuant to the Titling Trust Agreement or (iii) with respect to UTI
Assets or Other SUBI Assets if such UTI Assets or Other SUBI Assets are
insufficient to pay such liability. SEE "Certain Legal Aspects of the Titling
Trust--Structural Considerations--Allocation of Titling Trust Liabilities" and
"--Third-Party Liens on SUBI Assets". For purposes of making calculations with
respect to distributions on the Certificates, "Additional Loss Amounts" will
include both losses incurred with respect to the foregoing uninsured liabilities
and monies reserved within the SUBI Collection Account against future losses in
respect of such liabilities by the Servicer on behalf of the Trustee.
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SPECIAL OBLIGATIONS OF TMCC AS BENEFICIARY AND GRANTOR
TMCC, as grantor and holder of the UTI Certificate, will be liable for all
debts and obligations arising with respect to the Titling Trust Assets or the
operation of the Titling Trust; provided, however, that its liability to any
holder, assignee or pledgee of the SUBI or the SUBI Certificate will be governed
by the SUBI Supplement, the Agreement and the agreement pursuant to which TMCC
transfers the SUBI to the Transferor, and its liability with respect to any
transfer, pledge or other financing of the UTI or any UTI Certificate, or any
Other SUBI or Other SUBI Certificate shall be as set forth in the documents
relating thereto. To the extent that TMCC shall pay or suffer any liability or
expense with respect to the Titling Trust Assets or the operation of the Titling
Trust (including reasonable attorneys' fees and expenses, but excluding all
obligations with respect to making Advances, Reallocation Payments and
Reallocation Deposits), TMCC shall be indemnified, defended and held harmless
out of the Titling Trust Assets.
TITLING TRUSTEE DUTIES AND POWERS; FEES AND EXPENSES
Pursuant to the Titling Trust Agreement, the Titling Trustee will be
required to, among other things, (i) apply for and maintain, or cause to be
applied for and maintained, all licenses, permits and authorizations necessary
and appropriate to accept assignments of the Contracts and the Leased Vehicles
and to carry out its duties as Titling Trustee, including motor vehicle dealer
licenses, and (ii) file, or cause to be filed, applications for certificates of
title as are necessary and appropriate so as to cause the Titling Trust to be
recorded as the holder of legal title of record to the Leased Vehicles.
The Titling Trustee may be replaced by TMCC only if it ceases to be
qualified in accordance with the terms of the Titling Trust Agreement and shall
be removed if certain representations and warranties made by the Titling Trustee
therein prove to have been materially incorrect when made, or in certain events
of bankruptcy or insolvency thereof. The Trustee, as holder of the SUBI
Certificate, on behalf of the Certificateholders may, or at the direction of
holders of Certificates evidencing not less than 51% of the Voting Interests of
the Class A Certificates and the Class B Certificates voting together as a
single class will, exercise its powers under the Titling Trust Agreement to
cause the Trustee to be removed or replaced for a material breach of its
obligations.
The Titling Trustee will make no representations as to the validity or
sufficiency of the SUBI or the SUBI Certificate (other than as to the execution
and authentication of the SUBI Certificate), or of any Contract, Leased Vehicle
or related document, will not be responsible for performing any of the duties of
TMCC or the Servicer and will not be accountable for the use or application by
any owners of beneficial interests in the Titling Trust Assets of any funds paid
in respect of the Titling Trust Assets, or the investment of any of such monies
before such monies are deposited into the accounts relating to the SUBI, the
Other SUBIs and the UTI. The Titling Trustee will not independently verify the
Contracts or the Leased Vehicles. The duties of the Titling Trustee will
generally be limited to the holding and liquidation of lease contracts, the
titling of the related leased vehicles in the name of the Titling Trust, the
creation of the SUBI, the Other SUBIs and the UTI, the maintenance of the SUBI
Collection Account and accounts relating to the Other SUBIs and the UTI and the
receipt of the various certificates, reports or other instruments required to be
furnished to the Titling Trustee under the Titling Trust Agreement, in which
case it will only be required to examine them to determine whether they conform
to the requirements of the Titling Trust Agreement.
The Titling Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the Titling Trust Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of the Servicer, the UTI Beneficiary or by the holders of a majority
in interest in the SUBI, unless such party or parties have offered to the
Titling Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby. The reasonable expenses of
every such exercise of rights
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or powers or examination shall be paid by the party or parties requesting such
exercise or examination or, if paid by the Titling Trustee, shall be a
reimbursable expense of the Titling Trustee.
The Titling Trustee may enter from time to time into one or more agency
agreements (each, an "Agency Agreement") with such person or persons, including
without limitation any affiliate of the Titling Trustee (each, a "Trust Agent"),
as are by experience and expertise qualified to act in a trustee capacity and
otherwise acceptable to TMCC. The Titling Trustee has engaged U.S. Bank as the
Trust Agent. Pursuant to the Agency Agreement, the Trust Agent shall perform
each and every obligation of the Titling Trustee under the Titling Trust
Agreement.
The Titling Trustee shall be paid out of Titling Trust Assets reasonable
compensation and reimbursement of all reasonable expenses (including reasonable
attorneys' fees). However, with regard to the SUBI Assets allocable to the SUBI,
this requirement is subject to provisions regarding Capped Titling Trust
Administrative Expenses. SEE "Description of the Certificates--Allocations and
Distributions on the Certificates--Allocations and Distributions of
Collections".
INDEMNITY OF TITLING TRUSTEE AND TRUST AGENTS
The Titling Trustee and each Trust Agent will be indemnified and held
harmless out of and to the extent of the Titling Trust Assets with respect to
any loss, liability or expense, including reasonable attorneys' fees and
expenses (collectively "Claims"), arising out of or incurred in connection with
(i) any of the Titling Trust Assets (including without limitation any Claims
relating to lease contracts or leased vehicles of the Titling Trust, any
personal injury or property damage claims arising with respect to any such
leased vehicle or any claim with respect to any tax arising with respect to any
Titling Trust Asset) or (ii) the Titling Trustee's or the Trust Agent's
acceptance or performance of the trusts and duties contained in the Agreement or
any Agency Agreement. Notwithstanding the foregoing, neither the Titling Trustee
nor any Trust Agent will be indemnified or held harmless out of the Titling
Trust Assets as to any Claim (i) which TMCC shall have satisfied because of its
liability therefor pursuant to the Servicing Agreement, (ii) incurred by reason
of the Titling Trustee's or such Trust Agent's willful misfeasance, bad faith or
negligence or (iii) incurred by reason of the Titling Trustee's or Trust Agent's
breach of its respective representations and warranties pursuant to the Titling
Trust Agreement or the Servicing Supplement. Such indemnities may result in
Additional Loss Amounts to the extent payable in respect of the SUBI Assets or
allocated to the SUBI.
TERMINATION
The Titling Trust and the respective obligations and responsibilities of
TMCC and the Titling Trustee shall terminate upon the last to occur of (i) the
payment to TMCC and each permitted purchaser, assignee and pledgee of any of
TMCC's interests in the Titling Trust (including the Trustee, with respect to
the SUBI) of all amounts and obligations required to be paid to them, and the
expiration or termination of all financings secured by the Titling Trust Assets
by their respective terms and (ii) the maturity or liquidation and the
disposition of all Titling Trust Assets and the disposition to or upon the order
of TMCC or any permitted purchaser, assignee or pledgee of all net proceeds
thereof.
NO PETITION
The Titling Trustee and the Trust Agent will agree not to institute, or join
in, any bankruptcy or similar proceeding against the Transferor or TMCC until
one year and one day after final payment of all financings involving interests
in the Titling Trust. Each pledgee or assignee of any UTI or other SUBI must
give a similar non-petition covenant.
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AMENDMENT
The Titling Trust Agreement may be amended by written agreement between TMCC
and the Titling Trustee, with the approval of the Trustee (which may be given in
the circumstances described under "Additional Document Provisions--Additional
Agreement Provisions--Amendment"). To the extent that any such amendment relates
to or affects the UTI or any Other SUBI in addition to the SUBI, the SUBI
Certificate or the SUBI Assets, such amendment may require certain other
approvals.
GOVERNING LAW
The Titling Trust Agreement will be governed by the laws of the State of
Delaware.
TRUSTEE AS THIRD-PARTY BENEFICIARY
As the holder of the SUBI Certificate, the Trustee will be a third-party
beneficiary of the Titling Trust Agreement. Therefore, the Trustee may, and,
upon the direction of Certificateholders representing at least 51% of the Voting
Interests of the Class A Certificates and the Class B Certificates (voting
together as a single class) will, exercise any right conferred by the Titling
Trust Agreement upon a holder of any interest in the SUBI.
THE SERVICING AGREEMENT
Pursuant to the Servicing Agreement, the Servicer will perform on behalf of
the Titling Trustee all of the obligations of the Trust as lessor under the
Contracts, including, but not limited to, collecting and posting payments,
responding to inquiries of the lessees, investigating delinquencies, sending
payment statements to the lessees, collecting and remitting certain sales and
use and other taxes to state and local governments and agencies, advancing
certain licensing fees, payments of fines for citations and costs of disposition
of Leased Vehicles related to Charged-off Contracts, Matured Contracts and
Additional Loss Contracts and policing the Contracts, commencing legal
proceedings to enforce a Contract on behalf of the Titling Trust, administering
the Contracts, including accounting for collections and furnishing monthly and
annual statements to the Titling Trustee with respect to distributions and
generating federal income tax information. The Titling Trustee will furnish the
Servicer with all powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out such servicing and
administrative duties under the Servicing Agreement. The Trustee will be a
third-party beneficiary of the Servicing Agreement.
CUSTODY OF CONTRACT DOCUMENTS AND CERTIFICATES OF TITLE
To assure uniform quality in servicing the Contracts and TMCC's own
portfolio of automobile and light duty truck lease contracts and to reduce
administrative costs, the Titling Trustee will appoint TMCC, as Servicer, to be
its agent, bailee and custodian of the Contracts, the certificates of title
relating to the Leased Vehicles and insurance policies and other documents
relating to the Contracts, the related lessees and the Leased Vehicles. Such
documents will not be physically segregated from other automobile and light duty
truck lease contracts, certificates of title and insurance policies and other
documents relating to such lease contracts and leased vehicles of TMCC, or those
which TMCC services for others, including those leased vehicles constituting
Titling Trust Assets that are not evidenced by the SUBI. The accounting records
and computer systems of TMCC will reflect the interests of the holders of
interest in the SUBI in the Initial Contracts, the Subsequent Contracts, the
Initial Leased Vehicles, the Subsequent Leased Vehicles and all related Contract
Rights, and "protective" UCC financing statements reflecting certain interests
in the Contracts and the Contract Rights will be filed. SEE "Material Legal
Aspects of the Titling Trust--Structural Considerations--Back-up Security
Interest in Certain SUBI Assets" and "Certain Legal Aspects of the Contracts and
Leased Vehicles--Back-up Security Interests". The Servicer will be responsible
for filing all periodic sales and use tax or property (real or personal) tax
reports, periodic renewals of licenses and permits, periodic renewals of
qualification to act as a trust and a business trust and other
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periodic governmental filings, registration or approvals arising with respect to
or required of the Titling Trustee or the Titling Trust.
COLLECTIONS
The Servicer will service, administer and collect all amounts due on or in
respect of the Contracts. The Servicer will make reasonable efforts to collect
all such amounts and, in a manner consistent with the Servicing Agreement, will
be obligated to service the Contracts generally in accordance with its customary
and usual procedures in respect of lease contracts serviced by it for its own
account.
Consistent with its usual procedures, the Servicer may, in its discretion,
defer one or more payments (having the practical effect of extending the
Maturity Date of any Contract) by up to four months in the aggregate, provided
that no Contract may be deferred more than four times and that the new Maturity
Date of any such Contract must not be later than the last day of the Collection
Period with respect to the Stated Maturity Date in respect of the Class B
Certificates occurs. The amount of any Deferral Fee received by the Servicer in
connection with the deferral of a Contract will be treated as additional
servicing compensation and will not be deposited into the SUBI Collection
Account. The Servicing Agreement will provide that Advances be made with respect
to Contracts as to which deferrals of payments are made that result in any
diminution of the amount of Collections received in connection therewith
relative to the originally scheduled Monthly Payments. The Servicing Agreement
will also provide for the reallocation to the UTI from the SUBI (accompanied by
an appropriate Reallocation Payment by TMCC) of each Contract as to which more
than four deferrals are made or as to which, through deferrals or extensions,
the maturity date is extended beyond the last day of the Collection Period
relating to the Stated Maturity Date in respect of the Class B Certificates.
Upon any such reallocation, such Contract and the related Leased Vehicle and
other related assets and rights will be UTI Assets and will no longer constitute
SUBI Assets.
NOTIFICATION OF LIENS AND CLAIMS
The Servicer will be required to notify the Transferor (in the event that
TMCC is not acting as the Servicer), the Trustee and the Titling Trustee as soon
as practicable of all liens or claims of whatever kind made by a third party
that would materially adversely affect the interests of, among others, the
Transferor, the Titling Trust, the Trust or any Certificateholder in or with
respect to the Contracts or Leased Vehicles. Following its learning of any such
lien or claim with respect to the Contracts or Leased Vehicles, the Servicer
will take whatever actions it deems reasonably necessary to cause such lien or
claim to be removed. SEE "Certain Legal Aspects of the Titling Trust--Structural
Considerations".
ADVANCES
In addition to Advances with respect to delinquent Monthly Payments, on each
Deposit Date, the Servicer will be obligated to make, by deposit into the SUBI
Collection Account, an advance with respect to delinquent Contracts and
Contracts as to which it has deferred payments as described above under
"Collections" in an amount equal to the aggregate amount of Monthly Payments due
thereon but not received during the related Collection Period.
Notwithstanding the foregoing, the Servicer will not be required to make an
Advance to the extent that such Advance would constitute a Nonrecoverable
Advance. A "Nonrecoverable Advance" will be any Advance that, in the reasonable
judgment of the Servicer, may not be ultimately recoverable by the Servicer from
Net Liquidation Proceeds or otherwise. In making Advances, the Servicer will
assist in maintaining a regular flow of scheduled principal and interest
payments on such delinquent or deferred Contracts, rather than to guarantee or
insure against losses. Accordingly, all Advances including Nonrecoverable
Advances shall be reimbursable to the Servicer monthly, without interest, from
Collections prior to the deposit thereof into the SUBI Collection Account.
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SECURITY DEPOSITS
The Contract Rights will include all rights under the Contracts to the
security deposits paid by the lessees at the time of origination of the
Contracts (the "Security Deposits") to the extent applied to cover excess wear
and tear charges or treated as Liquidation Proceeds as described below. As part
of its general servicing obligations, the Servicer will retain possession of
each Security Deposit remitted by the lessees as an agent for the Titling Trust
and will apply the proceeds of Security Deposits in accordance with the terms of
the Contracts, its customary and usual servicing procedures and applicable law.
However, in the event that any Contract becomes a Charged-off Contract or the
related Leased Vehicle is repossessed, the related Security Deposit will, to the
extent provided by applicable law and such Contract, constitute Liquidation
Proceeds. The Titling Trustee may not have an interest in the Security Deposits
that is enforceable against third parties until such time as they are deposited
into the SUBI Collection Account. The Servicer will not be required to segregate
Security Deposits from its own funds, and any income earned from any investment
thereof by the Servicer shall be for the account of the Servicer as additional
servicing compensation.
INSURANCE ON LEASED VEHICLES
The terms of the Contracts require each lessee to maintain in full force and
effect during the term of a Contract a comprehensive collision and physical
damage insurance policy covering the actual cash value of the related Leased
Vehicle and naming the Titling Trust as loss payee. The terms of the Contracts
also require each lessee to maintain bodily injury and property damage liability
insurance in amounts equal to the greater of the amount prescribed by applicable
state law or industry standards as set forth in the Contract and naming the
Titling Trust as an additional insured. Since lessees may choose their own
insurers to provide the required coverage, the specific terms and conditions of
their policies vary. If a lessee fails to obtain or maintain the required
insurance, the related Contract will be in default. It is the practice of TMCC
not to obtain insurance on behalf of and at the expense of the related lessee.
TMCC's central insurance tracking unit, which monitors compliance with such
lease contract provisions, will initiate follow-up procedures, including the
telephone and mail contact with the related lessee, upon being alerted by the
tracking system that any lessee has not obtained or is not maintaining required
insurance. Typically, if such default is not cured within 70 days from the date
TMCC's central insurance tracking unit becomes aware of such default by the
tracking system, the related lease contract is forwarded to the appropriate TMCC
branch for follow-up handling, including possible repossession of the related
Leased Vehicles if the related lessee does not timely obtain a satisfactory
replacement policy.
The policies issued with respect to a significant number of the Contracts
may name TMCC rather than the Titling Trust as additional loss payee. If a
primary insurer makes payment under such a policy to TMCC, TMCC will apply such
amounts or forward such amounts to the Titling Trust for application as a
portion of Net Insurance Proceeds. If a primary insurer failed to make payments
under a policy to the lessee and also to TMCC and the Titling Trust, losses
could be experienced by the Certificateholders. However, the Transferor has been
advised by the primary provider of the Contingent and Excess Liability Policies
described herein that such provider will not refuse any claim under the
Contingent and Excess Liability Policies solely because a primary policy names
TMCC or an approved TMCC affiliate, rather than the Titling Trust, as additional
loss payee (although under such circumstances, if the primary insurer denies a
claim on such basis, a deductible of $250,000 (rather than the standard
deductible of $125,000) will be payable by TMCC, as to which TMCC will indemnify
the Trust).
TMCC does not require lessees to carry credit disability, credit life or
credit health insurance or other similar insurance coverage which provides for
payments to be made on the Contracts on behalf of such lessees in the event of
disability or death. To the extent that such insurance coverage is obtained by a
lessee, payments received in respect of such coverage may be applied to payments
on the related Contract to the extent that the lessee's beneficiary chooses to
do so.
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REALIZATION UPON CHARGED-OFF CONTRACTS
The Servicer will use commercially reasonable efforts to repossess and
liquidate the Leased Vehicle relating to a Contract that comes into and
continues in default and for which no satisfactory arrangements can be made for
collection of delinquent payments. Such liquidation may be through repossession
of such Leased Vehicle and disposition at a public or private sale, or the
Servicer may take any other action permitted by applicable law. The Servicer may
enforce all rights under any such Contract, sell the Leased Vehicle in
accordance with the Contract and commence and prosecute any proceedings in
connection with the Contract. In connection with any such repossession, the
Servicer will follow its usual and customary practices and procedures in respect
of lease contracts serviced by it for its own account, and in any event will act
in compliance with all applicable laws. The Servicer will be required to repair
the Leased Vehicle if it reasonably determines that such repairs will increase
the related Net Repossessed Vehicle Proceeds. The Servicer will be responsible
for all costs and expenses incurred in connection with the sale or other
disposition of Leased Vehicles related to Charged-off Contracts and other
Contracts as to which a lessee has defaulted, but will be entitled to
reimbursement to the extent that such costs constitute Repossessed Vehicle
Expenses or other Liquidation Expenses or expenses recoverable under an
applicable insurance policy. Proceeds from the sale or other disposition of
repossessed Leased Vehicles will constitute Repossessed Vehicle Proceeds and
will be deposited into the SUBI Collection Account. The Servicer will be
entitled to reimbursement of all related Repossessed Vehicle Expenses, and
Principal Collections in respect of a Collection Period will include all Net
Repossessed Vehicle Proceeds collected during such Collection Period.
MATURED LEASED VEHICLE INVENTORY
Upon the scheduled maturity of a Contract, the related lessee has the option
to acquire the related Leased Vehicle for an amount equal to its Residual Value
plus any applicable taxes and all other incidental charges which may be due
under such Contract. If the lessee chooses not to exercise this option but
instead returns the Leased Vehicle, the dealer to whom such vehicle is returned
will have the option to purchase such vehicle for the same price. TMCC disposes
of off-lease and repossessed vehicles not purchased by the related lessee or
dealer to whom the vehicle is returned through regional automobile auctions.
Off-lease and repossessed vehicles not yet disposed of constitute Matured Leased
Vehicle Inventory.
Principal Collections in respect of a Collection Period will include all Net
Matured Leased Vehicle Proceeds collected during such Collection Period. The
Servicer also will be entitled to reimbursement of certain payments made and
expenses and charges incurred by it in the ordinary course of servicing the
Contracts (including payments it makes on behalf of the related lessees in
connection with the payment of taxes, vehicle registration, clearance of parking
tickets and similar items) from Collections with respect to the related
Contracts, separate payment thereof by the related lessees or from amounts
realized upon the final disposition of the related Leased Vehicle. To the extent
such amounts are reimbursed prior to or at the final disposition of the related
leased vehicle but remain unpaid by the related lessee, such unreimbursed
amounts (together with any unpaid Monthly Payments under the related Contract)
will be treated as Matured Leased Vehicle Expenses or Liquidation Expenses, as
the case may be, and will therefor reduce Net Matured Leased Vehicle Proceeds or
Liquidation proceeds, as the case may be. Related Matured Leased Vehicle
Expenses may be retained by the Servicer or released from amounts on deposit in
the SUBI Collection Account upon request therefor presented to the Trustee by
the Servicer together with any supporting documentation reasonably requested by
the Trustee. Any Residual Value Surplus for a Collection Period will be released
to the Transferor on the related Monthly Allocation Date, and thereafter neither
the Trust nor any Certificateholder will have a claim to or interest in such
amounts.
RECORDS, SERVICER DETERMINATIONS AND REPORTS
The Servicer will retain or cause to be retained all data (including,
without limitation, computerized records, operating software and related
documentation) relating directly to or maintained in connection
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with the servicing of the Contracts for at least 2 years after the termination
of the Trust. Upon the occurrence and continuance of an Event of Servicing
Termination and termination of the Servicer's obligations under the Servicing
Agreement, the Servicer will use commercially reasonable efforts to effect the
orderly and efficient transfer of the servicing of the Contracts, including all
such records to the extent necessary, to a successor servicer.
The Servicer will perform certain monitoring and reporting functions on
behalf of the Transferor, the Trustee, the Titling Trustee and
Certificateholders, including the preparation and delivery to the Trustee, the
Titling Trustee and each Rating Agency of a monthly certificate, on or before
each Determination Date, setting forth all information necessary to make all
distributions required in respect of the related Collection Period (the
"Servicer's Certificate"), and the preparation and delivery of (i) monthly
statements setting forth information described under "Description of the
Certificates--Statements to Certificateholders" and (ii) an annual officer's
certificate specifying, among other things, the occurrence and status of any
Event of Servicing Termination.
EVIDENCE AS TO COMPLIANCE
The Servicing Agreement will provide that a firm of nationally recognized
independent public accountants will furnish to the Trustee annually, commencing
in 1998, a statement as to compliance by the Servicer during the preceding
twelve months (or since the Closing Date in the case of the first such
statement) with certain standards relating to the servicing of the Contracts.
The Servicing Agreement will also provide for delivery to the Trustee,
substantially simultaneously with the delivery of such accountants' statement,
of a certificate signed by an officer of the Servicer stating that the Servicer
has fulfilled its obligations under the Servicing Agreement throughout the
preceding twelve months (or since the Closing Date in the case of the first such
certificate) or, if there has been a default in the fulfillment of any such
obligation, describing each such default.
Copies of such statements and certificates may be obtained by Certificate
Owners or Class A Certificateholders by a request in writing addressed to the
Trustee at its Corporate Trust Office.
SERVICING COMPENSATION
The Servicer will be entitled to compensation for the performance of its
servicing obligations under the Servicing Agreement. The Servicer will be
entitled to receive on each Monthly Allocation Date, the Servicing Fee in
respect of the related Collection Period equal to one-twelfth of the product of
1.00% and the Aggregate Net Investment Value as of the first day of the related
Collection Period (or, in the case of the first Monthly Allocation Date, as of
the Cutoff Date). The Servicing Fee will be calculated and paid based upon a
360-day year consisting of twelve 30-day months. So long as TMCC is the
Servicer, it may, by notice to the Trustee and the Titling Trustee, on or before
a Determination Date, elect to waive the Servicing Fee with respect to the
related Collection Period, so long as TMCC believes that sufficient collections
will be available from Interest Collections on one or more future Monthly
Allocation Dates to pay such waived Servicing Fee, without interest. In such
event, the Servicing Fee for such Collection Period shall be deemed to equal
zero for all purposes of the Agreement and the Servicing Agreement.
The Servicer will also be entitled to additional servicing compensation in
the form of certain late payment fees, Deferral Fees and other administrative
fees or similar charges paid with respect to the Contracts, and earnings from
the investment of Security Deposits (to the extent lawful and as provided in the
Contracts). SEE "Additional Document Provisions--The Servicing Agreement--
Security Deposits". The Servicer will be entitled to retain Deferral Fees paid
in connection with deferred Contracts as additional servicing compensation. The
Servicer will pay all expenses incurred by it in connection with its servicing
activities under the Servicing Agreement, including the payment of Uncapped
Titling Trust Administrative Expenses allocable to the SUBI, and will not be
entitled to reimbursement of such expenses except to the extent any such
expenses constitute Liquidation Expenses in respect of a Contract or Leased
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Vehicle or reasonable expenses under an applicable insurance policy, or to the
extent that Uncapped Titling Trust Administrative Expenses are reimbursed out of
Interest Collections.
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of the Contracts as an agent for the Trustee under the
Servicing Agreement, including collecting and posting payments, responding to
inquiries of lessees on the Contracts, investigating delinquencies, policing the
SUBI Assets, administering the Contracts, making Advances, accounting for
collections and furnishing monthly and annual statements to the Trustee with
respect to distributions and generating federal income tax information.
SERVICER RESIGNATION AND TERMINATION
The Servicer may not resign from its obligations and duties under the
Servicing Agreement unless it determines that its duties thereunder are no
longer permissible by reason of a change in applicable law or regulations. No
such resignation will become effective until a successor servicer has assumed
the Servicer's obligations under the Servicing Agreement. The Servicer may not
assign the Servicing Agreement or any of its rights, powers, duties or
obligations thereunder except as otherwise provided therein or except in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with the Servicing Agreement.
The rights and obligations of the Servicer under the Servicing Agreement may
be terminated following the occurrence and continuance of an Event of Servicing
Termination. SEE "Additional Document Provisions--The Servicing Agreement--
Rights Upon Event of Servicing Termination".
INDEMNIFICATION BY THE SERVICER
The Servicer will indemnify the Trustee and its agents for any and all
liabilities, losses, damages and expenses that may be incurred by them as a
result of any act or omission by the Servicer in connection with the performance
of its duties under the Servicing Agreement.
EVENTS OF SERVICING TERMINATION
"Events of Servicing Termination" under the Servicing Agreement with respect
to the SUBI Assets will consist of, among other things: (i) any failure by the
Servicer to deliver to the Titling Trustee for distribution to holders of
interests in the SUBI or to the Trustee for distribution to the
Certificateholders any required payment on the related Certificates as to
allocations and distributions, which failure continues unremedied for three
Business Days after discovery of such failure by an officer of the Servicer or
receipt by the Servicer of notice thereof from the Trustee, the Titling Trustee
or holders of Certificates evidencing not less than 25% of the Voting Interests
of the Class A Certificates and the Class B Certificates, voting together as a
single class; (ii) any failure by the Servicer duly to observe or perform in any
material respect any other of its covenants or agreements in the Servicing
Agreement which failure materially and adversely affects the rights of holders
of interests in the SUBI or the Certificateholders and which continues
unremedied for 90 days after written notice of such failure is given as
described in clause (i) above; or (iii) the occurrence of certain Insolvency
Events relating to the Servicer. Notwithstanding the foregoing, a delay in or
failure of performance referred to under clause (i) above for a period of ten
Business Days shall not constitute an Event of Servicing Termination if such
failure or delay was caused by an event of force majeure. Upon the occurrence of
any such event, the Servicer shall not be relieved from using all commercially
reasonable efforts to perform its obligations in a timely manner in accordance
with the terms of the Servicing Agreement and the Servicer shall provide to the
Trustee, the Titling Trustee, the Transferor and the Certificateholders prompt
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations.
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RIGHTS UPON EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination remains unremedied, the Titling
Trustee, upon the direction of the Trustee or holders of Certificates evidencing
not less than 51% of the Voting Interests of the Class A Certificates and the
Class B Certificates, voting together as a single class, may terminate all of
the rights and obligations of the Servicer under the Servicing Agreement with
respect to the SUBI Assets. In the event of such a termination affecting the
SUBI Assets, the Trust Agent generally will succeed to the rights, powers,
responsibilities, duties and liabilities of the Servicer under the Servicing
Agreement with respect to the SUBI Assets (excluding certain specific
obligations listed in the Servicing Agreement) or provide for a new Servicer to
be approved by each Rating Agency. The Trust Agent or other new Servicer will
receive substantially the same servicing compensation to which the Servicer
otherwise would have been entitled. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Event of Servicing
Termination other than such appointment has occurred, such trustee or official
may have the power to prevent the Titling Trustee, the Trustee or such
Certificateholders from effecting a transfer of servicing. Notwithstanding the
termination of the Servicer's rights and powers in such event, the Servicer will
remain obligated to perform certain specific obligations listed in the Servicing
Agreement and to reimburse the Trust Agent for any losses incurred in performing
certain such obligations, and will be entitled to payment of certain amounts
payable to it for services rendered prior to such termination.
The holders of Certificates evidencing not less than 51% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, with the consent of the Titling Trustee and the
Trustee (which consents shall not be unreasonably withheld) may waive any
default by the Servicer in the performance of its obligations under the
Servicing Agreement and its consequences with respect to the SUBI Assets, other
than a default in making any required deposits to or payments from an Account in
accordance with the Servicing Agreement or in respect of a covenant or provision
of the Servicing Agreement that cannot be modified or amended without the
consent of each Certificateholder, in which event the related waiver will
require the approval of holders of all of the Certificates. No such waiver will
impair the rights of the Certificateholders with respect to subsequent defaults.
COMPLIANCE WITH ERISA
If the credit rating of TMCC becomes less than investment grade, then on a
quarterly basis, TMCC shall provide the Trustee and each Rating Agency with an
officer's certificate stating that none of TMCC and its affiliates for purposes
of ERISA (i) maintains an ERISA plan which, as of its last valuation date, had
unfunded current liability, (ii) anticipates that the value of the assets of any
ERISA plan it maintains would not be sufficient to cover any current liability
and (iii) is contemplating benefit improvements with respect to any plans then
maintained or the establishment of any new ERISA plans, either of which would
cause it to maintain an ERISA plan with unfunded current liability (the "ERISA
Compliance Test"). In the event that TMCC does not timely make the foregoing
certifications, all Excess Amounts in respect of each Monthly Allocation Date,
after giving effect to all payments or allocations required to be made therefrom
on such Monthly Allocation Date, will be deposited into the Reserve Fund until
the ERISA Compliance Test is satisfied. On the Monthly Allocation Date following
the date on which such failure is cured, monies on deposit in the Reserve Fund
in excess of the Specified Reserve Fund Balance shall be distributed to the
Transferor.
NO PETITION
The Servicer will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Transferor, the Titling Trustee or the Titling
Trust until one year and one day after final payment of all financings involving
interests in the Titling Trust.
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AMENDMENT
The Servicing Agreement may be amended from time to time in a writing signed
by the Titling Trustee and the Servicer, with the approval of the Trustee (which
approval may be given in the circumstances described under "Additional Document
Provisions--Additional Agreement Provisions--Amendment"). Any such amendment
relating to the UTI or any Other SUBI may require certain other approvals.
TERMINATION
The Servicing Agreement shall terminate upon the earlier to occur of (i) the
termination of the Titling Trust, (ii) the discharge of the Servicer in
accordance with its terms or (iii) the termination of the Agreement.
GOVERNING LAW
The Servicing Supplement will be governed by the laws of the State of
Delaware.
TMCC DEMAND NOTES
GENERAL
So long as a Monthly Payment Event has not occurred, and so long as the
Certificates of any Class are outstanding, amounts allocated to interest on or
principal of the Certificates of such Class on a Monthly Allocation Date that is
not also a Certificate Payment Date will be deposited into the
Certificateholders' Account on such Monthly Allocation Date and invested in
Permitted Investments maturing prior to the succeeding relevant Certificate
Payment Date or Targeted Maturity Date, as appropriate. The Servicer will have
the power to direct the investment of such funds in Permitted Investments. Due
to the incremental administrative difficulty in obtaining highly rated
investments in variable amounts and with variable maturities that bear the
required interest rate, the Servicer expects initially to invest all such funds
in TMCC Demand Notes. The TMCC Demand Notes will be issued under an indenture,
dated as of September 1, 1997, as such indenture may be amended from time to
time (the "Indenture"), between TMCC and U.S. Bank, as trustee thereunder (in
such capacity, the "Indenture Trustee"). The terms of the TMCC Demand Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
The principal amount of the TMCC Demand Notes outstanding will change from
time to time on Monthly Allocation Dates. The aggregate principal amount of TMCC
Demand Notes that may be issued under the Indenture is limited to $1.6 billion.
The principal amount of TMCC Demand Notes will bear interest from and including
the date of issuance of such principal amount, to but excluding its date of
Maturity. Interest on the TMCC Demand Notes will only be paid at Maturity. Each
TMCC Demand Note will mature on the earlier of (x) in the case of the TMCC
Demand Notes issued with respect to the investment of Available Interest, the
next succeeding Certificate Payment Date, and in the case of the TMCC Demand
Notes issued with respect to the investment of Principal Collections and other
amounts allocable as principal, the next succeeding Targeted Maturity Date, and
(y) the date on which the Trustee demands payment of the TMCC Demand Notes (each
such date, a "Maturity"). Each TMCC Demand Note will bear interest at the
related Required Rate. Interest accrued on TMCC Demand Notes will be calculated
on the basis of a 360 day year of twelve 30-day months.
The TMCC Demand Notes will be unsecured general obligations of TMCC and will
rank pari passu with all other unsecured and unsubordinated indebtedness of TMCC
from time to time outstanding. Currently, no outstanding debt of TMCC is senior
in right of payment to the TMCC Demand Notes. The TMCC Demand Notes will be
obligations solely of TMCC and will not be obligations of, or guaranteed by, TMS
or any affiliate of TMCC or TMS, directly or indirectly. The TMCC Demand Notes
will not be subject to redemption by TMCC and will not have the benefit of any
sinking fund.
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The TMCC Demand Notes will be issued only in fully registered form without
coupons and payment of principal of and interest on TMCC Demand Notes will be
made by the Indenture Trustee as paying agent by wire transfer to an account
maintained by the Trustee, as the holder of the TMCC Demand Notes.
No Certificateholder will have a direct interest in the TMCC Demand Notes or
have any direct rights under the TMCC Demand Notes or the Indenture. The Trustee
will be the only holder of the TMCC Demand Notes, which it will hold for the
benefit of the Certificateholders. In the event any vote or other action,
including action upon the occurrence of an Event of Default under the Indenture,
is required or permitted by the holders of the TMCC Demand Notes under the
Indenture, the Trustee as such holder will be permitted to vote or take such
other action as it shall deem fit. However, the Trustee shall be permitted to
seek the direction of the Certificateholders, who in such case shall be
permitted to vote in the manner set forth under "--Additional Agreement
Provisions--Amendment" above. References under this caption to "holders of the
TMCC Demand Notes" and phrases of similar import shall be to the Trustee as the
holder of the TMCC Demand Notes.
REMOVAL OF INDENTURE TRUSTEE; SUCCESSOR INDENTURE TRUSTEE
The Indenture Trustee may resign by providing written notice to TMCC and the
Trust, as holder of the TMCC Demand Notes. The Trust, as holder of the TMCC
Demand Notes, may remove the Indenture Trustee by written notice thereto and to
TMCC, and may appoint a successor Indenture Trustee. TMCC may remove the
Indenture Trustee in the event that: (a) the Indenture Trustee fails to continue
to satisfy the criteria for eligibility to act as Indenture Trustee; (b) the
Indenture Trustee is adjudged a bankrupt or insolvent; (c) a receiver or other
public officer takes charge of the Indenture Trustee or its property; or (d) the
Indenture Trustee otherwise becomes incapable of acting in such capacity.
If the Indenture Trustee resigns, is removed or is unable to act as
Indenture Trustee for any reason, TMCC shall promptly appoint a successor
Indenture Trustee, unless the Trust shall already have done so. Within one year
after a successor Indenture Trustee takes office, the Trust may appoint a
successor Indenture Trustee to replace any successor Indenture Trustee appointed
by TMCC. Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee shall become effective only upon such successor's
acceptance of such appointment and the payment of outstanding fees and expenses
due to the prior Indenture Trustee as set forth in the Indenture.
SUCCESSOR CORPORATION
The Indenture provides that TMCC may consolidate with, or sell, lease or
convey all or substantially all of its assets to, or merge with or into, any
other corporation, provided, that in any such case: (i) either TMCC shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States or any state thereof
and shall expressly assume, by execution and delivery to the Indenture Trustee
of a supplemental indenture in form satisfactory thereto, all of the obligations
of TMCC under the TMCC Demand Notes and the Indenture; and (ii) TMCC or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale, lease or conveyance, be in default in the
performance of any such obligation. Subject to certain limitations in the
Indenture, the Indenture Trustee may receive from TMCC an officer's certificate
and an opinion of counsel as conclusive evidence that any such consolidation,
merger, sale, lease or conveyance, and any such assumption, complies with the
provisions of the Indenture.
SUPPLEMENTAL INDENTURES
Supplemental indentures may be entered into by TMCC and the Indenture
Trustee with the consent of the holder of the TMCC Demand Notes, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of modifying in any manner the rights with
respect to the TMCC Demand Notes, provided that no supplemental indenture may,
among other things,
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reduce the principal amount of or interest on any TMCC Demand Notes, change the
maturity date for the payment of the principal, the date on which interest will
be payable or other terms of payment or reduce the percentage of holders of TMCC
Demand Notes necessary to modify or alter the Indenture, without the consent of
each holder of Certificates affected thereby. Under certain circumstances,
supplemental indentures may also be entered into without the consent of the
holders.
EVENTS OF DEFAULT UNDER THE INDENTURE
The Indenture defines an Event of Default with respect to the TMCC Demand
Notes as being any one of the following events: (i) default in payment of
principal on the TMCC Demand Notes; (ii) default in payment of any interest on
the TMCC Demand Notes and continuance of such default for a period of 30 days;
(iii) default in the performance, or breach, of any other covenant or warranty
of TMCC in the Indenture continued for 60 days after appropriate notice; and
(iv) certain events of bankruptcy, insolvency or reorganization. If an Event of
Default occurs and is continuing, the Indenture Trustee or the holders of at
least 25% in aggregate principal amount of TMCC Demand Notes may declare the
TMCC Demand Notes to be due and payable. Any past default with respect to the
TMCC Demand Notes may be waived by the holders of a majority in aggregate
principal amount of the outstanding TMCC Demand Notes, except in a case of
failure to pay principal of or interest on the TMCC Demand Notes for which
payment has not been subsequently made or a default in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
consent of the Holder of each outstanding TMCC Demand Note. TMCC will be
required to file with the Indenture Trustee annually an officer's certificate as
to the absence of certain defaults. The Indenture Trustee may withhold notice to
holders of the TMCC Demand Notes of any default with respect to such series
(except in payment of principal or interest) if it in good faith determines that
it is in the interest of such holders to do so.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee in case an Event of Default shall occur and be continuing, the
Indenture Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders,
unless such holders have offered to the Indenture Trustee reasonable indemnity
or security against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction. Subject to provisions in the
Indenture for the indemnification of the Indenture Trustee and to certain other
limitations, the holders of a majority in principal amount of the outstanding
TMCC Demand Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred on the Indenture Trustee with respect to
the TMCC Demand Notes.
ABSENCE OF COVENANTS
The provisions of the Indenture do not contain any covenants that limit the
ability of TMCC to subject its properties to liens, to enter into any type of
transaction or business or to secure any of its other indebtedness without
providing security for the TMCC Demand Notes. The provisions of the Indenture do
not afford the holders of the TMCC Demand Notes protection in the event of a
highly leveraged transaction, reorganization, restructuring, change in control,
merger or similar transaction or other event.
DEFEASANCE AND DISCHARGE OF INDENTURE
The Company may satisfy and discharge its obligations under the Indenture by
delivering to the Indenture Trustee for cancellation all outstanding TMCC Demand
Notes, or depositing with the Indenture Trustee money and/or U.S. Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money sufficient to pay the principal of and
interest on the outstanding TMCC Demand Notes on the date on which any such
payments are due and payable in accordance with the terms of the Indenture and
the TMCC Demand Notes, and in each case by satisfying certain additional
conditions in the Indenture. However, in the case of any such deposit, certain
of the
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Company's obligations under the Indenture (including the obligation to pay the
principal and interest on the outstanding TMCC Demand Notes) will continue until
all of the TMCC Demand Notes are paid in full.
REGARDING THE INDENTURE TRUSTEE
The Indenture Trustee is the Trustee under the Agreement. The Indenture
contains certain limitations on the right of the Indenture Trustee, should it
become a creditor of TMCC, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The Indenture Trustee is permitted to engage in other transactions
with TMCC; provided, however, that if the Indenture Trustee acquires any
conflicting interest (as defined) it must eliminate such conflict or resign.
The Indenture provides that, in case an Event of Default has occurred and is
continuing, the Indenture Trustee is required to use the degree of care and
skill of a prudent person in the conduct of his or her own affairs in the
exercise of its powers.
GOVERNING LAW
The Indenture and the TMCC Demand Notes will be governed by and construed in
accordance with the laws of the State of New York.
CERTAIN LEGAL ASPECTS OF THE TITLING TRUST
THE TITLING TRUST
The Titling Trust was formed as a Delaware business trust. The Titling Trust
also has been qualified as a business trust authorized to transact business in
certain other states where it is required to be so qualified.
Because the Titling Trust has been registered as a business trust for
Delaware and other state law purposes, like a corporation, it may be eligible to
be a debtor in its own right under the United States Bankruptcy Code. SEE "Risk
Factors--Risks Associated with Possible Future Insolvency of TMCC; Substantive
Consolidation with TMCC".
STRUCTURAL CONSIDERATIONS
Unlike many structured financings in which the holders of the related
securities have a direct ownership interest or a perfected security interest in
the underlying assets being securitized, the Trust will not own directly the
SUBI Assets. Instead, the Titling Trust will own the Titling Trust Assets,
including the SUBI Assets, and the Titling Trustee will take action with respect
thereto in the name of the Titling Trust on behalf of and as directed by the
beneficiaries of the Titling Trust (i.e. the holders of the UTI Certificate and
each SUBI Certificate or Other SUBI Certificate). The Trust will own the assets
of the Trust, the primary asset of which will be the SUBI Certificate evidencing
a 100% beneficial interest in the SUBI Assets, and the Trustee will take action
with respect thereto in the name of the Trust and on behalf of the
Certificateholders and the Transferor. Beneficial interests in the Contracts and
Leased Vehicles, rather than direct legal ownership thereof, are transferred
under this structure in order to avoid the administrative difficulty and expense
of retitling the Leased Vehicles in the name of the transferee. The SUBI Assets
will be segregated from the other Titling Trust Assets on the books and records
maintained with respect thereto by the Servicer and/or the Titling Trustee.
Except under the limited circumstances described below, neither the Servicer nor
any holders of other beneficial interests in the Titling Trust will have rights
in the SUBI Assets, and payments made on or in respect of any Titling Trust
Assets other than the SUBI Assets will not be available to make payments on the
Certificates or to cover expenses of the Titling Trust allocable to the SUBI
Assets.
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ALLOCATION OF TITLING TRUST LIABILITIES
Pursuant to the Titling Trust Agreement, the various liabilities of the
Titling Trust will be allocated to and charged against (i) to the extent
incurred specifically with respect thereto, the SUBI Assets, the Titling Trust
Assets allocated to Other SUBIs ("Other SUBI Assets") or Titling Trust Assets
not allocated to the SUBI or any Other SUBI (the "UTI Assets"), respectively, or
(ii) pro rata among the Titling Trust Assets if incurred with respect to the
Titling Trust Assets generally. The Titling Trustee and the beneficiaries of the
Titling Trust and their assignees and pledgees will be bound by the foregoing
allocation. Thus, any liability to third parties arising from or in respect of a
Contract or Leased Vehicle will be borne by the Trust as a holder of interests
in the SUBI. If any such liability arises from or in respect of a contract or
leased vehicle that is an Other SUBI Asset or a UTI Asset, the SUBI Assets will
not be subject to such liability unless such Other SUBI Assets or UTI Assets are
insufficient to pay the liability. However, to the extent that there are no
other assets from which to satisfy such liability, and such liability is owed to
entities other than the Titling Trustee or other beneficiaries of the Titling
Trust, the SUBI Assets may be used to satisfy such liabilities. Under such
circumstances, investors in the Class A Certificates could incur a loss on their
investment.
THIRD-PARTY LIENS ON SUBI ASSETS
Because the Trustee will not own directly the SUBI Assets, and since its
interest therein generally will be an indirect beneficial ownership interest,
perfected liens of third-party creditors of the Titling Trust in one or more
SUBI Assets will take priority over the interest of the Trustee therein. With
respect to claims relating to the SUBI Assets, this result is no different than
would be the case if a claim were made against the Trust and the Trust directly
owned the SUBI Assets. However, because the Titling Trust also will hold Other
SUBI Assets and UTI Assets, and third-party creditors of the Titling Trust may
not be bound in all cases by the allocation of liabilities described above, a
general creditor of the Titling Trust may obtain a lien on one or more SUBI
Assets. Such liens could include tax liens arising against the Transferor or the
Trust, liens arising under various federal and state criminal statutes, judgment
liens arising from successful claims under federal and state consumer protection
laws and Lemon Laws with respect to leases and leased vehicles that are Titling
Trust Assets and judgment liens arising from successful claims against the
Titling Trust arising from the operation of such leased vehicles. Various liens
could be imposed upon all or part of the SUBI Assets that, by operation of law,
would take priority over the Trustee's interest therein. SEE "Risk
Factors--Risks Associated with Consumer Protection Laws", "--Risks Associated
with ERISA Liabilities" and "--Risks Associated with Vicarious Tort Liability
with Respect to Leased Vehicles" and "Certain Legal Aspects of the Contracts and
the Leased Vehicles--Back-up Security Interests".
The Titling Trust Agreement provides that, to the extent that such a
third-party claim is satisfied out of one or more SUBI Assets rather than Other
SUBI Assets or UTI Assets, as the case may be, the Titling Trustee will
reallocate the remaining Titling Trust Assets (i.e., the Other SUBI Assets and
the UTI Assets) so that each portfolio will bear the expense of the claim as
nearly as possible as if the claim had been allocated as provided in the Titling
Trust Agreement. However, if a third party claim exceeds the value of the
portfolio or portfolios of Titling Trust Assets to which it should be allocated,
and as a result the damages and expenses with respect to such claim are borne by
the SUBI Assets, investors in the Class A Certificates could incur a loss on
their investment. SEE "Additional Document Provisions--The Titling Trust
Agreement--The SUBI, the Other SUBIs and the UTI".
TMCC may pledge the UTI as security for obligations to third-party lenders,
and may create and sell or pledge Other SUBIs in connection with other
financings. Each holder or pledgee of the UTI or any Other SUBI will be required
expressly to disclaim any interest in the SUBI Assets, and to fully subordinate
any claims to the SUBI Assets in the event that this disclaimer is not given
effect. Although no assurance can be given, in the unlikely event of a
bankruptcy of TMCC, the Transferor believes that the SUBI Assets would not be
treated as part of TMCC's bankruptcy estate and that, even if they were so
treated, the subordination by holders and pledgees of the UTI and Other SUBIs
should be enforceable. In addition, a
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pledge of the UTI will not impair the Titling Trustee's ability to reallocate
leases and leased vehicles out of the UTI Assets as Subsequent Contracts and
Subsequent Leased Vehicles during the Revolving Period.
BACK-UP SECURITY INTEREST IN CERTAIN SUBI ASSETS
The transfer of the SUBI Certificate by the Transferor to the Trust is
intended to constitute a sale of the SUBI Certificate and of the beneficial
interest in the SUBI Assets evidenced thereby, subject in each case to the
rights of the Transferor as the holder of the Transferor Interest. Although
unlikely, it is possible that a court could recharacterize (for accounting and
general state law purposes) the transactions contemplated by the Titling Trust
Agreement and SUBI Supplement as a financing secured by a pledge of the SUBI
Certificate or the SUBI Assets rather than as a sale. In such an event, absent
prior perfection of the Trustee's security interest in the SUBI Assets, the
holder of a perfected lien in one or more SUBI Assets would have priority over
the interest of the Trustee in such SUBI Assets.
Certain actions have been taken to ensure that, if the transfer of the SUBI
were to be so recharacterized as a transfer to secure a loan, the Trustee would
be deemed to have a perfected security interest in the SUBI Certificate (and the
SUBI evidenced thereby) and in the Contracts and the Contract Rights susceptible
of perfection under the Uniform Commercial Code (the "UCC") as in effect in the
Trust States. The "Contract Rights" are all rights relating to the Contracts and
the proceeds thereof, including the documents evidencing such Contracts, Monthly
Payments received or due on or after the related Cutoff Date, Security Deposits
(to the extent applied to cover excess wear and tear charges or treated as
Liquidation Proceeds as described herein and as provided for in the Contracts),
Prepayments, Liquidation Proceeds and Net Insurance Proceeds (to the extent
constituting proceeds of the related Contract rather than proceeds of the
related Leased Vehicle) received on or after the related Cutoff Date. The SUBI
Certificate will constitute an "instrument" under the UCC and, by virtue of its
possession thereof, the Trustee will be deemed to have a perfected security
interest therein (and the SUBI evidenced thereby). The Contracts will not be
stamped to reflect the Trustee's indirect interest therein. On or prior to the
Closing Date, however, "protective" UCC-1 financing statements will be filed in
California, Illinois and Delaware with respect to the Contracts and the Contract
Rights to reflect the perfection of any security interest that the Trustee would
be deemed to have therein. However, no action will be taken to perfect the lien
that the Trustee would be deemed to have in the Leased Vehicles in the event of
such a recharacterization. Therefore, to the extent that a valid lien is imposed
by a third party against a Leased Vehicle, the interest of the lienholder will
be superior to the unperfected beneficial interest of the Trustee in such Leased
Vehicle. The Servicing Agreement will require the Servicer to contest all such
liens and cause the removal of any liens that may be imposed, but investors in
the Class A Certificates could incur a loss on their investment if any such
liens are imposed against the Leased Vehicles. SEE "Additional Document
Provisions--The Servicing Agreement--Notification of Liens and Claims".
Additionally, any perfected security interest of the Trustee in all or part
of the property of the Trust could be subordinate to claims of any trustee in
bankruptcy or debtor-in-possession in the event of a bankruptcy of the
Transferor prior to any perfection of the transfer of the assets transferred by
the Transferor to the Trust pursuant to the Agreement. SEE "Risk Factors--Risks
Associated with Possible Future Insolvency of TMCC; Substantive Consolidation
with TMCC".
INSOLVENCY RELATED MATTERS
Although no assurance can be given, the Transferor believes that in the
unlikely event of a bankruptcy of TMCC the SUBI Assets would not be treated as
part of TMCC's bankruptcy estate and that, even if they were so treated, the
subordination by holders and pledgees of the UTI and Other SUBIs should be
enforceable. In addition, the Transferor has taken steps in structuring the
transactions contemplated hereby that are intended to make it unlikely that the
voluntary or involuntary application for relief by TMCC under any Insolvency
Laws will result in consolidation of the assets and liabilities of the
Transferor, the Titling Trust or the Trust with those of TMCC. If, however, (i)
a court concluded that the assets and
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liabilities of the Transferor, the Titling Trust or the Trust should be
consolidated with those of TMCC in the event of the application of applicable
Insolvency Laws to TMCC, (ii) a filing were made under any Insolvency Law by or
against the Transferor, the Titling Trust or the Trust or (iii) an attempt were
made to litigate any of the foregoing issues, delays in payments on the
Certificates and possible reductions in the amount of such payments could occur.
CERTAIN LEGAL ASPECTS OF THE
CONTRACTS AND THE LEASED VEHICLES
Although all Contracts have been or will be originated in the Trust States,
in some instances the related lessees may live in other states at the time of
origination or may move to another state after the time of origination.
Consequently, the related Leased Vehicles may be operated and registered in
states other than Trust States and the related certificates of title may be
recorded in such other states. The following discussion of certain legal aspects
of the Contracts and Leased Vehicles does not purport to address the laws of
every state in which a Leased Vehicle may be operated or registered or in which
title may be recorded.
BACK-UP SECURITY INTERESTS
The Contracts are "chattel paper" as defined in the UCC. Pursuant to the
California UCC, a non-possessory security interest in or transfer of chattel
paper in favor of the Titling Trust and the Transferor may be perfected by
filing a UCC-1 financing statement with the appropriate state authorities in the
jurisdiction in which the principal place of business of the transferor is
located (i.e. the California Secretary of State). On or prior to the Closing
Date, "protective" UCC-1 financing statements will be filed in California,
Delaware and Illinois to effect this perfection. If the Certificates were to be
recharacterized as loans secured by the SUBI Assets, the Trustee will be deemed
to have a perfected security interest in certain SUBI Assets, including the
Contracts. The Trustee's security interest in that circumstance could be
subordinate to the interest of certain other parties, if any, who take
possession of the Contracts before the filing described above has been
completed. Specifically, the Trustee's security interest in a Contract could be
subordinate to the rights of a purchaser of such Contract who takes possession
thereof without knowledge or actual notice of the Trustee's security interest.
The Contracts will not be stamped to reflect the foregoing back-up security
arrangements. Any perfected security interest of the Trustee in the Contracts
will be unaffected by any change of location of any lessee, since, under the
UCC, this back-up security interest will be perfected by the filing of a UCC-1
financing statement in the jurisdiction in which the chief executive office of
the "debtor" (in this case, the Titling Trust) is located, not the location of
any lessee.
Various liens could be imposed upon all or part of the SUBI Assets
(including the Leased Vehicles) that, by operation of law, would take priority
over the Trustee's interest therein. Such liens could include tax liens arising
against the Transferor or the Trust, mechanic's, repairmen's, garagemen's and
motor vehicle accident liens and certain liens for personal property taxes, in
each case arising with respect to a particular Leased Vehicle, and liens arising
under various state and federal criminal statutes. Additionally, any perfected
security interest of the Trustee in all or part of the property of the Trust
could also be subordinate to claims of any trustee in bankruptcy or
debtor-in-possession in the event of a bankruptcy of the Transferor prior to any
perfection of the transfer of the assets transferred by the Transferor to the
Trust pursuant to the Agreement.
VICARIOUS TORT LIABILITY
Although the Titling Trust will own the Leased Vehicles, they will be
operated by the lessees and their respective invitees. State laws differ as to
whether anyone suffering injury to person or property involving a leased vehicle
may bring an action against the owner of the vehicle merely by virtue of that
ownership. To
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the extent that applicable State law permits such an action, the Titling Trust
and the Titling Trust Assets may be subject to liability to such an injured
party.
For example, in California, where a majority of the Initial Contracts were
originated, under Section 17150 of the California Vehicle Code, the owner of a
motor vehicle subject to a lease is responsible for injuries to persons or
property resulting from the negligent or wrongful operation of the vehicle by
any person using the vehicle with the owner's permission. The owner's liability
for personal injuries is limited to $15,000 per person and $30,000 in total per
accident and for property damage is limited to $5,000 per accident. However,
recourse for any judgment arising out of the operation of the vehicle must first
be had against the operator's property if the operator is within the
jurisdiction of the court.
The laws of most states, including the Trust States, either do not permit
such suits, or limit the lessor's liability to the amount of any liability
insurance that the lessee was required under applicable law to maintain (or in
the case of Florida, the lessor was permitted to maintain), but failed to
maintain. Notwithstanding the foregoing, in the event that vicarious liability
is imposed on the Titling Trust as owner of a Leased Vehicle in a state that
does not so limit liability, and the coverage provided by the Contingent and
Excess Liability Insurance Policies is insufficient to cover such loss,
including in certain circumstances with respect to a leased vehicle that is an
Other SUBI Asset or a UTI Asset, investors in the Class A Certificates could
incur a loss on their investments.
The Titling Trust's insurance coverage is substantial. However, in the event
that all applicable insurance coverage were exhausted and damages were assessed
against the Titling Trust, claims could be imposed against the Titling Trust
Assets, including the Leased Vehicles. Such claims would not take priority over
any SUBI Assets to the extent that the Trustee has a prior perfected security
interest therein (such as would be the case, in certain limited circumstances,
with respect to the Contracts). If any such claims were imposed against the
Titling Trust Assets and the Trustee did not have a prior perfected security
interest, investors in the Class A Certificates could incur a loss on their
investment. SEE "Certain Legal Aspects of the Titling Trust--Structural
Considerations--Back-up Security Interest in Certain SUBI Assets".
REPOSSESSION OF LEASED VEHICLES
In the event that a default by a lessee has not been cured within a certain
period of time after notice, the Servicer will ordinarily retake possession of
the related leased vehicle. Some jurisdictions require that the lessee be
notified of the default and be given a time period within which to cure the
default prior to repossession. Generally, this right to cure may be exercised on
a limited number of occasions in any one-year period. In these jurisdictions, if
the lessee objects or raises a defense to repossession, an order must be
obtained from the appropriate state court, and the vehicle must then be
repossessed in accordance with that order. Other jurisdictions (including each
of the Trust States) permit repossession without notice, but only if the
repossession can be accomplished peacefully. If a breach of the peace cannot be
avoided, judicial action is required. If a breach of the peace cannot be
avoided, the lessor typically must seek a writ of possession or replevin in a
state court action or pursue other judicial action to repossess such leased
vehicle.
After the Servicer has repossessed a Leased Vehicle, it may provide the
lessee with a period of time within which to cure the default under the related
Contract. If by the end of such period the default has not been cured, the
Servicer will attempt to sell the Leased Vehicle. The Net Repossessed Vehicle
Proceeds therefrom may be less than the remaining amounts due under the Contract
at the time of default by the lessee.
DEFICIENCY JUDGMENTS
The proceeds of sale of a leased vehicle generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
amounts due under the related lease contract. While some
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states impose prohibitions or limitations on deficiency judgments if the net
proceeds from resale of a leased vehicle do not cover the full amounts due under
the related lease contract, a deficiency judgment can be sought in those states
(including each of the Trust States) that do not prohibit directly or limit such
judgments. However, in some states (including California), a lessee may be
allowed an offsetting recovery for any amount not recovered at resale because
the terms of the resale were not commercially reasonable. In any event, a
deficiency judgment would be a personal judgment against the lessee for the
shortfall, and a defaulting lessee might have little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment. Because it is a personal judgment against
an obligor who may have few if any assets remaining after the repossession, even
if a deficiency judgment is obtained, it may be settled at a significant
discount or it may prove impossible to collect all or any portion thereof.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws impose requirements upon
lessors and servicers involved in consumer leasing. The federal Consumer Leasing
Act of 1976 and Regulation M, issued by the Board of Governors of the Federal
Reserve System, for example, require that a number of disclosures be made at the
time a vehicle is leased, including, among other things, all amounts due at the
time of origination of the lease, a description of the lessee's liability at the
end of the lease term, the amount of any periodic payments, the circumstances
under which the lessee may terminate the lease prior to the end of the lease
term and (beginning in October 1997) the capitalized cost of the vehicle and a
warning regarding possible charges for early termination. Each of the Trust
States has adopted Article 2A of the uniform commercial code which provides
protection to lessees through certain implied warranties and the right to cancel
a lease contract relating to defective goods. In addition, California and
Florida have enacted comprehensive vehicle leasing statutes that, among other
things, regulate the disclosures to be made at the time a vehicle is leased. The
various federal and state consumer protection laws would apply to the Titling
Trust as a "co-lessor" of the Contracts and may also apply to the Trust as
holder of a beneficial interest in the Contracts. The failure to comply with
such consumer protection laws may give rise to liabilities on the part of the
Servicer, the Titling Trust and the Titling Trustee, including liabilities for
statutory damages and attorneys' fees. In addition, claims by the Servicer, the
Titling Trust and the Titling Trustee may be subject to set-off as a result of
such noncompliance.
Courts have applied general equitable principles in litigation relating to
repossession and deficiency balances. These equitable principles may have the
effect of relieving a lessee from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help remedies of
lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally found
that repossession and resale by a lessor do not involve sufficient state action
to afford constitutional protection to consumers.
Many states, including each of the Trust States, have adopted laws (each, a
"Lemon Law") providing redress to consumers who purchase or lease a vehicle that
remains out of conformance with its manufacturer's warranty after a specified
number of attempts to correct a problem or after a specific time period. Should
any Leased Vehicle become subject to a Lemon Law, a lessee could compel the
Titling Trust to terminate the related Contract and refund all or a portion of
payments that previously have been paid. Although the Titling Trust may be able
to assert a claim against the manufacturer of any such defective Leased Vehicle,
there can be no assurance any such claim would be successful. To the extent a
lessee is able to compel the Titling Trust to terminate the related Contract,
such Contract will be deemed to be a Liquidated Contract and amounts received
thereafter on such Contract will be deemed to be Liquidation Proceeds. As noted
below, TMCC will represent and warrant to the Trustee as of the Cutoff Date and
as of each Transfer Date that none of the Initial Leased Vehicles or the related
Subsequent Leased Vehicles, as the case may be, is out of compliance with any
law, including any Lemon Law. Nevertheless, there can be
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no assurance that one or more Leased Vehicles will not become subject to return
(and the related Contract terminated) in the future under a Lemon Law.
Representations and warranties will be made in the Titling Trust Agreement
that each Contract complies with all requirements of law in all material
respects. If any such representation and warranty proves to be incorrect with
respect to any Contract, has certain material adverse effects, and is not timely
cured, TMCC will be required under the Servicing Agreement to deposit an amount
equal to the Reallocation Payment (together with, in certain circumstances
during the Amortization Period, an amount equal to the Reallocation Deposit
Amount) in respect of such Contract into the SUBI Collection Account unless the
breach is cured. SEE "Additional Document Provisions--The Titling Trust
Agreement--The SUBI, the Other SUBIs and the UTI" and "The
Contracts--Representations, Warranties and Covenants".
OTHER LIMITATIONS
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including applicable Insolvency Laws, may interfere
with or affect the ability of a lessor to enforce its rights under an automobile
or light duty truck lease contract. For example, if a lessee commences
bankruptcy proceedings, the lessor's receipt of rental payments due under the
lease contract is likely to be delayed. In addition, a lessee who commences
bankruptcy proceedings might be able to assign the lease contract to another
party even though the lease prohibits assignment.
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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
Set forth below is a discussion representing the opinion of Andrews & Kurth
L.L.P., special federal income tax counsel to the Transferor, as to material
federal income tax consequences to holders of the Class A Certificates who are
original owners and who hold the Class A Certificates as capital assets under
the Internal Revenue Code of 1986, as amended (the "Code"). This discussion does
not purport to be complete or to deal with all aspects of federal income
taxation or any aspects of state or local taxation that may be relevant to Class
A Certificateholders or Certificate Owners in light of their particular
circumstances, nor to certain types of Class A Certificateholders or Certificate
Owners subject to special treatment under the federal income tax laws (for
example, banks and life insurance companies). This discussion is based upon
present provisions of the Code, the regulations promulgated thereunder and
judicial and ruling authorities, all of which are subject to change, which
change may be retroactive. The parties do not intend to seek a ruling from the
Internal Revenue Service ("IRS") on any of the issues discussed below. Moreover,
there can be no assurance that if such a ruling were sought, the IRS would rule
favorably. Taxpayers and preparers of tax returns (including those filed by any
partnership or other issuer) should be aware that under applicable Treasury
Regulations a provider of advice on specific issues of law is not considered an
income tax return preparer unless the advice is (i) given with respect to events
that have occurred at the time the advice is rendered and is not given with
respect to the consequences of contemplated actions and (ii) is directly
relevant to the determination of an entry on a tax return. Accordingly,
taxpayers should consult their respective tax advisors and tax return preparers
regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed herein. Prospective investors
should consult their own tax advisors with regard to the federal income tax
consequences of the purchase, ownership or disposition of the Class A
Certificates, as well as the tax consequences arising under the laws of any
state, foreign country or other taxing jurisdiction.
CHARACTERIZATION OF THE CLASS A CERTIFICATES AS INDEBTEDNESS
The Transferor and the Trustee (by entering into the Agreement) and each
Certificateholder, and each Certificate Owner (by acquiring a beneficial
interest in a Class A Certificate) will agree to and will express their intent
that the Class A Certificates be treated as indebtedness, secured by the assets
of the Trust, for all federal, state and local income and franchise tax
purposes. However, because different criteria are used to determine the non-tax
accounting characterization of the transaction, the Transferor will treat the
transfer of the SUBI to the Trust, for financial accounting purposes, as a sale
of an ownership interest in the Titling Trust Assets and not as the issuance of
a debt obligation.
In general, the characterization of a transaction for federal income tax
purposes is based upon economic substance, and the substance of the transaction
in which the Class A Certificates are issued is consistent with the treatment of
the Class A Certificates as debt for federal income tax purposes. Although there
are certain judicial precedents holding that under appropriate circumstances a
taxpayer should be required to treat a transaction in accordance with the form
chosen by the taxpayer regardless of the transaction's substance, the operative
provisions of the transaction and the Agreement will not be inconsistent with
treating the Class A Certificates as debt and, accordingly, these authorities
should not be applied to require sale characterization for federal income tax
purposes. The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property depends upon
numerous factors designed to determine whether the Transferor has relinquished
(and the transferee has obtained) substantial incidents of ownership in the
property. The primary factors examined are whether the transferee has the
opportunity to gain if the property increases in value, and has the risk of loss
if the property decreases in value. Based upon its analysis of such factors,
Andrews & Kurth L.L.P. is of the opinion that, for federal income tax purposes,
the characterization of the Class A Certificates should be governed by the
substance of the transaction and accordingly, (i) the Trust will not be treated
as an
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association or a publicly traded partnership taxable as a corporation and (ii)
the Class A Certificates will properly be characterized as indebtedness that is
secured by the assets of the Trust.
TAXATION OF INTEREST AND DISCOUNT INCOME
Assuming that the Certificate Owners are owners of debt obligations for
federal income tax purposes, interest generally will be taxable as ordinary
income for federal income tax purposes when received by the Certificate Owners
utilizing the cash method of accounting and when accrued by Certificate Owners
utilizing the accrual method of accounting. Interest received on the Class A
Certificates may also constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense.
ORIGINAL ISSUE DISCOUNT. Under regulations issued with respect to the
original issue discount ("OID") provisions of the Code, the Class A Certificates
will be deemed to have been issued with OID in an amount equal to the excess of
the "stated redemption price at maturity" of the Class A Certificates (generally
equal to their Initial Class Certificate Balances plus all interest other than
"qualified stated interest" payable prior to or at maturity), over their
original issue price (in this case, the initial offering price at which a
substantial amount of the related Class of Class A Certificates is sold to the
public). Qualified stated interest generally means interest payable at a single
fixed rate or qualified variable rate provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the relevant Class A Certificates. Under the OID provisions of the Code,
interest will only be treated as qualified stated interest if it is
"unconditionally payable". Interest will be treated as "unconditionally payable"
only if Certificateholders have reasonable remedies to compel payment of
interest deficiencies (E.G., default and acceleration rights). Because Class A
Certificateholders will not be entitled to penalty payments of interest on
interest deficiencies, and Class A Certificateholders will have no default and
acceleration rights in the event of interest shortfalls, interest paid on the
Class A Certificates may not be treated by the IRS as qualified stated interest,
and, in such event, would be treated as OID. A Class A Certificateholder must
include OID income over the term of the related Class A Certificate under a
constant yield method. In general, OID must be included in income in advance of
the receipt of cash representing that income, regardless of the
Certificateholder's method of accounting.
The issue price of a Class A Certificate is the first price at which a
substantial amount of Class A Certificates are sold to the public (excluding
brokers, underwriters or wholesalers). If less than a substantial amount of a
particular Class of Class A Certificates is sold for cash on or prior to the
Closing Date, the issue price of such Class will be treated as the fair market
value of such Class on the Closing Date. The issue price of a Class A
Certificate also includes the amount paid by a Class A Certificateholder for
accrued interest that relates to a period prior to the issue date of the Class A
Certificate. The stated redemption price at maturity of a Class A Certificate
includes the initial Certificate Balance of the Class A Certificate, but
generally will not include distributions of interest if such distributions
constitute "qualified stated interest."
Under the de minimis rule, OID on a Class A Certificate will be considered
to be zero if such OID is less than 0.25% of the stated redemption price at
maturity of the Class A Certificate multiplied by the weighted average maturity
of the Class A Certificate. Certificateholders generally must report de minimis
OID pro rata as principal payments are received, and such income will be capital
gain if the Class A Certificate is held as a capital asset. However, accrual
method holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.
The holder of a Class A Certificate issued with OID must include in gross
income, for all days during its taxable year on which it holds such Class A
Certificate, the sum of the "daily portions" of such original issue discount.
The amount of OID includible in income by a Certificateholder will be computed
by allocating to each day during a taxable year a pro rata portion of the
original issue discount that accrued during the relevant accrual period. If a
Certificateholder purchases a Class A Certificate issued with OID
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at an "acquisition premium" (i.e., at a price in excess of the adjusted issue
price of the Class A Certificate, but less than or equal to the "stated
redemption price at maturity"), the amount includible by such Certificateholder
in income in each taxable year as OID will be reduced by that portion of the
premium properly allocable to such year.
Although the matter is not entirely clear, the Transferor currently intends
to report all stated interest on the Class A Certificates as qualified stated
interest and not as OID.
MARKET DISCOUNT.
Certificate Owners should be aware that the resale of a Class A Certificate
may be affected by the market discount rules of the Code. These rules generally
provide that, subject to a de minimis exception, if a holder acquires a Class A
Certificate at a market discount (i.e., at a price below its "adjusted issue
price") and thereafter recognizes gain upon a disposition of the Class A
Certificate, the lesser of such gain or the portion of the market discount that
accrued while the Class A Certificate was held by such holder will be treated as
ordinary interest income realized at the time of the disposition. A taxpayer may
elect to include market discount currently in gross income in taxable years to
which it is attributable, computed using either a ratable accrual or a yield to
maturity method.
PREMIUM.
A Certificate Owner who purchases a Class A Certificate for more than its
stated redemption price at maturity will be subject to the premium amortization
rules of the Code. Under those rules, the Certificate Owner may elect to
amortize such premium on a constant yield method. Amortizable premium reduces
interest income on the related Class A Certificate. If the Certificate Owner
does not make such an election, the premium paid for the Class A Certificate
generally will be included in the tax basis of the Class A Certificate in
determining the gain or loss on its disposition.
Each Certificate Owner should consult his own tax advisor regarding the
impact of the original issue discount, market discount, and premium amortization
rules.
SALES OF CLASS A CERTIFICATES
In general, a Certificate Owner will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of a Class A Certificate
measured by the difference between (i) the amount of cash and the fair market
value of any property received (other than amounts attributable to, and taxable
as, accrued stated interest) and (ii) the Certificate Owner's tax basis in the
Class A Certificate (as increased by any OID or market discount previously
included in income by the holder and decreased by any deductions previously
allowed for amortizable bond premium and by any payments, other than qualified
stated interest payments, received with respect to such Class A Certificate).
Subject to the market discount rules discussed above and to the applicable
holding period requirement for long-term capital gain treatment, any such gain
or loss generally will be long-term capital gain or loss, provided that the
Class A Certificate was held as a capital asset. Moreover, capital losses
generally may be used only to offset capital gains. The recently enacted Tax
Relief Act of 1997 reduces the maximum rate of tax on net capital gains for
individuals on sales of certain assets (including stocks and securities) and
increases the time period for which an asset must be held for the gain from its
sale to be eligible for the lowest rate. Generally, the holding period is
increased from 12 to 18 months for the lowest rate, with a further rate
reduction scheduled to take effect after the year 2000 for the sale of certain
assets that have been held at least five years.
FEDERAL INCOME TAX CONSEQUENCES TO FOREIGN INVESTORS
The following information describes the United States federal income tax
treatment of investors that are not United States persons ("Foreign Investors")
if the Class A Certificates are treated as debt. The
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term "Foreign Investor" means any person other than (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized in
or under the laws of the United States or any state or political subdivision
thereof, or (iii) an estate the income of which is includible in gross income
for United States federal income tax purposes, regardless of its source or (iv)
a trust whose administration is subject to the primary supervision of a United
States court and which has one or more United States fiduciaries who have
authority to control all substantial decisions of the trust.
The Code and Treasury regulations generally subject interest paid to a
Foreign Investor to a withholding tax at a rate of 30% (unless such rate were
changed by an applicable treaty). The withholding tax, however, is eliminated
with respect to certain "portfolio debt investments" issued to Foreign
Investors. Portfolio debt investments include debt instruments issued in
registered form for which the United States payor receives a statement that the
beneficial owner of the instrument is a Foreign Investor. The Class A
Certificates will be issued in registered form; therefore, if the information
required by the Code is furnished (as described below) and no other exceptions
to the withholding tax exemption are applicable, no withholding tax will apply
to the Class A Certificates.
For the Class A Certificates to constitute portfolio debt investments exempt
from United States withholding tax, the withholding agent must receive from the
Certificate Owner an executed IRS Form W-8 signed under penalty of perjury by
the Certificate Owner stating that the Certificate Owner is a Foreign Investor
and providing such Certificate Owner's name and address. The statement must be
received by the withholding agent in the calendar year in which the interest
payment is made, or in either of the two preceding calendar years.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to United States federal income tax on gain realized on the sale,
exchange or redemption of such Class A Certificate, provided that (i) such gain
is not effectively connected with a trade or business carried on by the
Certificate Owner in the United States, (ii) in the case of a Certificate Owner
that is an individual, such Certificate Owner is not present in the United
States for 183 days or more during the taxable year in which such sale, exchange
or redemption occurs and (iii) in the case of gain representing accrued
interest, the conditions described in the immediately preceding paragraph are
satisfied.
BACKUP WITHHOLDING
A Certificate Owner may be subject to a backup withholding at the rate of
31% with respect to interest paid on the Class A Certificates if the Certificate
Owner, upon issuance, fails to supply the Trustee or his broker with such
Certificate Owner's taxpayer identification number, fails to report interest,
dividends or other "reportable payments" (as defined in the Code) properly, or
under certain circumstances, fails to provide the Trustee or his broker with a
certified statement, under penalty of perjury, that such Certificate Owner is
not subject to backup withholding. Information returns will be sent annually to
the IRS and to each Certificate Owner setting forth the amount of interest paid
on the Class A Certificates and the amount of tax withheld thereon.
POSSIBLE ALTERNATIVE TREATMENT OF THE CLASS A CERTIFICATES
Although, as described above, it is the opinion of Andrews & Kurth L.L.P.
that the Class A Certificates will properly be characterized as debt for federal
income tax purposes, such opinion will not be binding on the IRS and thus no
assurance can be given that such a characterization shall prevail. If the IRS
were to contend successfully that the Class A Certificates did not represent
debt for federal income tax purposes, certain adverse tax consequences to the
Class A Certificateholders could result. For example, the Trust generally should
be required to pay corporate income tax on its taxable income (thus reducing the
cash available to make payments on the Class A Certificates). In addition,
income to certain tax-exempt entities (including pension funds) generally should
be "unrelated business taxable income", and income to
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foreign holders generally should be subject to U.S. withholding tax and
reporting requirements. Prospective investors are advised to consult with their
own tax advisors regarding the federal income tax consequences of the purchase,
ownership and disposition of the Class A Certificates.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit pension, profit sharing
or other employee benefit plans ("Benefit Plans") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plans. ERISA
also imposes certain duties on persons who are fiduciaries of Benefit Plans
subject to ERISA. Under ERISA, any person who exercises any authority or control
with respect to the management or disposition of the assets of a Benefit Plan is
considered to be a fiduciary of such Benefit Plan (subject to certain exceptions
not here relevant). A violation of these "prohibited transaction" rules may
result in liability under ERISA and the Code for such persons.
Neither ERISA nor the Code defines the terms "plan assets". Under Section
2510.3-101 of the United States Department of Labor ("DOL") regulations (the
"Regulation"), a Plan's assets may include an interest in the underlying assets
of an entity (such as a trust) for certain purposes, including the prohibited
transaction provisions of ERISA and the Code, if the Plan acquires an "equity
interest" in such entity. The Transferor believes that the Certificates will
give Certificateholders an equity interest in the Trust for purposes of the
Regulation. Under the Regulation, when a Plan acquires an equity interest that
is neither a "publicly offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, the underlying
assets of the entity will be considered "plan assets" unless the entity is an
"operating company" or equity participation in the entity by benefit plan
investors is not "significant".
A "publicly-offered security" is a security that is (a) freely transferable,
(b) part of a class of securities that is owned, immediately subsequent to the
initial offering, by 100 or more investors who were independent of the issuer
and of one another ("Independent Investors") and (c) either is (i) part of a
class of securities registered under section 12(b) or 12(g) of the Exchange Act,
or (ii) sold to the plan as part of an offering of securities to the public
pursuant to an effective registration statement under the Securities Act and the
class of securities of which such security is a part is registered under the
Exchange Act within 120 days (or such later time as may be allowed by the
Commission) after the end of the fiscal year of the issuer during which the
offering of such securities to the public occurred. For purposes of the 100
Independent Investor criterion, each Class of Certificates should be deemed to
be a "class" of securities that would be tested separately from any other
securities that may be issued by the Trust.
Except to the extent otherwise disclosed herein, it is anticipated that each
Class of Class A Certificates will meet the foregoing criteria for treatment as
"publicly-offered securities." No restrictions will be imposed on the transfer
of the Class A-1, Class A-2 or Class A-3 Certificates. Although no assurances
can be given, and no monitoring or other measures will be taken to ensure, that
such condition will be met, the Underwriters expect that the Class A-1, Class
A-2 and Class A-3 Certificates will be held by at least 100 independent
investors at the conclusion of the initial public offering. The Class A
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Act and then will be timely registered under
the Exchange Act except as described below.
The Transferor has applied to the DOL for the Requested Exemption described
herein pursuant to which the Class A-1, Class A-2 and Class A-3 Certificates
would be eligible to be held by employee benefit plan investors meeting the
conditions specified therein as of the effective date of the Requested
Exemption. In the event the Requested Exemption is granted substantially in the
form for which such application was made, the Transferor intends to deregister
the Class A Certificates under the Exchange Act as soon as permitted by law or
not to register such Classes if the Requested Exemption is granted prior to the
date such registration is required. As a result, the Class A-1, Class A-2 or
Class A-3 Certificates may no longer
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be eligible to be held by Benefit Plans that did not meet the eligibility
criteria for the Requested Exemption, even if more than 100 other qualified
investors continued to hold securities of each such Class. Accordingly, Benefit
Plans intending to purchase any Class A Certificates should confirm that they
meet the conditions specified in the Requested Exemption. The Transferor
anticipates that all of the conditions of the Exemption that are within its
control will be satisfied if and when the Exemption is granted. There can be no
assurance that the Exemption will be granted, or the date on which the Exemption
might be granted.
Equity participation in an entity by "benefit plan investors" (i.e., Plans
and other employee benefit plans not subject to ERISA, such as governmental or
foreign plans, as well as entities holding assets deemed to be "plan assets") is
not "significant" on any date on which any series of certificates is issued and
outstanding if, immediately after the most recent acquisition of any equity
interest therein, less than 25% of the value of each class of equity interests
therein (excluding interests held by the related transferor, the trustee or
their affiliates in the case of a trust) is held by benefit plan investors. No
assurance can be given by the Transferor as to whether the value of each Class
of Certificates that might be deemed to be equity interests in the Trust held by
benefit plan investors will be "significant" upon completion of the offering of
any Certificates or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception.
TMCC, on behalf of itself and certain of its affiliates (including the
Transferor), has applied to the DOL for an administrative exemption (the
"Requested Exemption") from certain of the prohibited transaction rules of ERISA
with respect to the initial purchase, the holding and the subsequent resale by
Benefit Plans of certificates similar to the Class A Certificates. There can be
no assurance that the Requested Exemption will be granted or that, if granted,
it will be made retroactive through the date of the issuance of the Class A
Certificates. Should the Requested Exemption be granted, it would apply to the
acquisition, holding and resale by Benefit Plans of the Class A Certificates
provided that specified conditions (including those described below) are met.
The Transferor believes that all conditions of the Requested Exemption other
than those within the control of the investors have or will be met.
For the Requested Exemption to apply to the acquisition by a Benefit Plan of
Class A Certificates, the Class A Certificates would be required to be offered
and sold initially to the public (including Benefit Plans) pursuant to an
underwriting arrangement with one or more underwriters which have received one
of a group of administrative exemptions from certain of the prohibited
transaction rules of ERISA. Such exemptions apply with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of certificates
representing interests in asset backed pass-through trusts that consist of
certain receivables, loans and other obligations that meet the conditions and
requirements of such exemption. The DOL has granted such an administrative
exemption to one of the underwriters (Prohibited Transaction Exemption 90-25;
Exemption Application No. D-8102, 55 Fed. Reg. 42597 (1990), as amended).
Among the other conditions that are required to be satisfied for the
Requested Exemption to apply to the acquisition by a Benefit Plan of the Class A
Certificates are the following (each of which the Transferor believes has been
or will be met in connection with the Class A Certificates):
(i) The acquisition of the Class A Certificates by a Benefit Plan is on
terms (including the price for the Class A Certificates) that are at least
as favorable to the Benefit Plan as they would be in an arm's length
transaction with an unrelated party.
(ii) The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by any other Class of Certificates, and the rights and
interests evidenced by the SUBI are not subordinated to the rights and
interests evidenced by Other SUBI Certificates or UTI Certificates.
(iii) The Class A Certificates acquired by the Benefit Plan have received
a rating at the time of such acquisition that is in one of the three highest
generic rating categories from Standard & Poor's,
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Moody's, Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Fitch
Investors Service, Inc. ("Fitch").
(iv) The sum of all payments made to the Underwriters in connection with
the distribution of the Class A Certificates represents not more than
reasonable compensation for underwriting the Class A Certificates. The sum
of all payments made to and retained by the Transferor pursuant to the sale
of the SUBI to the Trust represents not more than the fair market value of
the interest in the Contracts and Leased Vehicles represented thereby. The
sum of all payments made to and retained by the Servicer with regard to the
SUBI Assets represents not more than reasonable compensation for the
Servicer's services under the Servicing Agreement and reimbursement of the
Servicer's reasonable expenses in connection therewith.
(v) The Revolving Period ends no more than 15 consecutive months from
the Closing Date and (A) all Subsequent Contracts meet the terms and
conditions for eligibility described in this Prospectus, and (B) the
addition of Subsequent Contracts does not result in the reduction of the
ratings on the Class A Certificates received from any of Moody's, Standard &
Poor's, Duff & Phelps or Fitch.
(vi) After the Revolving Period ends, the average Lease Rate for the
Contracts included in the SUBI Assets shall not be more than 200 basis
points greater than the average Lease Rate for the Initial Contracts.
(vii) Principal Collections that are reinvested in Subsequent Contracts
during the Revolving Period are first invested in an eligible lease contract
with the earliest origination date, then in an eligible lease contract with
the next earliest origination date and so forth, beginning with the lease
contracts that have been reserved specifically for such purpose at the time
of the initial allocation of lease contracts to the SUBI, but excluding
those specific lease contracts reserved for allocation to or allocated to
Other SUBIs.
In addition, it is a condition that the Benefit Plan investing in the Class
A Certificates be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
The Requested Exemption would not apply to Benefit Plans sponsored by the
Transferor, the Underwriters, the Trustee, the Servicer, any lessee with respect
to Contracts allocated to the SUBI Assets constituting more than 5% of the
aggregate unamortized principal balance of the SUBI Assets, or any affiliate of
such parties (the "Restricted Group"). As of the date hereof, no lessee with
respect to the Contracts allocated to the SUBI Assets constitutes more than 5%
of the aggregate unamortized principal balance of the Trust (i.e., more than 5%
of the Aggregate Net Investment Value as of the Cutoff Date). Moreover, the
Requested Exemption would provide relief for sales, exchanges or transfers
between a Benefit Plan and the underwriter or sponsor with discretionary
investment authority over such Benefit Plan's assets, from certain
self-dealing/conflict of interest prohibited transactions, only if, among other
requirements, (i) a Benefit Plan's investment in the Class A Certificates does
not exceed 25% of all of the Class A Certificates outstanding at the time of the
acquisition, and (ii) immediately after the acquisition, no more than 25% of the
assets of a Benefit Plan with respect to which the person who has discretionary
authority or renders investment advice are invested in Class A Certificates
representing an interest in a trust containing assets sold or serviced by the
same entity.
Due to the complexities of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is important that the fiduciary
of a Benefit Plan considering the purchase of Class A Certificates consult with
its counsel regarding the grant and applicability of the Requested Exemption and
the prohibited transaction provisions of ERISA and the Code to such investment.
Moreover, each Benefit Plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification, an
investment in the Class A Certificates is appropriate for the Benefit Plan,
taking into account the overall investment policy of the Benefit Plan and the
composition of the Benefit Plan's investment portfolio.
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UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated September , 1997 (the "Underwriting Agreement"), among the
Transferor, TMCC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman
Brothers Inc. and Morgan Stanley & Co. Incorporated (the "Underwriters"), the
Transferor has agreed to sell to the Underwriters, and the Underwriters have
agreed to purchase from the Transferor, severally but not jointly, the following
respective amounts of Class A Certificates:
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3
UNDERWRITER CERTIFICATES CERTIFICATES CERTIFICATES
- -------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................. $ $ $
Lehman Brothers Inc..................................... $ $ $
Morgan Stanley & Co. Incorporated....................... $ $ $
----------- ----------- -----------
Total......................................... $ $ $
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
In the Underwriting Agreement the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Class A Certificates
if any are purchased. The Underwriting Agreement provides that, in the event of
a default by an Underwriter, in certain circumstances the purchase commitments
of the non-defaulting Underwriter may be increased or the Underwriting Agreement
may be terminated.
The Transferor has been advised by the Underwriters that they propose to
offer the Class A Certificates to the public initially at the public offering
prices set forth on the cover page of this Prospectus and to certain dealers at
such prices less a concession of %, % and % of the principal amount per
Class A-1, Class A-2 and Class A-3 Certificate, respectively, and that the
Underwriters and such dealers may allow a discount of %, % and % of
such principal amount per Class A-1, Class A-2 and Class A-3 Certificate,
respectively, on sales to certain other dealers. After the initial public
offering, the public offering price and concessions and discounts to dealers may
be changed by the Underwriters.
The Transferor and TMCC have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
The Class A Certificates are a new issue of securities with no established
trading markets. The Transferor has been advised by the Underwriters that the
Underwriters intend to make a market in each Class of Class A Certificates, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in any Class of Class A Certificates and
any such market-making may be discontinued at any time at the sole discretion of
the Underwriters without notice. Accordingly, no assurance can be given as to
the liquidity of or trading markets for any Class of Class A Certificates.
The Underwriters have advised the Transferor that, pursuant to Regulation M
under the Securities Act, certain persons participating in this offering may
engage in transactions, including stabilizing bids and syndicate covering
transactions, which may have the effect of stabilizing or maintaining the market
price of any Class of Class A Certificates at levels above those that might
otherwise prevail in the open market. A "stabilizing bid" is a bid for or the
purchase of any Class A Certificates on behalf of the Underwriters for the
purpose of fixing or maintaining the price of such Certificates. A "syndicate
covering transaction" is the bid for or the purchase of Class A Certificates on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with this offering.
Stabilizing bids and syndicate covering transactions may have the effect of
causing the price of the Class A Certificates of any Class to be higher than it
might be in the absence thereof. Neither the Transferor nor the Underwriters
makes any representation or prediction as to the direction or magnitude of any
such effect on the prices for the Certificates. Neither the Transferor nor the
Underwriters makes any
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representation that the Underwriters will engage in any such transactions or
that, once commenced, any such transactions will not be discontinued without
notice.
The Trust may, from time to time, invest the funds in the Accounts in
Permitted Investments acquired from one or more of the Underwriters or the
Servicer.
It is expected that delivery of the Class A Certificates will be made
against payment therefor on or about the date specified in the last paragraph of
the cover page of this Prospectus, which is the business day following the
date hereof. Under Rule 15c6-1 of the Commission under the Exchange Act, trades
in the secondary market generally are required to settle in three business days,
unless the parties to any such trade expressly agree otherwise. Accordingly,
purchasers who wish to trade Class A Certificates on the date hereof will be
required, by virtue of the fact that the Class A Certificates initially will
settle business days after the date hereof, to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement.
TMCC has agreed to pay the Underwriters a fee for certain advisory,
analytical and structuring services relating to the Titling Trust.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Transferor or the Underwriters will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
LISTING AND GENERAL INFORMATION FOR NON-U.S. INVESTORS
REPRESENTATIONS OF TRANSFEROR AND UNDERWRITERS
The Transferor, having made all reasonable inquiries, confirms that this
Prospectus contains all information with regard to the Trust and the Class A
Certificates offered hereby that is material in the context of the issuance of
the Class A Certificates, that such information is true and accurate in all
material respects and is not misleading, that the opinions and intentions
expressed herein are honestly held and that there are no other facts the
omission of which makes this Prospectus, including any information incorporated
by reference herein, as a whole, or any of such information or the expression of
any such opinions or intentions misleading. The Transferor accepts
responsibility accordingly.
The Stock Exchange of Hong Kong Limited and the Luxembourg Stock Exchange
take no responsibility for the contents of this Prospectus, make no
representation as to their accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon the
whole or any part of its contents.
In connection with the listing of the Class A Certificates on The Stock
Exchange of Hong Kong Limited, the Underwriters have each represented and agreed
that they have not, directly or indirectly, offered or sold and will not,
directly or indirectly, offer or sell in Hong Kong, by means of any document,
the Class A Certificates other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Ordinance (Cap. 32) of Hong Kong. The Underwriters have further
represented and agreed that, unless they are persons who are permitted to do so
under the securities laws of Hong Kong, they have not issued, or had in their
possession for the purposes of issuing, and they will not issue, or have in
their possession for the purposes of issuing, any advertisement, invitation or
document relating to the Class A Certificates other than with respect to Class A
Certificates intended to be disposed of to persons outside Hong Kong or to
persons whose business involves the acquisition, or disposal or holding of
securities, whether as principal or agent.
This Prospectus includes particulars given in compliance with the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
for the purpose of giving information with
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regard to the Class A Certificates. For the purposes of such Rules, the Class A
Certificates are treated as "selectively marketed debt securities".
Bankers Trust Company Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450,
Luxembourg, has been appointed as paying agent in Luxembourg in relation to the
Class A Certificates. The Transferor will maintain a paying agent in relation to
the Class A Certificates in Luxembourg for so long as any Class A Certificates
are listed on the Luxembourg Stock Exchange.
Each Underwriter will represent that: (i) it has not offered or sold and
will not offer or sell, prior to the date six months after their date of
issuance, any Class A Certificates to persons in the United Kingdom, except to
persons whose activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted in and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Class A Certificates in, from
or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Class A Certificates to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a
person to whom the document can otherwise lawfully be issued or passed on.
No action has been taken or will be taken by the Transferor or the
Underwriters that would permit a public offering of any Class A Certificates in
any country or jurisdiction other than in the United States where action for
that purpose is required. Accordingly, the Class A Certificates may not be
offered or sold, directly or indirectly, and neither this Prospectus nor any
circular, prospectus, form of application, advertisement or other material may
be distributed in or from or published in any country or jurisdiction except
under circumstances that will result in compliance with any applicable laws and
regulations. Persons into whose hands this Prospectus comes are required by the
Transferor and the Underwriters to comply with all applicable laws and
regulations in each country or jurisdiction in which they purchase, sell or
deliver Class A Certificates or have in their possession or distribute this
Prospectus, in all cases at their own expense.
Each Underwriter will represent and agree that it will comply with all
applicable laws and regulations in each jurisdiction in which it purchases,
offers or sells Class A Certificates or possesses or distributes this Prospectus
or any other offering material and will obtain any consent, approval or
permission required by it for the purchase, offer or sale by it of Class A
Certificates under the laws and regulations in force in any jurisdiction to
which it is subject or in which it makes such purchases, offers or sales and
neither the Transferor nor TMCC shall have any responsibility therefor. Each
Underwriter will also represent and agree that it will not offer, sell or
deliver any of the Class A Certificates or distribute any such offering material
in or from any jurisdiction except under circumstances which will result in
compliance with applicable laws and regulations and which will not impose any
obligation on the Transferor, TMCC or the Underwriters.
LISTING
Application will be made for listing the Class A Certificates on the
Luxembourg Stock Exchange and for listing and permission to deal in the Class A
Certificates on The Stock Exchange of Hong Kong Limited. The Trust has requested
that such permission become effective on September 23, 1997. In connection with
the listing application made to the Luxembourg Stock Exchange, the Articles of
Incorporation and Bylaws of the Transferor and the Agreement and a legal notice
relating to the issuance of the Class A Certificates will be deposited prior to
the listing with the Chief Registrar of the District Court of Luxembourg, where
copies thereof may be obtained upon request.
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TOYOTA LEASING, INC.
The Transferor was incorporated in the State of California in April 1997 as
a wholly owned, limited purpose subsidiary of TMCC. The principal executive
offices of the Transferor are located at 19001 South Western Avenue, Torrance,
California 90509 and its telephone number is (310) 618-4000.
DOCUMENTS AVAILABLE FOR COLLECTION AND INSPECTION
Copies of the Articles of Incorporation and Bylaws of the Transferor, the
Agreement, the Titling Trust Agreement, the SUBI Supplement, the Servicing
Supplement and the Indenture will be available for inspection during the term of
the Class A Certificates, and for so long as any Class A Certificates are listed
on the Luxembourg Stock Exchange or The Stock Exchange of Hong Kong Limited,
copies of the reports to Certificateholders to be delivered by the Trustee will
be obtainable at the offices of Bankers Trust Company Luxembourg S.A., 14
Boulevard F.D. Roosevelt, L-2450, Luxembourg and at the offices of Merrill Lynch
& Co. at Asia Pacific Financial, 3 Garden Road, Hong Kong.
AUTHORIZATION
The execution and delivery of the Agreement, the Titling Trust Agreement,
the SUBI Supplement, the Servicing Supplement and the Indenture and the sale of
the Class A Certificates were authorized by the Boards of Directors of the
Transferor and/or TMCC, as appropriate, on July 29, 1997 and August 15, 1997.
NO MATERIAL CHANGE
There has been no material adverse change in the information provided in
this Prospectus with respect to the SUBI, the Contracts, the Leased Vehicles or
the Trust since August 1, 1997 except as otherwise disclosed herein.
LITIGATION
Neither the Trust nor TMCC or any of its subsidiaries are involved in, nor
are there any, legal or arbitration proceedings pending or threatened of which
TMCC is aware, which may have or have had during the 12 months prior to the date
hereof a material effect on the financial position of TMCC and its subsidiaries
on a consolidated basis.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP of Los Angeles, California are independent public
accountants of TMCC.
EUROCLEAR AND CEDEL
The Class A Certificates have been accepted for clearance through the Cedel
Bank and Euroclear systems. The Common Codes and ISIN numbers for the Class A
Certificates are:
<TABLE>
<CAPTION>
CLASS COMMON CODE ISIN
- ----------- ------------------- -----------
<S> <C> <C>
Class A-1
Class A-2
Class A-3
</TABLE>
UNITED STATES LAW
Andrews & Kurth L.L.P., a law firm licensed in the states of California, New
York and Texas, and in the District of Columbia, in the United States, has given
and has not withdrawn its consent to the inclusion in the Registration Statement
and this Prospectus of the descriptions of its opinions regarding matters of
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United States federal income taxation and other matters with respect to the
Class A Certificates in the forms and contexts in which they are included, in
each case effective as of the dates of such documents.
NOTICES
For so long as any Class A Certificates are listed on the Luxembourg Stock
Exchange, notices to Certificateholders will be given by publication in a
leading daily newspaper of general circulation in Luxembourg or, if publication
in Luxembourg is not practical, in Europe. Such publication is expected to be
made in the Luxembourg Wort. For so long as the Class A Certificates are listed
on The Stock Exchange of Hong Kong Limited, notices to Certificateholders will
be given by publication in a leading daily newspaper of general circulation in
the English language in Hong Kong. Such publication is expected to be made in
the South China Morning Post. In addition, if Definitive Certificates are
issued, such notices will be mailed to the addresses of holders thereof at the
addresses therefor as they appear in the register maintained by the Trustee
prior to such mailing. Such notices will be deemed to have been given on the
date of such publication or mailing.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Class A Certificates in Canada is being made only on
a private placement basis exempt from the requirement that the Transferor, on
behalf of the Trust, prepare and file a prospectus with the securities
regulatory authorities in each province where trades of the Class A Certificates
are effected. Accordingly, any resale of the Class A Certificates in Canada must
be made in accordance with applicable securities laws which will vary depending
on the relevant jurisdiction, and which may require resales to be made in
accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Class A
Certificates.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Class A Certificates in Canada who receives a purchase
confirmation will be deemed to represent to the Transferor, the Trust, the
Trustee, TMCC and the dealer from whom such purchase confirmation is received
that (i) such purchaser is entitled under applicable provincial securities laws
to purchase such Class A Certificates without the benefit of a prospectus
qualified under such securities laws, (ii) where required by law, that such
purchaser is purchasing as principal and not as agent, and (iii) such purchaser
has reviewed the text above under "Resale Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT (ONTARIO PURCHASERS)
The securities being offered are those of foreign issuers and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liabilities provisions of the U.S. federal securities laws. All of the
issuer's directors and officers as well as the experts named herein may be
located outside of Canada and, as a result, it may not be possible for Ontario
purchasers to effect service of process within Canada upon the issuer or such
persons. All or a substantial portion of the assets of the issuer and such
persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such issuer or persons
outside of Canada. Following a recent decision of the U.S. Supreme Court, it is
possible that Ontario purchasers will not be able to rely upon the remedies set
out in Section 12(2) of the Securities Act if the securities are being offered
under a U.S. private placement memorandum.
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NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Class A Certificates to whom the SECURITIES ACT (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Class A Certificates acquired by such purchaser pursuant to this offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from the
Transferor. Only one such report must be filed in respect of Class A
Certificates acquired on the same date and under the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Class A Certificates should consult their own legal
and tax advisers with respect to the tax consequences of an investment in the
Class A Certificates in their particular circumstances and with respect to the
eligibility of the Class A Certificates for investment by the purchaser under
relevant Canadian legislation.
RATINGS OF THE CLASS A CERTIFICATES
It is a condition of issuance that each of Moody's and Standard & Poor's
rates each Class of Class A Certificates in its highest rating category. The
ratings of the Class A Certificates will be based primarily upon the value of
the Initial Contracts, the Reserve Fund and the terms of the Transferor Interest
and the Class B Certificates. There is no assurance that any such rating will
not be lowered or withdrawn by the assigning Rating Agency if, in its judgment,
circumstances so warrant. In the event that a rating with respect to any Class
of Class A Certificates is qualified, reduced or withdrawn, no person or entity
will be obligated to provide any additional credit enhancement with respect to
such Class of Class A Certificates.
The ratings of the Class A Certificates should be evaluated independently
from similar ratings on other types of securities. A rating is not a
recommendation to buy, sell or hold the related Class A Certificates, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The ratings of each Class of Class A Certificates addresses
the likelihood of the payment of principal of and interest on such Certificates
pursuant to their terms.
There can be no assurance as to whether any rating agency other than Moody's
and Standard & Poor's will rate the Class A Certificates, or, if one does, what
rating will be assigned by such other rating agency. A rating on any Class of
Class A Certificates by another rating agency, if assigned at all, may be lower
than the ratings assigned to such Class A Certificates by each of Moody's and
Standard & Poor's.
LEGAL MATTERS
Certain legal matters, including certain federal income tax matters, with
respect to the Class A Certificates have been passed upon for TMCC and the
Transferor by Andrews & Kurth L.L.P., Los Angeles, California. Brown & Wood LLP,
New York, New York will act as counsel for the Underwriters and has performed
certain legal services for TMCC in connection with the Titling Trust.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of Toyota Motor Credit Corporation for the year ended
September 30, 1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of that firm as
experts in auditing and accounting.
With respect to the unaudited consolidated financial information of Toyota
Motor Credit Corporation for the three-month periods ended December 31, 1996 and
1995, the six-month periods ended March 31, 1997 and 196, and the nine-month
periods ended June 30, 1997 and 1996 incorporated by reference in this
Prospectus, Price Waterhouse LLP reported that they have applied limited
procedures in accordance with
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professional standards for a review of such information. However, their separate
reports dated February 12, 1997, May 12, 1997 and August 12, 1997 incorporated
by reference herein state that they did not audit and they do not state an
opinion on that unaudited consolidated financial information. Price Waterhouse
LLP has not carried out any significant additional audit tests beyond those
which would have been necessary if their reports had not been included.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Price Waterhouse LLP is not subject to the liability provisions of section 11 of
the Securities Act for their reports on the unaudited consolidated financial
information because those reports are not a "report" or a "part" of the
registration statement prepared or certified by Price Waterhouse LLP within the
meaning of section 7 and 11 of the Securities Act.
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INDEX OF CAPITALIZED TERMS
<TABLE>
<S> <C>
Accelerated Principal Distribution Amount........................................ 10
Accounts......................................................................... 60
Additional Loss Amounts.......................................................... 68
Additional Loss Contract......................................................... 63
Adjusted Certificate Balance..................................................... 10
Advance.......................................................................... 18
Agency Agreement................................................................. 70
Aggregate Net Investment Value................................................... 11
Aggregate Net Losses............................................................. 62
Agreement........................................................................ i
Amortization Date................................................................ 7
Amortization Period.............................................................. 10
Available Interest............................................................... 49
Benefit Plans.................................................................... 92
Business Day..................................................................... 4
Capped Contingent and Excess Liability Premiums.................................. 50
Capped Origination Trust Administrative Expenses................................. 50
Capped Titling Trust Administrative Expenses..................................... 50
Capped Trust Administrative Expenses............................................. 50
Cedel Bank....................................................................... 12
Cedel Bank Participants.......................................................... 58
Certificate Balance.............................................................. 5
Certificate Distribution Amount.................................................. 54
Certificate Factor............................................................... 43
Certificate Owners............................................................... 12
Certificate Payment Date......................................................... 6
Certificate Principal Loss Amounts............................................... 5, 48
Certificate Rates................................................................ 6
Certificateholders' Account...................................................... 61
Certificateholders............................................................... ii
Certificates..................................................................... i
Charge-off Rate.................................................................. 62
Charged-off Amount............................................................... 45
Charged-off Contract............................................................. 45
Claims........................................................................... 70
Class A Certificate Balance...................................................... 5
Class A Certificates............................................................. ii
Class A Interest Carryover Shortfall............................................. 49
Class A-1 Certificates........................................................... ii
Class A-1 Rate................................................................... 6
Class A-2 Rate................................................................... 6
Class A-3 Rate................................................................... 6
Class B Available Principal...................................................... 50
Class B Certificates............................................................. ii
Class B Interest Carryover Shortfall............................................. 49
Class B Interest Reserve Amount.................................................. 62
Class B Rate..................................................................... 6
Class Certificate Balance........................................................ 5
Closing Date..................................................................... 4
</TABLE>
102
<PAGE>
<TABLE>
<S> <C>
Code............................................................................. 19, 88
Collection Period................................................................ 9
Collections...................................................................... 9
Commission....................................................................... iii
Contingent and Excess Liability Insurance Policies............................... 64
Contract Rights.................................................................. 83
Contracts........................................................................ 2
Cooperative...................................................................... 58
Current Contract................................................................. 63
Cutoff Date...................................................................... 2
Dealers.......................................................................... 1
Deferral Fee..................................................................... 32
Definitive Certificates.......................................................... 59
Delinquency Percentage........................................................... 62
Deposit Date..................................................................... 14
Determination Date............................................................... 46
Discounted Contract.............................................................. 9, 11
Discounted Principal Balance..................................................... 11
DOL.............................................................................. 92
DTC.............................................................................. 12
DTC Participants................................................................. 56
Early Amortization Event......................................................... 52
ERISA............................................................................ 19, 92
Euroclear........................................................................ 12, 61
Euroclear Operator............................................................... 58
Euroclear Participants........................................................... 58
Events of Servicing Termination.................................................. 76
Excess Amounts................................................................... 50
Exchange Act..................................................................... iii
First Principal Monthly Allocation Date.......................................... 7
Full Term Ratio.................................................................. 23
Indenture........................................................................ 78
Indenture Trustee................................................................ 78
Indirect DTC Participants........................................................ 57
Initial Certificate Balance...................................................... 4
Initial Class A Certificate Balance.............................................. 4
Initial Class A-1 Certificate Balance............................................ 4
Initial Class A-2 Certificate Balance............................................ 4
Initial Class A-3 Certificate Balance............................................ 4
Initial Class B Certificate Balance.............................................. 4
Initial Contracts................................................................ 2
Initial Deposit.................................................................. 16
Initial Leased Vehicles.......................................................... 2
Insolvency Event................................................................. 26
Insolvency Laws.................................................................. 26
Interest Collections............................................................. 9
Interest Period.................................................................. 7
Investor Interest................................................................ 4
Investor Percentage.............................................................. 10
IRS.............................................................................. 88
Lease Rate....................................................................... 13
</TABLE>
103
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<TABLE>
<S> <C>
Leased Vehicles.................................................................. 2
Lemon Law........................................................................ 86
Liquidated Contract.............................................................. 63
Liquidation Expenses............................................................. 15
Liquidation Proceeds............................................................. 15
Loss Amounts..................................................................... 20, 45
Matured Contract................................................................. 11
Matured Leased Vehicle Expenses.................................................. 15
Matured Leased Vehicle Inventory................................................. 11
Matured Leased Vehicle Proceeds.................................................. 14
Maturity......................................................................... 78
Maturity Advance................................................................. 18
Maturity Date.................................................................... 36
Monthly Allocation Date.......................................................... ii
Monthly Payment.................................................................. 13
Monthly Payment Events........................................................... 12
Moody's.......................................................................... 19
Net Insurance Proceeds........................................................... 61
Net Liquidation Proceeds......................................................... 9
Net Matured Leased Vehicle Proceeds.............................................. 16
Net Repossessed Vehicle Proceeds................................................. 9
Nonrecoverable Advance........................................................... 72
OID.............................................................................. 89
Other SUBI Assets................................................................ 82
Other SUBI Certificates.......................................................... 29
Other SUBIs...................................................................... 1
Other SUBI Supplement............................................................ 68
Outstanding Principal Balance.................................................... 13
Payment Ahead.................................................................... 14
Payoff Amount.................................................................... 36
Permitted Investments............................................................ 64
Prepayment....................................................................... 60
Principal Allocation............................................................. 10
Principal Collections............................................................ 9
Rating Agencies.................................................................. 19
Realized Value................................................................... 36
Reallocation Deposit Amount...................................................... 45
Reallocation Payment............................................................. 41
Record Date...................................................................... 4
Registration Statement........................................................... iii
Repossessed Vehicle Expenses..................................................... 15
Repossessed Vehicle Proceeds..................................................... 15
Requested Exemption.............................................................. 93
Required Amount.................................................................. 16
Required Rate.................................................................... 64
Reserve Fund..................................................................... 16
Residual Value................................................................... 13
Residual Value Loss Amount....................................................... 20
Residual Value Surplus........................................................... 16
Residual Value Test.............................................................. 63
Revolving Period................................................................. 8
</TABLE>
104
<PAGE>
<TABLE>
<S> <C>
Schedule of Contracts and Leased Vehicles........................................ 40
Securities Act................................................................... iii
Security Deposits................................................................ 73
Servicer......................................................................... 3
Servicer's Certificate........................................................... 75
Servicing Agreement.............................................................. 3
Servicing Fee.................................................................... 18
Servicing Supplement............................................................. 3
Specified Reserve Fund Balance................................................... 62
Standard & Poor's................................................................ 19
Stated Maturity Date............................................................. i, 6
SUBI............................................................................. i, 1
SUBI Supplement.................................................................. 28
SUBI Assets...................................................................... i, 2
SUBI Certificate................................................................. 13
SUBI Collection Account.......................................................... 14, 60
Subsequent Contracts............................................................. 2
Subsequent Leased Vehicles....................................................... 2
Targeted Maturity Date........................................................... 6
Titling Trust.................................................................... i
Titling Trust Agreement.......................................................... 2
Titling Trust Assets............................................................. i, 30
Titling Trustee.................................................................. 2
TMA.............................................................................. 3
TMC.............................................................................. 3
i, iii,
TMCC............................................................................. 31
TMCC Demand Note................................................................. 11
TMS.............................................................................. 3
Transfer Date.................................................................... 8
Transferor....................................................................... i
Transferor Amounts............................................................... 46
Transferor Interest.............................................................. ii, 1
Transferor Percentage............................................................ 45
Trust............................................................................ i
Trust Administrative Expenses.................................................... 55
Trust Agent...................................................................... 2, 70
Trust Indenture Act.............................................................. 78
Trust States..................................................................... 1, 13, 23
Trustee.......................................................................... i
U.S. Bank........................................................................ 1
Unallocated Principal Collections................................................ 46
Uncapped Titling Trust Administrative Expenses................................... 50
Uncapped Trust Administrative Expenses........................................... 50
Underwriters..................................................................... 95
Underwriting Agreement........................................................... 95
UTI.............................................................................. 1
UTI Assets....................................................................... 82
UTI Certificates................................................................. 29
Voting Interests................................................................. 53
</TABLE>
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ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A-1
Certificates (the "Global Securities") will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
DTC, Cedel Bank or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel Bank and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement). Secondary
market trading between investors holding Global Securities through DTC will be
conducted according to the rules and procedure applicable to U.S. corporate debt
obligations and prior asset-backed securities issues. Secondary cross-market
trading between Cedel Bank or Euroclear and DTC Participants holding securities
will be effected on a delivery-against-payment basis through the Relevant
Depositaries of Cedel Bank and Euroclear (in such capacity) and as DTC
Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel Bank and Euroclear will
hold positions on behalf of their participants through their Depositaries, which
in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
DTC settlement practice. Investor securities custody accounts will be credited
with their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel Bank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior
asset-backed securities issues in same-day funds.
TRADING BETWEEN CEDEL BANK AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Bank Participants or Euroclear Participants will be
settled using the Procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND CEDEL BANK OR EUROCLEAR PARTICIPANTS. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Bank Participant or a Euroclear Participant, the
purchaser will send instructions to Cedel Bank or Euroclear through a Cedel
A-1
<PAGE>
Bank Participant or Euroclear Participant at least one business day prior to
settlement. Cedel Bank or Euroclear will instruct the respective Depositary, as
the case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date, on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
Payment will then be made by the respective Depositary to the DTC Participant's
account against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Cedel Bank Participant's or Euroclear Participant's account. The securities
credit will appear the next day (European time) and the cash debt will be
back-valued to, and the interest on the Global Securities will accrue from, the
value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedel Bank or Euroclear cash debt will be valued instead as of
the actual settlement date.
Cedel Bank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel Bank or Euroclear. Under
this approach, they may take on credit exposure to Cedel Bank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedel Bank or Euroclear has extended a line of credit
to them, Cedel Bank Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedel Bank Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they clear the overdraft when the Global Securities are credited
to their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges, although this result will depend on each
Cedel Bank Participants or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Cedel Bank Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL BANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Cedel Bank Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel Bank or Euroclear through a Cedel Bank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedel Bank or Euroclear will instruct the Relevant Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment to and excluding the settlement date
on the basis of the actual number of days in such accrual period and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The payment will then be reflected in the account of the
Cedel Bank Participant or Euroclear Participant the following day, and receipt
of the cash proceeds in the Cedel Bank Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Cedel Bank Participant or
Euroclear Participant have a line of credit with its respective clearing system
and elect
A-2
<PAGE>
to be in debt in anticipation of receipt of the sale proceeds in its account,
the back valuation will extinguish any overdraft incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel Bank Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Cedel Bank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Bank Participants
or Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing though Cedel Bank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel Bank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel Bank or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Bank Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel
Bank or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are Non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons residing in a country that has a tax treaty with
the United States can obtain an exemption or reduced tax rate depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding tax
will be imposed at that rate unless the filer alternatively files Form W-8. Form
1001 may be filed by the Certificate Owners or their agents.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
A-3
<PAGE>
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person though whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years,
and Form 4224 is effective for one calendar year.
As used in the foregoing discussion, the term "U.S. Person" means (i) a
citizen or resident of the United States, (ii) a corporation or partnership
organized in or under the laws of the United States or any political subdivision
thereof, (iii) an estate that is subject to United States federal income tax,
regardless of the source of its income or (iv) a trust if (a) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (b) one or more United States fiduciaries have the authority to
control all substantial decisions of the Trust. The term "Non-U.S. Person" means
any person who is not a U.S. Person. This summary does not deal with all aspects
of U.S. federal income tax withholding that may be relevant to foreign holders
of Global Securities. Investors are advised to consult their own tax advisors
for specific tax advice concerning their holding and disposing of Global
Securities.
A-4
<PAGE>
PRINCIPAL OFFICES OF THE TRANSFEROR
Toyota Leasing, Inc.
19001 South Western Avenue
Torrance, California 90509
United States
JOINT BOOKRUNNERS
Merrill Lynch & Co. Lehman Brothers Morgan Stanley Dean Witter
(GLOBAL COORDINATOR)
TRUSTEE, REGISTRAR AND PAYING AGENT (U.S.)
U.S. Bank National Association
One Illinois Center
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
United States
ADDITIONAL PAYING AGENT
Bankers Trust Company Luxembourg S.A.
14 Boulevard F.D. Roosevelt
L-2450, Luxembourg
<TABLE>
<S> <C>
LUXEMBOURG LISTING AGENT HONG KONG LISTING AGENT
Bankers Trust Company Luxembourg S.A. Clifford Chance
14 Boulevard F.D. Roosevelt 30th Floor, Jardine House
L-2450, Luxembourg One Connaught Place
Hong Kong
</TABLE>
<TABLE>
<S> <C>
LEGAL ADVISER INDEPENDENT PUBLIC ACCOUNTANTS
(as to United States law) OF THE COMPANY
Andrews & Kurth L.L.P. Price Waterhouse LLP
601 S. Figueroa, Suite 4200 400 South Hope Street, 22nd Floor
Los Angeles, California 90017 Los Angeles, California 90071-2889
United States United States
</TABLE>
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE TRANSFEROR SINCE SUCH DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information................................ iii
Documents Incorporated by Reference.................. iii
Reports to Certificateholders........................ iv
Summary.............................................. 1
Risk Factors......................................... 20
The Trust and the SUBI............................... 27
The Titling Trust.................................... 28
Use of Proceeds...................................... 30
The Transferor....................................... 30
TMCC................................................. 31
TMCC's Leasing Operations............................ 31
The Contracts........................................ 35
Maturity, Prepayment and Yield Considerations........ 42
Class A Certificate Factors and Trading Information;
Reports to Class A Certificateholders.............. 43
Description of the Certificates...................... 43
Assets of the Trust.................................. 60
Additional Document Provisions....................... 65
Certain Legal Aspects of the Titling Trust........... 82
Certain Legal Aspects of the Contracts and the Leased
Vehicles........................................... 84
Material Federal Income Tax Considerations........... 88
ERISA Considerations................................. 92
Underwriting......................................... 95
Listing and General Information for Non-U.S.
Investors.......................................... 96
Notice to Canadian Residents......................... 99
Ratings of the Class A Certificates.................. 100
Legal Matters........................................ 100
Experts.............................................. 100
Index of Capitalized Terms........................... 102
Global Clearance, Settlement and Tax Documentation
Procedures......................................... A-1
</TABLE>
TOYOTA AUTO LEASE TRUST 1997-A
$410,000,000 % Auto Lease
Asset Backed Certificates, Class A-1
$650,000,000 % Auto Lease
Asset Backed Certificates, Class A-2
$72,750,000 % Auto Lease
Asset Backed Certificates, Class A-3
TOYOTA LEASING, INC.
TRANSFEROR
TOYOTA MOTOR CREDIT CORPORATION
SERVICER
-------------------
PROSPECTUS
-------------------
JOINT BOOKRUNNERS
MERRILL LYNCH & CO.
(GLOBAL COORDINATOR)
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
, 1997
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND PAYMENT.
Expenses in connection with the offering of the Class A Certificates being
registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 347,272.73
Legal fees and expenses....................................... 617,500.00
Accounting fees and expenses.................................. 90,000.00
Blue sky fees and expenses.................................... 10,000.00
Rating agency fees............................................ 203,181.00
Trustee fees and expenses..................................... 45,000.00
Printing...................................................... 75,000.00
Miscellaneous................................................. 62,046.27
------------
Total..................................................... $1,450,000.00
------------
------------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Toyota Motor Credit Corporation ("TMCC") and Toyota Leasing, Inc. ("TLI")
were incorporated as California corporations. Section 317 of the California
Corporations Code authorizes a corporation to indemnify any person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the corporation to procure a judgment in its favor)
by reason of the fact that such person is or was an officer or director of the
corporation, against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with such proceeding if such
person acted in good faith and in a manner such person reasonably believed to be
in the best interests of the corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of such person was
unlawful.
Each of TMCC's and TLI's Bylaws authorize TMCC and the Transferor to
indemnify their officers and directors to the maximum extent permitted by the
California Corporations Code. TMCC has entered into indemnification agreements
with its officers and directors to indemnify such officers and directors to the
maximum extent permitted by the California Corporations Code.
This item is not applicable to the other Registrants.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. Exhibits:
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Articles of Incorporation of Toyota Leasing, Inc.
3.2 Bylaws of Toyota Leasing, Inc.
4.1 Form of Securitization Trust Agreement between Toyota Leasing, Inc. and First Bank
National Association ("First Bank")+, as Trustee (including forms of Class A
Certificates).
5.1 Opinion of Andrews & Kurth L.L.P. with respect to legality.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
8.1 Opinion of Andrews & Kurth L.L.P. with respect to federal income tax matters.
10.1 Amended and Restated Trust and Servicing Agreement among Toyota Motor Credit
Corporation ("TMCC"), TMTT, Inc., as Trustee and First Bank, as Trust Agent, dated
as of October 1, 1996.**
10.2 UTI Supplement to Amended and Restated Trust and Servicing Agreement among TMCC,
TMTT, Inc., as Trustee, and First Bank, as Trust Agent, dated October 1, 1996
(including form of UTI Certificate).**
10.3 Form of SUBI Supplement 1997-A to Amended and Restated Trust Agreement among TMCC,
TMTT, Inc., as Trustee and U.S. Bank National Association (f/k/a First Bank
National Association, "U.S. Bank")+, as Trust Agent (including form of SUBI
Certificate).**
10.4 Form of 1997-A SUBI Servicing Supplement to Amended and Restated Trust and Servicing
Agreement between TMTT, Inc., TMCC and Toyota Leasing, Inc.**
10.5 Form of SUBI Certificate Purchase and Sale Agreement between TMCC and Toyota Leasing,
Inc.**
10.6 Form of Indenture with respect to TMCC Demand Notes between TMCC and U.S. Bank, as
Trustee.
15.1 Awareness Letter of Price Waterhouse LLP.**
23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 5.1).
23.2 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 8.1).
23.3 Consent of Price Waterhouse LLP.**
24.1 Powers of Attorney.**
25.1 Statement of Eligibility on Form T-1 of U.S. Bank.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ First Bank changed its name to U.S. Bank National Association following its
merger therewith in July 1997.
b. Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake as follows:
(a) To provide to the Underwriters at the closing date specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriters to provide prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question
II-2
<PAGE>
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(c) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment that contains a form of prospectus will
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to be
the initial BONA FIDE offering thereof.
(e) TMCC, one of the undersigned registrants, hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of such registrant's annual report pursuant to Section 13(a) and 15(d) of
the Securities Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(f) The undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (f)(1)(i) and (f)(1)(ii) do not apply if the
registration statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Torrance and State of California, on the 28th day of August, 1997.
TOYOTA AUTO LEASE TRUST 1997-A
By: TOYOTA LEASING, INC., solely as
originator of Toyota Auto Lease
Trust 1997-A
<TABLE>
<S> <C> <C>
By: /s/ GREGORY WILLIS
-----------------------------------------
Gregory Willis,
DIRECTOR AND PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ GREGORY WILLIS Director and Principal
- ------------------------------ Executive Officer of August 28, 1997
Gregory Willis Toyota Leasing, Inc.
Director and Principal
/s/ NOBU SHIGEMI* Financial Officer and
- ------------------------------ Principal Accounting August 28, 1997
Nobu Shigemi Officer of Toyota
Leasing, Inc.
/s/ WILLIAM LATHAM, III*
- ------------------------------ Director of Toyota August 28, 1997
William Latham, III Leasing, Inc.
*By: /s/ GREGORY WILLIS
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 3 to Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Torrance and State of California, on the 28th day of August, 1997.
<TABLE>
<S> <C> <C>
TOYOTA LEASING, INC.
By: /s/ GREGORY WILLIS
-----------------------------------------
Gregory Willis,
DIRECTOR AND PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ GREGORY WILLIS Director and Principal
- ------------------------------ Executive Officer of August 28, 1997
Gregory Willis Toyota Leasing, Inc.
Director and Principal
/s/ NOBU SHIGEMI* Financial Officer and
- ------------------------------ Principal Accounting August 28, 1997
Nobu Shigemi Officer of Toyota
Leasing, Inc.
/s/ WILLIAM LATHAM, III*
- ------------------------------ Director of Toyota August 28, 1997
William Latham, III Leasing, Inc.
*By: /s/ GREGORY WILLIS
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of
Torrance and State of California, on the 28th day of August, 1997.
<TABLE>
<S> <C> <C>
TOYOTA MOTOR CREDIT CORPORATION, solely as
transferor of the SUBI to the Transferor and
issuer of the TMCC Demand Notes
By: /s/ GEORGE BORST
-----------------------------------------
George Borst
SENIOR VICE PRESIDENT AND GENERAL MANAGER
TOYOTA LEASE TRUST
By: TOYOTA MOTOR CREDIT
CORPORATION, solely as originator
of the Toyota Lease Trust
By: /s/ GEORGE BORST
-----------------------------------------
George Borst
SENIOR VICE PRESIDENT AND GENERAL MANAGER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Director, Senior Vice
/s/ GEORGE BORST President and General
- ------------------------------ Manager of TMCC August 28, 1997
George Borst (principal executive
officer)
/s/ ROBERT PITTS*
- ------------------------------ Director and Secretary of August 28, 1997
Robert Pitts TMCC
Director, Senior Vice
/s/ NOBU SHIGEMI* President and Treasurer
- ------------------------------ of TMCC (principal August 28, 1997
Nobu Shigemi financial officer)
/s/ DOUGLAS WEST*
- ------------------------------ Director of TMCC August 28, 1997
Douglas West
Vice President of Finance
/s/ GREGORY WILLIS and Administration
- ------------------------------ (principal accounting August 28, 1997
Gregory Willis officer)
*By: /s/ GREGORY WILLIS
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT DESCRIPTION NUMBERED PAGE
- ----------- ---------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
1.1 Form of Underwriting Agreement.*........................................................
3.1 Articles of Incorporation of Toyota Leasing, Inc........................................
3.2 Bylaws of Toyota Leasing, Inc...........................................................
4.1 Form of Securitization Trust Agreement between Toyota Leasing, Inc. and First Bank
National Association ("First Bank")+, as Trustee (including forms of Class A
Certificates).........................................................................
5.1 Opinion of Andrews & Kurth L.L.P. with respect to legality..............................
8.1 Opinion of Andrews & Kurth L.L.P. with respect to federal income tax matters............
10.1 Amended and Restated Trust and Servicing Agreement among Toyota Motor Credit Corporation
("TMCC"), TMTT, Inc., as Trustee and First Bank, as Trust Agent, dated as of October
1, 1996.**............................................................................
10.2 UTI Supplement to Amended and Restated Trust and Servicing Agreement among TMCC, TMTT,
Inc., as Trustee, and First Bank, as Trust Agent, dated October 1, 1996 (including
form of UTI Certificate).**...........................................................
10.3 Form of SUBI Supplement 1997-A to Amended and Restated Trust Agreement among TMCC, TMTT,
Inc., as Trustee and U.S. Bank National Association (f/k/a First Bank National
Association, "U.S. Bank")+, as Trust Agent (including form of SUBI Certificate).**....
10.4 Form of 1997-A SUBI Servicing Supplement to Amended and Restated Trust and Servicing
Agreement between TMTT, Inc., TMCC and Toyota Leasing, Inc.**.........................
10.5 Form of SUBI Certificate Purchase and Sale Agreement between TMCC and Toyota Leasing,
Inc.**................................................................................
10.6 Form of Indenture with respect to TMCC Demand Notes between TMCC and U.S. Bank, as
Trustee...............................................................................
15.1 Awareness Letter of Price Waterhouse LLP.**.............................................
23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 5.1).....................
23.2 Consent of Andrews & Kurth L.L.P. (included as part of Exhibit 8.1).....................
23.3 Consent of Price Waterhouse LLP.**......................................................
24.1 Powers of Attorney.**...................................................................
25.1 Statement of Eligibility on Form T-1 of U.S. Bank.......................................
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ First Bank changed its name to U.S. Bank National Association following its
merger therewith in July 1997.
II-7
<PAGE>
ARTICLES OF INCORPORATION
OF
TOYOTA LEASING, INC.
-------------------------
ARTICLE I
NAME
The name of the corporation is Toyota Leasing, Inc. Toyota Leasing, Inc.
is referred to throughout these articles of incorporation as the "Corporation".
ARTICLE II
The existence of the corporation is perpetual.
ARTICLE III
PURPOSES
(a) Subject to paragraph (b) below, the purpose of the Corporation is to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of California other than the banking business,
the trust company business or the practice of a profession that is permitted to
be incorporated under the California Corporations Code.
(b) Notwithstanding paragraph (a) above, the purpose of the Corporation is
limited to the following purposes, and activities incident to and necessary or
convenient to accomplish the following purposes: (i) to acquire from time to
time from Toyota Motor Credit Corporation ("TMCC"), all right, title and
interest in and to certificates ("SUBI Certificates") evidencing units of
beneficial interest in segregated portfolios of assets of Toyota Lease Trust, a
Delaware business trust, including lease contracts arising out of or relating to
the lease of new or used motor vehicles or industrial equipment, moneys due
thereunder, ownership or security interests in the vehicles or industrial
equipment leased thereby, proceeds from claims on insurance policies related
thereto and related rights (collectively, "SUBI Assets"); (ii) to acquire, own,
hold, service, sell, assign, pledge and otherwise deal with the SUBI
Certificates and SUBI Assets, related insurance policies, related agreements
with TMCC and any proceeds or further rights associated with any of the
foregoing; (iii) to sell, assign, transfer, convey and/or pledge all or any part
of each such SUBI Certificate to one or more trusts or other persons or legal
entities pursuant to one or more Securitization Trust
1
<PAGE>
Agreements, Indentures or similar agreements (the "Agreements") to be entered
into by and among TMCC, as servicer, the Corporation and each other pledgee or
transferee named therein (the "transferees"); (iv) to sell any series or class
of asset-backed certificates or other securities issued by or evidencing
interests in the transferees or obligations of the transferees or the
Corporation under the related Agreements ("Securities"); (v) to hold and enjoy
all of the rights and privileges of any Securities so issued under the related
Agreements; (vi) to perform its obligations under the Agreements; and (vii) to
engage in any activity and to exercise any powers permitted to corporations
under the laws of the State of California that are related or incidental to the
foregoing and necessary, convenient or advisable to accomplish the foregoing.
So long as any outstanding debt of the Corporation or Securities are rated
by any nationally recognized statistical rating agency, the Corporation shall
not issue unsecured notes or otherwise borrow money unless (A) the Corporation
has made a written request to the related nationally recognized rating agency to
issue unsecured notes or incur borrowings and such notes or borrowings are rated
by the related nationally recognized rating agency the same as or higher than
the rating afforded any outstanding rated debt or Securities, or (B) such notes
or borrowings (1) are fully subordinated (and which shall provide for payment
only after payment in respect of all outstanding rated debt and/or Securities)
or are nonrecourse against any assets of the Corporation other than the assets
pledged to secure such notes or borrowings, (2) do not constitute a claim
against the Corporation in the event such assets are insufficient to pay such
notes or borrowings, and (3) where such notes or borrowings are secured by the
rated debt or Securities, are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt and/or
Securities) to such rated debt or Securities.
ARTICLE IV
SERVICE OF PROCESS
The name and address of the Corporation's initial agent for service of
process are:
Alan F. Cohen, Esq.
19001 South Western Avenue
Torrance, California 90509
ARTICLE V
CAPITAL STOCK
The Corporation shall have one class of stock designated as Common Stock,
and the total number of shares of stock of that class that the Corporation shall
have authority to issue is 1,000
2
<PAGE>
shares of $100.00 par value stock. No shareholder shall have any preemptive
right to acquire additional shares of the Corporation.
ARTICLE VI
LIMITATIONS ON CERTAIN ACTIONS BY THE CORPORATION
Notwithstanding any other provision of these Articles and any provision of
law, the Corporation shall not do any of the following:
(a) Engage in any business or activity other than as set forth in
Article III hereof;
or
(b) without the unanimous affirmative vote of the members of the
Board of Directors of the Corporation, merge or consolidate with any other
corporation, company or entity or sell all or substantially all of its assets or
acquire all or substantially all of the assets or capital stock or other
ownership interest of any other corporation, company or equity, provided that
such restrictions shall not limit the acquisition of SUBI Certificates from TMCC
or the ability of the Corporation to sell, assign, transfer, convey and/or
pledge all or any part of any SUBI Certificate in accordance with the terms of
Article III(b) hereof, on which there shall be no such restriction.
ARTICLE VII
INTERNAL AFFAIRS
The Corporation shall insure at all times that (a) it maintains separate
corporation records and books of account from those of TMCC's, and (b) except as
permitted by contract between the Corporation and TMCC with respect to deposits
in certain accounts of collections in respect of the assets securing a SUBI
Certificate pursuant to an agreement between the Corporation and TMCC, none of
the Corporation's assets will be commingled with those of TMCC or any of their
affiliates.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles in any manner now or hereafter provided
herein or by statute and all rights, preferences and privileges conferred by
these Articles upon shareholders, directors or any other person are granted
subject to such right; provided, however, that the Corporation shall not amend,
alter, change or repeal any provision of Articles III, VI, VII, VIII and IX (the
"Restricted Articles") without the unanimous affirmative vote of the members of
the Board of Directors and provided,
3
<PAGE>
further, that the Corporation shall not amend or change any article so as to be
inconsistent with the Restricted Articles.
ARTICLE IX
LIABILITY OF DIRECTORS; INDEMNIFICATION
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) for breach of duty
to the Corporation and its shareholders through bylaw provisions, agreements
with agents, vote of shareholders or disinterested directors, or otherwise, in
excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject only to the applicable limits set forth in
Section 204 of the California Corporations Code.
Any amendment, repeal or modification of any provision of this Article IX
shall not adversely affect any right or protection of an agent of this
corporation existing at the time of such amendment, repeal or modification.
IN WITNESS WHEREOF, I have set my hand to be affixed to these Articles of
Incorporation, as of this 22nd day of April, 1997.
By: /s/ Daniel F. Passage
------------------------------
Name: Daniel F. Passage
Title: Incorporator
4
<PAGE>
B Y L A W S
TOYOTA LEASING, INC.
A CALIFORNIA CORPORATION
<PAGE>
INDEX
ARTICLE I
SHAREHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Section 1. PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . -1-
Section 2. ANNUAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . -1-
Section 3. SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . -1-
Section 4. NOTICE OF MEETINGS . . . . . . . . . . . . . . . . . . . . -1-
Section 5. CONSENT TO SHAREHOLDERS' MEETINGS. . . . . . . . . . . . . -2-
Section 6. QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 7. VOTING RIGHTS, CUMULATIVE VOTING . . . . . . . . . . . . . -2-
Section 8. PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . -2-
ARTICLE II
DIRECTORS; MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
Section 1. POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
Section 2. NUMBER AND QUALIFICATION . . . . . . . . . . . . . . . . . -3-
Section 3. ELECTION AND TENURE OF OFFICE. . . . . . . . . . . . . . . -3-
Section 4. VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . -3-
Section 5. REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . -4-
Section 6. PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . -4-
Section 7. ORGANIZATION MEETINGS. . . . . . . . . . . . . . . . . . . -4-
Section 8. SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . -4-
Section 9. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
Section 10. WRITTEN CONSENT. . . . . . . . . . . . . . . . . . . . . . -5-
Section 11. NOTICE OF ADJOURNMENT. . . . . . . . . . . . . . . . . . . -5-
Section 12. QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
Section 13. FEES AND COMPENSATION. . . . . . . . . . . . . . . . . . . -5-
Section 14. INDEPENDENT DIRECTORS. . . . . . . . . . . . . . . . . . . -6-
Section 15. DEFINITIONS OF CERTAIN TERMS USED IN SECTION 14. . . . . . -6-
Section 16. LIMITATIONS ON CERTAIN ACTIONS BY THE CORPORATION. . . . . -8-
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Section 1. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Section 2. ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Section 3. TENURE OF OFFICE . . . . . . . . . . . . . . . . . . . . . -9-
Section 4. REMOVAL AND RESIGNATION. . . . . . . . . . . . . . . . . . -9-
Section 5. VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 6. CHAIRMAN OF THE BOARD AND PRESIDENT. . . . . . . . . . . . -9-
A. CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . -9-
B. PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 7. VICE PRESIDENTS. . . . . . . . . . . . . . . . . . . . . .-10-
A. Senior Vice Presidents . . . . . . . . . . . . . . . . . .-10-
B. Vice Presidents. . . . . . . . . . . . . . . . . . . . . .-10-
Section 8. SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . .-10-
Section 9. CHIEF FINANCIAL OFFICER/TREASURER. . . . . . . . . . . . .-10-
Section 10. ASSISTANTS . . . . . . . . . . . . . . . . . . . . . . . .-10-
Section 11. SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . .-11-
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INDEX
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES . . . . . . . . . . . . . . . . . . . . . . .-11-
ARTICLE V
CORPORATE RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-11-
Section 1. RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . .-11-
Section 2. INSPECTION OF BOOKS AND RECORDS. . . . . . . . . . . . . .-11-
Section 3. CERTIFICATION AND INSPECTION OF BYLAWS . . . . . . . . . .-11-
Section 4. ENDORSEMENT OF CHECKS, DRAFTS, OR OTHER INSTRUMENTS. . . .-11-
Section 5. ENDORSEMENT OF CONTRACTS OR OTHER DOCUMENTS. . . . . . . .-12-
Section 6. ANNUAL REPORTS . . . . . . . . . . . . . . . . . . . . . .-12-
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . .-12-
Section 1. CERTIFICATES FOR SHARES. . . . . . . . . . . . . . . . . .-12-
Section 2. TRANSFER ON THE BOOKS. . . . . . . . . . . . . . . . . . .-12-
Section 3. RECORD DATE FOR SHAREHOLDERS . . . . . . . . . . . . . . .-12-
ARTICLE VII
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-13-
ARTICLE VIIIAMENDMENTS TO BYLAWS . . . . . . . . . . . . . . . . . . . . . .-13-
Section 1. BY SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . .-13-
Section 2. POWERS OF DIRECTORS. . . . . . . . . . . . . . . . . . . .-13-
Section 3. RECORD OF AMENDMENTS . . . . . . . . . . . . . . . . . . .-14-
ARTICLE IX
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-14-
ARTICLE X
FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-14-
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<PAGE>
BYLAWS
Bylaws for the regulation, except as otherwise provided by statute or
its Articles of Incorporation, of Toyota Leasing, Inc., a California
corporation.
ARTICLE I
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS
All meetings of the shareholders shall be held at such place as
may be designated for that purpose from time to time by the President, by any
Vice President who is a director or by the Secretary.
SECTION 2. ANNUAL MEETINGS
The annual meeting of the shareholders shall be held on the 5th
day of December in each year, if not a legal holiday, and if a legal holiday,
then on the next succeeding day; or if such date is found to be inconvenient,
then the President may set an alternate date within 60 days either before or
after the 5th of December. At this meeting, the shareholders, by plurality
vote, shall, subject to Article II hereof, elect a Board of Directors, consider
reports of the affairs of the corporation, and transact such other business as
may properly be brought before the meeting.
SECTION 3. SPECIAL MEETINGS
Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the President, or by the Board of
Directors, or by any two or more members thereof, or by one or more shareholders
holding not less than one-fifth (1/5) of the voting power of the corporation.
SECTION 4. NOTICE OF MEETINGS
Notices of meetings, annual or special, shall be given in writing
to shareholders entitled to vote by the Secretary or an Assistant Secretary.
Such notices shall be sent to the shareholder's address appearing
on the books of the corporation, or supplied by him to the corporation for the
purpose of notice, not less than ten (10) days nor more than sixty (60) days
before such meeting.
Notice of any meeting of shareholders shall specify the place,
the date and the hour of meeting, and in the case of a special meeting, as
provided by the California Corporations Code, the general nature of the business
to be transacted.
When a meeting is adjourned for thirty (30) days or more, notice
of the adjourned meeting shall be given as in the case of an original meeting.
Save, as aforesaid, it shall not be necessary to give any notice of the
adjournment or of the business to be transacted at an
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adjourned meeting other than by announcement at the meeting at which such
adjournment is taken.
SECTION 5. CONSENT TO SHAREHOLDERS' MEETINGS
The transactions of any meeting of shareholders, however called
and noticed, shall be valid as though taken at a meeting duly held after regular
call and notice if a quorum be present either in person or by proxy, and if,
either before or after the meeting, each of the shareholders entitled to vote,
not present in person or by proxy, signs a written waiver of notice, or a
consent to the holding of such meeting, or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
Any action which may be taken at a meeting of the shareholders,
may be taken without a meeting if authorized by a writing signed by all of the
holders of shares who would be entitled to vote at a meeting for such purpose,
and filed with the Secretary of the corporation.
SECTION 6. QUORUM
The holders of a majority of the shares entitled to vote thereat,
present in person, or represented by proxy, shall be requisite for and shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by law, by the Articles of Incorporation,
or by these Bylaws. If, however, such majority shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person, or by proxy, shall have power to adjourn the
meeting from time to time, until the requisite amount of voting shares shall be
present. At such adjourned meeting at which the requisite amount of voting
shares shall be represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
SECTION 7. VOTING RIGHTS, CUMULATIVE VOTING
Only persons in whose names shares entitled to vote are
registered on the stock records of the corporation on the day of any meeting of
shareholders, or if some other day be fixed by the Board of Directors for the
determination of shareholders of record, then on such other day, shall be
entitled to vote at such meeting.
Every shareholder entitled to vote shall be entitled to one vote
for each of said shares and shall have the right to cumulate his votes as
provided in the appropriate section of the California Corporations Code.
SECTION 8. PROXIES
Every shareholder entitled to vote, or to execute consents, may
do so either in person or by written proxy executed in accordance with the
appropriate provisions of the California Corporations Code and filed with the
Secretary of the corporation.
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ARTICLE II
DIRECTORS; MANAGEMENT
SECTION 1. POWERS
Subject to the limitation of the Articles of Incorporation, of
the Bylaws and of the California Corporations Code as to the action to be
authorized or approved by the shareholders, all corporate powers shall be
exercised by or under authority of, and the business and affairs of this
corporation shall be controlled by, a Board of Directors.
SECTION 2. NUMBER AND QUALIFICATION
The authorized number of directors of the corporation shall be
not less than three nor more than five, unless changed by a Bylaw duly adopted
whether by the Board or the shareholders amending this Section 2, Article II.
The exact number of directors shall be fixed from time to time within the limits
specified by resolution duly adopted either by the Board or the shareholders.
Until modified by such a resolution or automatically increased as provided in
Section 14 of this Article II, the number of directors shall be three.
SECTION 3. ELECTION AND TENURE OF OFFICE
At each annual meeting of the shareholders, directors shall be
elected to hold office until the next annual meeting.
Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
SECTION 4. VACANCIES
Subject to Section 14 of this Article II, vacancies on the Board
of Directors may be filled by a majority of the remaining directors, though less
than a quorum, or by a sole remaining director, and each director so elected
shall hold office until his successor is elected at an annual meeting of
shareholders or at a special meeting called for that purpose.
Subject to Section 14 of this Article II, the shareholders may at
any time elect a director to fill any vacancy not filled by the directors, and
may elect the additional directors at the meeting at which an amendment of the
Bylaws is voted authorizing an increase in the number of directors.
A vacancy or vacancies shall be deemed to exist in case of the
death, resignation or removal of any director, or if the shareholders shall
increase the authorized number of directors but shall fail at the meeting at
which such increase is authorized, or at any adjournment thereof, to elect the
additional director so provided for.
Subject to Section 14 of this Article II, if the Board of
Directors accepts the resignation of a director tendered to take effect at a
future time, the Board or the shareholders
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shall have power to elect a successor to take office when the resignation shall
become effective.
No reduction of the number of directors shall have the effect of
removing any director prior to the expiration of his or her term of office.
SECTION 5. REMOVAL OF DIRECTORS
Subject to Section 14 of this Article II, the entire Board of
Directors or any individual director may be removed from office as provided by
the appropriate sections of the California Corporations Code.
SECTION 6. PLACE OF MEETINGS
Meetings of the Board of Directors shall be held at such place as
may be designated for that purpose, from time to time, by the President, by any
Vice President who is a director or by the Secretary. Any meeting shall be
valid, wherever held, if held by the written consent of all Members of the Board
of Directors, given either before or after the meeting and filed with the
Secretary of the corporation.
SECTION 7. ORGANIZATION MEETINGS
The organizational meetings of the Board of Directors shall be
held immediately following the adjournment of the annual meetings of the
shareholders.
SECTION 8. SPECIAL MEETINGS - NOTICES
Special meetings of the Board of Directors for any purpose or
purposes shall be called at any time by the President or, if he is absent or
unable or refuses to act, by any Vice President who is a director.
Special meetings of the Board shall be held upon four days'
written notice or 48 hours' notice given personally or by telephone, telegraph,
telex or other similar means of communication. Any such notice shall be
addressed or delivered to each director at such director's address as it is
shown upon the records of the corporation or as may have been given to the
corporation by the director for purposes of notice or, if such address is not
shown on such records or is not readily ascertainable, at the place in which the
meetings of the directors are regularly held.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mail, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone or wireless, to
the recipient or to a person at the office of the recipient who the person
giving the notice has reason to believe will promptly communicate it to the
recipient.
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SECTION 9. WAIVER
Notice of a meeting need not be given to any director who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, the lack of notice to
such director. All such waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
SECTION 10. WRITTEN CONSENT
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting if all members of the Board shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board. Such action by written consent shall have the same force and effect as a
unanimous vote of such directors. Any certificate or other document filed which
relates to action so taken shall state that the action was taken by the
unanimous written consent of the Board of Directors without a meeting and that
the Bylaws authorize the directors so to act. Such statement shall be the prima
facie evidence of such authority. This section is drafted pursuant to and is
intended to comply with the appropriate section of the California Corporations
Code.
SECTION 11. NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need
not be given to absent directors if the time and place was fixed at the meeting
adjourned.
SECTION 12. QUORUM
A majority of the authorized number of directors as fixed by the
Articles or Bylaws shall be necessary to constitute a quorum for the transaction
of business, and, subject to the provisions of the Articles of Incorporation,
the action of a majority of the directors present at any meeting at which there
is a quorum, when duly assembled, is valid as a corporate act; provided that a
minority of the directors, in the absence of a quorum, may adjourn from time to
time, but may not transact any business. Members of the Board of Directors may
participate in a meeting through use of conference telephone, video conference
or similar communications equipment, so long as all members participating in
such a meeting can hear one another. Participation in a meeting as permitted in
the preceding sentence constitutes presence in person at such meeting.
SECTION 13. FEES AND COMPENSATION
Directors and members of committees may receive such compensation
and fees, if any, for their services, and such reimbursement for expenses, as
may be determined by resolution of the Board of Directors.
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SECTION 14. INDEPENDENT DIRECTORS
Of the authorized number of directors provided in Section 2,
Article II hereof, the corporation shall at all times have at least one
individual who is an Independent Director (as defined in Section 15) and
provided further that in the event that the authorized number of directors
exceeds four, at least two of such directors shall be Independent Directors.
Notwithstanding the foregoing, at all times after the occurrence of a Rating
Event (as defined in Section 15) the Board of Directors shall include at least
two individuals who are Independent Directors. Accordingly, upon the occurrence
of a Rating Event, the authorized number of directors established by the Board
of Directors shall be increased by one and such vacancy shall be filled promptly
with an individual who is an Independent Director unless, at the time of such
Rating Event, the Board of Directors includes two Independent Directors. This
Section 14 shall not be amended, altered or repealed without the written consent
of each nationally recognized statistical rating agency which has been requested
by the corporation to rate one or more classes of securities issued by the
corporation or by a trust in which the corporation holds a beneficial interest
and which is then rating such class or classes of securities (each a "Rating
Agency").
SECTION 15. DEFINITIONS OF CERTAIN TERMS USED IN SECTION 14
For purposes of Section 14, the following terms shall have the
meaning set forth in this Section 15:
(i) A "Rating Event" shall be deemed to have occurred upon the
earlier to occur of (A) the downgrading of Toyota Motor Credit
Corporation's short-term unsecured debt to or below (1) A-2 by Standard &
Poor's, a division of the McGraw-Hill Companies or (2) P-2 by Moody's
Investors Service, Inc., and (B) the downgrading of Toyota Motor Credit
Corporation's long-term debt below (1) A- by Standard & Poor's, a division
of the McGraw-Hill Companies, or (2) A2 by Moody's Investors Service, Inc.
(ii) An "Independent Director" shall be an individual who: (A) is
not and has not been employed by Toyota Motor Credit Corporation or any of
its subsidiaries or affiliates as a director, officer or employee within
the five years immediately prior to such individual's appointment as an
Independent Director; (B) is not (and is not affiliated with a company or
a firm that is) a significant advisor or consultant to Toyota Motor Credit
Corporation or any of its subsidiaries and affiliates; (C) is not
affiliated with a significant customer or supplier of Toyota Motor Credit
Corporation or any of its subsidiaries or affiliates; (D) is not
affiliated with a company of which Toyota Motor Credit Corporation or any
of its subsidiaries and affiliates is a significant customer or supplier;
(E) does not have significant personal services contract(s) with Toyota
Motor Credit Corporation or any of its subsidiaries or affiliates; (F) is
not affiliated with a tax-exempt entity that receives significant
contributions from Toyota Motor Credit Corporation or any of its
subsidiaries or affiliates; (G) is not the beneficial owner at the time of
such individual's appointment as an Independent Director, or any time
thereafter while serving as an Independent Director, of shares of any
class of common stock of Toyota Motor Credit Corporation or any of its
subsidiaries or affiliates the value of which constitutes more than 5% of
such individual's net worth; and (H) is not a spouse, parent, sibling or
child of any person described by (A) through (H).
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(iii) An "affiliate" of a person, or a person "affiliated with,"
a specified person, shall mean a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, the specified person.
(iv) The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise; provided,
however, that a person shall not be deemed to control another person
solely because he or she is a director of such other person.
(v) The term "person" shall mean any individual, partnership,
firm, corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group deemed to be a person
pursuant to Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, as in effect on April 24, 1997.
(vi) A "subsidiary" of Toyota Motor Credit Corporation shall
mean any corporation a majority of the voting stock of which is owned,
directly or indirectly, through one or more other subsidiaries, by Toyota
Motor Credit Corporation.
(vii) A person shall be deemed to be, or to be affiliated with a
company or firm that is a "significant advisor or consultant to Toyota
Motor Credit Corporation or any of its subsidiaries or affiliates" if he,
she or it, as the case may be, received or would receive fees or similar
compensation from Toyota Motor Credit Corporation or any of its
subsidiaries or affiliates in excess of the lesser of (A) 3% of the
consolidated gross revenues which Toyota Motor Credit Corporation and its
subsidiaries received for the sale of their products and services during
the last fiscal year of Toyota Motor Credit Corporation; (B) 5% of the
gross revenues of the person during the last calendar year, if such person
is a self-employed individual, and (C) 5% of the consolidated gross
revenues received by such company or firm for the sale of its products and
services during its last fiscal year, if the person is a company or firm;
provided, however, that director's fees and expense reimbursements shall
not be included in the gross revenues of an individual for purposes of
this determination.
(viii) A "significant customer of Toyota Motor Credit Corporation
or any of its subsidiaries or affiliates" shall mean a customer from which
Toyota Motor Credit Corporation and any of its subsidiaries or affiliates
collectively in the last fiscal year of Toyota Motor Credit Corporation
received payment in consideration for the products and services of Toyota
Motor Credit Corporation and its subsidiaries or affiliates which are in
excess of 3% of the consolidated gross revenues of Toyota Motor Credit
Corporation and its subsidiaries during such fiscal year.
(ix) A "significant supplier of Toyota Motor Credit Corporation
or any of its subsidiaries or affiliates" shall mean a supplier to which
Toyota Motor Credit Corporation and any of its subsidiaries or affiliates
collectively in the last fiscal year of Toyota Motor Credit Corporation
made payments in consideration for the supplier's products and services in
excess of 3% of the consolidated gross revenues of Toyota Motor Credit
Corporation and its subsidiaries during such fiscal year.
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(x) Toyota Motor Credit Corporation or any of its subsidiaries
and affiliates shall be deemed a "significant customer" of a company if
Toyota Motor Credit Corporation and any of its subsidiaries and affiliates
collectively were the direct source during such company's last fiscal year
or in excess of 5% of the gross revenues which such company received for
the sale of its products and services during such fiscal year.
(xi) Toyota Motor Credit Corporation or any of its subsidiaries
and affiliates shall be deemed a "significant supplier" of a company if
Toyota Motor Credit Corporation and any of its subsidiaries and affiliates
collectively received in such company's last fiscal year payments from
such company in excess of 5% of the gross revenues which such company
received during such fiscal year for the sale of its products and
services.
SECTION 16. LIMITATIONS ON CERTAIN ACTIONS BY THE CORPORATION
Notwithstanding any other provision of these Bylaws, the Articles
of Incorporation and any other provision of these Bylaws, the Articles of
Incorporation and any provision of law, the Corporation shall not do any of the
following without the affirmative vote of a majority of the members of the Board
of Directors of the Corporation (which must include the affirmative vote of all
duly appointed Independent Directors): (i) dissolve or liquidate, in whole or in
part, or institute proceedings to be adjudicated bankrupt or insolvent, (ii)
consent to the institution of bankruptcy or insolvency proceedings against it,
(iii) file a petition seeking, or consent to, reorganization or relief under any
applicable federal or state law relating to bankruptcy, (iv) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Corporation or a substantial part of its property, (v)
make a general assignment for the benefit of creditors, (vi) admit in writing
its inability to pay its debts generally as they become due, or (vii) take any
corporate action in furtherance of the actions set forth in clauses (i) through
(vi) of this section; provided, however, that no director may be required by any
shareholder of the Corporation to consent to the institution of bankruptcy or
insolvency proceedings against the Corporation so long as the Corporation is
solvent.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS
The officers of the corporation shall be a president, a secretary
and a chief financial officer/treasurer, which officers shall be elected by, and
hold office at the pleasure of, the Board of Directors. The corporation may
also have, at the discretion of the Board of Directors, a Chairman of the Board,
one or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers and such other officers as may be appointed in accordance
with the provisions of Section 11 of this Article.
SECTION 2. ELECTION
After their election, the directors shall meet and organize by
electing a President from their own number, Secretary and a Chief Financial
Officer, and, at the discretion of the directors, one or more Vice Presidents,
who may, but need not, be members of the Board of
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Directors. Any two or more of such offices, except those of President and
Secretary, may be held by the same person.
SECTION 3. TENURE OF OFFICE
The tenure of office of all the officers of the corporation shall
be fixed by the Board of Directors.
SECTION 4. REMOVAL AND RESIGNATION
Any officer may be removed, either with or without cause, by a
majority of the directors at the time in office, at any regular or special
meeting of the Board or, except in the case of an officer chosen by the Board of
Directors, by any officer upon whom such power of removal may be conferred by
the Board of Directors.
Any officer may resign at any time by giving written notice to
the Board of Directors or to the President, or to the Secretary of the
corporation. Any such resignation shall take effect on the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 5. VACANCIES
A vacancy in any office because of death, resignation, removal,
disqualification or other cause shall be filled in the manner prescribed in the
Bylaws for regular appointment to such office.
SECTION 6. CHAIRMAN OF THE BOARD AND PRESIDENT
A. CHAIRMAN OF THE BOARD
The Chairman of the Board, if there shall be such an officer,
shall, if present, preside at all meetings of the Board of Directors, and
exercise and perform such other powers and duties as may from time to time
be assigned to him by the Board of Directors as prescribed by these
Bylaws.
B. PRESIDENT
The President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business affairs of
the corporation. He or she shall preside at all meetings of the
shareholders, and in the absence of the Chairman of the Board, he or she
shall preside at meetings of the Board of Directors. He or she shall be
ex officio, a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties
as may be prescribed by the Board of Directors or the Bylaws.
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SECTION 7. VICE PRESIDENTS
A. Senior Vice Presidents
The Senior Vice Presidents shall be the deputy chief executive
officers of the corporation and shall exercise such corporate level
authority over the activities of the corporation as prescribed by the
President. In the absence or disability of the President, they shall, in
the order designated by the President or the Board of Directors, perform
the duties and exercise the powers of the President.
B. Vice Presidents
The Vice Presidents shall exercise authority over the activities
of their assigned area of responsibility as prescribed by the President
and under the overall direction and control of the President or Senior
Vice Presidents.
SECTION 8. SECRETARY
The Secretary shall keep, or cause to be kept, a book of minutes
at the principal office or such other place as the Board of Directors may order,
of all meetings of directors and shareholders, with the time and place of
holding, whether regular or special and, if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at shareholders' meetings and the proceedings
thereof.
The Secretary shall keep, or cause to be kept, at the principal
office or at the office of the corporation's transfer agent, a share register,
or a duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the Board of Directors required by the
Bylaws or by law to be given; he shall keep the seal of the corporation and
affix said seal to all documents requiring a seal, and shall have such other
powers and perform such other duties as may be prescribed by the Board of
Directors or the Bylaws.
SECTION 9. CHIEF FINANCIAL OFFICER/TREASURER
The Chief Financial Officer/Treasurer shall receive and keep all
the funds of the corporation, and pay them out only on the check of the
corporation, signed in the manner authorized by the Board of Directors.
SECTION 10. ASSISTANTS
Any Assistant Secretary or Assistant Treasurer, respectively, may
exercise any of the powers of Secretary or Treasurer, respectively, as provided
in these Bylaws or as
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directed by the Board of Directors, and shall perform such other duties as are
imposed upon them by these Bylaws of the Board of Directors.
SECTION 11. SUBORDINATE OFFICERS
The Board of Directors may from time to time appoint such
subordinate officers or agents as the business of the corporation may require,
and fix their tenure of office.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
The Board of Directors may designate an executive committee, and
such other committees as may be necessary from time to time, each consisting of
two or more of its members and with such powers as it may designate, consistent
with the Articles of Incorporation and these Bylaws and the California
Corporations Code. Such committees shall hold office at the pleasure of the
Board of Directors.
ARTICLE V
CORPORATE RECORDS
SECTION 1. RECORDS
The corporation shall maintain adequate and correct accounts,
books and records of its business and properties. All of such books, records
and accounts shall be kept at its principal place of business in the State of
California, as fixed by the Board of Directors from time to time.
SECTION 2. INSPECTION OF BOOKS AND RECORDS
All books and records provided for in the appropriate sections of
the California Corporations Code shall be open to inspection of the directors
and shareholders from time to time and in the manner provided in said sections.
SECTION 3. CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these Bylaws, as amended or otherwise
altered to date, certified by the Secretary, shall be open to inspection by the
shareholders of the corporation, as provided for in the appropriate sections of
the California Corporations Code.
SECTION 4. ENDORSEMENT OF CHECKS, DRAFTS, OR OTHER INSTRUMENTS
All checks, drafts or other orders for payment of money, notes or
other evidences of indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in such
manner as shall be determined from time to time by resolution of the Board of
Directors.
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SECTION 5. ENDORSEMENT OF CONTRACTS OR OTHER DOCUMENTS
The Board of Directors, except as otherwise provided in these
Bylaws, may authorize any officer or officers, agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
corporation. Such authority may be general or confined to specific instances.
Unless so authorized by the Board of Directors, no officer, agent or employee
shall have any power or authority to bind the corporation by any contract or
engagement, or to pledge its credit, or to render it liable for any purpose or
amount.
SECTION 6. ANNUAL REPORTS
The Board of Directors may cause annual reports to be made to the
shareholders as provided by the appropriate sections of the California
Corporations Code, but need not, except upon written request of the shareholders
owning at least five (5) percent of the number of outstanding shares. The Board
of Directors shall cause such annual reports, when so made, to be sent to the
shareholders at least fifteen (15) days prior to the annual meeting, but not
later than one hundred twenty (120) days after the close of the fiscal or
calendar year.
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES
SECTION 1. CERTIFICATES FOR SHARES
Certificates for shares shall be of such form and device as the
Board of Directors may designate and shall state the name of the record holder
of the shares represented thereby; its number; date of issuance; the number of
shares for which it is issued; the par value, if any, or a statement that such
shares are without par value; a statement of the rights, privileges, preferences
and restrictions, if any; a statement as to redemption or conversion, if any;
and a statement of liens or restrictions upon transfer or voting, if any.
Every certificate for shares must be signed by the President or a
Vice President and the Secretary or Assistant Secretary.
SECTION 2. TRANSFER ON THE BOOKS
Upon surrender to the Secretary of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, and to
cancel the old certificate and record the transaction upon its books.
SECTION 3. RECORD DATE FOR SHAREHOLDERS
In order that the Corporation may determine the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
the directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the
directors, the
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<PAGE>
record date for determining shareholders entitled to notice of or to vote at
such meeting shall be at the close of business on the date next preceding the
day on which the meeting is held.
If no record date has been fixed by the directors, the record date for
determining the shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the directors is required by the
California Corporations Code, shall be the first date on which a signed written
consent setting forth the action taken on or proposed to be taken is delivered
to the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or to an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.
If no record date has been fixed by the directors and prior action by the
directors is required by the California Corporations Code, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
directors adopt the resolution taking such prior action.
In order that the Corporation may determine the shareholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the shareholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted, and which
record date shall be not more than sixty days prior to such action. If no
record date is fixed, the record date for determining shareholders for any such
purpose shall be at the close of business on the day on which the directors
adopt the resolution relating thereto.
ARTICLE VII
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have
inscribed thereon the name of the corporation, the date of its incorporation,
and the word California.
ARTICLE VIII
AMENDMENTS TO BYLAWS
SECTION 1. BY SHAREHOLDERS
New Bylaws may be adopted or these Bylaws may be repealed or
amended at the annual meeting of shareholders, or any other meeting of the
shareholders called for that purpose, by a vote of shareholders entitled to
exercise a majority of the voting power of the corporation, or by written assent
of such shareholders. Notwithstanding the foregoing, Sections 14 and 15 of
Article II may not be amended, altered or repealed without the further consents
specified therein.
SECTION 2. POWERS OF DIRECTORS
Subject to the right of the shareholders to adopt, amend or
repeal the Bylaws, as provided in Section 1 of this Article VIII, the Board of
Directors may adopt, amend or repeal any of these Bylaws other than a Bylaw or
amendment thereof changing the range (as opposed
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<PAGE>
to the number within the authorized range) of the authorized number of
directors. Notwithstanding the foregoing, Sections 14, 15 and 16 of Article II
may not be amended, altered or repealed without the further consents specified
therein.
SECTION 3. RECORD OF AMENDMENTS
Whenever an amendment or new Bylaw is adopted, it shall be copied
in the Minute Book of the corporation with the original Bylaws, in the
appropriate place. If any Bylaw is repealed, the fact of repeal with the date
of the meeting at which the repeal was enacted or written assent was filed shall
be stated in said book.
ARTICLE IX
INDEMNIFICATION
The corporation shall have the authority, to the maximum extent
permitted by the California Corporations Code, to indemnify each of its
directors, officers, employees and agents to the fullest extent permissible
under California law and the corporation's Articles of Incorporation. The
corporation may enter into agreements with any director, officer, employee or
agent of the corporation providing for indemnification to the fullest extent
permissible under California law and the corporation's Articles of
Incorporation.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
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Draft 8/25/97
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TOYOTA LEASING, INC.
AND
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE
TOYOTA AUTO LEASE TRUST 1997-A
AUTOMOBILE LEASE ASSET-BACKED CERTIFICATES
SECURITIZATION TRUST AGREEMENT
DATED AS OF SEPTEMBER 1, 1997
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<PAGE>
TABLE OF CONTENTS
PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Article and Section References . . . . . . . . . . . . . . . 2
ARTICLE TWO
CREATION OF TRUST
Section 2.01. Creation of Trust. . . . . . . . . . . . . . . . . . . . . . 3
Section 2.02. Conveyance of 1997-A SUBI Interest . . . . . . . . . . . . . 3
Section 2.03. Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . 4
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. Distributions. . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.02. Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.03. Statements to Certificateholders . . . . . . . . . . . . . . 11
ARTICLE FOUR
THE CERTIFICATES
Section 4.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.02. Authentication and Delivery of Certificates. . . . . . . . . 15
Section 4.03. Registration of Transfer and Exchange of Certificates. . . . 15
Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates. . . . . . 18
Section 4.05. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 19
Section 4.06. Access to List of Certificateholders' Names
and Addresses. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.07. Maintenance of Office or Agency. . . . . . . . . . . . . . . 19
Section 4.08. Temporary Certificates . . . . . . . . . . . . . . . . . . . 20
Section 4.09. Book-Entry Certificates. . . . . . . . . . . . . . . . . . . 20
Section 4.10. Notices to Clearing Agency . . . . . . . . . . . . . . . . . 22
Section 4.11. Definitive Certificates. . . . . . . . . . . . . . . . . . . 22
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Section 4.12. Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE FIVE
THE TRANSFEROR
Section 5.01. Representations of Transferor. . . . . . . . . . . . . . . . 24
Section 5.02. Liability of Transferor; Indemnities . . . . . . . . . . . . 26
Section 5.03. Merger or Consolidation of, or Assumption
of the Obligations of, Transferor;
Certain Limitations. . . . . . . . . . . . . . . . . . . . . 26
Section 5.04. Limitation on Liability of Transferor
and Others . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.05. Transferor May Own Investor Certificates . . . . . . . . . . 29
Section 5.06. No Transfer. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.07. Tax Matters Partner. . . . . . . . . . . . . . . . . . . . . 30
ARTICLE SIX
THE SECURITIZATION TRUSTEE
Section 6.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . 30
Section 6.02. Certain Matters Affecting the Securitization Trustee.. . . . 32
Section 6.03. Trustee Not Liable for Certificates or Contracts . . . . . . 33
Section 6.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . 35
Section 6.05. Trustee's Fees and Expenses. . . . . . . . . . . . . . . . . 35
Section 6.06. Eligibility Requirements for Trustee.. . . . . . . . . . . . 35
Section 6.07. Resignation or Removal of Trustee. . . . . . . . . . . . . . 36
Section 6.08. Successor Trustee. . . . . . . . . . . . . . . . . . . . . . 37
Section 6.09. Merger or Consolidation of Trustee.. . . . . . . . . . . . . 37
Section 6.10. Appointment of Co-Trustee or
Separate Trustee.. . . . . . . . . . . . . . . . . . . . . . 38
Section 6.11. Representations and Warranties of Trustee. . . . . . . . . . 39
Section 6.12. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.13. Trustee May Enforce Claims Without
Possession of Certificates.. . . . . . . . . . . . . . . . . 40
Section 6.14. Suit for Enforcement . . . . . . . . . . . . . . . . . . . . 41
Section 6.15. Rights of Certificateholders to
Direct Trustee . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.16. No Petition. . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE SEVEN
TERMINATION
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Section 7.01. Termination of the 1997-A
Securitization Trust . . . . . . . . . . . . . . . . . . . . 42
Section 7.02. Optional Purchase of 1997-A SUBI Interest. . . . . . . . . . 44
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS
Section 8.01. Early Amortization Events. . . . . . . . . . . . . . . . . . 45
Section 8.02. Additional Rights Upon the Occurrence
of Certain Event . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE NINE
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.02. Protection of Title to Trust . . . . . . . . . . . . . . . . 50
Section 9.03. Limitation on Rights of Certificateholders . . . . . . . . . 51
Section 9.04. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.06. Severability of Provisions; Counterparts . . . . . . . . . . 53
Section 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.08. Certificates Nonassessable and Fully Paid. . . . . . . . . . 54
ARTICLE TEN
AGENT FOR SERVICE
Section 10.01. Agent for Service of Transferor . . . . . . . . . . . . . . 54
Section 10.02. Agent of Trustee. . . . . . . . . . . . . . . . . . . . . . 54
EXHIBITS:
Exhibit A-1 - Form of Class A-1 Certificate ..............................A-1
Exhibit A-2 - Form of Class A-2 Certificate ..............................A-2
Exhibit A-3 - Form of Class A-3 Certificate ..............................A-3
Exhibit B - Form of Class B Certificate ................................B-1
Exhibit C - Form of Transferor Certificate .............................C-1
Exhibit D-1 - Form of Non-Rule 144-A Representation Letter..............D-1-1
Exhibit D-2 - Form of Rule 144-A Representation Letter..................D-2-1
Exhibit E - Annex of Definitions........................................E-1
Exhibit F - Annex of Supplemental Definitions...........................F-1
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iv
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SECURITIZATION TRUST AGREEMENT
THIS SECURITIZATION TRUST AGREEMENT, dated as of September 1, 1997, is made
with respect to the formation of the TOYOTA AUTO LEASE TRUST 1997-A (the
"1997-A SECURITIZATION TRUST"), between TOYOTA LEASING, INC. a California
corporation ("TLI" or, in its capacity as transferor hereunder, the
"Transferor"), and U.S. BANK NATIONAL ASSOCIATION, as trustee (the
"SECURITIZATION TRUSTEE").
RECITALS
A. The Toyota Lease Trust (the "Titling Trust") is governed by the
Amended and Restated Trust and Servicing Agreement dated as of October 1, 1996
(the "Titling Trust Agreement") among Toyota Motor Credit Corporation, a
California corporation, as grantor, initial beneficiary and servicer ("TMCC" and
in its capacity as servicer, the "Servicer"), TMTT, Inc. (the "TITLING
TRUSTEE"), a Delaware corporation, as trustee, and, for the limited purposes
stated therein, U.S. Bank National Association ("U.S. BANK"), a national banking
association. The Titling Trust acquires and holds title to various automobiles,
light-duty trucks, related lease contracts and certain other assets in
accordance with the terms of the Titling Trust Agreement. Capitalized terms
used and not defined in these Recitals have the meanings given in Article I
below.
B. Concurrently herewith, TMCC, the Titling Trustee and U.S. Bank have
entered into the 1997-A SUBI Supplement to the Titling Agreement dated as of
September 1, 1997 (the "1997-A SUBI Supplement") pursuant to which the Titling
Trust, at the direction of TMCC, will create and issue to TLI a special unit of
beneficial interest in the Titling Trust (the "1997-A SUBI"), whose
beneficiaries generally will be entitled to the net cash flow arising from the
related SUBI Portfolio (such SUBI Portfolio, the "1997-A SUBI Portfolio"). The
1997-A SUBI will be evidenced by one SUBI Certificate representing the entire
beneficial interest in the 1997-A SUBI (the "1997-A SUBI Certificate").
C. Concurrently herewith, the Titling Trustee (on behalf of the Titling
Trust) and the Servicer also have entered into a Supplement 1997-A to Servicing
Agreement dated as of September 1, 1997 (the "1997-A SUBI Servicing
Supplement"), pursuant to which the terms of the Titling Trust Agreement will be
supplemented insofar as they apply to the 1997-A SUBI Portfolio, providing for
further servicing obligations that will benefit the holders of the 1997-A SUBI
Certificate.
D. Concurrently herewith, TMCC and the Transferor have entered into the
1997-A SUBI Certificate Purchase and Sale Agreement dated as of September 1,
1997 (the "SUBI Certificate Agreement"), pursuant to which TMCC sold to the
Transferor, without recourse, all of TMCC's right, title and interest in and to
the 1997-A SUBI and the 1997-A SUBI Certificate,
<PAGE>
all monies due thereon and the right to realize on any property subject to the
1997-A SUBI, and all proceeds thereof, all in consideration of the cash payment
to TMCC of an amount equal to the Aggregate Net Investment Value of the 1997-A
SUBI Portfolio as of the 1997-A Cutoff Date.
E. The parties desire to enter into this Securitization Trust Agreement
to create the 1997-A Securitization Trust, to provide for the issuance by the
1997-A Securitization Trust of certain Certificates and to provide for the
exchange of those Certificates for the 1997-A SUBI Certificate in connection
with a Securitized Financing by the Transferor.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS.
For all purposes of this Securitization Trust Agreement, except as
otherwise expressly provided or unless the context otherwise requires, (a)
unless otherwise defined herein, all capitalized terms used herein shall have
the meanings attributed to them in the Annex of Definitions or the Annex of
Supplemental Definitions attached hereto as Exhibit E and Exhibit F,
respectively, (b) defined terms include (i) all genders and (ii) the plural as
well as the singular, (c) all references to words such as "herein", "hereof" and
the like shall refer to this Securitization Trust Agreement as a whole and not
to any particular article or section within this Securitization Trust Agreement,
(d) the term "include" and all variations thereon shall mean "include without
limitation", and (e) the term "or" shall include "and/or".
SECTION 1.02. ARTICLE AND SECTION REFERENCES.
Except as otherwise specified herein, all article and section references
shall be to Articles and Sections in this Securitization Trust Agreement.
ARTICLE TWO
CREATION OF TRUST
SECTION 2.0
1. CREATION OF TRUST.
Upon the execution of this Securitization Trust Agreement by the parties
hereto, there is hereby created the Toyota Auto Lease Trust 1997-A.
2
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SECTION 2.02. CONVEYANCE OF 1997-A SUBI INTEREST.
In consideration of the Securitization Trustee's delivery to, or upon the
order of, the Transferor of executed and authenticated Investor Certificates, in
authorized denominations, in an aggregate amount equal to the Initial
Certificate Balance, and of the executed and authenticated Transferor
Certificate, the Transferor does hereby transfer, assign and otherwise convey to
the Securitization Trustee, in trust for the benefit of the Certificateholders,
to the full extent of the Transferor's interest therein, without recourse
(subject to the Transferor's obligations herein):
(i) all right, title and interest of the Transferor in and to the
1997-A SUBI and the 1997-A SUBI Certificate evidencing the 1997-A SUBI and
all monies due thereon and paid thereon or in respect thereof;
(ii) the right to realize upon any property that may be deemed to
secure the 1997-A SUBI Interest;
(iii) all rights accruing to the holder of the 1997-A SUBI Interest
under the Titling Trust Agreement, the 1997-A SUBI Supplement and the
1997-A SUBI Servicing Supplement; and
(iv) all proceeds of the foregoing;
PROVIDED that all monies and payments due or payable under any Residual Value
Insurance Policy applicable to the 1997-A Leased Vehicles and the right to
receive such payments and monies are retained by the Transferor and are not
hereby transferred, assigned or otherwise conveyed to the Securitization
Trustee.
The Transferor also does hereby grant to the Securitization Trustee a
security interest in all of the foregoing, and the Securitization Trustee shall
have all the rights, powers and privileges of a secured party under the UCC.
SECTION 2.03. ACCEPTANCE BY TRUSTEE.
The Securitization Trustee does hereby accept all consideration conveyed by
the Transferor pursuant to Section 2.02 and declares that the Securitization
Trustee shall hold such consideration in trust as herein set forth for the
benefit of the Certificateholders, subject to the terms and provisions of this
Securitization Trust Agreement.
ARTICLE THREE
3
<PAGE>
ALLOCATIONS AND DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 3.01. ALLOCATIONS AND DISTRIBUTIONS.
(a) On each Determination Date, pursuant to Section 4.02(g) of the
1997-A SUBI Servicing Supplement, the Servicer shall calculate the amounts to be
allocated or distributed to the holder of the 1997-A SUBI Certificate, the Class
A-1 Distributable Amount, the Class A-2 Distributable Amount, the Class A-3
Distributable Amount, the Class B Distributable Amount, the Transferor
Distributable Amount, and all other distributions to be made on the related
Distribution Date.
(b) The rights of the Class B Certificateholders to receive
distributions of Interest Collections allocable to the 1997-A SUBI Interest in
respect of the Class B Certificates shall be and hereby are subordinated to the
rights of the Class A-1 Certificateholders, the Class A-2 Certificateholders and
the Class A-3 Certificateholders to receive distributions of Interest
Collections allocable to the 1997-A SUBI Interest to the extent provided in this
subsection. On each Monthly Allocation Date, based on the monthly servicing
report prepared by the Servicer, the Securitization Trustee shall distribute
from the 1997-A SUBI Collection Account the Available Interest, together with
any Transferor Amounts and the Reserve Fund Withdrawal Amount, if any, for such
Monthly Allocation Date, and any amount of Principal Collections allocable to
the Class B Certificates but applied pursuant to subsection (e)(iii) below, in
the following amounts and in the following order of priority to the following
accounts and Persons:
(i) in the event of an Early Amortization Event involving an
Insolvency Event, as a result of which the Securitization Trustee has
elected or has been instructed to sell the property of the 1997-A
Securitization Trust pursuant to Section 8.02(a), to the Securitization
Trustee, the Investor Percentage of Capped Securitization Trust
Administrative Expenses;
(ii) to the Certificateholders' Account until there has been deposited
therein pursuant to this clause (ii), the Class A-1 Interest Distributable
Amount for the next Distribution Date together with any Class A-1
Certificate Principal Loss Interest Amount for such Distribution Date and
any unpaid Class A-1 Interest Carryover Shortfall, the Class A-2 Interest
Distributable Amount for such Distribution Date together with any Class A-2
Certificate Principal Loss Interest Amount for such Distribution Date and
any Class A-2 Interest Carryover Shortfall and the Class A-3 Interest
Distributable Amount for such Distribution Date together with any Class A-3
Certificate Principal Loss Interest Amount for such Distribution Date and
any Class A-3 Interest Carryover Shortfall;
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(iii) to the Certificateholders' Account until there has been
deposited therein pursuant to this clause (iii), the Class B Interest
Distributable Amount for such Distribution Date, together with any unpaid
Class B Interest Carryover Shortfall;
(iv) to the Servicer, the Investor Percentage of (a) the Servicing Fee
and (b) any unpaid Servicing Fee in respect of any prior Collection Period;
(v) to the Servicer, the Investor Percentage of the Capped Contingent
and Excess Liability Premium in respect of the related Collection Period;
(vi) to the Titling Trustee, the Investor Percentage of Capped
Titling Trust Administration Expenses;
(vii) in circumstances other than those set forth in clause (i), the
Investor Percentage of Capped Securitization Trust Administrative Expenses
for the preceding Collection Period, to the Securitization Trustee;
(viii) to the Certificateholders' Account until there has been
deposited therein pursuant to this clause (viii), the Class A-1 Loss
Amount, the Class A-2 Loss Amount and the Class A-3 Loss Amount plus the
aggregate amounts of the Class A-1 Certificate Principal Loss Amounts,
Class A-2 Certificate Principal Loss Amounts and Class A-3 Certificate
Principal Loss Amounts, if any, for previous Distribution Dates that have
not been previously deposited in the Certificateholders' Account;
(ix) to the Certificateholders' Account until there has been deposited
therein pursuant to this clause (ix), the Class B Certificate Principal
Loss Interest Amount and the Class B Certificate Principal Carryover
Shortfall Interest Amount, if any, for such Distribution Date, the Class B
Loss Amount, the aggregate of the Class B Certificate Principal Loss
Amounts and Class B Certificate Principal Carryover Shortfall, if any, for
previous Distribution Dates that has not been previously deposited in the
Certificateholders' Account pursuant to this clause (ix);
(x) into the Reserve Fund until the amount on deposit therein equals
the Specified Reserve Fund Balance;
(xi) the Investor Percentage of Uncapped Administrative Expenses, to
the Titling Trustee or the Securitization Trustee, as applicable;
(xii) the balance, if any, shall constitute Excess Collections and
shall be applied as set forth in subsection (c) below.
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Notwithstanding the foregoing, on any Distribution Date related to a Collection
Period in the Revolving Period, the amounts set forth in clauses (viii) through
(ix) above shall not be deposited in the Certificateholders' Account, but shall
be treated as Principal Collections for purposes of Section 3.02 of the 1997-A
SUBI Servicing Supplement and this Section 3.01.
On each Semiannual Distribution Date, or if a Monthly Payment Event has
occurred, then on each Monthly Distribution Date, the Securitization Trustee
shall distribute to the holders of Investor Certificates of each Class the
amounts deposited in the Certificateholders' Account for such Class pursuant to
the following clauses of this Section 3.01(b) and in the following order of
priority: (ii), (iii), (viii) and (ix); provided that if the amount deposited
pursuant to any such clause in the Certificateholders' Account is distributable
to Class A Certificateholders and the amount available pursuant to such clause
is less than the full amount due to be distributed pursuant to such clause, then
such available amount shall be distributed to the Class A-1 Certificateholders,
the Class A-2 Certificateholders and the Class A-3 Certificateholders PRO RATA
on the basis of the full amounts due them pursuant to such clause.
(c) On each Monthly Allocation Date, based on the Servicer's
Certificate prepared by the Servicer, the Securitization Trustee shall
distribute any Excess Collections as follows:
(i)if the Monthly Allocation Date relates to a Collection Period in the
Revolving Period, any remainder to the Transferor, and (ii) if the Monthly
Allocation Date relates to a Collection Period in the Amortization Period, any
remainder up to but not exceeding the product of one-twelfth of [.25%] and the
Aggregate Net Investment Value as of the last day of the related Collection
Period (the "Accelerated Principal Distribution Amount") to the
Certificateholders' Account as additional principal. The balance of any
remainder will then be paid to the Transferor.
(d)(i) On each Monthly Allocation Date beginning with the Monthly
Allocation Date related to the Collection Period in which the Amortization
Period commences and ending on the Monthly Allocation Date that is the
Distribution Date on which the Class B Certificates will be paid in full, based
on the Servicer's Certificate prepared by the Servicer, the Securitization
Trustee shall withdraw from the 1997-A SUBI Collection Account and deposit in
the Certificateholders' Account an amount equal to the Investor Percentage of
all Principal Collections collected or received in respect of the related
Collection Period allocable to the 1997-A SUBI Interest.
(ii) If a Monthly Payment Event has not occurred, the Securitization
Trustee, based on the Servicer's Certificate prepared by the Servicer, shall
distribute to holders of the Certificates of
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each Class on the Targeted Maturity Date for such Class the lesser of (x) the
entire Certificate Principal Balance of such Class of Investor Certificates and
(y) the sum of the amount of Principal Collections and the Accelerated Principal
Distribution Amount on deposit in the Certificateholders' Account and the
Maturity Advance actually made by the Servicer in respect of such Class of
Investor Certificates pursuant to Section ____ of the 1997-A SUBI Servicing
Supplement.
(iii) If on the Targeted Maturity Date for any Class of Investor
Certificates the entire Certificate Principal Balance of such Class of Investor
Certificates is not distributed, then the Securitization Trustee shall, based on
the Servicer's Certificate, distribute to the holders of such Class of Investor
Certificates on each following Monthly Distribution Date, until the Certificate
Principal Balance of such Class of Investor Certificates has been reduced to
zero, (I) the lesser of (x) the outstanding Certificate Principal Balance of
such Class of Investor Certificates and (y) the amount of Principal Collections
and the Accelerated Principal Distribution Amount on deposit in the
Certificateholders' Account on such Monthly Distribution Date and (II) the
amount of interest deposited into the Certificateholders' Account and allocated
to such Class of Investor Certificates pursuant to Section 3.01(b) in respect of
such Monthly Distribution Date.
(iv) If a Monthly Payment Event occurs in any month, then on the Monthly
Distribution Date in each succeeding month the Securitization Trustee shall,
based on the Servicer's Certificate for such Monthly Distribution Date,
distribute the sum of the Principal Collections and the Accelerated Principal
Distribution Amount in the following order of priority:
(1) to the Class A-1 Certificateholders until the Class A-1
Certificate Principal Balance is reduced to zero;
(2) to the Class A-2 Certificateholders until the Class A-2
Certificate Principal Balance is reduced to zero;
(3) to the Class A-3 Certificateholders until the Class A-3
Certificate Principal Balance is reduced to zero; and
(4) to the Class B Certificateholders until the Class B
Certificate Principal Balance is reduced to zero.
(v) If a Monthly Payment Event occurs in any month, then on the Monthly
Distribution Date in each succeeding month the Securitization Trustee shall,
based on the Servicer's Certificate for such Monthly Distribution Date,
distribute the amount of interest deposited into the Certificateholders' Account
and allocated to each Class of Investor Certificates pursuant to Section 3.01(b)
in respect of such Monthly Distribution Date.
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(e) On each Monthly Allocation Date for which there is a Required
Amount, based on the Servicer's Certificate prepared by the Servicer, the
Securitization Trustee shall apply the following amounts in the following order
to the payment of the unpaid components of the Required Amount (in the order of
clauses (i) through (xiv) of Section 3.01(b)) to the extent necessary to pay
such components:
(i) the Reserve Fund Withdrawal Amount;
(ii) to the extent of any remaining Required Amount, first the
Transferor Interest Distributable Amount and then the Transferor Principal
Distributable Amount; and
(iii) to the extent of any remaining unpaid components of the Required
Amount in clauses (ii) and (viii) of Section 3.01(b), the amounts otherwise
available for distribution on account of principal to the Class B
Certificateholders pursuant to Section 3.01(d).
Amounts applied pursuant to the preceding sentence on a Distribution Date in
respect of the Revolving Period pursuant to clauses (viii) through (xiii) of
Section 3.01(b) shall be treated as Principal Collections and applied pursuant
to Section 3.02 of the 1997-A SUBI Servicing Supplement.
On such Distribution Date, after giving effect to all payments required to
be made and all required deposits to or withdrawals from the Reserve Fund,
amounts that otherwise would be payable to the Transferor in respect of the
Transferor Distributable Amount (other than Transferor Amounts) will be
deposited into the Reserve Fund until the amount on deposit therein equals the
Specified Reserve Fund Balance, and any remaining amounts so payable to the
Transferor will be distributed to the Transferor by the Securitization Trustee
as follows: (A) if such Distribution Date relates to a Collection Period during
the Revolving Period, the interest component of such remaining amounts will be
paid in respect of the Transferor Interest Distributable Amount and (B) if such
Distribution Date relates to a Collection Period during the Amortization Period,
(l) the interest component of such remaining amounts will be paid in respect of
the Transferor Interest Distributable Amount and (2) if and to the extent that
the Transferor Interest will be equal to or greater than zero, after all
required distributions have been made on such Distribution Date, the principal
component of such remaining amounts will be paid in respect of the Transferor
Principal Distributable Amount. Any amounts that would otherwise be payable to
the Transferor pursuant to the foregoing as the Transferor Principal
Distributable Amount, but may not be so paid because the Transferor Interest
would be less than or equal to zero, shall instead be distributed to the
Investor Certificateholders pursuant to Section 3.01(d).
(f) Subject to Section 7.01 respecting the final payment upon
retirement of each Certificate, the Securitization Trustee shall on each
Distribution Date distribute to each
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Certificateholder of any Class of record on the related Record Date by check
mailed to such Certificateholder at the address of such Holder appearing in the
Certificate Register (or, if DTC, its nominee or a Clearing Agency is the
relevant Certificateholder, by wire transfer of immediately available funds or
pursuant to other arrangements), the amount to be distributed to such
Certificateholder pursuant to such Holder's Certificates.
(g) Amounts properly received by the Transferor pursuant to this
Securitization Trust Agreement shall be free of any claim of the Securitization
Trust, the Securitization Trustee or the Investor Certificateholders and shall
not be available to the Securitization Trustee or the Securitization Trust for
the purpose of making deposits to the Reserve Fund or making payments to the
Investor Certificateholders, nor shall the Transferor be required to refund any
amount properly received by it.
SECTION 3.02. RESERVE FUND.
(a)(i) The Servicer shall establish and maintain with the
Securitization Trustee a separate trust account to be known as the "Reserve
Fund", which will include the money and other property deposited and held
therein pursuant to Section 3.01(b) and this Section. Funds in the Reserve Fund
shall be property of the Transferor, and the Transferor hereby grants to the
Securitization Trustee for the benefit of the Investor Certificateholders a
security interest in all funds (including Permitted Investments) and the
proceeds thereof. The Reserve Fund shall be an Eligible Account and initially
shall be established with the Securitization Trustee. If for any reason the
Reserve Fund is no longer an Eligible Account, the Securitization Trustee shall
promptly cause the Reserve Fund to be moved to another institution or otherwise
changed so that the Reserve Fund becomes an Eligible Account.
(ii) All amounts held in the Reserve Fund shall, to the extent
permitted by applicable laws, rules and regulations, be invested, as directed by
the Servicer, in Permitted Investments. Earnings on investment of funds in the
Reserve Fund shall be paid to the Transferor on each Distribution Date, and
losses and any investment expenses shall be charged against the funds on deposit
therein.
(b) On or prior to the Closing Date, the Transferor shall deposit an
amount equal to the Reserve Fund Initial Deposit into the Reserve Fund. The
Transferor also does hereby grant to the Securitization Trustee a security
interest in such initial deposit, and the Securitization Trustee shall have all
the rights and powers of a secured party under the UCC. Amounts on deposit in
the Reserve Fund shall be supplemented from time to time by the deposit therein
of Excess Collections otherwise distributable to the Transferor pursuant to
Section 3.01(c), and amounts that otherwise would be payable to the Transferor
pursuant to Section 3.01(e) but for the fact that the amount on deposit in the
Reserve Fund is less than the Specified Reserve Fund Balance, to the extent
described in this subparagraph (b). On each Distribution Date the amounts
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on deposit in the Reserve Fund shall be available for distribution as provided
in Section 3.01; provided that the Class B Interest Reserve Amount shall only be
applied to distributions of interest on the Class B Certificates and, on each
Distribution Date, if the amount on deposit in the Reserve Fund (after giving
effect to all deposits thereto or withdrawals therefrom on such Distribution
Date) is greater than the Specified Reserve Fund Balance, the Securitization
Trustee will distribute any such excess amount to the Transferor, whereupon such
excess amount shall no longer be available to the Securitization Trustee or the
Investor Certificateholders.
(c) Upon termination of the Securitization Trust pursuant to Section
7.01, any amounts on deposit in the Reserve Fund shall be available for payment
of any remaining amounts due to the Investor Certificateholders, and for payment
of any remaining amounts due to the Securitization Trustee, and after payment of
such amounts due, shall be paid to the Transferor.
SECTION 3.03. STATEMENTS TO CERTIFICATEHOLDERS.
(a) On each Distribution Date, the Securitization Trustee shall
include with each distribution to each Certificateholder of record, a statement,
prepared by the Servicer, based on information in the Servicer's Certificate
furnished pursuant to Section 5.01(b) of the 1997-A SUBI Servicing Supplement,
setting forth for the related Collection Period and such Distribution Date the
following information as of the related Record Date or Deposit Date or such
Distribution Date, as the case may be:
(i) the Investor Percentage for such Collection Period, stated
separately for Interest Collections and Loss Amounts, and for Principal
Collections;
(ii) the total amount being distributed to Investor Certificateholders
in such distribution;
(iii) the total amount being distributed to each Class of Investor
Certificateholders in such distribution;
(iv) the total amount of interest being distributed to each Class of
Investor Certificateholders in such distribution;
(v) the amount, if any, of Class A-1 Interest Carryover Shortfall,
Class A-2 Interest Carryover Shortfall, Class A-3 Interest Carryover
Shortfall and Class B Interest Carryover Shortfall included in such
distribution;
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(vi) the amount, if any, of the remaining unpaid Class A-1 Interest
Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3
Interest Carryover Shortfall and Class B Interest Carryover Shortfall after
giving effect to such distribution;
(vii) the total amount of principal being distributed to each Class of
Investor Certificateholders in such distribution;
(viii) the Class A-1 Allocation Percentage, the Class A-2 Allocation
Percentage, the Class A-3 Allocation Percentage, the Class B Allocation
Percentage and the amount, if any, of the reimbursement of Class A-1
Charged-off Amounts, Class A-1 Residual Value Loss Amounts and Class A-1
Additional Loss Amounts, Class A-2 Charged-off Amounts, Class A-2 Residual
Value Loss Amounts and Class A-2 Additional Loss Amounts, Class A-3
Charged-off Amounts, Class A-3 Residual Value Loss Amounts and Class A-3
Additional Loss Amounts, Class B Charged-off Amounts, Class B Residual
Value Loss Amounts and Class B Additional Loss Amounts being included in
such distribution;
(ix) the amount, if any, of the reimbursement of Class A-1 Certificate
Principal Loss Amounts, Class A-2 Certificate Principal Loss Amounts, Class
A-3 Certificate Principal Loss Amounts and Class B Certificate Principal
Loss Amounts included in such distribution;
(x) the amount, if any, of the aggregate of unreimbursed Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss
Amounts, Class A-3 Certificate Principal Loss Amounts and Class B
Certificate Principal Loss Amounts after giving effect to such
distribution;
(xi) the amount, if any, of accrued Class A-1 Certificate Principal
Loss Interest Amounts, Class A-2 Certificate Principal Loss Interest
Amounts, Class A-3 Certificate Principal Loss Interest Amounts and Class B
Certificate Principal Loss Interest Amounts included in such distribution;
(xii) the amount, if any, of accrued and unpaid Class A-1 Certificate
Principal Loss Interest Amounts, Class A-2 Certificate Principal Loss
Interest Amounts, Class A-3 Certificate Principal Loss Interest Amounts and
Class B Certificate Principal Loss Interest Amounts after giving effect to
such distribution;
(xiii) the amount, if any, of accrued and unpaid Class B Certificate
Principal Carryover Shortfall after giving effect to such distribution;
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(xiv) the Investor Percentage of the Servicing Fee allocable to the
1997-A SUBI Interest for such Distribution Date and any unpaid previous
such amounts with respect to prior Distribution Dates;
(xv) the Certificate Balance, the Class A-1 Certificate Balance, the
Class A-2 Certificate Balance, the Class A-3 Certificate Balance, the Class
B Certificate Balance, the Class A-1 Certificate Factor, the Class A-2
Certificate Factor, the Class A-3 Certificate Factor and the Class B
Certificate Factor, each after giving effect to such distribution;
(xvi) the Transferor Amount, if any, included in such distribution and
the amount of the Transferor Interest, after giving effect to all payments
made on such Distribution Date;
(xvii) the Reserve Fund Withdrawal Amount, if any, included in such
distribution;
(xviii) the Aggregate Net Investment Value as of the end of such
Collection Period;
(xix) the portion of any Required Amount included in the distribution
to Investor Certificateholders, the amount on deposit in the Reserve Fund
on such Distribution Date, after giving effect to such distributions, the
change in such balance from the immediately preceding Distribution Date and
the Specified Reserve Fund Balance;
(xx) the amount of Payments Ahead on deposit in the 1997-A SUBI
Collection Account and representing Monthly Contract Payments due in one or
more immediately subsequent Collection Periods and the change in such
balance from the immediately preceding Distribution Date;
(xxi) the amount of Advances made in respect of such Distribution
Date, the amount of Outstanding Advances on such Distribution Date and the
change in such amount from the immediately preceding Distribution Date; and
(xxii) the weighted average Contract Rate of the Contracts in the
1997-A SUBI Portfolio for the immediately preceding Collection Period and
the Charge-off Rate and Delinquency Percentage for each of the three
immediately preceding Collection Periods.
[Each amount set forth pursuant to subclauses (ii) through (xiii) above shall be
expressed as a dollar amount per $1,000 of original principal balance of an
Investor Certificate.] Any Certificate Owner may obtain a copy of any such
statement, of any Servicer's Certificate required
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pursuant to Section 5.01(b) of the 1997-A SUBI Servicing Supplement, any annual
report of Independent Accountants required pursuant to Section 5.02 of the
1997-A SUBI Servicing Supplement, and of any annual Officer's Certificate
required pursuant to Section 5.03 of the 1997-A SUBI Servicing Supplement, upon
written request to the Securitization Trustee at the Corporate Trust Office.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Securitization
Trustee shall mail to each Person who at any time during such calendar year
shall have been a Holder of an Investor Certificate, a statement or statements
which in the aggregate contain the sum of the amounts set forth in clauses
(a)(ii) through (xiii) in Section 3.03(a) for such calendar year or, in the
event such Person shall have been a Holder of an Investor Certificate during a
portion of such calendar year, for the applicable portion of such year, for the
purposes of such Certificateholder's preparation of federal income tax returns.
In addition, the Servicer shall furnish to the Securitization Trustee for
distribution to such Person at such time any other information reasonably
necessary under applicable law for the preparation of such income tax returns.
ARTICLE FOUR
THE CERTIFICATES
SECTION 4.01. THE CERTIFICATES.
(a) The Class A-1 Certificates, the Class A-2 Certificates, the Class
A-3 Certificates, the Class B Certificates and the Transferor Certificate shall
be substantially in the form of Exhibits A-1, A-2, A-3, B and C, respectively,
to this Securitization Trust Agreement. The Class A-1 Certificates, the Class
A-2 Certificates and the Class A-3 Certificates shall be issuable in minimum
denominations of $1,000 and integral multiples in excess thereof and the Class B
Certificates shall be issuable in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof (provided that no Class B Certificate may
be issued or transferred in a denomination that would cause there to be,
immediately after such issuance or transfer, one hundred (100) or more Class B
Certificateholders); PROVIDED, HOWEVER, that one Class A-1 Certificate, one
Class A-2 Certificate, one Class A-3 Certificate and one Class B Certificate may
be issued in a denomination that includes any remaining portion of the Initial
Class A-1 Certificate Balance, the Initial Class A-2 Certificate Balance, the
Initial Class A-3 Certificate Balance and the Initial Class B Certificate
Balance, respectively (each, a "Residual Certificate"). A single Transferor
Certificate shall be issued. The Certificates shall be executed on behalf of
the Transferor by manual or facsimile signature of an officer of the Transferor.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Securitization Trustee shall not be rendered invalid, notwithstanding that
such individuals or any of them have ceased to be so
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authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates. All Certificates shall
be dated the date of their authentication.
(b) The Investor Certificates shall represent fractional undivided
interests in the 1997-A Securitization Trust, including the right to receive the
Investor Percentage of Interest Collections and Principal Collections and the
other amounts at the times and in the amounts specified in this Securitization
Trust Agreement. The Transferor Certificate shall represent the interest in the
1997-A Securitization Trust not represented by the Investor Certificates.
SECTION 4.02. AUTHENTICATION AND DELIVERY OF CERTIFICATES.
In exchange for, and simultaneously with the sale, assignment and transfer
to the Securitization Trustee of the 1997-A SUBI Interest, the 1997-A SUBI
Certificate and the other assets of the 1997-A Securitization Trust, the
Securitization Trustee shall cause to be executed, authenticated and delivered
to or upon the order of the Transferor Investor Certificates in authorized
denominations equaling in the aggregate the sum of the Initial Class A-1
Certificate Balance, the Initial Class A-2 Certificate Balance, the Initial
Class A-3 Certificate Balance and the Initial Class B Certificate Balance, and
the Transferor Certificate, each duly authorized by the Securitization Trustee,
and evidencing the entire ownership of the Securitization Trust. No Certificate
shall be entitled to any benefit under this Securitization Trust Agreement, or
be valid for any purpose, unless there appears on such Certificate a certificate
of authentication substantially in the form set forth in Exhibit A-1, A-2, A-3,
B or C to this Securitization Trust Agreement, as the case may be, executed by
the Securitization Trustee by manual signature, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered under this Securitization
Trust Agreement.
SECTION 4.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Certificate Registrar shall maintain a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the
Certificate Register shall provide for the registration of Certificates and
transfers and exchanges of Certificates as provided in this Securitization Trust
Agreement. The Securitization Trustee is hereby initially appointed Certificate
Registrar for the purpose of registering Certificates and transfers and
exchanges of Certificates as provided in this Securitization Trust Agreement.
In the event that, subsequent to the Closing Date, the Securitization Trustee
notifies the Servicer that it is unable to act as Certificate Registrar, the
Servicer shall appoint another bank or trust company, having an office or agency
located in the Borough of Manhattan, The City of New York, agreeing to act in
accordance with the provisions of this Securitization Trust Agreement applicable
to it, and
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otherwise acceptable to the Securitization Trustee, to act as successor
Certificate Registrar under this Securitization Trust Agreement.
The Transferor Certificate shall be owned by the Transferor and may not be
transferred, as provided by Section 5.06.
No transfer of a Class B Certificate shall be made unless the registration
requirements of the Securities Act and any applicable state securities laws are
complied with, or such transfer is exempt from the registration requirements
under the Securities Act and such state securities laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such state securities laws, the Securitization Trustee shall require that the
transferee execute a representation letter acceptable to and in form and
substance satisfactory to the Securitization Trustee (PROVIDED that the forms
attached as Exhibits D-1 and D-2 shall be deemed acceptable if they are
completed in a manner acceptable to the Securitization Trustee) certifying to
the Securitization Trustee the facts surrounding such transfer, which
representation letter shall not be an expense of the Securitization Trustee, the
Transferor or the Servicer. The Holder of a Class B Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the
Securitization Trustee, the Transferor and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with the Securities Act and such state laws. Neither the Transferor, the
Servicer nor the Securitization Trustee is under any obligation to register the
Class B Certificates under the Securities Act or any state securities laws.
Notwithstanding anything to the contrary contained herein, no resale or
other transfer of a Class B Certificate or any interest therein shall be made
unless (i) immediately after giving effect to such resale or other transfer,
there would be less than 100 Class B Certificateholders and (ii) the
Securitization Trustee shall have received either a representation letter or
Opinion of Counsel from the prospective transferee of such Class B Certificate,
in form and substance satisfactory to the Transferor and the Securitization
Trustee (provided that the forms attached as Exhibits D-1 and D-2 shall be
deemed acceptable), to the effect that (A) such transferee will not acquire such
Class B Certificate with the assets of any "employee benefit plan" as defined in
Section 3(3) of ERISA, (B) no "prohibited transaction" under ERISA or the Code
will occur in connection with such prospective transferee's acquisition of such
Class B Certificate, (C) the acquisition of such Class B Certificate is subject
to a statutory or administrative exemption, specified in such letter or opinion,
from the "prohibited transaction" provisions of ERISA and the Code, and (D) if
the transferee is a partnership, grantor trust or S corporation for federal
income tax purposes (a "Flow-Through Entity"), any Class B Certificates owned by
such Flow-Through Entity will represent less than 50% of the value of all the
assets owned by such Flow-Through Entity and no special allocation of income,
gain, loss, deduction or credit from such Class B Certificates will be made
among the beneficial owners of such Flow-Through Entity. Each prospective
transferee of any Class B Certificate will be required to represent to the
Securitization Trustee whether it
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will purchase such Class B Certificate with the assets of an "employee benefit
plan" as defined under ERISA or other benefit plan investor.
The Class B Certificates, this Securitization Trust Agreement and related
documents may be amended or supplemented from time to time to modify
restrictions on and procedures for resale and other transfer of such Class B
Certificates to reflect any change in applicable law or regulation (or the
interpretation thereof) or practices relating to the resale or transfer of
restricted securities generally.
(b) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office of the Securitization Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Securitization
Trustee as Certificate Registrar, who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, the City of New York, or the appropriate
office of any successor Certificate Registrar, the Securitization Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class in authorized
denominations of a like aggregate principal amount.
(c) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class of authorized denominations
of a like aggregate principal amount, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Securitization Trustee on behalf of the 1997-A
Securitization Trust shall execute, authenticate and deliver the Certificates
that the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Securitization Trustee and the Certificate Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to any Holder for any registration
of transfer or exchange of Certificates, but the Securitization Trustee may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
(e) All Certificates surrendered for registration of transfer and
exchange shall be cancelled and subsequently destroyed by the Securitization
Trustee.
(f) No Class B Certificate shall be listed for trading on any
recognized securities exchange.
SECTION 4.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
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If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Certificate Registrar and the Securitization Trustee such security or
indemnity as may be required by them to save each of them and the Securitization
Trust harmless, then, in the absence of notice that such Certificate has been
acquired by a bona fide purchaser, the Securitization Trustee on behalf of the
1997-A Securitization Trust shall execute and the Securitization Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
fractional undivided interest. In connection with the issuance of any new
Certificate under this Section, the Securitization Trustee may require the
payment by the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the 1997-A Securitization Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time, and any such lost, stolen or destroyed Certificate shall, upon
issuance of any such duplicate Certificate, be null, void and of no effect.
SECTION 4.05. PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the Securitization Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 3.01 and for all other purposes whatsoever,
and neither the Securitization Trustee, the Certificate Registrar nor any of
their respective agents shall be affected by any notice to the contrary.
SECTION 4.06. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
The Certificate Registrar shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Certificate Registrar of a written
request therefor from the Servicer, a list, in such form as the Servicer may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If three or more Certificateholders or holders of
Investor Certificates evidencing not less than 25% of the aggregate Percentage
Interests of any Class (hereinafter referred to as "Applicants") apply in
writing to the Securitization Trustee, and such application states that the
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Securitization Trust Agreement or under the
Certificates and such application is accompanied by a copy of the communication
that such Applicants propose to transmit, then the Securitization Trustee shall,
within five Business Days after the receipt of such application, afford such
Applicants access, during normal business hours, to the current list of Investor
Certificateholders. Every
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Certificateholder, by receiving and holding a Certificate, agrees with the
Servicer and the Securitization Trustee that neither the Servicer nor the
Securitization Trustee shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Certificateholders
under the Agreement, regardless of the source from which such information was
derived.
SECTION 4.07. MAINTENANCE OF OFFICE OR AGENCY.
The Securitization Trustee shall maintain in the Borough of Manhattan, The
City of New York, an office or offices or agency or agencies where Certificates
may be surrendered for registration of transfer or exchange. The initial such
agency shall be c/o First Trust of New York, National Association, 100 Wall
Street, 20th Floor, New York, New York 10005; PROVIDED that a copy of any such
Certificate surrendered shall be sent to the Securitization Trustee at the
Corporate Trust Office. The Securitization Trustee shall give prompt written
notice to the Transferor, the Servicer and the Certificateholders of any change
in the location of any such office or agency. Notices and demands to or upon
the Securitization Trustee in respect of the Certificates and this
Securitization Trust Agreement shall not be sent to such office or agency, but
shall be sent as set forth in Section 10.02.
SECTION 4.08. TEMPORARY CERTIFICATES.
Pending the preparation of definitive Class A-1 Certificates, Class A-2
Certificates or Class A-3 Certificates, the Securitization Trustee, on behalf of
the 1997-A Securitization Trust, may execute, authenticate and deliver,
temporary Class A-1 Certificates, Class A-2 Certificates or Class A-3
Certificates that are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Class A-1 Certificates, Class A-2 Certificates or Class A-3
Certificates in lieu of which they are issued. If temporary Class A-1
Certificates, Class A-2 Certificates or Class A-3 Certificates are issued, the
Transferor will cause definitive Class A-1 Certificates, Class A-2 Certificates
or Class A-3 Certificates to be prepared without unreasonable delay. After the
preparation of definitive Class A-1 Certificates, Class A-2 Certificates, Class
A-3 Certificates, the temporary Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates shall be exchangeable for definitive Class A-1
Certificates, Class A-2 Certificates or Class A-3 Certificates upon surrender of
the temporary Class A-1 Certificates, Class A-2 Certificates, or Class A-3
Certificates at the office or agency to be maintained as provided in Section
4.07, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Class A Certificates, the Securitization Trustee shall execute
and authenticate and deliver in exchange therefor a like principal amount of
definitive Class A Certificates in authorized denominations. Until so exchanged
the temporary Class A Certificates shall in all respects be entitled to the same
benefits under the Agreement as definitive Class A Certificates.
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SECTION 4.09. BOOK-ENTRY CERTIFICATES.
The Class A-1 Certificates, the Class A-2 Certificates and the Class A-3
Certificates, upon original issuance will be issued in the form of one or more
typewritten certificates representing the Book-Entry Certificates, to be
delivered to DTC, the initial Clearing Agency, by, or on behalf of, the
Transferor. The certificate or certificates delivered to DTC evidencing such
Class A-1 Certificates, Class A-2 Certificates and Class A-3 Certificates shall
initially be registered on the Certificate Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Class A-1 Certificates, the Class A-2 Certificates or the Class A-3
Certificates, except as provided in Section 4.11. Unless otherwise specified in
this Securitization Trust Agreement, unless and until definitive, fully
registered Class A-1 Certificates, Class A-2 Certificates, and Class A-3
Certificates (the "Definitive Certificates") have been issued to Certificate
Owners pursuant to Section 4.11:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Transferor, the Servicer, the Certificate Registrar and the
Securitization Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Class A-1 Certificates, the
Class A-2 Certificates and the Class A-3 Certificates) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of the Agreement, the provisions of this Section shall
control;
(iv) the rights of Certificate Owners shall be exercised only through
(or through procedures established by) the Clearing Agency and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued pursuant to Section
4.11, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates to such Clearing Agency
Participants; and
(v) whenever this Securitization Trust Agreement requires or permits
actions to be taken based upon instructions or directions of Holders of
Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates
evidencing a specified aggregate Percentage Interest thereof the Clearing
Agency shall be deemed to represent such percentage (if and to the extent
that it will act on behalf of Certificate Owners and/or Clearing Agency
Participants) only to the extent that it has received instructions to such
effect from Certificate Owners and/or Clearing Agency Participants owning
or representing,
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respectively, such required percentages of the beneficial interest in Class
A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates and has
delivered such instructions to the Securitization Trustee.
SECTION 4.10. NOTICES TO CLEARING AGENCY.
Whenever notice or other communication to the Class A-1 Certificateholders,
Class A-2 Certificateholders or the Class A-3 Certificateholders is required
under this Securitization Trust Agreement, other than to the Holder of the
Residual Certificate with respect to the Class A-1 Certificates, the Class A-2
Certificates or the Class A-3 Certificates, respectively, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant to
Section 4.11, the Securitization Trustee and the Servicer shall give all such
notices and communications specified herein to be given to Holders of the Class
A-1 Certificates, the Class A-2 Certificates or the Class A-3 Certificates to
the Clearing Agency.
SECTION 4.11. DEFINITIVE CERTIFICATES.
If (i)(A) the Transferor advises the Securitization Trustee in writing that
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities as described in the letter of representations among the
Transferor, the Securitization Trustee and the Clearing Agency and (B) the
Securitization Trustee or the Transferor is unable to locate a qualified
successor, (ii) the Transferor at its option, advises the Securitization Trustee
in writing that it elects to terminate the book-entry system through the
Clearing Agency, or (iii) after the occurrence of an Early Amortization Event,
Certificate Owners representing beneficial interests in the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates (voting
together as a single class) aggregating not less than 51% of the Percentage
Interests advise the Securitization Trustee and the Clearing Agency through the
Clearing Agency Participants in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Certificate Owners, then the Securitization Trustee shall notify all Certificate
Owners, through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Securitization Trustee of the Class A-1
Certificates, the Class A-2 Certificates or the Class A-3 Certificates by the
Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Securitization Trustee shall issue the Definitive
Certificates and deliver such Definitive Certificates in accordance with the
instructions of the Clearing Agency. None of the Transferor, the Certificate
Registrar or the Securitization Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Securitization Trustee shall recognize the Holders of the
Definitive Certificates as Class A-1 Certificateholders, Class A-2
Certificateholders or Class A-3 Certificateholders hereunder, as
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applicable. The Securitization Trustee shall not be liable if the
Securitization Trustee or the Transferor is unable to locate a qualified
successor Clearing Agency.
SECTION 4.12. TAX TREATMENT.
(a) It is the intention of the Transferor and the Investor
Certificateholders that the Investor Certificates will be indebtedness of the
Transferor for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. The Transferor,
the Securitization Trustee and each Holder of an Investor Certificate (or
Certificate Owner) by acceptance of its Investor Certificate (or, in the case of
a Certificate Owner, by virtue of such Certificate Owner's acquisition of a
beneficial interest therein) agree to treat the Investor Certificates (or
beneficial interest therein), for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as secured
indebtedness of the Transferor and to report the transactions contemplated by
this Securitization Trust Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of an Investor Certificate agrees
that it will cause any Certificate Owner acquiring an interest in a Certificate
through it to comply with this Securitization Trust Agreement as to treatment as
secured indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income.
Each Holder of an Investor Certificate also agrees that it will not be entitled
to any of the tax benefits related to the Contracts and Leased Vehicles,
including any of the depreciation deductions resulting therefrom.
(b) In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a), it is finally determined that the
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates
and/or the Class B Certificates do not evidence indebtedness of the Transferor
for all income and franchise tax purposes, but rather represent an equity
interest in the assets of the 1997-A Securitization Trust, then the Transferor,
the Securitization Trustee, each Holder of such Investor Certificate and each
Certificate Owner thereof, by virtue of acquiring a beneficial interest therein,
all agree (i) to treat such Investor Certificates, together with the Transferor
Certificate, as representing an interest in a partnership for all tax purposes,
(ii) to treat all payments in respect of such Investor Certificates (to the
extent not a return of capital) as a "guaranteed payment" thereon made pursuant
to Section 707(c) of the Code, and (iii) to allocate all other items of income,
gain, deduction, loss or credit with respect to the assets and operations of the
1997-A Securitization Trust to the Transferor.
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ARTICLE FIVE
THE TRANSFEROR
SECTION 5.01. REPRESENTATIONS OF TRANSFEROR.
The Transferor hereby makes the following representations on which the
Securitization Trustee relies in accepting the 1997-A SUBI Interest and 1997-A
SUBI Certificate in trust and authenticating the Certificates. The
representations speak as of the execution and delivery of this Securitization
Trust Agreement, but shall survive the sale, transfer and assignment of the
1997-A SUBI Interest and 1997-A SUBI Certificate to the Securitization Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Transferor is a corporation
duly incorporated and validly existing and in good standing under the laws of
the State of California, with power and authority to own its properties and to
conduct its business as such properties shall be currently owned and such
business is presently conducted, and has power, authority and legal right to
acquire, own and sell the 1997-A SUBI Interest and 1997-A SUBI Certificate.
(b) DUE REGISTRATION. The Transferor is duly registered as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property or
the conduct of its business requires such qualifications, except where the
failure to so qualify or to have obtained such licenses and approvals would not
have a material adverse effect on the earnings, business affairs or business
prospects of the Transferor.
(c) POWER AND AUTHORITY. The Transferor has the power and authority
to execute and deliver this Securitization Trust Agreement and to carry out its
terms, the Transferor has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Securitization
Trustee as part of the 1997-A Securitization Trust and has duly authorized such
sale and assignment to the Securitization Trustee by all necessary action; and
the execution, delivery and performance of this Securitization Trust Agreement
have been duly authorized by the Transferor by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATIONS. This Securitization Trust
Agreement evidences a valid sale, transfer and assignment of the 1997-A SUBI
Interest and 1997-A SUBI Certificate, enforceable against creditors of and
purchasers from the Transferor; and constitutes a legal, valid and binding
obligation of the Transferor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in general and by
general principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
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(e) NO VIOLATION. The consummation of the transactions contemplated
by this Securitization Trust Agreement and the fulfillment of the terms of this
Securitization Trust Agreement do not conflict with, result in any breach of any
of the terms and provisions of, nor constitute (with or without notice or lapse
of time) a default under, the certificate of incorporation of the Transferor, or
conflict with or violate any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Transferor is a party or
by which it is bound; nor result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than this Securitization Trust Agreement); nor violate
any law or, to the best of the Transferor's knowledge, any order, rule or
regulation applicable to the Transferor of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Transferor or its properties; which breach,
default, conflict, lien or violation would have a material adverse effect on the
earnings, business affairs or business prospects of the Transferor.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or to the Transferor's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Transferor or its properties: (i) asserting the
invalidity of this Securitization Trust Agreement or the Certificates, (ii)
seeking to prevent the issuance of the Certificates or the consummation of any
of the transactions contemplated by this Securitization Trust Agreement, (iii)
seeking any determination or ruling that might materially and adversely affect
the performance by the Transferor of its obligations under, or the validity or
enforceability of, this Securitization Trust Agreement or the Certificates or
(iv) relating to the Transferor and which might adversely affect the federal,
Delaware or Illinois income tax attributes of the Certificates.
(g) TITLE TO 1997-A SUBI CERTIFICATE. The Transferor has good title
to, and is the sole legal and beneficial owner of, the 1997-A SUBI Certificate,
free and clear of all Liens.
(h) CONSENTS AND APPROVALS. The Transferor has obtained or made all
necessary licenses, consents, approvals, waivers and notifications of creditors,
lessors and other nongovernmental Persons, in each case in connection with the
execution and delivery of this Securitization Trust Agreement and the
consummation of all the transactions herein contemplated, and the Transferor is
not required to obtain the consent of any other party or the consent, license,
approval, or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Securitization Trust
Agreement.
SECTION 5.02. LIABILITY OF TRANSFEROR; INDEMNITIES.
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(a) The Transferor shall be liable in accordance with this
Securitization Trust Agreement only to the extent of the obligations in this
Securitization Trust Agreement specifically undertaken by the Transferor in such
capacity under this Securitization Trust Agreement and shall have no other
obligations or liabilities hereunder.
(b) The Transferor agrees to be, and shall be, liable (as if the
1997-A Securitization Trust were a limited partnership under the [California
Limited Partnership Act] in which the Transferor is the general partner) without
limitation for all liabilities (including taxes), contracts, expenses, indemnity
payments and other charges of the 1997-A Securitization Trust, other than
distributions to Certificateholders.
SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, TRANSFEROR; CERTAIN LIMITATIONS.
(a) Any Person (i) into which the Transferor may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Transferor shall be a party or (ii) which may succeed to all or
substantially all of the business of the Transferor, shall be the successor to
the Transferor under this Securitization Trust Agreement without the execution
or filing of any document or any further act on the part of any of the parties
to this Securitization Trust Agreement, except that if the Transferor in any of
the foregoing cases is not the surviving entity, then the surviving entity shall
execute an agreement of assumption to perform every obligation of the Transferor
either generally or specifically as provided herein. The Transferor shall
provide notice of any merger, consolidation or succession pursuant to this
Section to each Rating Agency and shall receive from each Rating Agency a letter
to the effect that such merger, consolidation, or succession will not result in
a qualification, downgrading or withdrawal of the then-current rating assigned
to any Rated Certificates.
(b)(i) Subject to subparagraph (ii) below, the purpose of the
Transferor shall be to engage in any lawful activity for which a corporation may
be organized under the laws of the State of California.
(ii) Notwithstanding subparagraph (b)(i) above, the purpose of the
Transferor shall be limited to the following purposes:
(A) to acquire from time to time from TMCC all right, title and
interest in and to the SUBI Certificates evidencing units of beneficial interest
in the SUBI Assets;
(B) to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the SUBI Certificates and SUBI Assets, related insurance
policies, related agreements with TMCC and any proceeds or further rights
associated with any of the foregoing;
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(C) to sell, assign, transfer, convey and/or pledge all or any part
of each such SUBI Certificate to one or more trusts or other persons or legal
entities pursuant to one or more Securitization Trust Agreements, indentures or
similar agreements (the "Agreements") to be entered into by and among TMCC, as
servicer, the Transferor and each other pledgee or transferee named therein (the
"transferees");
(D) to sell any series or class of asset-backed certificates or other
securities issued by or evidencing interests in the transferees or obligations
of the transferees or the Transferor under the related Agreements, including the
Investor Certificates ("Securities");
(E) to hold and enjoy all of the rights and privileges of any
Securities so issued under the related Securitization Trust Agreements;
(F) to perform its obligations under the Securitization Trust
Agreements, indentures or similar agreements; and
(G) to engage in any activity and to exercise any powers permitted to
corporations under the laws of the State of California that are related or
incidental to the foregoing and necessary, convenient and advisable to
accomplish the foregoing.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Transferor shall not do any of the following:
(i) engage in any business or activity other than as set forth in
clause (b) above;
(ii)without the affirmative vote of a majority of the members of the
Board of Directors of the Transferor (which must include the affirmative
vote of all Independent Directors of the Transferor, as required by
certificate of incorporation of the Transferor), (A) dissolve or liquidate,
in whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law relating
to bankruptcy, (D) consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Transferor or a substantial part of its property, (E) make a general
assignment for the benefit of creditors, (F) admit in writing its inability
to pay its debts generally as they become due, or (G) take any corporate
action in furtherance of the actions set forth in clauses (A) through (F)
above;
(iii) without the unanimous affirmative vote of the members of the
Board of Directors of the Transferor, merge or consolidate with any other
Person or sell all or substantially all of its assets or acquire all or
substantially all of the assets or capital stock
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or other ownership interest of any other Person, (provided that such
restrictions shall not limit the acquisition of SUBI Certificates or the
ability of the Transferor to sell, assign, transfer, convey and/or pledge
all or any part of any SUBI Certificate in accordance with Section
5.03(b)(ii) hereof, financing, and refinancing of, or otherwise dealing
with, beneficial interests in the Titling Trust in accordance with the
terms of subparagraph (b)(ii) above, which shall not be otherwise
restricted by this Section 5.03(c)); or
(iv) so long as any outstanding debt of the Transferor or Securities
are rated by any nationally recognized statistical rating agency issue,
unsecuritized notes or otherwise borrow money unless
(A) the Transferor has made a written request to the related
nationally recognized rating agency to issue unsecured notes or incur borrowings
and such notes or borrowings are rated by the related nationally recognized
rating agency the same as or higher than the rating afforded any outstanding
rated debt or Securities, or
(B) such notes or borrowings (1) are fully subordinated (and which
shall provide for payment only after payment in respect of all outstanding rated
debt and/or Securities) or are nonrecourse against any assets of the Transferor
other than the assets pledged to secure such notes or borrowings, (2) do not
constitute a claim against the Transferor in the event that such assets are
insufficient to pay such notes or borrowings, and (3) where such notes or
borrowings are secured by the rated debt or Securities, are fully subordinated
(and which shall provide for payment only after payment in respect of all
outstanding rated debt and/or Securities) to such rated debt or Securities.
SECTION 5.04. LIMITATION ON LIABILITY OF TRANSFEROR AND OTHERS.
The Transferor and any director or officer or employee or agent of the
Transferor may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising under this Securitization Trust Agreement.
SECTION 5.05. TRANSFEROR MAY OWN INVESTOR CERTIFICATES.
Each of the Transferor and any Person controlling, controlled by or under
common control with the Transferor may in its individual or any other capacity
become the owner or pledgee of Investor Certificates with the same rights as it
would have if it were not the Transferor or such an affiliate thereof except as
otherwise specifically provided in the definition of the term
"Certificateholder." Investor Certificates so owned by or pledged to the
Transferor or such controlling or commonly controlled Person shall have an equal
and proportionate benefit under the provisions of this Securitization Trust
Agreement, without preference, priority or distinction
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as among all of the Investor Certificates. The Transferor will give notice to
each Rating Agency if any such controlling or commonly controlled Person shall
at any time become the owner or pledgee of Investor Certificates.
SECTION 5.06. NO TRANSFER.
The Transferor on behalf of itself and its successors and assigns hereby
covenants that it will not transfer, pledge or assign to any Person the
Transferor Certificate or any part of its right to receive any Excess
Collections pursuant to Section 3.01(c).
SECTION 5.07. TAX MATTERS PARTNER.
In the event that the 1997-A Securitization Trust is recharacterized as a
partnership for tax purposes, the Transferor shall act as "Tax Matters Partner"
(i) to represent the Transferor and the Class B Certificateholders, in their
capacities as partners in a partnership for tax purposes, before taxing
authorities or courts of competent jurisdiction in any tax matters affecting the
1997-A Securitization Trust as a tax partnership; and (ii) to execute any
agreements or other documents relating to or affecting such tax matters,
including agreements or other documents binding the Class B Certificateholders
with respect to such tax matters or otherwise affecting their rights, including,
but not limited to, extending the statute of limitations for assessment of tax
deficiencies against the Class B Certificateholders and adjusting the 1997-A
Securitization Trust's federal, state or local tax returns. The Transferor
shall not be liable to the 1997-A Securitization Trust or to any
Certificateholder for any action taken or omitted by the Transferor with regard
to such tax matters or otherwise as a result of its holding the position of Tax
Matters Partner.
ARTICLE SIX
THE SECURITIZATION TRUSTEE
SECTION 6.01. DUTIES OF TRUSTEE.
(a) The Securitization Trustee, both prior to and after the occurrence of
an Event of Servicing Termination under the 1997-A SUBI Servicing Supplement,
undertakes to perform such duties and only such duties as are specifically set
forth in this Securitization Trust Agreement.
(b) The Securitization Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Securitization Trustee that shall be specifically
required to be furnished pursuant to any provision of this Securitization
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Trust Agreement, shall examine them to determine whether they conform on their
face to the requirements of this Securitization Trust Agreement.
(c) No provision of this Securitization Trust Agreement shall be construed
to relieve the Securitization Trustee from liability for its own negligent
action, its own negligent failure to act, its own bad faith or its own willful
misfeasance; PROVIDED, HOWEVER, that
(i) the duties and obligations of the Securitization Trustee shall be
determined solely by the express provisions of this Securitization Trust
Agreement, the Securitization Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Securitization Trust Agreement, no implied covenants or obligations
shall be read into this Securitization Trust Agreement against the
Securitization Trustee, the permissive right of the Securitization Trustee
to do things enumerated in this Securitization Trust Agreement shall not be
construed as a duty and, in the absence of bad faith on the part of the
Securitization Trustee, the Securitization Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Securitization Trustee and conforming on their face to the requirements of
this Securitization Trust Agreement;
(ii) the Securitization Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Securitization Trustee was negligent in performing
its duties in accordance with the terms of this Securitization Trust
Agreement; and
(iii) the Securitization Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken in good faith
in accordance with the direction of the Holders of Investor Certificates
evidencing not less than 51% of the aggregate Percentage Interest relating
to the time, method and place of conducting any proceeding for any remedy
available to the Securitization Trustee, or exercising any trust or power
conferred upon the Securitization Trustee, under this Securitization Trust
Agreement or the Titling Trust Agreement (as supplemented by the 1997-A
SUBI Supplement).
(d) The Securitization Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties under this Securitization Trust Agreement, or in the exercise of
any of its rights or powers, if there shall be reasonable grounds for believing
that the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
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(e) All information obtained by the Securitization Trustee regarding
the Obligors and the Contracts contained in the 1997-A SUBI, whether upon the
exercise of its rights under this Securitization Trust Agreement or otherwise,
shall be maintained by the Securitization Trustee in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by any
applicable law or regulation or pursuant to subpoena.
SECTION 6.02. CERTAIN MATTERS AFFECTING THE SECURITIZATION TRUSTEE.
(a) Except as otherwise provided in Section 6.01:
(i) the Securitization Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of an authorized signatory, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) the Securitization Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this
Securitization Trust Agreement in good faith and in accordance with such
Opinion of Counsel;
(iii) the Securitization Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Securitization
Trust Agreement or the Titling Trust Agreement (as supplemented by the
1997-A SUBI Supplement), or to institute, conduct or defend any litigation
under this Securitization Trust Agreement or the Titling Trust Agreement
(as supplemented by the 1997-A SUBI Supplement), or in relation to this
Securitization Trust Agreement or the Titling Trust Agreement (as
supplemented by the 1997-A SUBI Supplement), at the request, order or
direction of any of the Certificateholders pursuant to the provisions of
this Securitization Trust Agreement or the Titling Trust Agreement (as
supplemented by the 1997-A SUBI Supplement), unless such Certificateholders
shall have offered to the Securitization Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby;
(iv) the Securitization Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Securitization Trust Agreement;
(v) the Securitization Trustee shall not be bound to recalculate,
reverify, or make any investigation into the facts of matters stated in any
resolution, certificate, statement,
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instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
Holders of Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interest of any Class; PROVIDED, HOWEVER, that if the
payment within a reasonable time to the Securitization Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Securitization Trustee, not
reasonably assured to the Securitization Trustee by the security afforded
to it by the terms of this Securitization Trust Agreement, the
Securitization Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding; the reasonable
expense of every such examination shall be paid by the Transferor or, if
paid by the Securitization Trustee, shall be reimbursed by the Transferor
upon demand; and nothing in this clause shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors; and
(vi) the Securitization Trustee may execute any of the trusts or
powers under this Securitization Trust Agreement or perform any duties
under this Securitization Trust Agreement either directly or by or through
agents or attorneys or a custodian.
(b) No Certificateholder will have any right to institute any
proceeding with respect to this Securitization Trust Agreement except upon
satisfying the conditions set forth in Section 9.03(c).
SECTION 6.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR CONTRACTS.
The Securitization Trustee shall make no representations as to the validity
or sufficiency of this Securitization Trust Agreement or of the Certificates
(other than the execution by the Securitization Trustee on behalf of the 1997-A
Securitization Trust of, and the certificate of authentication on, the
Certificates), or of the 1997-A SUBI Interest or 1997-A SUBI Certificate. The
Securitization Trustee shall have no obligation to perform any of the duties of
the Transferor unless explicitly set forth in this Securitization Trust
Agreement. The Securitization Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
the 1997-A SUBI Interest or 1997-A SUBI Certificate or any 1997-A Contract, any
ownership interest in any 1997-A Leased Vehicle, or the maintenance of any such
ownership interest, or for or with respect to the efficacy of the 1997-A
Securitization Trust or its ability to generate the payments to be distributed
to Certificateholders under this Securitization Trust Agreement, including
without limitation the validity of the assignment of the 1997-A SUBI Interest or
1997-A SUBI Certificate to the 1997-A Securitization Trust or of any intervening
assignment; the existence, condition, location and ownership of any 1997-A
Contract or 1997-A Leased Vehicle; the existence and enforceability of any
physical damage or credit life or credit disability insurance; the existence and
contents of any 1997-A Contract or any computer or other record thereof; the
completeness of any 1997-A Contract; the performance or enforcement of any
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Contract; the compliance by the Transferor with any covenant or the breach by
the Transferor of any warranty or representation made under this Securitization
Trust Agreement or in any related document and the accuracy of any such warranty
or representation prior to the Securitization Trustee's receipt of notice or
other discovery of any noncompliance therewith or any breach thereof; the acts
or omissions of the Transferor or the Servicer; or any action by the
Securitization Trustee taken at the instruction of the Servicer PROVIDED,
HOWEVER, that the foregoing shall not relieve the Securitization Trustee of its
obligation to perform its duties under this Securitization Trust Agreement.
Except with respect to a claim based on the failure of the Securitization
Trustee to perform its duties under this Securitization Trust Agreement or based
on the Securitization Trustee's willful misconduct, bad faith or negligence, no
recourse shall be had for any claim based on any provision of this
Securitization Trust Agreement, the Certificates, the 1997-A SUBI Interest or
1997-A SUBI Certificate or assignment thereof against the institution serving as
Trustee in its individual capacity. The Securitization Trustee shall not have
any personal obligation, liability or duty whatsoever to any Certificateholder
or any other Person with respect to any such claim, and any such claim shall be
asserted solely against the 1997-A Securitization Trust or any indemnitor who
shall furnish indemnity as provided in this Securitization Trust Agreement. The
Securitization Trustee shall not be accountable for the use or application by
the Transferor of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Servicer in
respect of the 1997-A SUBI Interest or 1997-A SUBI Certificate.
SECTION 6.04. TRUSTEE MAY OWN CERTIFICATES.
The Securitization Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not Trustee.
SECTION 6.05. TRUSTEE'S FEES AND EXPENSES.
The Securitization Trustee shall be entitled to reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by this Securitization Trust Agreement
and in the exercise and performance of any of the powers and duties of the
Securitization Trustee under this Securitization Trust Agreement, and payment or
reimbursement upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Securitization Trustee in its capacity as
Trustee in accordance with any of the provisions of this Securitization Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence, willful misfeasance or bad faith or that is the responsibility of
Certificateholders under this Securitization Trust Agreement. Such compensation
and reimbursement shall be paid as set forth in Section 3.01(b) hereof.
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SECTION 6.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Securitization Trustee under this Securitization Trust Agreement shall
at all times be a national banking association or state banking institution
[having its corporate trust office in the same State as the location of the
Corporate Trust Office as specified in this Securitization Trust Agreement]; and
organized and doing business under the laws of such State or the United States;
authorized under such laws to exercise corporate trust powers; having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authorities; and having a long-term deposit
rating no lower than Baa3 by Moody's, so long as Moody's is a Rating Agency, or
be otherwise acceptable to each Rating Agency, as evidenced by a letter to such
effect from each of them.
If the Securitization Trustee shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Securitization Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Securitization Trustee shall
resign immediately in the manner and with the effect specified in Section 6.07.
SECTION 6.07. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Securitization Trustee may at any time resign and be
discharged from the trusts created by this Securitization Trust Agreement by
giving written notice thereof to the Transferor. Upon receiving such notice of
resignation, the Transferor shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(b) If at any time the Securitization Trustee shall cease to be
eligible in accordance with the provisions of Section 6.06 and shall fail to
resign after written request therefor by the Transferor, or if at any time the
Securitization Trustee shall be legally unable to act, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Securitization Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Securitization Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Transferor may remove the
Securitization Trustee. If it shall remove the Securitization Trustee under the
authority of the immediately preceding sentence, the Transferor shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
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which instrument shall be delivered to the Securitization Trustee so removed and
one copy to the successor Trustee, and payment of all fees owed to the outgoing
Trustee.
(c) Any resignation or removal of the Securitization Trustee and
appointment of a successor Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor Trustee as provided in Section 6.08. The Servicer shall give each
Rating Agency notice of any such resignation or removal of the Securitization
Trustee and appointment and acceptance of a successor Trustee.
SECTION 6.08. SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 6.07 shall execute,
acknowledge and deliver to the Transferor and to its predecessor Trustee an
instrument accepting such appointment under this Securitization Trust Agreement,
and thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Securitization Trust Agreement, with
like effect as if originally named as Trustee. The predecessor Trustee shall
deliver to the successor Trustee all documents and statements held by it under
this Securitization Trust Agreement; and the Transferor and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations. No successor
Trustee shall accept appointment as provided in this Section unless at the time
of such acceptance such successor Trustee shall be eligible under the provisions
of Section 6.06. Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Transferor shall cause notice of the successor of
such Trustee under this Securitization Trust Agreement to be mailed to all
Certificateholders at their addresses as shown in the Certificate Register and
shall give notice by mail to each Rating Agency. If the Transferor fails to
mail or cause to be mailed such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Transferor.
SECTION 6.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation (i) into which the Securitization Trustee may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Securitization Trustee shall be a party, or (iii) which may succeed
to the corporate trust business of the Securitization Trustee, shall be the
successor of the Securitization Trustee hereunder, provided such corporation
shall be eligible pursuant to Section 6.06, without the execution or filing of
any instrument or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, except that if the
Securitization Trustee in any of the foregoing cases is not the surviving
entity, then the surviving entity shall execute an agreement of assumption to
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perform every obligation of the Securitization Trustee, either generally or
particularly as provided herein. Notice of any such event shall be given by the
Securitization Trustee to each Rating Agency.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Securitization Trust
Agreement, at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Securitization Trust may at the time be
located, the Transferor and the Securitization Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Securitization Trustee to act as co-trustee, jointly
with the Securitization Trustee, or separate trustee or separate trustees, of
all or any part of the 1997-A Securitization Trust, and to vest in such Person,
in such capacity and for the benefit of the Certificateholders, such title to
the 1997-A Securitization Trust, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Transferor and the Securitization Trustee may consider necessary or
desirable. If the Transferor shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, the Securitization
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee under this Securitization Trust Agreement shall be required to
meet the terms of eligibility as a successor Trustee pursuant to Section 6.06
and no notice of a successor Trustee pursuant to Section 6.08 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 6.08.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Securitization Trustee shall be conferred upon and exercised or
performed by the Securitization Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Securitization
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed,
the Securitization Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the 1997-A Securitization
Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Securitization Trustee;
(ii) no trustee under this Securitization Trust Agreement shall be
personally liable by reason of any act or omission of any other trustee
under this Securitization Trust Agreement; and
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(iii) the Transferor and the Securitization Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Securitization Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Securitization
Trust Agreement and the conditions of this Section. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Securitization Trustee or separately, as may be provided
therein, subject to all the provisions of this Securitization Trust Agreement,
specifically including every provision of this Securitization Trust Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Securitization Trustee. Each such instrument shall be filed with the
Securitization Trustee and a copy thereof given to the Transferor and the
Servicer.
Any separate trustee or co-trustee may at any time appoint the
Securitization Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Securitization Trust Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Securitization Trustee, to the
extent permitted by law, without the appointment of a new or successor trustee.
Notwithstanding anything to the contrary in this Securitization Trust Agreement,
the appointment of any separate trustee or co-trustee shall not relieve the
Securitization Trustee of its obligations and duties under this Securitization
Trust Agreement.
SECTION 6.11. REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Securitization Trustee makes the following representations and
warranties on which the Transferor and Certificateholders may rely:
(i) ORGANIZATION AND GOOD STANDING. The Securitization Trustee is a
national banking association organized, existing and in good standing under
the laws of the United States of America.
(ii) POWER AND AUTHORITY. The Securitization Trustee has full power,
authority and right to execute, deliver and perform this Securitization
Trust Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Securitization Trust
Agreement.
(iii) DUE EXECUTION. This Securitization Trust Agreement has been
duly executed and delivered by the Securitization Trustee.
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(iv) ENFORCEABILITY. This Securitization Trust Agreement constitutes
the legal, valid and binding obligation of the Securitization Trustee,
enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity.
SECTION 6.12. TAX RETURNS.
The Securitization Trustee shall, at the direction of the Servicer and on
behalf of the Transferor, prepare or shall cause to be prepared any required
federal tax information returns (in a manner consistent with the treatment of
the Investor Certificates as indebtedness) and shall file and distribute such
forms as required by law. The Servicer shall prepare or cause to be prepared
any federal and state tax returns that may be required with respect to the
1997-A Securitization Trust or the Securitization Trust assets and shall deliver
any such returns to the Securitization Trustee for signature at least five days
prior to the date such returns are required by law to be filed.
SECTION 6.13. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.
All rights of action and claims under this Securitization Trust Agreement
or the Certificates may be prosecuted and enforced by the Securitization Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Securitization Trustee shall be brought in its own name as trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Securitization
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been obtained.
SECTION 6.14. SUIT FOR ENFORCEMENT.
If an Event of Servicing Termination shall occur and be continuing under
the Titling Trust Agreement, as supplemented by the 1997-A SUBI Servicing
Supplement with respect to the 1997-A SUBI Portfolio, the Securitization
Trustee, in its discretion may, subject to the provisions of Sections 6.01 and
6.02 hereof and Section 6.01(b) of the 1997-A SUBI Servicing Supplement, proceed
to protect and enforce its rights and the rights of the Certificateholders under
this Securitization Trust Agreement, the Titling Trust Agreement and the 1997-A
SUBI Servicing Supplement by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained herein or therein or in aid of the execution of any power granted
herein or therein or for the enforcement of any other legal, equitable or other
remedy as the Securitization Trustee, being advised by counsel, shall deem
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most effectual to protect and enforce any of the rights of the Securitization
Trustee or the Certificateholders.
SECTION 6.15. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
Holders of Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interest shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Securitization Trustee under this Securitization Trust Agreement, or exercising
any trust or power conferred on the Securitization Trustee by this
Securitization Trust Agreement; PROVIDED, HOWEVER, that (a) if any greater
Percentage Interest is required to cause any action to be taken under the
Titling Trust Agreement or the 1997-A SUBI Supplement by the Securitization
Trustee in its capacity as a transferee of the 1997-A SUBI Certificate, the
greater Percentage Interest shall prevail; (b) subject to Sections 6.01 and
6.02, the Securitization Trustee shall have the right to decline to follow any
such direction if the Securitization Trustee being advised by counsel determines
that the action so directed may not lawfully be taken, or if the Securitization
Trustee in good faith shall determine that the proceedings so directed would be
illegal or subject it to personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and (c) nothing in
this Securitization Trust Agreement shall impair the right of the Securitization
Trustee to take any action deemed proper by the Securitization Trustee and which
is not inconsistent with such direction by the Certificateholders.
SECTION 6.16. NO PETITION.
The Securitization Trustee covenants and agrees that prior to the date
which is one year and one day after the last date upon which (a) each Class of
Investor Certificates has been paid in full, and (b) all obligations due under
any other Securitized Financing have been paid in full, the Securitization
Trustee will not institute against, or join any other Person in instituting
against the Transferor, TMCC, the Titling Trustee or the Titling Trust any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceedings under any federal or state bankruptcy or similar law. The
foregoing shall not limit the Securitization Trustee's right to file any claim
in or otherwise take actions with respect to any such proceeding instituted by
any Person not under such a constraint. This Section shall survive the
termination of this Securitization Trust Agreement or the resignation or removal
of the Securitization Trustee under this Securitization Trust Agreement.
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ARTICLE SEVEN
TERMINATION
SECTION 7.01. TERMINATION OF THE 1997-A SECURITIZATION TRUST.
(a) The 1997-A Securitization Trust and the respective obligations and
responsibilities of the Transferor and the Securitization Trustee shall
terminate upon the earliest of (i) the purchase as of any Distribution Date by
the Transferor of the corpus of the 1997-A Securitization Trust as described in
Section 7.02 (except that the Securitization Trust shall continue solely for the
limited purposes set forth in (b) and (c) below), (ii) the day following the
Distribution Date upon which all Investor Certificates have been paid in full
and after which there is no unreimbursed Class A-1 Certificate Principal Loss
Amount, Class A-2 Certificate Principal Loss Amount, Class A-3 Certificate
Principal Loss Amount, Class B Certificate Principal Loss Amount, Class A-1
Certificate Principal Loss Interest Amount, Class A-2 Certificate Principal Loss
Interest Amount, Class A-3 Certificate Principal Loss Interest Amount, Class B
Certificate Principal Loss Interest Amount, Class B Certificate Principal
Carryover Shortfall or Class B Certificate Principal Carryover Shortfall
Interest Amount or (iii) the expiration, disposition or termination of the
1997-A SUBI Interest; PROVIDED, HOWEVER, that in no event shall the trust
created by this Securitization Trust Agreement continue beyond the expiration of
21 years from the death of the last survivor of the descendants of William
Jefferson Clinton of the State of Arkansas, living on the date of the Agreement.
The Transferor shall promptly notify the Securitization Trustee and each Rating
Agency of any prospective termination of the 1997-A Securitization Trust.
(b) Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the
Securitization Trustee for payment of the final distribution and retirement of
the Certificates, shall be given promptly by the Securitization Trustee by
letter to Certificateholders mailed not earlier than the 15th day and not later
than the 30th day prior to the date on which such final distribution is expected
to occur specifying (i) the Distribution Date upon which final payment of the
Certificates shall be made upon presentation and surrender of Certificates at
the Corporate Trust Office or such other office of the Securitization Trustee
therein specified, (ii) the amount of any such final payment and (iii) if
applicable, that the Record Date otherwise applicable to such Distribution Date
is not applicable, payments being made only upon presentation and surrender of
the Certificates at the Corporate Trust Office or such other office of the
Securitization Trustee therein specified. The Securitization Trustee shall give
such notice to the Certificate Registrar (if other than the Securitization
Trustee) at the time such notice is given to Certificateholders. In the event
such notice is given, in the case of an optional purchase of the Securitization
Trust corpus pursuant to Section 7.02, the Transferor shall deposit the amount
specified in Section 7.02. Upon presentation and surrender of the Certificates,
the Securitization Trustee shall cause to be
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distributed to Certificateholders so surrendering amounts distributable on such
Distribution Date pursuant to Section 3.01. No further interest will accrue
with respect to any Investor Certificate from and after the final Distribution
Date with respect thereto.
(c) In the event that all of the Certificateholders shall not have
surrendered their Certificates for retirement within six months after the date
specified in the above-mentioned written notice, the Securitization Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for retirement and receive the final distribution
with respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for retirement, the Securitization
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain subject to this Securitization Trust Agreement. Any funds
remaining in the Securitization Trust after exhaustion of such remedies shall be
distributed by the Securitization Trustee to the [United Way].
SECTION 7.02. OPTIONAL PURCHASE OF 1997-A SUBI INTEREST.
(a) On each Distribution Date following the last day of a Collection
Period as of which the Certificate Balance shall be less than or equal to ten
percent (10%) of the Initial Certificate Balance, the Transferor shall have the
option to purchase the Investor Certificateholders' interest in the corpus of
the 1997-A Securitization Trust. To exercise such option, the Transferor shall
notify the Securitization Trustee and the Servicer, in writing, no later than
the tenth day of the month preceding the month in which the Distribution Date as
of which such purchase is to be effected and shall deposit in the 1997-A SUBI
Collection Account an amount equal to the greater of (i) the Aggregate Net
Investment Value as of the last day of the related Collection Period, and (ii)
the sum of (A) the Certificate Balance (B) the accrued and unpaid Class A-1
Interest Distributable Amount, Class A-2 Interest Distributable Amount, Class
A-3 Interest Distributable Amount and Class B Interest Distributable Amount, (C)
any accrued and unpaid Class A-1 Interest Carryover Shortfall, Class A-2
Interest Carryover Shortfall, Class A-3 Interest Carryover Shortfall, Class A-4
Interest Carryover Shortfall and Class B Interest Carryover Shortfall, (D) any
unpaid Class A-1 Certificate Principal Loss Amount, unpaid Class A-2 Certificate
Principal Loss Amount, unpaid Class A-3 Certificate Principal Loss Amount,
unpaid Class B Certificate Principal Loss Amount and unpaid Class B Certificate
Principal Carryover Shortfall, and (E) any accrued and unpaid Class A-1
Certificate Principal Loss Interest Amount, unpaid Class A-2 Certificate
Principal Loss Interest Amount, unpaid Class A-3 Certificate Principal Loss
Interest Amount, unpaid Class B Certificate Principal Loss Interest Amount and
Class B Certificate Principal Carryover Shortfall Interest Amount through the
day preceding the final Distribution Date. The Transferor also shall pay to the
Servicer the aggregate amount of any unreimbursed Advances. Thereupon the
Transferor shall succeed to all of the Investor Certificateholders' interests in
and to the 1997-A Securitization Trust corpus.
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(b) The Investor Certificateholders' interest in the corpus of the
Securitization Trust may only be purchased pursuant to this Section 7.02 if the
Securitization Trustee and each Rating Agency receives an Opinion of Counsel
from the Transferor's counsel to the effect that such purchase would not
constitute a fraudulent conveyance, or each Rating Agency is otherwise satisfied
(as evidenced by written notice from each to the Securitization Trustee).
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS
SECTION 8.01. EARLY AMORTIZATION EVENTS.
If any one of the following events shall occur during the Revolving
Period:
(a) failure on the part of the Servicer (i) to make any payment or
deposit required with respect to the 1997-A SUBI, the 1997-A SUBI Interest, or
the Investor Certificates under this Securitization Trust Agreement, the Titling
Trust Agreement or the 1997-A SUBI Supplement or the 1997-A SUBI Servicing
Supplement, on or before the date occurring five Business Days after the payment
or deposit is required to be made, or (ii) to deliver a Servicer's Certificate
within ten Business Days after any Determination Date, which failure continues
for three Business Days;
(b) failure on the part of the Transferor or the Servicer duly to
observe or perform in any material respect any other covenants or agreements of
the Transferor or the Servicer set forth in this Securitization Trust Agreement,
the Titling Trust Agreement, the 1997-A SUBI Supplement or the 1997-A SUBI
Servicing Supplement, which failure materially and adversely affects the rights
of the holder of the 1997-A SUBI Interest or of the Investor Certificateholders
and which continues unremedied and continues to affect materially and adversely
the rights of the holder of the 1997-A SUBI Interest or of the Investor
Certificateholders for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, is given (i) to the
Transferor or the Servicer, as the case may be, by the Securitization Trustee or
the Titling Trustee, or (ii) to the Transferor or the Servicer, as the case may
be, and to the Securitization Trustee by the Holders of Investor Certificates
evidencing not less than 25% of the aggregate Percentage Interest;
(c) any representation or warranty made by TMCC in the SUBI
Certificate Agreement, by the Transferor in this Securitization Trust Agreement,
or the representation and warranty made by the Servicer in Section 3.02( ) of
the 1997-A SUBI Servicing Supplement or any certificate given pursuant to
Section 3.02( ) of the 1997-A SUBI Servicing Supplement, shall prove to have
been incorrect in any material respect when made or given, as a result of which
the interests of the holder of the 1997-A SUBI Interest or of the Investor
Certificateholders are
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materially and adversely affected and which continues to be incorrect in any
material respect and continues to affect materially and adversely affect the
interests of the holder of the 1997-A SUBI Interest or of the Certificateholders
for a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, is given (i) to TMCC, the Transferor or the
Servicer, as the case may be, by the Securitization Trustee or the Titling
Trustee, or (ii) to TMCC, the Transferor or the Servicer, as the case may be,
and to the Securitization Trustee by the Holders of Investor Certificates
evidencing not less than 25% of the aggregate Percentage Interest; PROVIDED,
HOWEVER, that an Early Amortization Event pursuant to this subparagraph (c)
shall not be deemed to have occurred hereunder if the Servicer has made the
deposit contemplated by Section of the 1997-A SUBI Servicing Supplement and has
reallocated the relevant 1997-A Contract and 1997-A Leased Vehicle to the UTI
Portfolio within the time provided therefor;
(d) the Transferor shall file a petition commencing a voluntary case
under any chapter of the Federal bankruptcy laws; or the Transferor shall file a
petition or answer or consent seeking reorganization, arrangement, adjustment,
or composition under any other similar applicable Federal law, or shall consent
to the filing of any such petition, answer, or consent; or the Transferor shall
appoint, or consent to the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator or other similar official in bankruptcy or
insolvency of it or of any substantial part of its property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due;
(e) any order for relief against the Transferor shall have been
entered by a court having jurisdiction in the premises under any chapter of the
Federal bankruptcy laws; or a decree or order by a court having jurisdiction in
the premises shall have been entered approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of the
Transferor under any other similar applicable Federal law; or a decree or order
of a court having jurisdiction in the premises for the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of the Transferor or of any
substantial part of its property, or for the winding up or liquidation of its
affairs, shall have been entered;
(f) any Lien, other than Liens permitted under this Securitization
Trust Agreement, the Titling Trust Agreement or the 1997-A SUBI Supplement or
the 1997-A SUBI Servicing Supplement shall be created on or extend to or
otherwise arise upon or burden the 1997-A SUBI Interest, the 1997-A SUBI
Certificate, or the 1997-A Contracts or 1997-A Leased Vehicles, or any part
thereof or any interest therein or the proceeds thereof, and not be released or
bonded over within 60 days thereafter;
(g) the Transferor, the 1997-A Securitization Trust or the Titling
Trust shall become subject to registration as an "investment company" under the
Investment Company Act;
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(h) on the last calendar day of any calendar month (commencing
September 1997) the aggregate amount of Principal Collections collected through
the last day of the related Collection Period that have not been reinvested in
new 1997-A Contracts and 1997-A Leased Vehicles, as contemplated by Section 3.02
of the 1997-A SUBI Servicing Supplement, exceeds [$1,000,000];
(i) an Event of Servicing Termination has occurred; or
(j) on any Distribution Date the aggregate amount withdrawn from the
Reserve Fund and deposited in the 1997-A SUBI Collection Account on or prior to
such Distribution Date (without reference to any subsequent deposits to the
Reserve Fund from any source) exceeds $_________;
then (but in the case of any event described in subparagraph (a), (b), (c) or
(f) after any applicable grace period) an early amortization event (an "Early
Amortization Event") shall have occurred.
SECTION 8.02. ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN EVENTS
(a) Following the occurrence of an Early Amortization Event described
in Section 8.01(d) or (e) (such event, an "Insolvency Event"), the Transferor
shall promptly give notice to the Securitization Trustee of such Insolvency
Event. Within 15 days of the receipt by the Securitization Trustee of the
notice, the Securitization Trustee may and, upon receipt of a notice from
Investor Certificateholders evidencing more than 51% of the aggregate Percentage
Interest of the Class A Certificates or 51% of the aggregate Percentage
Interests of the Class A Certificates and the Class B Certificates (voting
together as a single class), shall publish a notice in Authorized Newspapers
that an Insolvency Event has occurred and that the Securitization Trustee
intends to sell, dispose of or otherwise liquidate the 1997-A SUBI Interest, the
1997-A SUBI Certificate and the other property of the 1997-A Securitization
Trust in a commercially reasonable manner. Following such publication, the
Securitization Trustee shall, unless otherwise prohibited by applicable law from
any such action, sell, dispose of, or otherwise liquidate the 1997-A SUBI
Interest, the 1997-A SUBI Certificate and the other property of the 1997-A
Securitization Trust, in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids, and
shall proceed to consummate the sale, liquidation or disposition thereof as
provided above with the highest bidder; PROVIDED, HOWEVER, that such sale,
disposition or other liquidation shall not be made without the consent of all
Holders of Investor Certificates if a net loss would be realized. The
Transferor and the Servicer shall be permitted to bid for the 1997-A
Securitization Trust property. The Securitization Trustee may obtain a prior
determination from the conservator, receiver, or trustee in bankruptcy of the
Transferor that the terms and manner of any proposed
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sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 8.01 and 8.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
1997-A SUBI Interest, the 1997-A SUBI Certificate and the other property of the
1997-A Securitization Trust pursuant to Section 8.02 (a) above, net of expenses
incurred in such sale, disposition or liquidation, shall be treated as Principal
Collections and Interest Collections received during the Amortization Period;
PROVIDED that such Principal Collections, will be distributed, first, on a PRO
RATA basis, to the Class A-1 Certificateholders, the Class A-2
Certificateholders and the Class A-3 Certificateholders based on their
respective Certificate Balances, and second, to the Class B Certificateholders;
FURTHER PROVIDED that the Servicer on behalf of the Securitization Trustee shall
determine conclusively without liability for such determination the amount of
such proceeds which are allocable to Interest Collections and the amount of such
proceeds which are allocable to Principal Collections. On the day following the
Distribution Date on which such proceeds are distributed to the Investor
Certificateholders, the 1997-A Securitization Trust shall terminate.
ARTICLE NINE
MISCELLANEOUS PROVISIONS
SECTION 9.01. AMENDMENT.
(a) This Securitization Trust Agreement and the other Transaction
Documents may be amended by the respective parties thereto, without the consent
of any of the Certificateholders, (i) to cure any ambiguity, mistake or error,
(ii) to correct or supplement any provisions herein or therein that may be
inconsistent with any provisions hereof or thereof or with the prospectus
pursuant to which the Class A Certificates were offered, (iii) to add, change or
eliminate any other provisions hereof or thereof with respect to matters or
questions arising hereunder or thereunder that shall not be inconsistent with
the provisions hereof or thereof, or (iv) to add or amend any provision therein
in connection with permitting transfers of the Class B Certificates; PROVIDED,
HOWEVER, that in the case of clause (iii), any such action shall not, in the
good faith judgment or the parties hereto or thereto, adversely affect in any
material respect the interests of the Certificateholders and the Titling Trustee
and the Securitization Trustee shall have received an Opinion of Counsel to the
effect that such action shall not affect the legal interests or positions of the
Certificateholders.
(b) This Securitization Trust Agreement and the other Transaction
Documents may also be amended from time to time by the respective parties hereto
or thereto including with respect to (i) changing the formula for determining
the Specified Reserve Fund Balance which change would result in a decrease in
the amount of the Specified Reserve Fund Balance, (ii) changing the manner by
which the Reserve Fund is funded, which changes could include
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borrowings by the Transferor to fund all or a portion of the Reserve Fund
Initial Deposit (which borrowings would be payable from assets or cash flow
otherwise payable to the Transferor), (iii) changing the remittance schedule for
collection deposits in the 1997-A SUBI Collection Account, or (iv) changing the
definition of "Permitted Investments"), if either (A) the Securitization Trustee
has been furnished with a letter from each Rating Agency to the effect that such
amendment would not cause its then-current rating of any Rated Certificate to be
qualified, reduced or withdrawn, or (B) the Securitization Trustee has received
the consent of the Holders of Investor Certificates representing not less than
51% of the aggregate Percentage Interests (which consent of any Holder of an
Investor Certificate given pursuant to this Section or pursuant to any other
provision of this Securitization Trust Agreement shall be conclusive and binding
on such Holder and on all future Holders of such Investor Certificate and of any
Investor Certificate issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Investor Certificate); PROVIDED, HOWEVER, that no such amendment shall (x)
except as otherwise provided in Section 9.01(a), increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the 1997-A SUBI or any 1997-A SUBI Certificate or distributions that
shall be required to be made on any Investor Certificate or the applicable
Certificate Rate or (y) reduce the aforesaid percentage of the aggregate
Percentage Interest of the Investor Certificates of each Class required to
consent to any such amendment, without the consent of the Holders of all
Certificates of such Class then outstanding.
(c) The Securitization Trustee shall provide each Rating Agency prior
notice of any proposed amendment hereto and copies of an Opinion of Counsel, if
required pursuant to Section 9.01(a), whether or not such amendment requires its
approval. Any notice of any such amendment or modification as to which notice
is required to be given to any Rating Agency shall contain both the substance
and substantial form of the proposed amendment or modification.
(d) Promptly after the execution of any such amendment or consent, the
Securitization Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder. The failure to send such
notification shall not affect the validity of such amendment. It shall not be
necessary for the consent of Certificateholders pursuant to Section 9.01(b) 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 by
Certificateholders of the execution thereof shall be subject to such reasonable
requirements as the Securitization Trustee may prescribe.
(e) Prior to the execution of any amendment to this Securitization
Trust Agreement, the Securitization Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Securitization Trust Agreement. The
Securitization Trustee may, but shall not be obligated to,
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enter into any such amendment which affects the Securitization Trustee's own
rights, duties or immunities under this Securitization Trust Agreement or
otherwise.
SECTION 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Transferor shall execute and file, or cause to be executed and
filed, such financing statements and such continuation and other statements, all
in such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Certificateholders and the
Securitization Trustee under this Securitization Trust Agreement in the 1997-A
SUBI Interest, the 1997-A SUBI Certificate and in the proceeds thereof. The
Transferor shall deliver (or cause to be delivered) to the Securitization
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) The Transferor shall not change its name, identity or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by the Transferor in accordance with paragraph
(a) above seriously misleading within the meaning of Section 9-402(7) of the
UCC, unless it shall have given the Securitization Trustee written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
(c) The Transferor shall give the Securitization Trustee prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement and shall promptly make any such filing.
(d) The Transferor shall deliver to the Securitization Trustee
promptly after the execution and delivery of each amendment to this
Securitization Trust Agreement, an Opinion of Counsel either (i) stating that,
in the opinion of such Counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Securitization Trustee in the 1997-A SUBI Interest,
and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (ii) stating that, in the opinion of
such Counsel, no such action is necessary to preserve and protect such interest.
(e) The Transferor shall, to the extent required by applicable law,
cause the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3
Certificates to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
Sections.
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SECTION 9.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Certificateholder shall not operate
to terminate this Securitization Trust Agreement or the 1997-A Securitization
Trust, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the 1997-A Securitization Trust, nor
otherwise affect the rights, obligations and liabilities of the parties to this
Securitization Trust Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as
provided in Section 9.01) or in any manner otherwise control the operation and
management of the 1997-A Securitization Trust, or the obligations of the parties
to this Securitization Trust Agreement, nor shall anything set forth in this
Securitization Trust Agreement, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action pursuant to any
provision of this Securitization Trust Agreement.
(c) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Securitization Trust Agreement to institute any
suit, action, or proceeding in equity or at law upon or under or with respect to
this Securitization Trust Agreement or any other Transaction Document, unless
such Holder previously shall have given to the Securitization Trustee a written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of Investor Certificates evidencing not less than 25% of
the aggregate Percentage Interest, shall have made written request upon the
Securitization Trustee to institute such action, suit or proceeding in its own
name as Trustee under this Securitization Trust Agreement and shall have offered
to the Securitization Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Securitization Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit, or proceeding and during such 30-day period, no request or
waiver inconsistent with such written request has been given to the
Securitization Trustee pursuant to this Section; it being understood and
intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Securitization Trustee, that no one or more
Holders of Certificates shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Securitization Trust
Agreement or any other Transaction Document to affect, disturb, or prejudice the
rights of the Holders of any other of the Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under this Securitization Trust Agreement or any other Transaction
Document, except in the manner provided in this Securitization Trust Agreement
and for the equal, ratable, and common benefit of all Certificateholders. For
the protection and enforcement of the provisions of this Section,
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each and every Certificateholder and the Securitization Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 9.04. GOVERNING LAW.
THIS SECURITIZATION TRUST AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 9.05. NOTICES.
All demands, notices and communications under this Securitization Trust
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Transferor, to the agent for service as specified
in this Securitization Trust Agreement, or at such other address as shall be
designated by the Transferor in a written notice to the Securitization Trustee;
(ii) in the case of the Securitization Trustee, at the Corporate Trust Office;
(iii) in the case of Standard & Poor's, at 25 Broadway, 20th Floor, New York,
New York 10004, Attention: Asset Backed Surveillance Department; and (iv) in the
case of Moody's, at 99 Church Street, New York, New York 10007 Attention: ABS
Monitoring Department. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Securitization Trust Agreement shall
be conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
SECTION 9.06. SEVERABILITY OF PROVISIONS; COUNTERPARTS.
If any one or more of the covenants, agreements, provisions or terms of
this Securitization Trust Agreement shall be for any reason whatsoever held
invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Securitization Trust Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Securitization Trust Agreement or
of the Certificates or the rights of the Holders thereof.
This Securitization Trust Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
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SECTION 9.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained in this Securitization
Trust Agreement, except as provided in Section 5.03, this Securitization Trust
Agreement may not be assigned by the Transferor without the prior written
consent of Holders of Investor Certificates evidencing not less than 51% of the
aggregate Percentage Interest. The Transferor shall provide a copy of any such
assignment to each Rating Agency.
SECTION 9.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Except as provided in Section 5.02(b) with regard to the Transferor,
Certificateholders shall not be personally liable for obligations of the 1997-A
Securitization Trust. The interests represented by the Certificates shall be
nonassessable for any losses or expenses of the 1997-A Securitization Trust or
for any reason whatsoever, and, upon the execution and authentication thereof by
the Securitization Trustee pursuant to Section 4.02, 4.03 or 4.04, the
Certificates are and shall be deemed fully paid.
ARTICLE TEN
AGENT FOR SERVICE
SECTION 10.01. AGENT FOR SERVICE OF TRANSFEROR.
The agent for service of process for the Transferor shall be its
Treasurer, at 19001 South Western Avenue, Torrance, California 90501, Attention:
Corporate Treasury Manager (fax: 310-787-6194).
SECTION 10.02. AGENT OF TRUSTEE.
The Securitization Trustee shall maintain an office or offices or agency or
agencies where notices and demands to or upon the Securitization Trustee in
respect of the Certificates and this Securitization Trust Agreement may be
served. The initial such office shall be the Corporate Trust Office. The
Securitization Trustee shall give prompt written notice to the Transferor, the
Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency. Certificates shall be
surrendered for transfer or exchange not at this office, but as set forth in
Section 4.07.
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IN WITNESS WHEREOF, the parties have caused this Securitization Trust
Agreement to be duly executed by their respective officers as of the day and
year first above written.
TOYOTA LEASING, INC.
as Transferor
By:
-----------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Securitization Trustee
By:
---------------------------------
Name:
Title:
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EXHIBIT A-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TOYOTA AUTO LEASE TRUST 1997-A
_____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-1
evidencing a percentage interest in the distributions allocable to the Investor
Certificates, as defined below, evidencing an undivided interest in the
Securitization Trust, as defined below, the property of which includes, among
other things, a special unit of beneficial interest (the "1997-A SUBI Interest")
in Toyota Lease Trust, a Delaware business trust, which SUBI Interest represents
a beneficial interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and light-duty
trucks) entered into by various automobile and light duty truck dealers pursuant
to contractual arrangements with Toyota Motor Credit Corporation, and which
1997-A SUBI Interest was originally issued to Toyota Leasing, Inc. and then to
the Securitization Trust.
(This Certificate does not represent an obligation of, or an interest in, Toyota
Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates.)
Aggregate Denominations of
all Class A-1 Certificates: CUSIP #
$_______________
Number A-1- Denomination: $____________
A-1-1
<PAGE>
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
_______________________________ ($____________) nonassessable, fully-paid,
fractional undivided interest in the Toyota Auto Lease Trust 1997-A (the
"Trust") formed by Toyota Leasing, Inc., a Delaware corporation, as Transferor
(the "Transferor"). The Securitization Trust was created pursuant to a
Securitization Trust Agreement dated as of 1, 1997 (the "Agreement"),
between the Transferor and U.S. Bank National Association, a national banking
association, as trustee (the "Trustee"). A summary of certain of the pertinent
provisions of the Agreement is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "Toyota Auto Lease Trust 1997-A _____%
Automobile Lease Asset Backed Certificates, Class 1997 A-1" (the "Class A-1
Certificates"). Also issued under the Agreement are Certificates designated as
"Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed
Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates designated
as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed
Certificates, Class A-3" (the "Class A-3 Certificates" and, together with the
Class A-1 Certificates and the Class A-2 Certificates, the "Class A
Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A
_____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates") and a Certificate designated as the "Toyota Auto Lease Trust
1997-A Asset Backed Transferor Certificate" (the "Transferor Certificate" and,
together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent described
in the Agreement. This Class A-1 Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Class A-1 Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound.
The property of the Securitization Trust includes, among other things, a
special unit of beneficial interest (the "1997-A SUBI Interest") in Toyota Lease
Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI
Interest represents a beneficial interest in a pool of retail automobile and
light duty truck lease contracts ("Contracts") and the new and used automobiles
and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts
and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by various
automobile and light duty truck dealers pursuant to contractual arrangements
with Toyota Motor Credit Corporation, which also acts as servicer (in that
capacity, the "Servicer") of the 1997-A SUBI Portfolio.
Under the Agreement, there will be distributed on the 25th day of March and
September or, to the extent provided in the Agreement, on the 25th day of each
month, or if such 25th day is not a Business Day, the next succeeding Business
Day (each, a "Distribution Date"), commencing on March 25, 1998, to the Person
in whose name this Class A-1 Certificate is
A-1-2
<PAGE>
registered at the close of business on the last calendar day immediately
preceding calendar month (each a "Record Date"), such Class A-1
Certificateholder's percentage interest in the amount distributed on the Class
A-1 Certificates pursuant to Section 3.01 of the Agreement, all to the extent
and as more specifically set forth in the Agreement. To the extent provided in
the Agreement, no principal payments shall be made in respect of the Class A-2
Certificates until the Class A-1 Certificates have been paid in full, no
principal payments shall be made in respect of the Class A-3 Certificates until
the Class A-2 Certificates have been paid in full and no principal payments will
be made in respect of the Class B Certificates until the Class A-3 Certificates
have been paid in full.
Distributions on this Class A-1 Certificate will be made by the
Securitization Trustee by check mailed to the Class A-1 Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Class A-1 Certificate or the making of any notation hereon except that with
respect to Class A-1 Certificates registered in the name of Cede & Co., the
nominee for The Depository Trust Company, distributions will be made by wire
transfer of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the foregoing, the final distribution on this
Class A-1 Certificate will be made after due notice by the Securitization
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class A-1 Certificate at the Corporate Trust Office of the
Securitization Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Securitization
Trustee and the Holder of this Certificate (or Certificate Owner) by acceptance
of this Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interests therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Titling Trustee and to all assets of the Titling Trust other than those from
time to time included in the 1997-A SUBI Assets and those proceeds or assets
derived from or earned by such 1997-A SUBI Assets.
A-1-3
<PAGE>
In the event that, notwithstanding the statement of intentions and
undertakings set forth in SECTION 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-1 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Securitization Trust, then the
Holder (and each Certificate Owner hereof with respect hereto by virtue of
acquiring a beneficial interest herein), agrees (i) to treat such Certificates,
together with the Transferor Certificate, as representing an interest in a
partnership for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Securitization Trust to the Transferor.
The Certificates do not represent an obligation of, or an interest in, the
Transferor, the Servicer, the Titling Trust, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the 1997-A SUBI Interest and 1997-A SUBI Certificate and certain monies on
deposit in the Reserve Fund and in certain other accounts established for the
benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Securitization Trustee, and at such other places, if any, designated by the
Securitization Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Securitization Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the Holders
of Investor Certificates evidencing not less than 51% of the aggregate
Percentage Interest of all Investor Certificates, voting together as a single
class. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office of the Securitization Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Securitization
Trustee in its capacity as Certificate Registrar, who shall initially be First
Trust of New York, National Association, 100 Wall Street, 20th Floor, New York,
New York 10005, in the Borough of Manhattan, the City of New York, or at the
appropriate office of any successor Certificate Registrar, accompanied by a
written instrument of transfer in form satisfactory to the Securitization
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
A-1-4
<PAGE>
Holder's attorney duly authorized in writing, and thereupon one or more new
Class A-1 Certificates of authorized denominations and of a like aggregate
fractional undivided interest will be issued to the designated transferee.
The Class A-1 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-1 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-1 Certificate
Balance). As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class, of authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Securitization
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
Prior to due presentation of this Certificate for registration of transfer,
the Securitization Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Class A-1 Certificate
is registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Securitization Trustee, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Securitization Trust created thereby shall terminate upon the payment to
Investor Certificateholders of all amounts required to be paid to them pursuant
to the Agreement and the disposition of all property held as part of the
Securitization Trust. The Transferor may at its option purchase the corpus of
the Securitization Trust at a price specified in the Agreement, and such
purchase of the 1997-A SUBI Interest and 1997-A SUBI Certificate and other
property of the Securitization Trust will effect early retirement of the
Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on
the Distribution Date following the last day of a Collection Period as of which
the Certificate Balance shall be less than or equal to ten percent (10%) of the
Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, Toyota
Motor Credit Corporation, the Securitization Trust, the Titling Trustee or the
Titling Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted
A-1-5
<PAGE>
by any Person not under such a constraint. This non-petition covenant shall
survive the termination of the Agreement.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Securitization Trustee, by manual signature, this
Class A-1 Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class A-1 Certificate to
be duly executed.
Dated: __________ __, 199_
TOYOTA LEASING, INC.,
By:
--------------------------------
Authorized Officer
A-1-6
<PAGE>
This is one of the Class A-1 Certificates referred
to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------
A-1-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -----------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- -----------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -----------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
-----------------------------
Signature Guaranteed:
*
-----------------------------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-1-8
<PAGE>
EXHIBIT A-2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TOYOTA AUTO LEASE TRUST 1997-A
_____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-2
evidencing a percentage interest in the distributions allocable to the Investor
Certificates, as defined below, evidencing an undivided interest in the
Securitization Trust, as defined below, the property of which includes, among
other things, a special unit of beneficial interest (the "1997-A SUBI Interest")
in Toyota Lease Trust, a Delaware business trust, which SUBI Interest represents
a beneficial interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and light-duty
trucks) entered into by various automobile and light duty truck dealers pursuant
to contractual arrangements with Toyota Motor Credit Corporation, and which
1997-A SUBI Interest was originally issued to Toyota Leasing, Inc. and then to
the Securitization Trust.
(This Certificate does not represent an obligation of, or an interest in, Toyota
Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates.)
Aggregate Denominations of
all Class A-2 Certificates: CUSIP #
$________________
Number A-2-__ Denomination: $__________
A-2-1
<PAGE>
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
____________________________ ($__________) nonassessable, fully-paid, fractional
undivided interest in the Toyota Auto Lease Trust 1997-A (the "Trust") formed by
Toyota Leasing, Inc., a Delaware corporation, as Transferor (the "Transferor").
The Securitization Trust was created pursuant to a Securitization Trust
Agreement dated as of 1, 1997 (the "Agreement"), between the
Transferor and U.S. Bank National Association, a national banking association,
as trustee (the "Trustee"). A summary of certain of the pertinent provisions of
the Agreement is set forth below. To the extent not otherwise defined herein,
the capitalized terms used herein have the meanings assigned to them in the
Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "Toyota Auto Lease Trust 1997-A _____%
Automobile Lease Asset Backed Certificates, Class A-2" (the "Class A-2
Certificates"). Also issued under the Agreement are Certificates designated as
"Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed
Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates
designated as "Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset
Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together with
the Class A-1 Certificates, the Class A-3 Certificates and the Class A-3
Certificates, the "Class A Certificates"), Certificates designated as "Toyota
Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class
B" (the "Class B Certificates" and, together with the Class A Certificates, the
"Investor Certificates") and a Certificate designated as the "Toyota Auto Lease
Trust 1997-A Asset Backed Transferor Certificate" (the "Transferor Certificate"
and, together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent described
in the Agreement. This Class A-2 Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Class A-2 Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound.
The property of the Securitization Trust includes, among other things, a
special unit of beneficial interest (the "1997-A SUBI Interest") in Toyota Lease
Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI
Interest represents a beneficial interest in a pool of retail automobile and
light duty truck lease contracts ("Contracts") and the new and used automobiles
and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts
and Leased Vehicles; the "1997-A SUBI Portfolio") entered into by various
automobile and light duty truck dealers pursuant to contractual arrangements
with Toyota Motor Credit Corporation, which also acts as servicer (in that
capacity, the "Servicer") of the 1997-A SUBI Portfolio.
Under the Agreement, there will be distributed on the 25th day of March and
September or, to the extent provided in the Agreement, on the 25th day of each
month, or if such 25th day is not a Business Day, the next succeeding Business
Day (each, a "Distribution Date"), commencing on March 25, 1998, to the Person
in whose name this Class A-2 Certificate is
A-2-2
<PAGE>
registered at the close of business on the last calendar day immediately
preceding calendar month (each a "Record Date"), such Class A-2
Certificateholder's percentage interest in the amount distributed on the Class
A-2 Certificates pursuant to Section 3.01 of the Agreement, all to the extent
and as more specifically set forth in the Agreement. To the extent provided in
the Agreement, no principal payments shall be made in respect of the Class A-2
Certificates until the Class A-1 Certificates have been paid in full, and no
principal payments shall be made in respect of the Class A-3 Certificates until
the Class A-2 Certificates have been paid in full and no principal payments
shall be made in respect of the Class B Certificates until the Class A-3
Certificates have been paid in full.
Distributions on this Class A-2 Certificate will be made by the
Securitization Trustee by check mailed to the Class A-2 Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Class A-2 Certificate or the making of any notation hereon except that with
respect to Class A-2 Certificates registered in the name of Cede & Co., the
nominee for The Depository Trust Company, distributions will be made by wire
transfer of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the foregoing, the final distribution on this
Class A-2 Certificate will be made after due notice by the Securitization
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class A-2 Certificate at the Corporate Trust Office of the
Securitization Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Securitization
Trustee and the Holder of this Certificate (or Certificate Owner) by acceptance
of this Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Titling Trustee and to all assets of the Titling Trust other than those from
time to time included in the 1997-A SUBI Assets and those proceeds or assets
derived from or earned by such 1997-A SUBI Assets.
A-2-3
<PAGE>
In the event that, notwithstanding the statement of intentions and
undertakings set forth in SECTION 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-2 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Securitization Trust, then the
Holder (and each Certificate Owner hereof with respect hereto by virtue of
acquiring a beneficial interest herein), agrees (i) to treat such Certificates,
together with the Transferor Certificate, as representing an interest in a
partnership for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Securitization Trust to the Transferor.
The Certificates do not represent an obligation of, or an interest in, the
Transferor, the Servicer, the Titling Trust, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the 1997-A SUBI Interest and 1997-A SUBI Certificate and certain monies on
deposit in the Reserve Fund and in certain other accounts established for the
benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Securitization Trustee, and at such other places, if any, designated by the
Securitization Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Securitization Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the Holders
of Investor Certificates evidencing not less than 51% of the aggregate
Percentage Interest of all Investor Certificates, voting together as a single
class. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office of the Securitization Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Securitization
Trustee in its capacity as Certificate Registrar, who shall initially be First
Trust of New York, National Association, 100 Wall Street, 20th Floor, New York,
New York 10005, in the Borough of Manhattan, the City of New York, or at the
appropriate office of any successor Certificate Registrar, accompanied by a
written instrument of transfer in form satisfactory to the Securitization
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
A-2-4
<PAGE>
Holder's attorney duly authorized in writing, and thereupon one or more new
Class A-2 Certificates of authorized denominations and of a like aggregate
fractional undivided interest will be issued to the designated transferee.
The Class A-2 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-2 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-2 Certificate
Balance). As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class, of authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Securitization
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
Prior to due presentation of this Certificate for registration of transfer,
the Securitization Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Class A-2 Certificate
is registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Securitization Trustee, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Securitization Trust created thereby shall terminate upon the payment to
Investor Certificateholders of all amounts required to be paid to them pursuant
to the Agreement and the disposition of all property held as part of the
Securitization Trust. The Transferor may at its option purchase the corpus of
the Securitization Trust at a price specified in the Agreement, and such
purchase of the 1997-A SUBI Interest and 1997-A SUBI Certificate and other
property of the Securitization Trust will effect early retirement of the
Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on
the Distribution Date following the last day of a Collection Period as of which
the Certificate Balance shall be less than or equal to ten percent (10%) of the
Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, Toyota
Motor Credit Corporation, the Securitization Trust, the Titling Trustee or the
Titling Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted
A-2-5
<PAGE>
by any Person not under such a constraint. This non-petition covenant shall
survive the termination of the Agreement.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Securitization Trustee, by manual signature, this
Class A-2 Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class A-2 Certificate to
be duly executed.
Dated: __________ __, 199_
TOYOTA LEASING INC.
By:
--------------------------------
Authorized Officer
A-2-6
<PAGE>
This is one of the Class A-2 Certificates referred
to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------
A-2-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -----------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- -----------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -----------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
-----------------------------
Signature Guaranteed:
*
-----------------------------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-2-8
<PAGE>
EXHIBIT A-3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TOYOTA AUTO LEASE TRUST 1997-A
_____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-3
evidencing a percentage interest in the distributions allocable to the Investor
Certificates, as defined below, evidencing an undivided interest in the
Securitization Trust, as defined below, the property of which includes, among
other things, a special unit of beneficial interest (the "1997-A SUBI Interest")
in Toyota Lease Trust, a Delaware business trust, which SUBI Interest represents
a beneficial interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and light-duty
trucks) entered into by various automobile and light duty truck dealers pursuant
to contractual arrangements with Toyota Motor Credit Corporation, and which
1997-A SUBI Interest was originally issued to Toyota Leasing, Inc. and then to
the Securitization Trust.
(This Certificate does not represent an obligation of, or an interest in, Toyota
Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates.)
Aggregate Denominations of
all Class A-3 Certificates: CUSIP #
$______________
Number A-3-__ Denomination: $____________
A-3-1
<PAGE>
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
_______________________________ ($____________) nonassessable, fully-paid,
fractional undivided interest in the Toyota Auto Lease Trust 1997-A (the
"Trust") formed by Toyota Leasing, Inc., a Delaware corporation, as Transferor
(the "Transferor"). The Securitization Trust was created pursuant to a
Securitization Trust Agreement dated as of 1, 1997 (the "Agreement"),
between the Transferor and U.S. Bank National Association, a national banking
association, as trustee (the "Trustee"). A summary of certain of the pertinent
provisions of the Agreement is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "Toyota Auto Lease Trust 1997-A _____%
Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3
Certificates"). Also issued under the Agreement are Certificates designated as
"Toyota Auto Lease Trust 1997-A _____% Automobile Lease Asset Backed
Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates
designated as "Toyota Auto Lease Trust 1997-A_____% Automobile Lease Asset
Backed Certificates, Class A-2" (the "Class A-2 Certificates" and, together with
the Class A-1 Certificates and, the Class A-2 Certificates, the "Class A
Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A
_____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates") and a Certificate designated as the "Toyota Auto Lease Trust
1997-A Asset Backed Transferor Certificate" (the "Transferor Certificate" and,
together with the Investor Certificates, the "Certificates"). The Class B
Certificates are subordinated to the Class A Certificates and the Transferor
Certificate is subordinated to the Investor Certificates to the extent described
in the Agreement. This Class A-3 Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Class A-3 Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound.
The property of the Securitization Trust includes, among other things, a
special unit of beneficial interest (the "1997-A SUBI Interest") in Toyota Least
Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI
Interest represents a beneficial interest in a pool of retail automobile and
light duty truck lease contracts ("Contracts") and the new and used automobiles
and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts
and Leased Vehicles; the "1997-A SUBI Portfolio") entered into by various
automobile and light duty truck dealers pursuant to contractual arrangements
with Toyota Motor Credit Corporation, which also acts as servicer (in that
capacity, the "Servicer") of the 1997-A SUBI Portfolio.
Under the Agreement, there will be distributed on the 25th day of March and
September or, to the extent provided in the Agreement, on the 25th day of each
month, or if such 25th day is not a Business Day, the next succeeding Business
Day (each, a "Distribution Date"), commencing on March 25, 1998, to the Person
in whose name this Class A-3 Certificate is
A-3-2
<PAGE>
registered at the close of business on the last calendar day immediately
preceding calendar month (each a "Record Date"), such Class A-3
Certificateholder's percentage interest in the amount distributed on the Class
A-3 Certificates pursuant to Section 3.01 of the Agreement, all to the extent
and as more specifically set forth in the Agreement. To the extent provided in
the Agreement, no principal payments shall be made in respect of the Class A-2
Certificates until the Class A-1 Certificates have been paid in full, and no
principal payments shall be made in respect of the Class A-3 Certificates until
the Class A-2 Certificates have been paid in full and no principal payments
shall be made in respect of the Class B Certificates until the Class A-3
Certificates have been paid in full.
Distributions on this Class A-3 Certificate will be made by the
Securitization Trustee by check mailed to the Class A-3 Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Class A-3 Certificate or the making of any notation hereon except that with
respect to Class A-3 Certificates registered in the name of Cede & Co., the
nominee for The Depository Trust Company, distributions will be made by wire
transfer of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the foregoing, the final distribution on this
Class A-3 Certificate will be made after due notice by the Securitization
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class A-3 Certificate at the Corporate Trust Office of the
Securitization Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Securitization
Trustee and the Holder of this Certificate (or Certificate Owner) by acceptance
of this Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agree to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees that it
will cause any Certificate Owner acquiring an interest in this Certificate
through it to comply with the Agreement as to treatment as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Titling Trustee and to all assets of the Titling Trust other than those from
time to time included in the 1997-A SUBI Assets and those proceeds or assets
derived from or earned by such 1997-A SUBI Assets.
A-3-3
<PAGE>
In the event that, notwithstanding the statement of intentions and
undertakings set forth in SECTION 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-3 Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Securitization Trust, then the
Holder (and each Certificate Owner hereof with respect hereto by virtue of
acquiring a beneficial interest herein), agrees (i) to treat such Certificates,
together with the Transferor Certificate, as representing an interest in a
partnership for all tax purposes, (ii) to treat all payments in respect of such
Certificates (to the extent not a return of capital) as a "guaranteed payment"
thereon made pursuant to Section 707(c) of the Code, and (iii) to allocate all
other items of income, gain, deduction, loss or credit with respect to the
assets and operations of the Securitization Trust to the Transferor.
The Certificates do not represent an obligation of, or an interest in, the
Transferor, the Servicer, the Titling Trust, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the 1997-A SUBI Interest and 1997-A SUBI Certificate and certain monies on
deposit in the Reserve Fund and in certain other accounts established for the
benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Securitization Trustee and at such other places, if any, designated by the
Securitization Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Securitization Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the Holders
of Investor Certificates evidencing not less than 51% of the aggregate
Percentage Interest of all Investor Certificates, voting together as a single
class. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office of the Securitization Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Securitization
Trustee in its capacity as Certificate Registrar, who shall initially be First
Trust of New York, National Association, 100 Wall Street, 20th Floor, New York,
New York 10005, in the Borough of Manhattan, the City of New York, or at the
appropriate office of any successor Certificate Registrar, accompanied by a
written instrument of transfer in form satisfactory to the Securitization
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
A-3-4
<PAGE>
Holder's attorney duly authorized in writing, and thereupon one or more new
Class A-3 Certificates of authorized denominations and of a like aggregate
fractional undivided interest will be issued to the designated transferee.
The Class A-3 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-3 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-3 Certificate
Balance). As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class, of authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Securitization
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
Prior to due presentation of this Certificate for registration of transfer,
the Securitization Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Class A-3 Certificate
is registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Securitization Trustee, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Securitization Trust created thereby shall terminate upon the payment to
Investor Certificateholders of all amounts required to be paid to them pursuant
to the Agreement and the disposition of all property held as part of the
Securitization Trust. The Transferor may at its option purchase the corpus of
the Securitization Trust at a price specified in the Agreement, and such
purchase of the 1997-A SUBI Interest and 1997-A SUBI Certificate and other
property of the Securitization Trust will effect early retirement of the
Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on
the Distribution Date following the last day of a Collection Period as of which
the Certificate Balance shall be less than or equal to ten percent (10%) of the
Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Transferor, Toyota
Motor Credit Corporation, the Securitization Trust, the Titling Trustee or the
Titling Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted
A-3-5
<PAGE>
by any Person not under such a constraint. This nonpetition covenant shall
survive the termination of the Agreement.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Securitization Trustee, by manual signature, this
Class A-3 Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
A-3-6
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Class A-3 Certificate to
be duly executed.
Dated: __________ __, 199_
TOYOTA LEASING INC.
By:
--------------------------------
Authorized Officer
A-3-7
<PAGE>
This is one of the Class A-3 Certificates referred
to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------
A-3-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -----------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- -----------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -----------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
-----------------------------
Signature Guaranteed:
*
-----------------------------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-3-9
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1
CERTIFICATES, THE CLASS A-2 CERTIFICATES AND THE CLASS A-3 CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT AND SUCH STATE SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN
ACCORDANCE WITH SECTION 4.03 OF THE AGREEMENT REFERRED TO HEREIN AND (B) IS MADE
(i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
(ii) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, (iii) TO TOYOTA LEASING
INC. (THE "TRANSFEROR") OR (iv) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A. NEITHER THE TRANSFEROR NOR U.S. BANK
NATIONAL ASSOCIATION, AS TRUSTEE (THE "SECURITIZATION TRUSTEE"), IS OBLIGATED TO
REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS. IN THE EVENT THAT THE TRANSFER OF A CLASS B CERTIFICATE IS TO
BE MADE, EITHER (A) AN OPINION OF COUNSEL OR (B) A REPRESENTATION LETTER FROM
THE PROSPECTIVE INVESTOR, IN EITHER CASE IN FORM AND SUBSTANCE SATISFACTORY TO
THE SECURITIZATION TRUSTEE AND THE TRANSFEROR, IS REQUIRED TO BE DELIVERED TO
THE SECURITIZATION TRUSTEE AND THE TRANSFEROR, TO THE EFFECT THAT SUCH TRANSFER
MAY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE
SECURITIZATION TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER OR OPINION OF
COUNSEL FROM THE TRANSFEREE OF THIS CERTIFICATE, ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRANSFEROR AND THE SECURITIZATION TRUSTEE, TO THE
EFFECT THAT (A) SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE ON BEHALF OR
WITH THE ASSETS OF
B-1
<PAGE>
ANY "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), (B) NO "PROHIBITED
TRANSACTION" UNDER ERISA OR THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), WILL OCCUR IN CONNECTION WITH SUCH TRANSFEREE'S ACQUISITION OF THIS
CERTIFICATE OR (C) THE ACQUISITION OF THIS CERTIFICATE IS SUBJECT TO A STATUTORY
OR ADMINISTRATIVE EXEMPTION FROM THE "PROHIBITED TRANSACTION" PROVISIONS OF
ERISA AND THE CODE. IN ADDITION, NO TRANSFER OF THIS CERTIFICATE WILL BE
PERMITTED IF, AS A RESULT OF SUCH TRANSFER, 25% OR MORE OF THE OUTSTANDING
CERTIFICATE BALANCE OF ALL CLASS B CERTIFICATES WOULD BE HELD BY "EMPLOYEE
BENEFIT PLANS" (AS DEFINED IN SECTION 3(3) OF ERISA) OR OTHER BENEFIT PLAN
INVESTORS.
THE RESTRICTIONS ON RESALE OR TRANSFER DESCRIBED ABOVE ARE SUBJECT TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF THE HOLDER'S PROPERTY SHALL AT ALL
TIMES BE AND REMAIN WITHIN ITS CONTROL.
TOYOTA AUTO LEASE TRUST 1997-A
_____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS B
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidence an undivided
interest in the Securitization Trust, as defined below, the property
of which includes, among other things, a special unit of beneficial
interest (the "1997-A SUBI Interest") in Toyota Lease Trust, a
Delaware business trust, which 1997-A SUBI Interest represents a
beneficial interest in a pool of retail lease contracts for new and
used automobiles and light duty trucks (and the related automobiles
and light-duty trucks) entered into by various automobile and light
duty truck dealers pursuant to contractual arrangements with Toyota
Motor Credit Corporation, and which special unit of beneficial
interest was originally issued to Toyota Leasing Inc. and then to the
Securitization Trust.
(This Certificate does not represent an obligation of, or an interest
in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling
Trustee or the Securitization Trustee or any of their respective
affiliates.)
Aggregate Denominations
of all Class B Certificates: CUSIP #
B-2
<PAGE>
$_____________
Number B-__ Denomination: $__________
THIS CERTIFIES THAT _______________ is the registered owner of a
________________________________________________ DOLLAR and ________________
CENTS ($__________ ) nonassessable, fully-paid, fractional undivided interest
in the Toyota Auto Lease Trust 1997-A (the "Trust") formed by Toyota Leasing,
Inc., a Delaware corporation, as Transferor (the "Transferor"). The
Securitization Trust was created pursuant to a Securitization Trust Agreement
dated as of ___________________ 1, 1997 (the "Agreement"), between the
Transferor and U.S. Bank National Association, a national banking
association, as trustee (the "Trustee"). A summary of certain of the
pertinent provisions of the Agreement is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "Toyota Auto Lease Trust 1997-A_____% Automobile
Contract Asset Backed Certificates, Class B" (the "Class B Certificates"). Also
issued under the Agreement are Certificates designated as "Toyota Auto Lease
Trust 1997-A _____% Automobile Lease Asset Backed Certificates, Class A-1" (the
"Class A-1 Certificates"), Certificates designated as "Toyota Auto Lease Trust
1997-A_____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class
A-2 Certificates"), Certificates designated as "Toyota Auto Lease Trust 1997-A
_____% Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3
Certificates" and, together with the Class A-1 Certificates and the Class A-2
Certificates, the "Class A Certificates" and, together with the Class B
Certificates, the "Investor Certificates") and a Certificate designated as the
"Toyota Auto Lease Trust 1997-A Automobile Asset Backed Transferor Certificate"
(the "Transferor Certificate" and, together with the Investor Certificates, the
"Certificates"). The Class B Certificates are subordinated to the Class A
Certificates, and the Transferor Certificate is subordinated to the Investor
Certificates, to the extent described in the Agreement. This Class B
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class B
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
The property of the Securitization Trust includes, among other things, a
special unit of beneficial interest (the "1997-A SUBI Interest") in Toyota Lease
Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI
Interest represents a beneficial interest in a pool of retail automobile and
light duty truck lease contracts ("Contracts") and the new and used automobiles
and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts
and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by various
automobile and light duty truck dealers pursuant to contractual arrangements
with Toyota Motor Credit Corporation, which also acts as servicer (in that
capacity, the "Servicer") of the 1997-A SUBI Portfolio.
B-3
<PAGE>
Under the Agreement, there will be distributed on the 25th day of March and
September or, to the extent provided in the Agreement, on the 25th day of each
month, or if such 25th day is not a Business Day, the next succeeding Business
Day (each, a "Distribution Date"), commencing on March 25, 1998, to the Person
in whose name this Class B Certificate is registered at the close of business on
the last calendar day immediately preceding calendar month (each a "Record
Date"), such Class B Certificateholder's percentage interest in the amount
distributed on the Class B Certificates pursuant to Section 3.01 of the
Agreement, all to the extent and as more specifically set forth in the
Agreement. To the extent provided in the Agreement, no principal payments shall
be made in respect of the Class A-2 Certificates until the Class A-1
Certificates have been paid in full, no principal payments shall be made in
respect of the Class A-3 Certificates until the Class A-2 Certificates have been
paid in full and no principal payments shall be made in respect of the Class B
Certificates until the Class A-3 Certificates have been paid in full.
Distributions on this Class B Certificate will be made by the
Securitization Trustee by check mailed to the Class B Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Class B Certificate or the making of any notation hereon or, at the option of a
Holder who owns Class B Certificates having an aggregate initial denomination of
$250,000 or more, upon written instructions received by the Securitization
Trustee not later than fifteen days prior to the related Record Date, by wire
transfer of immediately available funds to an account maintained by such Holder
at a depository institution in the United States having appropriate facilities
therefor. Except as otherwise provided in the Agreement and notwithstanding the
foregoing, the final distribution on this Class B Certificate will be made after
due notice by the Securitization Trustee of the pendency of such distribution
and only upon presentation and surrender of this Class B Certificate at the
Corporate Trust Office of the Securitization Trustee.
It is the intention of the Transferor and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Transferor, the Securitization
Trustee and the Holder of this Certificate by acceptance of this Certificate
agree to treat the Investor Certificates, for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness and to report the transactions contemplated by the
Agreement on all applicable tax returns in a manner consistent with such
treatment.
By accepting this Certificate, the Holder hereof waives any claim to any
proceeds or assets of the Titling Trustee and to all assets of the Titling Trust
other than those from time to time included in the 1997-A SUBI Assets and those
proceeds or assets derived from or earned by such 1997-A SUBI Assets.
B-4
<PAGE>
In the event that, notwithstanding the statement of intentions and
undertakings set forth in SECTION 4.12(a) of the Agreement and herein, it is
finally determined that the Class B Certificates do not evidence indebtedness of
the Transferor for all income and franchise tax purposes, but rather represent
an equity interest in the assets of the Securitization Trust, then Holder hereof
agrees (i) to treat such Certificates, together with the Transferor Certificate,
as representing an interest in a partnership for all tax purposes, (ii) to treat
all payments in respect of such Certificates (to the extent not a return of
capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of
the Code, and (iii) to allocate all other items of income, gain, deduction, loss
or credit with respect to the assets and operations of the Securitization Trust
to the Transferor.
The Certificates do not represent an obligation of, or an interest in, the
Transferor, the Servicer, the Titling Trust, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the 1997-A SUBI Interest and 1997-A SUBI Certificate and certain monies on
deposit in the Reserve Fund and in certain other accounts established for the
benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Securitization Trustee, and at such other places, if any, designated by the
Securitization Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Securitization Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the Holders
of Investor Certificates evidencing not less than 51% of the aggregate
Percentage Interest of all Investor Certificates, voting together as a single
class. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Registrar upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office of the Securitization Trustee in its capacity as
Certificate Registrar, or at the office of the agent of the Securitization
Trustee in its capacity as Certificate Registrar, who shall initially be First
Trust of New York, National Association, 100 Wall Street, 20th Floor, New York,
New York 10005, in the Borough of Manhattan, the City of New York, or at the
appropriate office of any successor Certificate Registrar, accompanied by a
written instrument of transfer in form satisfactory to the Securitization
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Class B Certificate
B-5
<PAGE>
of authorized denominations and of a like aggregate fractional undivided
interest will be issued to the designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $250,000 and integral multiples of $1,000 in
excess thereof, (except for one Class B Certificate in a smaller minimum
denomination representing any remaining portion of the Initial Class B
Certificate Balance). As provided in the Agreement, and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class, of authorized denominations of a like aggregate
principal amount, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Securitization Trustee may require payment of a sum sufficient to cover any tax
or governmental charges payable in connection therewith.
Prior to due presentation of this Certificate for registration of transfer,
the Securitization Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Class B Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Securitization Trustee, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Securitization Trust created thereby shall terminate upon the payment to
Investor Certificateholders of all amounts required to be paid to them pursuant
to the Agreement and the disposition of all property held as part of the
Securitization Trust. The Transferor may at its option purchase the corpus of
the Securitization Trust at a price specified in the Agreement, and such
purchase of the 1997-A SUBI Interest and 1997-A SUBI Certificate and other
property of the Securitization Trust will effect early retirement of the
Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on
the Distribution Date following the last day of a Collection Period as of which
the Certificate Balance shall be less than or equal to ten percent (10%) of the
Initial Certificate Balance.
By accepting this Certificate, the Holder hereof covenants and agrees that
prior to the date which is one year and one day after the last date upon which
(a) each Class of Investor Certificates has been paid in full, and (b) all
obligations due under any other Securitized Financing have been paid in full,
the Holder will not institute against, or join any other Person in instituting
against the Transferor, Toyota Motor Credit Corporation, the Securitization
Trust, the Titling Trustee or the Titling Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. The foregoing shall not limit the
Holder's right to file any claim in or otherwise take actions with respect to
any such proceeding instituted by any Person not under such a constraint. This
non-petition covenant shall survive the termination of the Agreement.
B-6
<PAGE>
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Securitization Trustee, by manual signature, this
Class B Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
B-7
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Class B Certificate to
be duly executed.
Dated: __________ __, 199_
TOYOTA LEASING INC.
By:
--------------------------------
Authorized Officer
B-8
<PAGE>
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------
B-9
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -----------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- -----------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -----------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
-----------------------------
Signature Guaranteed:
*
-----------------------------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
B-10
<PAGE>
EXHIBIT C
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED.
TOYOTA AUTO LEASE TRUST 1997-A
AUTOMOBILE LEASE ASSET BACKED TRANSFEROR CERTIFICATE
evidencing the entire interest in the distributions allocable to the
Transferor Certificate evidencing an undivided interest in the
Securitization Trust, as defined below, the property of which
includes, among other things, a special unit of beneficial interest
(the "1997-A SUBI Interest") in Toyota Lease Trust, a Delaware
business trust, which 1997-A SUBI Interest represents a beneficial
interest in a pool of retail lease contracts for new and used
automobiles and light duty trucks (and the related automobiles and
light-duty trucks) entered into by various automobile and light duty
truck dealers pursuant to contractual arrangements with Toyota Motor
Credit Corporation, and which 1997-A SUBI Interest was originally
issued to Toyota Leasing, Inc., and then to the Securitization Trust.
(This Certificate does not represent an obligation of, or an interest
in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, or any of
their respective affiliates.)
THIS CERTIFIES THAT TOYOTA LEASING, INC. (the "Transferor") is the
registered owner of the entire interest not allocated to the Investor
Certificates in the Toyota Auto Lease Trust 1997-A (the "Trust") formed by
the Transferor. The Securitization Trust was created pursuant to a
Securitization Trust Agreement dated as of __________________ 1, 1997 (the
"Agreement"), between the Transferor and U.S. Bank National Association, a
national banking association, as trustee (the "Trustee"). A summary of
certain of the pertinent provisions of the Agreement is set forth below. To
the extent not otherwise defined herein the capitalized terms used herein
have the meanings assigned to them in the Agreement.
This Certificate is the duly authorized Transferor Certificate issued under
the Agreement and designated as the "Toyota Auto Lease Trust 1997-A Automobile
Lease Asset Backed Transferor Certificate" (the "Transferor Certificate"). Also
issued under the Agreement are Certificates designated as "Toyota Auto Lease
Trust 1997-A ____% Automobile Lease Asset
C-1
<PAGE>
Backed Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates
designated as "Toyota Auto Lease Trust 1997-A ____% Automobile Contract Asset
Backed Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates
designated as "Toyota Auto Lease Trust 1997-A ____% Automobile Lease Asset
Backed Certificates, Class A-3" (the "Class A-3 Certificates" and, together with
the Class A-1 Certificates and the Class A-2 Certificates, the "Class A
Certificates") and Certificates designated as "Toyota Auto Lease Trust 1997-A
___% Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates" and, together with the Transferor Certificate, the
"Certificates"). This Transferor Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Transferor Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound.
The property of the Securitization Trust includes, among other things, a
special unit of beneficial interest (the "1997-A SUBI Interest") in Toyota Lease
Trust, a Delaware business trust (the "Titling Trust"), which 1997-A SUBI
Interest represents a beneficial interest in a pool of retail automobile and
light duty truck lease contracts ("Contracts") and the new and used automobiles
and light duty trucks leased thereby ("Leased Vehicles") (such pool of Contracts
and Leased Vehicles, the "1997-A SUBI Portfolio") entered into by various
automobile and light duty truck dealers pursuant to contractual arrangements
with Toyota Motor Credit Corporation, which also acts as servicer (in that
capacity, the "Servicer") of the 1997-A SUBI Portfolio. During the Revolving
Period, Principal Collections allocable to the 1997-A SUBI Interest generally
will be applied towards the allocation to the 1997-A SUBI Portfolio of
additional qualifying Contracts and Leased Vehicles from among all other
unallocated Contracts and Leased Vehicles owned by the Titling Trust.
Payments in respect of the 1997-A SUBI Interest will be allocated between
the Investor Certificates and this Transferor Certificate and paid to the
registered Holder of this Transferor Certificate as provided in the Agreement.
It is the intention of the Transferor, as the Holder of this Certificate,
and the Holders of Investor Certificates that the Investor Certificates will be
indebtedness for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. The
Securitization Trustee and Transferor, as the Holder of this Certificate, by
acceptance of this Certificate, agree to treat the Investor Certificates, for
purposes of federal, state and local income or franchise taxes and any other tax
imposed on or measured by income, as indebtedness and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment.
By accepting this Certificate, the Holder hereof waives any claim to any
proceeds or assets of the Titling Trustee and to all assets of the Titling Trust
other than those from time to
C-2
<PAGE>
time included in the 1997-A SUBI Assets and those proceeds or assets derived
from or earned by such 1997-A SUBI Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Investor Certificates do not evidence indebtedness
of the Transferor for all income and franchise tax purposes, but rather
represent an equity interest in the assets of the Securitization Trust, then the
Transferor, as Holder hereof, agrees (i) to treat the Investor Certificates,
together with this Certificate, as representing an interest in a partnership for
all tax purposes, (ii) to treat all payments in respect of such Certificates (to
the extent not a return of capital) as a "guaranteed payment" thereon made
pursuant to Section 707(c) of the Code, and (iii) to allocate all other items of
income, gain, deduction, loss or credit with respect to the assets and
operations of the Securitization Trust to the Transferor.
The Certificates do not represent an obligation of, or an interest in, the
Transferor, the Servicer, the Titling Trust, the Titling Trustee, the
Securitization Trustee or any of their respective affiliates. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the 1997-A SUBI Interest and 1997-A SUBI Certificate and certain monies on
deposit in the Reserve Fund and in certain other accounts established for the
benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Securitization Trustee, and at such other places, if any, designated by the
Securitization Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Transferor and the Securitization Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the Holders
of Certificates evidencing not less than 51% of the aggregate Percentage
Interest of all Investor Certificates, voting together as a single class.
As provided in the Agreement, this Certificate shall be owned by the
Transferor and may not be transferred.
As provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of the same Class, of
authorized denominations of a like aggregate principal amount, as requested by
the Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Securitization Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
C-3
<PAGE>
The obligations and responsibilities created by the Agreement and the
Securitization Trust created thereby shall terminate upon the payment to
Investor Certificateholders of all amounts required to be paid to them pursuant
to the Agreement and the disposition of all property held as part of the
Securitization Trust. The Transferor may at its option purchase the corpus of
the Securitization Trust at a price specified in the Agreement, and such
purchase of the 1997-A SUBI Interest and 1997-A SUBI Certificate and other
property of the Securitization Trust will effect early retirement of the
Certificates; PROVIDED, HOWEVER, such right of purchase is exercisable only on
the Distribution Date following the last day of a Collection Period as of which
the Certificate Balance shall be less than or equal to ten percent (10%) of the
Initial Certificate Balance.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Securitization Trustee, by manual signature, this
Transferor Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
C-4
<PAGE>
IN WITNESS WHEREOF, the Securitization Trustee on behalf of the
Securitization Trust and not in its individual capacity has caused this
Transferor Certificate to be duly executed.
Dated: __________, 1997 TOYOTA LEASING, INC.
(SEAL) By:
--------------------------------
Authorized Officer
ATTEST
- -------------------------
C-5
<PAGE>
This is the Transferor Certificate referred
to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------
C-6
<PAGE>
EXHIBIT D-1
NON-RULE 144A REPRESENTATION LETTER
Toyota Leasing, Inc.,
19001 S. Western Avenue
Torrance, California 90509
U.S. Bank National Association
11 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Re: Toyota Auto Lease Trust 1997-A ____% Automobile
Lease Asset Backed Certificates, Class B
----------------------------------------
Ladies and Gentlemen:
The undersigned purchaser (the "Purchaser") understands that the purchase
of the above-referenced certificates (the "Certificates") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), which
includes banks, savings and loan associations, registered brokers and dealers,
insurance companies, investment companies and organizations described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"),
corporations, business trusts and partnerships, not formed for the specific
purpose of acquiring the Certificates offered, with total assets in excess of
$5,000,000. The undersigned represents on behalf of the Purchaser that the
Purchaser is an "Accredited Investor" within the meaning of such definition.
The Purchaser is urged to review carefully the responses, representations and
warranties it is making herein.
REPRESENTATIONS AND WARRANTIES
The Purchaser makes the following representations and warranties in order
to permit U.S. Bank National Association, as trustee (the "Trustee") of the
Toyota Auto Lease Trust 1997-A (the "Securitization Trust"), and Toyota Leasing,
Inc. (the "Transferor") to determine its suitability as a purchaser of
Certificates and to determine that the exemption from registration relied upon
by the Transferor under Section 4(2) of the Securities Act is available to it.
1. The Purchaser understands that the Certificates have not been, and
throughout their term will not be, registered or qualified under the Securities
Act or the securities law of any state and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration under the Securities
D-1-1
<PAGE>
Act and other applicable state securities laws are available, that neither the
Transferor nor the Securitization Trustee is required to register the
Certificates under the Securities Act or any applicable state securities laws
and that any transfer must comply with Section 4.03 of the Securitization Trust
Agreement, dated as of _______ 1, 1997 (the "Agreement"), among the Transferor,
and the Securitization Trustee.
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates.
3. The Purchaser is an institutional "accredited investor" within the
meaning of paragraphs 1, 2, 3 or 7 Rule 501(a) under the Securities Act and a
sophisticated institutional investor and has knowledge and experience in
financial and business matters (and, in particular, in such matters related to
securities similar to the Certificates) and is capable of evaluating the merits
and risks of its investment in the Certificates and is able to bear the economic
risk of such investment. The Purchaser has been given such information
concerning the Certificates and the Transferor as it has requested.
4. The Purchaser is acquiring the Certificates as principal for its own
account (or for the account of one or more other sophisticated institutional
investors for which it is acting as duly authorized fiduciary or agent) for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Certificate, any
interest in any Certificate or any other similar security of the Transferor to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of any Certificate, any interest in any Certificate or any other similar
security of the Transferor with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, which would constitute a distribution of the Certificates
under the Securities Act or which would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, require registration or qualification pursuant thereto, or
require registration of the Securitization Trust or the Transferor as an
"investment company" under the Investment Company Act of 1940, as amended, nor
will it act, nor has it authorized or will it authorize any person to act in
such manner with respect to the Certificates.
6. The Purchaser has reviewed the Private Placement Memorandum with
respect to the Certificates dated _______ __, 1997, including the Prospectus
attached thereto as Exhibit A (the "Private Placement Memorandum"), and the
agreements and other materials referred to therein, and has had the opportunity
to ask questions and receive answers concerning the terms and conditions of the
transaction contemplated by the Private Placement Memorandum and to
D-1-2
<PAGE>
obtain additional information necessary to verify the accuracy and completeness
of any information furnished to the Purchaser or to which the Purchaser had
access.
7. [The Purchaser will not acquire the Certificates with the assets of
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").] [No "prohibited
transaction" under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Code will occur in connection with our acquisition of
the Certificates.] [The acquisition of the Certificates is subject to a
statutory or administrative exemption from the "prohibited transaction"
provisions of the Employee Retirement Income Security act of 1974, as amended
("ERISA"), and the Code [specifying exemption].l*
8. [The Purchaser will not acquire the Certificates with the assets of
any "employee benefit plan" or any other benefit plan investor.] [The Purchaser
represents that it is an insurance company and is holding and will be holding
all funds used to purchase the Certificates in its general account, the assets
of which such Purchaser reasonably believes do not constitute "plan assets" as
defined in the plan asset regulations under ERISA.] [The Purchaser will acquire
the Certificates with the assets of an "employee benefit plan" or other benefit
plan investor.]*
9. The Purchaser understands that the Certificates will bear a legend
substantially as set forth in the form of Certificate included as Exhibit B to
the Agreement.
- -------------------
* Purchaser required to select applicable sentence.
D-1-3
<PAGE>
10. The Purchaser understands that there is no market, nor is there any
assurance that a market will develop, for the Certificates and that the
Transferor does not have any obligation to make or facilitate any such market
(or to otherwise repurchase the Certificates from the Purchaser) under any
circumstances.
11. The Purchaser has consulted with its own legal counsel, independent
accountants and financial advisors to the extent it deems necessary regarding
the tax consequences to it of ownership of the Certificates, is aware that its
taxable income with respect to the Certificates in any accounting period may not
correspond to the cash flow (if any) from the Certificates for such period, and
is not purchasing the Certificates in reliance on any representations of the
Transferor or its counsel with respect to tax matters.
12. The Purchaser represents, on behalf of itself (or, if it is acquiring
the Certificates on behalf of one or more other sophisticated institutional
investors, on behalf of each of such investors) that if the Purchaser or any
such other investor is a partnership, grantor trust or S corporation for federal
income tax purposes (a "Flow-Through Entity"), any Certificates owned by such
Flow-Through Entity will represent less than 50% of the value of all the assets
owned by such Flow-Through Entity and no special allocation of income, gain,
loss, deduction or credit from such Certificates will be made among the
beneficial owners of such Flow-Through Entity.
13. The Purchaser agrees that it will obtain from any subsequent purchaser
of the Certificates substantially the same representations, warranties and
agreements contained in the foregoing paragraphs 1 through 12 and in this
paragraph 13.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Agreement or the Private Placement Memorandum,
as the case may be.
D-1-4
<PAGE>
The representations and warranties contained herein shall be binding upon
the successors of the undersigned.
Executed at _________________, this ____ day of ____________ 199_
------------------------------
Purchaser's Name (Print)
By
----------------------------
Signature
Its
---------------------------
------------------------------
Address of Purchaser
------------------------------
Purchaser's Taxpayer
Identification Number
D-1-5
<PAGE>
EXHIBIT D-2
RULE 144A REPRESENTATION LETTER
Toyota Leasing, Inc.,
19001 S. Western Avenue
Torrance, California 90509
U.S. Bank National Association
11 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Re: Toyota Auto Lease Trust ____% Automobile
Lease Asset Backed Certificates, Class B
----------------------------------------
Ladies and Gentlemen:
______________________ (the "Purchaser") is today purchasing in a private
resale from ________________________ (the "Transferor") $__________ aggregate
principal amount of the above-captioned certificates (the "Certificates"),
issued pursuant to the securitization trust agreement, dated as of _______ 1,
1997 (the "Agreement"), among Toyota Leasing, Inc. ("the Transferor") and U.S.
Bank National Association.
In connection with the purchase of the Certificates, the Purchaser hereby
represents and warrants to each of you as follows:
1. The Purchaser understands that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or the securities laws of any state.
2. The Purchaser is acquiring the Certificates for its own account only
for investment and not for any other person, and not with a view to, or for
resale in connection with, a distribution that would constitute a violation of
the Securities Act or any state securities laws (subject to the understanding
that disposition of the Purchaser's property will remain at all times within its
control). The Purchaser is not an affiliate of the Transferor, Toyota Motor
Credit Corporation, the Securitization Trustee, any custodian of the
Certificates or any of their respective affiliates.
3. The Purchaser agrees that the Certificates must be held indefinitely
by it unless (i) the Certificates are subsequently registered under the
Securities Act or (ii) an exemption from the registration requirements of the
Securities Act is available.
D-2-1
<PAGE>
4. The Purchaser agrees that if at some time it wishes to dispose of or
exchange any of the Certificates, it will not transfer or exchange any of the
Certificates unless such transfer or exchange is in accordance with the
provisions of Section 4.03 of the Agreement.
5. The Purchaser is a qualified institutional buyer as defined in Rule
144A of the Securities Act and has completed and is delivering herewith either
of the forms of certification to that effect attached as Annexes hereto, it is
aware that the sale to it is being made in reliance on Rule 144A, it is
acquiring the Certificates for its own account or for the account of a qualified
institutional buyer and it understands that such Certificates may be resold,
pledged or transferred only (i) to a person who the Transferor reasonably
believes is a qualified institutional buyer that purchases for its own account
or for the account of a qualified institutional buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule 144A or
(ii) pursuant to another exemption from registration under the Securities Act
and applicable state securities laws.
6. Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Certificate, any
interest in any Certificate or any other similar security of the Transferor to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of any Certificate any interest in any Certificate or any other similar security
of the Transferor with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, which would constitute a distribution of the Certificates
under the Securities Act or which would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, require registration or qualification pursuant thereto, or
require registration of the 1997-A Securitization Trust or the Transferor as an
"investment company" under the Investment Company Act of 1940, as amended, nor
will it act, nor has it authorized or will it authorize any person to act in
such manner with respect to the Certificates.
7. [The Purchaser will not acquire the Certificates with the assets of
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").] [No "prohibited
transaction" under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Internal Revenue Code of 1986, as amended (the
"Code"), will occur in connection with our acquisition of the Certificates.]
[The acquisition of the Certificates is subject to a statutory or administrative
exemption from the "prohibited transaction provisions of the Employee Retirement
Income Security act of 1974, as amended ("ERISA"), and the Internal Revenue Code
of 1986, as amended (the "Code"), [specifying exemption].
- -----------------------
* Purchaser required to select applicable sentence.
D-2-2
<PAGE>
8. [The Purchaser will not acquire the Certificates with the assets of
any "employee benefit plan" or any other benefit plan investor.] [The Purchaser
represents that it is an insurance company and is holding and will be holding
all funds used to purchase the Certificates in its general account, the assets
of which such Purchaser reasonably believes do not constitute "plan assets" as
defined in the plan asset regulations under ERISA.] [The Purchaser will acquire
the Certificates with the assets of an "employee benefit plan" or other benefit
plan investor.]
9. The Purchaser understands that there is no market, nor is there any
assurance that a market will develop, for the Certificates and that the
Transferor does not have any obligation to make or facilitate any such market
(or to otherwise repurchase the Certificates from the Purchaser) under any
circumstances.
10. The Purchaser has consulted with its own legal counsel, independent
accountants and financial advisors to the extent it deems necessary regarding
the tax consequences to it of ownership of the Certificates, is aware that its
taxable income with respect to the Certificates in any accounting period may not
correspond to the cash flow (if any) from the Certificates for such period, and
is not purchasing the Certificates in reliance on any representations of the
Transferor or its counsel with respect to tax matters.
11. The Purchaser has reviewed the Private Placement Memorandum with
respect to the Certificates dated ________ ___, 1997, including the Prospectus
attached as Exhibit A thereto (the "Private Placement Memorandum"), and the
agreements and other materials referred to therein, and has had the opportunity
to ask questions and receive answers concerning the terms and conditions of the
transaction contemplated by the Private Placement Memorandum and to obtain
additional information necessary to verify the accuracy and completeness of any
information furnished to the Purchaser or to which the Purchaser had access.
12. The Purchaser understands that the Certificates will bear a legend
substantially as set forth in the form of Certificate included as Exhibit B to
the Agreement.
13. The Purchaser hereby further agrees to be bound by all the terms and
conditions of the Certificates as provided in the Agreement.
14. The Purchaser represents that if the Purchaser is a partnership,
grantor trust or S corporation for federal income tax purposes (a "Flow-Through
Entity"), any Certificates owned by such Flow-Through Entity will represent less
than 50% of the value of all the assets owned by such Flow-Through Entity and no
special allocation of income, gain, loss deduction or credit from such
Certificates will be made among the beneficial owners of such Flow-Through
Entity.
D-2-3
<PAGE>
15. If the Purchaser sells any of the Certificates, the Purchaser will
obtain from any subsequent purchaser substantially the same representations
contained in this Representation Letter.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Agreement or the Private Placement Memorandum,
as the case may be.
The representations and warranties contained herein shall be binding upon
the successors of the undersigned.
Executed at ___________________, this ____ day of ___________ 199_
------------------------------
Purchaser's Name (Print)
By
----------------------------
Signature
------------------------------
Its
------------------------------
Address of Purchaser
------------------------------
Purchaser's Taxpayer
Identification Number
D-2-4
<PAGE>
ANNEX 1 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to the
addressees of the Rule 144A Representation Letter to which this certification is
attached with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Purchaser.
2. In connection with purchases by the Purchaser, the Purchaser is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Purchaser owned
and/or invested on a discretionary basis $________** in securities (except for
the excluded securities referred to below) as of the end of the Purchaser's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Purchaser satisfies the criteria in the category marked below.
___ CORPORATION, ETC. The Purchaser is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ BANK. The Purchaser (a) is a national bank or banking
institution organized under the laws of any State, territory or
the District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements.
- -------------------------
** Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
D-2-5
<PAGE>
___ SAVINGS AND LOAN. The Purchaser (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over any such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto
___ BROKER-DEALER. The Purchaser is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Purchaser is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia
___ STATE OR LOCAL PLAN. The Purchaser is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
___ ERISA PLAN. The Purchaser is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
____ INVESTMENT ADVISOR. The Purchaser is an investment advisor
registered under the Investment Advisors Act of 1940.
___ SMALL BUSINESS INVESTMENT COMPANY. The Purchaser is a small
business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
___ BUSINESS DEVELOPMENT COMPANY. The Purchaser is a business
development company as defined in Section 202(a) (22) of the
Investment Advisors Act of 1940.
___ TRUST FUND. The Purchaser is a trust fund whose trustee is a
bank or trust company and whose participants are exclusively
State or Local Plans or ERISA Plans as defined above, and no
participant of the Purchaser is an individual retirement account
or an H.R. 10 (Keogh) plan.
3. The term "SECURITIES" as used herein does not include (i) securities
of issuers that are affiliated with the Purchaser, (ii) securities that are part
of an unsold allotment to or
D-2-6
<PAGE>
subscription by the Purchaser, if the Purchaser is a dealer, (iii) bank deposit
notes and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Purchaser, the Purchaser used
the cost of such securities to the Purchaser and did not include any of the
securities referred to in the preceding paragraph, except (i) where the
Purchaser reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Purchaser may have included securities
owned by subsidiaries of the Purchaser, but only if such subsidiaries are
consolidated with the Purchaser in its financial statements prepared in
accordance with generally accepted accounting principles and if the investments
of such subsidiaries are managed under the Purchaser's direction. However, such
securities were not included if the Purchaser is a majority owned, consolidated
subsidiary of another enterprise and the Purchaser is not itself a reporting
company under the Securities Exchange Act of 1934, as amended.
5. The Purchaser acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Purchaser may be in reliance on Rule 144A.
6. Until the date of purchase of the Certificates, the Purchaser will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the
Purchaser's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Purchaser is
a bank or savings and loan is provided above, the Purchaser agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
------------------------------
Name of Purchaser or Adviser
By:
---------------------------
Name:
Title:
Date:
-------------------------
D-2-7
<PAGE>
D-2-8
<PAGE>
ANNEX 2 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to the
addressees of the Rule 144A Representation Letter which this certification is
attached with respect to the Transferor Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Purchaser or, if the Purchaser is a
"qualified institutional buyer as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because the Purchaser is part
of a Family of Investment Companies (as defined below), is such an officer of
the Adviser.
2. In connection with purchases by the Purchaser, the Purchaser is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Purchaser is an investment company registered under the Investment Company Act
of 1940, as amended and (ii) as marked below, the Purchaser alone, or the
Purchaser's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Purchaser's most recent fiscal year. For purposes of determining the
amount of securities owned by the Purchaser or the Purchaser's Family of
Investment Companies, the cost of such securities was used, except (i) where the
Purchaser or the Purchaser's Family of Investment Companies reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.
___ The Purchaser owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Purchaser's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The Purchaser is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than the
excluded securities referred to below) as of the end of the
Purchaser's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
D-2-9
<PAGE>
4. The term "SECURITIES" as used herein does not include (i) securities
of issuers that are affiliated with the Purchaser or are part of the Purchaser's
Family of Investment Companies, (ii) bank deposit notes and certificates of
deposit, (iii) loan participations, (iv) repurchase agreements, (v) securities
owned but subject to a repurchase agreement and (vi) currency, interest rate and
commodity swaps.
5. The Purchaser is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Representation Letter to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Purchaser will be in reliance on
Rule 144A. In addition, the Purchaser will only purchase for the Purchaser's
own account.
6. Until the date of purchase of the Transferor Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Purchaser's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
------------------------------
Name of Purchaser or Adviser
By:
---------------------------
Name:
Title:
IF AN ADVISER:
------------------------------
Name of Purchaser
Date:
-------------------------
D-2-10
<PAGE>
[Letterhead Of Andrews & Kurth L.L.P.]
August 28, 1997
Toyota Leasing, Inc.
Toyota Auto Lease Trust 1997-A
c/o Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
Re: TOYOTA AUTO LEASE TRUST 1997-A,
REGISTRATION STATEMENT ON FORM S-3
(REGISTRATION NO. 333-26717)
Ladies and Gentlemen:
We have acted as special counsel to Toyota Leasing, Inc. ("TLI"), as
originator of Toyota Auto Lease Trust 1997-A (the "Securitization Trust") and
to the Securitization Trust, in connection with the proposed issuance by the
Securitization Trust of the Automobile Lease Asset Backed Certificates, Class
A-1, Class A-2 and Class A-3 (the "Certificates") evidencing certain
beneficial interests in the assets of the Securitization Trust pursuant to
the Securitization Trust Agreement (the "Securitization Trust Agreement") to
be dated as of September 1, 1997 between TLI and U.S. Bank National
Association (formerly knows as First Bank National Association). We have
also acted as special counsel to the Securitization Trust in connection with
the execution and delivery by TLI of the Registration Statement and of
Amendments No.1, No. 2 and No. 3 thereto (collectively, the "Registration
Statement") on behalf of the Securitization Trust as issuer of the
Certificates.
The Securitization Trust Agreement has been filed with the Securities
and Exchange Commission as an exhibit to the Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the form of Securitization Trust
Agreement and the forms of Certificates included therein, and such other
documents, records, certificates of officers of TLI and the Securitization
Trust and of
<PAGE>
Toyota Auto Lease Trust 1997-A
August 28, 1997
Page 2
public officials and such other instruments as we have deemed necessary for
the purposes of rendering this opinion. In addition, we have assumed that
the Securitization Trust Agreement will be duly executed and delivered by
each of the parties thereto substantially in the form filed as an exhibit to
the Registration Statement; that the Certificates, as completed, will be duly
executed, authenticated and delivered substantially in the forms contemplated
by the Securitization Trust Agreement; and that the Certificates will be sold
as described in the Registration Statement, including all amendments thereto.
Based upon the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that, assuming the due
authorization, execution and delivery of the Securitization Trust Agreement
by each of the parties thereto, and the due authorization of the Certificates
by all necessary action on the part of the Securitization Trustee, when the
Certificates have been validly executed, authenticated and issued in
accordance with the Securitization Trust Agreement and delivered against
payment therefor, the the Certificates will be validly issued and
outstanding, fully paid and non-assessable, and entitled to the benefits of
the Securitization Trust Agreement in accordance with their terms, except
that the enforceability thereof may be subject to (a) bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent or preferential
conveyance or other similar laws now or hereinafter in effect relating to
creditors' rights generally, and (b) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and to the discretion of the court before which any proceeding therefor
may be brought.
The opinion expressed above is subject to the qualification that we do
not purport to be experts as to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the States of
California and New York, and we express no opinion herein as to the effect
that the laws and decisions of courts of any such other jurisdiction may have
upon such opinions.
We consent to the use and filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus contained therein. In giving such consent
we do not imply or admit that we are within the category of persons whose
consent is required under Section 7 of the 1933 Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
<PAGE>
[LETTERHEAD OF ANDREWS & KURTH L.L.P.]
August 28, 1997
Toyota Leasing, Inc.
Toyota Auto Lease Trust 1997-A
c/o Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
Re: TOYOTA AUTO LEASE TRUST 1997-A,
REGISTRATION STATEMENT
(REGISTRATION NO. 333-26717)
Ladies and Gentlemen:
We have acted as special counsel to Toyota Leasing, Inc. ("TLI"), as
originator of Toyota Auto Lease Trust 1997-A (the "Securitization Trust") and
to the Securitization Trust, in connection with the proposed issuance by the
Securitization Trust of the Automobile Lease Asset Backed Certificates, Class
A-1, Class A-2 and Class A-3 (the "Certificates") evidencing certain
beneficial interests in the assets of the Securitization Trust pursuant to
the Securitization Trust Agreement (the "Securitization Trust Agreement") to
be dated as of September 1, 1997 between TLI and U.S. Bank National
Association (formerly knows as First Bank National Association). We have
also acted as special counsel to the Securitization Trust in connection with
the execution and delivery by TLI of the Registration Statement and of
Amendments No.1, No. 2 and No. 3 thereto (collectively, the "Registration
Statement") on behalf of the Securitization Trust as issuer of the
Certificates.
The Securitization Trust Agreement has been filed with the Securities
and Exchange Commission as an exhibit to the Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the form of Securitization Trust Agreement and the
forms of Certificates included therein, and such other documents, records,
certificates of officers of TLI and the Securitization Trust and of
<PAGE>
Page 2
public officials and such other instruments as we have deemed necessary for the
purposes of rendering this opinion. In addition, we have assumed that the
Securitization Trust Agreement will be duly executed and delivered by each of
the parties thereto substantially in the form filed as an exhibit to the
Registration Statement; that the Certificates, as completed, will be duly
executed, authenticated and delivered substantially in the forms contemplated by
the Securitization Trust Agreement; and that the Certificates will be sold as
described in the Registration Statement, including all amendments thereto.
On the basis of the foregoing, we are of the opinion that the description
of federal income tax consequences appearing under the heading "Material Federal
Income Tax Consequences" in the Prospectus accurately describes the material
federal income tax consequences to holders of Certificates, under existing law
and subject to the qualifications and assumptions stated therein.
The opinions herein are based upon our interpretations of current law,
including court authority and existing Final and Temporary Regulations, which
are subject to change both prospectively and retroactively, and upon the facts
and assumptions discussed herein. This opinion letter is limited to the matters
set forth herein, and no opinions are intended to be implied or may be inferred
beyond those expressly stated herein. Our opinion is rendered as of the date
hereof and we assume no obligation to update or supplement this opinion or any
matter related to this opinion to reflect any change of fact, circumstances, or
law after the date hereof. In addition, our opinion is based on the assumption
that the matter will be properly presented to the applicable court. In
addition, we must note that our opinion represents merely our best legal
judgment on the matters presented and that others may disagree with our
conclusion. Our opinion is not binding on the Internal Revenue Service or a
court and there can be no assurance that the Internal Revenue Service will not
take a contrary position or that a court would agree with our opinion if
litigated. In the event any one of the statements, representations or
assumptions we have relied upon to issue this opinion is incorrect, our opinion
might be adversely affected and may not be relied upon.
We hereby consent to the reference to us under the caption "Material
Federal Income Tax Consequences" in the Prospectus, and to the filing of this
opinion as an Exhibit to the Registration Statement, without implying or
admitting that we are experts within the meaning of the 1933 Act with respect to
any part of the Registration Statement.
Very truly yours,
/s/Andrews & Kurth L.L.P.
<PAGE>
- --------------------------------------------------------------------------------
TOYOTA MOTOR CREDIT CORPORATION
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
----------------------------
Indenture
Dated as of August 1, 1997
----------------------------
$-
TMCC Demand Notes
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
(not a part of this Indenture)
TIA Indenture
Section Section
- ------- ----------
(Section)310(a) (1). . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a) (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a) (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08
7.10
11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(Section)311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(Section)312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(Section)313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(Section)314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
4.10
11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
11.02
(c) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09(c)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(Section)315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
i
<PAGE>
TIA Indenture
Section Section
- ------- ----------
(Section)316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . 2.09
(a) (1) (A). . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a) (1) (B). . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04
(Section)317(a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
(Section)318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
- ---------
N.A. means not applicable
ii
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Incorporation by Reference of TIA.. . . . . . . . . . . . . . . 1
Section 1.03. Rules of Construction.. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE TWO
THE SECURITIES
Section 2.01. Form; Title and Terms . . . . . . . . . . . . . . . . . . . . . 2
Section 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . . 3
Section 2.03. Securities Register.. . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04. Paying Agent to Hold Money in Trust.. . . . . . . . . . . . . . 4
Section 2.05. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . . 4
Section 2.06. Transfer and Exchange.. . . . . . . . . . . . . . . . . . . . . 5
Section 2.07. Replacement Securities. . . . . . . . . . . . . . . . . . . . . 5
Section 2.08. Outstanding Securities. . . . . . . . . . . . . . . . . . . . . 6
Section 2.09. Treasury Securities Not Outstanding.. . . . . . . . . . . . . . 6
Section 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . 6
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.13. Persons Deemed Owners.. . . . . . . . . . . . . . . . . . . . . 8
Section 2.14. Computation of Interest.. . . . . . . . . . . . . . . . . . . . 8
ARTICLE THREE
REDEMPTION
Section 3.01. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE FOUR
COVENANTS
Section 4.01. Payment of Securities.. . . . . . . . . . . . . . . . . . . . . 9
Section 4.02. Maintenance of Office or Agency.. . . . . . . . . . . . . . . . 9
Section 4.03. Company Statement as to Compliance; Notice of
Certain Defaults. . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE FIVE
CONSOLIDATIONS AND MERGERS, ETC.
Section 5.01. Company May Consolidate, Etc., Only on Certain Terms. . . . . .10
Section 5.02. Successor Person Substituted for Company. . . . . . . . . . . .11
i
<PAGE>
ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01. Events of Default.. . . . . . . . . . . . . . . . . . . . . . .11
Section 6.02. Acceleration of Maturity; Rescission and Annulment. . . . . . .12
Section 6.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. . . . . . . . . . . . . . . . . . . . .13
Section 6.04. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . .14
Section 6.05. Trustee May Enforce Claims without Possession of Securities.. .14
Section 6.06. Application of Money Collected. . . . . . . . . . . . . . . . .15
Section 6.07. Limitation on Suits.. . . . . . . . . . . . . . . . . . . . . .15
Section 6.08. Unconditional Right of Holders to Receive Principal and
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 6.09. Restoration of Rights and Remedies. . . . . . . . . . . . . . .16
Section 6.10. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . .16
Section 6.11. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . .16
Section 6.12. Control by Holders of Securities. . . . . . . . . . . . . . . .16
Section 6.13. Waiver of Past Defaults.. . . . . . . . . . . . . . . . . . . .17
Section 6.14. Undertaking for Costs.. . . . . . . . . . . . . . . . . . . . .17
ARTICLE SEVEN
TRUSTEE
Section 7.01. Duties of Trustee.. . . . . . . . . . . . . . . . . . . . . . .18
Section 7.02. Rights of Trustee.. . . . . . . . . . . . . . . . . . . . . . .19
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . .19
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . .19
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . .20
Section 7.06. Reports by Trustee to Holders.. . . . . . . . . . . . . . . . .20
Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . .20
Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . .21
Section 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . .22
Section 7.10. Eligibility; Disqualification.. . . . . . . . . . . . . . . . .22
Section 7.11. Preferential Collection of Claims Against Company . . . . . . .22
ARTICLE EIGHT
DEFEASANCE; SATISFACTION AND DISCHARGE
Section 8.01. Defeasance of the Indenture.. . . . . . . . . . . . . . . . . .22
Section 8.02. Satisfaction and Discharge of the Indenture.. . . . . . . . . .23
Section 8.03. Survival of Certain Obligations.. . . . . . . . . . . . . . . .24
Section 8.04. Acknowledgment of Discharge by Trustee. . . . . . . . . . . . .25
Section 8.05. Application of Trust Money. . . . . . . . . . . . . . . . . . .25
Section 8.06. Repayment to the Company. . . . . . . . . . . . . . . . . . . .25
Section 8.07. Reinstatement.. . . . . . . . . . . . . . . . . . . . . . . . .26
ii
<PAGE>
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders. . . . . . . . . . . . . . . . . . .26
Section 9.02. With Consent of Holders.. . . . . . . . . . . . . . . . . . . .27
Section 9.03. Compliance with TIA.. . . . . . . . . . . . . . . . . . . . . .28
Section 9.04. Revocation and Effect of Consents.. . . . . . . . . . . . . . .28
Section 9.05. Notation on or Exchange of Securities.. . . . . . . . . . . . .29
Section 9.06. Trustee to Sign Amendments, Etc.. . . . . . . . . . . . . . . .29
Section 9.07. Effect of Supplemental Indentures.. . . . . . . . . . . . . . .29
ARTICLE TEN
MEETINGS OF AND ACTIONS BY SECURITYHOLDERS
Section 10.01. Purposes for Which Meetings may be Called.. . . . . . . . . . .30
Section 10.02. Manner of Calling Meetings. . . . . . . . . . . . . . . . . . .30
Section 10.03. Call of Meetings by Company or Holders. . . . . . . . . . . . .30
Section 10.04. Who May Attend and Vote at Meetings.. . . . . . . . . . . . . .31
Section 10.05. Regulations may be Made by Trustee; Conduct of the
Meeting; Voting Rights; Adjournment.. . . . . . . . . . . . . .31
Section 10.06. Voting at the Meeting and Record to be Kept.. . . . . . . . . .32
Section 10.07. Exercise of Rights of Trustee or Securityholders
May Not be Hindered or Delayed by Call of Meeting.. . . . . . .32
Section 10.08. Evidence of Action Taken by Securityholders.. . . . . . . . . .32
Section 10.09. Proof of Execution of Instruments and of Holding of Securities.33
Section 10.10. Right of Revocation of Action Taken.. . . . . . . . . . . . . .33
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. TIA Controls.. . . . . . . . . . . . . . . . . . . . . . . . .34
Section 11.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Section 11.03. Communications by Holders with Other Holders.. . . . . . . . .35
Section 11.04. Certificate and Opinion as to Conditions Precedent.. . . . . .35
Section 11.05. Statements Required in Certificate or Opinion. . . . . . . . .35
Section 11.06. Rules by Trustee, Paying Agent, Registrar. . . . . . . . . . .36
Section 11.07. Legal Holidays.. . . . . . . . . . . . . . . . . . . . . . . .36
Section 11.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .36
Section 11.09. No Adverse Interpretation of Other Agreements. . . . . . . . .36
Section 11.10. No Recourse Against Others.. . . . . . . . . . . . . . . . . .36
Section 11.11. Successors.. . . . . . . . . . . . . . . . . . . . . . . . . .37
Section 11.12. Duplicate Originals. . . . . . . . . . . . . . . . . . . . . .37
Section 11.13. Severability.. . . . . . . . . . . . . . . . . . . . . . . . .37
Section 11.14. Headings and Table of Contents.. . . . . . . . . . . . . . . .37
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SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
Annex I -- Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Exhibit A -- Form of Security. . . . . . . . . . . . . . . . . . . . . . . . A-1
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INDENTURE dated as of August 1, 1997 between Toyota Motor Credit
Corporation, a California corporation (the "Company"), and U.S. Bank National
Association, a national banking association, as trustee (the "Trustee").
Recitals
A. The Company is duly authorized to execute and deliver this Indenture
and to provide for the issuance by the Company of the Securities as provided
herein.
B. All things have been done that are necessary to make the Securities,
when executed by the Company and authenticated and delivered by the Trustee
hereunder, the valid obligations of the Company in accordance with the terms of
this Indenture.
For and in consideration of the premises and the purchase of the Securities
by the Holders, each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
All capitalized terms used in this Indenture and not defined elsewhere
herein shall have the meanings assigned to them in Annex I, which is hereby
incorporated by reference in and made a part of this Indenture.
SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.
Wherever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
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"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) unless otherwise expressly provided in this Indenture, an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP and all financial computations required under this
Indenture shall be made in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(7) "including" shall be deemed to mean "including, without
limitation."
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM; TITLE AND TERMS.
The Securities and the Trustee's certificate of authentication thereon
shall be substantially in the forms set forth in Exhibit A hereto. The
Securities may have notations, legends or endorsements required by law or stock
exchange rules. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities shall constitute a
part of, and are hereby incorporated by reference in and made a part of, this
Indenture and to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to their incorporation
herein.
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The Securities shall be known and designated as the "TMCC Demand Notes" of
the Company. The aggregate original principal amount of Securities that may be
authenticated and delivered under this Indenture is limited to $-, except as
otherwise provided in Sections 2.06, 2.07, 2.10, 3.06 and 9.05.
The Securities shall be issuable only in registered form, without coupons.
The minimum denominations of the Securities will be $0.01.
Interest on the Securities which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date, shall, except as otherwise provided
in Section 2.12, be paid to the Persons in whose names the Securities (or one or
more Predecessor Securities) are registered at the close of business on the
Record Date next preceding such Interest Payment Date. At the option of the
Company, payment of interest on the Securities due on any Interest Payment Date,
falling after a Record Date for the payment of interest on the Securities and on
or before the related Interest Payment Date, may be paid by check mailed to the
address of the Persons entitled thereto as they shall appear in the Securities
register.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
The Securities shall be executed on behalf of the Company by the Chairman,
the President, or any Vice Chairman or Vice President of the Company. Any such
signature may be by facsimile.
If an Officer, Secretary or Assistant Secretary whose signature is on a
Security no longer holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
All of the Securities to be issued under this Indenture, and all of the
principal amounts to be evidenced by the Securities need not be issued at the
same time and may be issued from time to time at the order of the Company as
herein provided for. The principal amount of Securities to be issued hereunder
shall all be of the same series known as the "TMCC Demand Notes", but need not
have the same issue date, Stated Maturity Date, Interest Rate, or Interest
Payment Date. Each Security will have a Schedule attached thereto indicating:
(i) the amount of the increase in the principal amount outstanding under such
Security and the date on which each principal amount under such Security was
first issued, (ii) the Stated Maturity Date for such principal amount, (iii) the
Interest Rate applicable to such principal amount,(iv) the amount of the
decrease in the principal amount outstanding under such Security and the date on
which such principal amount under such Security was paid, and (v) the amount of
the interest paid on such Security and the date on which such interest was
paid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security, and an entry on the Schedule to
any such Security shall not be valid until the Trustee manually signs the space
provided for such entry as authentication of such increase or decrease in
outstanding principal amount of such Security. Such signature shall be
conclusive evidence that the Security and such entry has been authenticated
under this Indenture.
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The Trustee shall authenticate Securities and for original issue in the
maximum aggregate principal amount as aforesaid, upon a written order of the
Company signed by two Officers or by an Officer and either an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company. The Trustee
shall authenticate the Schedule attached to a Security to indicate the issuance
of an additional principal amount of the Securities, upon either (i) a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, or
(ii) if an Officers' Certificate has previously been delivered to the Trustee by
the Company specifying the names and titles of officers, employees or agents of
the Company eligible to give such an order, the order of any such officer,
employee or agent of the Company, which order may be by telephone (confirmed in
writing) or by facsimile. Any such order shall specify the principal amount
of Securities to be authenticated, the applicable Interest Rate, the Stated
Maturity Date and the date on which such issue of Securities is to be
authenticated.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.03. SECURITIES REGISTER.
The Company shall keep or cause to be kept at the Corporate Trust Office or
at any office or agency of the Company where Securities may be presented for
registration of transfer or for exchange as provided in Section 4.02 a register
in which, subject to such reasonable regulations as the Company may prescribe,
the Company shall provide for the registration of Securities and registration of
transfers and exchanges of Securities as in this Article provided. The
Registrar shall keep the register of the Securities and of their transfer and
exchange.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
Each Paying Agent shall hold in trust for the benefit of the Persons
entitled thereto, without interest, all money held by such Paying Agent for the
payment of principal of, premium, if any, and interest on the Securities
(whether such money has been paid to it by the Company or any other obligor on
the Securities), and shall notify the Trustee of any Default by the Company (or
any other obligor on the Securities) in making any such payment. If the Company
or a Subsidiary of the Company acts as Paying Agent, it shall segregate the
money and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee and account for any
funds disbursed and the Trustee may at any time during the continuance of any
payment Default, upon written request to a Paying Agent, require such Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed. Upon payment of all funds held by it to the Trustee, the Paying
Agent shall have no further liability for such money. As provided in Section
6.04 hereof, in any bankruptcy, insolvency, reorganization or other similar
proceeding relative to the Company or any other obligor on the Securities, the
Trustee shall serve as Paying Agent for the Securities; provided that the
foregoing shall not relieve the Company of its obligations under Section 4.02.
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SECTION 2.05. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list of the names and addresses of the
Securityholders furnished to it or maintained by it in its capacity as Paying
Agent and Registrar. If and so long as the Trustee is not the Registrar, in
accordance with Section 312(a) of the TIA the Company shall furnish or cause to
be furnished to the Trustee semiannually not less than 30 days nor more than 60
days before each Interest Payment Date and at such times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders including an
identification of the Securities and the aggregate amount thereof.
SECTION 2.06. TRANSFER AND EXCHANGE.
When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities in other authorized
denominations, the Registrar or co-Registrar shall register the transfer or make
the exchange if its reasonable requirements for such transactions (which may
include a requirement that any Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Registrar and the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing) are met. To permit registration of transfers and exchanges as provided
herein, the Company shall execute and the Trustee shall authenticate and deliver
Securities at the Registrar's or a co-Registrar's request. All Securities
issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company evidencing the same debt and entitling the
Holders thereof to the same benefits under this Indenture as the Securities
surrendered upon such registration of transfer or exchange. No service charge
shall be made to a Holder for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith, other than in the
case of exchanges under Sections 2.10, 3.06 and 9.05 not involving any transfer.
SECTION 2.07. REPLACEMENT SECURITIES.
If a defaced or mutilated Security is surrendered to the Trustee or if the
Holder of a Security presents evidence to the reasonable satisfaction of the
Trustee that the Security has been lost, destroyed or stolen the Company shall
execute and the Trustee shall authenticate a replacement Security if the
Company's and the Trustee's reasonable requirements are met. The Trustee or the
Company may require an indemnity bond, sufficient in the reasonable judgment of
both the Company and the Trustee, to protect the Company, the Trustee or any
Agent from any loss which any of them may suffer if a Security is replaced. The
Company and the Trustee may charge such Holder for their reasonable expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company,
whether or not the apparently destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and such replacement Security shall be entitled to
the benefits of and subject to the limitations of rights set forth in this
Indenture.
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The provisions of this Section, as amended or supplemented pursuant to this
Indenture with respect to particular Securities or generally, shall be exclusive
and shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
SECTION 2.08. OUTSTANDING SECURITIES.
Securities outstanding at any time under this Indenture are all Securities
that have been theretofore authenticated and delivered under this Indenture,
except (a) those cancelled by the Trustee, (b) those delivered to the Trustee
for cancellation, (c) those in exchange for or in lieu of which other Securities
have been authenticated and delivered under this Indenture and (d) those
described in this Section as not outstanding.
Except as provided in Section 2.09 hereof, a Security does not cease to be
outstanding because the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor holds the Security.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If on the Stated Maturity of the Securities, the Paying Agent (other than
the Company or a Subsidiary) holds U.S. Legal Tender sufficient to pay all of
the principal, premium, if any, and interest due on the Securities payable on
that date, then on and after that date such Securities shall cease to be
outstanding and interest on them shall cease to accrue.
SECTION 2.09. TREASURY SECURITIES NOT OUTSTANDING.
In determining whether the Holders of the required principal amount of
outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or whether a quorum is present at a meeting
of Holders of Securities, Securities owned by the Company or an other obligor on
the Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such
determination as to the presence of a quorum, only Securities which a Trust
Officer knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or an Affiliate of the Company or of such
other obligor. The Trustee may require an Officers' Certificate listing
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
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SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company shall
execute and, upon the written order of the Company signed by two Officers or by
an Officer and either an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall execute and the
Trustee shall authenticate definitive Securities which shall be exchangeable for
temporary Securities upon surrender of the temporary Securities at the office or
agency of the Company designated for such purpose pursuant to Section 4.02 for
the purpose of exchanges of Securities without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until such exchange, temporary Securities shall be entitled to
the same rights, benefits and privileges as definitive Securities and shall be
subject to the same limitation of rights as definitive Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, each co-Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for transfer, exchange
or payment. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation.
Subject to Section 2.07 hereof, the Company may not execute new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation.
All cancelled Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company, unless by a written
order signed by two Officers the Company shall direct that cancelled Securities
be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company fails to pay any principal of, premium if any, or interest
on any Security on the due date therefor (whether upon acceleration, at Stated
Maturity or otherwise), the Company shall pay interest, at the rate per annum
borne by the Securities, on such principal, premium, if any, and, to the extent
permitted by law, interest until such amounts are paid. Any interest on any
Security which shall be payable, but shall not be punctually paid or duly
provided for, on any Interest Payment Date for such Security (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder thereof
on the relevant Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Person in whose name such Security (or a Predecessor Security
thereof) shall be registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on such Security and
the date
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of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of U.S. Legal Tender equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit on or prior
to the date of the proposed payment, such U.S. Legal Tender when so
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the Trustee
shall fix a "Special Record Date" for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class, postage prepaid, to each Holder of
Securities at his address as it appears in the Security register not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Person in whose name such Security (or a Predecessor Security thereof)
shall be registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer or in exchange for
or in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
SECTION 2.13. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any Agent may treat the Person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payments of principal of, premium, if any, and, subject to Section
2.12, interest on such Security and for all other purposes whatsoever (whether
or not such Security is overdue), and neither the Company nor the Trustee or any
other Agent shall be affected by notice to the contrary.
SECTION 2.14. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day year
of twelve 30-day months.
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ARTICLE THREE
REDEMPTION
SECTION 3.01. REDEMPTION.
The Securities may not be redeemed at the option of the Company, in whole
or in part at any time prior to their respective Stated Maturities
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company will punctually pay the principal of and premium, if any, and
interest on the Securities on the dates and in the manner provided in the
Securities and this Indenture.
The Company will, on or prior to the day when any principal of or premium
or interest on any of the Securities becomes payable, whether at the Stated
Maturity thereof, by call for redemption, surrender for repurchase, declaration
of acceleration or otherwise, deposit with the Paying Agent (or, if the Company
or a Subsidiary of the Company is acting as Paying Agent, segregate and hold in
trust), in immediately available funds, no later than 12:00 noon (New York City
time), a sum in U.S. Legal Tender sufficient to pay the principal, premium and
interest becoming due. Such sum shall be held in trust for the benefit of the
Holders entitled to such payment and (unless such Paying Agent is the Trustee)
the Company shall promptly notify the Trustee of its action or failure so to
act, and of the amount of each such payment made to each Paying Agent.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in -, an office or agency where Securities may be
presented or surrendered for payment ("Paying Agent"), where Securities may be
surrendered for registration of transfer or exchange ("Registrar") and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. Unless otherwise expressly provided herein, the
Trustee, the Company or a Subsidiary of the Company may act as Registrar,
co-Registrar or Paying Agent. The Company shall give prompt written notice to
the Trustee and the Holders of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company initially appoints the Trustee, as the initial Registrar and
Paying Agent in -, and designates such agent as an agency where notices and
demands to or upon the Company in respect to the Securities and this Indenture
may be served.
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SECTION 4.06. COMPANY STATEMENT AS TO COMPLIANCE; NOTICE OF CERTAIN
DEFAULTS.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year, a written statement (which need not be contained in or
accompanied by an Officer's Certificate) signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company, stating that
(a) a review of the activities of the Company during such year and of its
performance under this Indenture has been made under his or her supervision, and
(b) to the best of his or her knowledge, based on such review, (a) the
Company has complied with all the conditions and covenants imposed on it under
this Indenture throughout such year, or, if there has been a default in the
fulfillment of any such condition or covenant, specifying each such default
known to him or her and the nature and status thereof, and (b) no event has
occurred and is continuing which is, or after notice or lapse of time or both
would become, an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and status
thereof.
(c) The Company shall deliver to the Trustee, within five days after the
occurrence thereof, written notice of any event which after notice or lapse of
time or both would become an Event of Default pursuant to clause (c) of Section
6.01.
ARTICLE FIVE
CONSOLIDATIONS AND MERGERS, ETC.
SECTION 5.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other Person
or Persons (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any conveyance, transfer or lease
of the property of the Company as an entirety or substantially as an entirety,
to any other Person (whether or not affiliated with the Company); provided,
however, that:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the entity formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a Corporation organized and existing under the laws of the
United States of America, any state thereof or the District of Columbia and
shall expressly assume, by an indenture (or indentures, if at such time there is
more than one Trustee) supplemental hereto, executed by the successor Person and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of, any premium and interest on all the
Securities and the
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performance of every other covenant of this Indenture on the part of the Company
to be performed or observed;
(2) immediately after giving effect to such transaction, no event which,
after notice or lapse of time, would become an Event of Default, shall have
occurred and be continuing;
(3) either the Company or the successor Person shall have delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel, stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 5.02. SUCCESSOR PERSON SUBSTITUTED FOR COMPANY.
Upon any consolidation or merger or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety to any
Person in accordance with Section 5.01, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
and thereafter, except in the case of a lease to another Person, the predecessor
Person shall be released from all obligations and covenants under this Indenture
and the Securities.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
The occurrence of any one of the following events for any reason
whatsoever, and whether voluntary, involuntary or by operation of law, shall
constitute an "Event of Default":
(a) default in the payment of any interest on any Security when such
interest becomes due and payable, and continuance of such default for a
period of [30] days; or
(b) default in the payment of the principal of and any premium on any
Security of such series when it becomes due and payable at its Maturity; or
(c) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture or the Securities, and
continuance of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
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(d) the entry by a court having competent jurisdiction of:
(i) a decree or order for relief in respect of the Company in an
involuntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(ii) a decree or order adjudging the Company to be insolvent, or
approving a petition seeking reorganization, arrangement, adjustment or
composition of the Company and such decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or
(iii) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of the
Company or of any substantial part of the property of the Company, or
ordering the winding up or liquidation of the affairs of the Company; or
(e) the commencement by the Company of a voluntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar law or of
a voluntary proceeding seeking to be adjudicated insolvent or the consent by the
Company to the entry of a decree or order for relief in an involuntary
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any insolvency proceedings against it, or
the filing by the Company of a petition or answer or consent seeking
reorganization or relief under any applicable law, or the consent by the Company
to the filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or similar official of the
Company or any substantial part of the property of the Company or the making by
the Company of an assignment for the benefit of creditors, or the taking of
corporate action by the Company in furtherance of any such action.
SECTION 6.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities occurs and is continuing,
then the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
amount shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
Money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of not less than a majority in principal amount of the
Outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum of Money
sufficient to pay:
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(A) all overdue installments of interest on all Securities;
(B) the principal of any Securities which have become due otherwise
than by such declaration of acceleration and interest thereon at the rate
borne by or provided for in such Securities;
(C) to the extent that payment of such interest is lawful, interest
upon overdue installments of interest at the rate borne by or provided for
in such Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities, other than the non-
payment of the principal of, and interest on Securities which shall have become
due solely by such declaration of acceleration, shall have been cured or waived
as provided in Section 6.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 6.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any installment of interest on any
Security when such interest shall have become due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of any Security at its
Maturity,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount of Money then due
and payable with respect to such Securities with interest upon the overdue
principal, and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest at the rate borne by or
provided for in such Securities, and, in addition thereto, such further amount
of Money as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay the Money it is required to pay the Trustee
pursuant to the preceding paragraph forthwith upon the demand of the Trustee,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the Money so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
Money adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities wherever
situated.
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If an Event of Default with respect to Securities occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Securities by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or such Securities or in aid of the exercise of any power granted
herein or therein, or to enforce any other proper remedy.
SECTION 6.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any overdue principal and/or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount, or such lesser amount
as may be provided for in the Securities, of the principal, interest owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents or counsel) and of the Holders of
Securities allowed in such judicial proceeding, and
(ii) to collect and receive any Money or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding.
SECTION 6.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or any of the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the
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Trustee shall be brought in its own name as trustee of an express trust, and any
recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security in respect of which such judgment has been recovered.
SECTION 6.06. APPLICATION OF MONEY COLLECTED.
Any Money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such Money on account of principal or interest,
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 7.07;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities for principal and interest in respect of which or for
the benefit of which such Money has been collected, ratably,
without preference or priority of any kind, according to the
aggregate amounts due and payable on such Securities and Coupons
for principal and interest, respectively;
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 6.07. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities;
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it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders, or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 6.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Security, as the case may be,
on the respective Stated Maturity or Maturities therefor specified in such
Security and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 6.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Security has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and each such Holder shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and each such
Holder shall continue as though no such proceeding had been instituted.
SECTION 6.10. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
2.07, no right or remedy herein conferred upon or reserved to the Trustee or to
each and every Holder of a Security is intended to be exclusive of any other
right or remedy, and every right and remedy, to the extent permitted by law,
shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to any Holder of a Security may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by such Holder, as
the case may be.
SECTION 6.12. CONTROL BY HOLDERS OF SECURITIES.
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The Holders of a majority in principal amount of the Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Securities of such series
provided that:
(1) such direction shall not be in conflict with any rule of law, with
this Indenture or with the Securities of such series;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; and
(3) such direction is not unduly prejudicial to the rights of the other
Holders of Securities of such series not joining in such action.
SECTION 6.13. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities on behalf of the Holders of all the Securities may waive
any past default hereunder with respect to such series and its consequences,
except a default:
(1) in the payment of the principal of or interest on any Security; or
(2) in respect of a covenant or provision hereof which under Article Nine
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 6.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, the Trustee or by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Outstanding Securities, or to
any suit instituted by any Holder of any Security for the enforcement of the
payment of the principal of or interest on any Security on or after the
respective Stated Maturities expressed in such Security or interest on any
overdue principal of any Security.
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ARTICLE SEVEN
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be
implied in this Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture, but need
not verify the accuracy of the contents thereof.
(c) The Trustee shall not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any 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 for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.
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(e) Whether or not expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liability which might be
incurred by the Trustee in compliance with such request or direction.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to the provisions of Section 7.01 hereof:
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and an Opinion of Counsel, which shall conform to Section
11.05. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate or opinion. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or its
Subsidiaries or Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities or any money paid to the Company or upon the
Company's direction under any provision hereof, and the Trustee shall not be
accountable for the Company's use of the proceeds from the
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Securities, and the Trustee shall not be responsible for any statement in the
Securities other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or an Event of Default occurs and is continuing and it is
known to the Trustee, the Trustee shall mail to each Securityholder notice of
the Default or Event of Default within 90 days after it occurs; provided that,
except in the case of a Default or an Event of Default in payment of principal
of, or premium, if any, or interest on any Security, the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of the
Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, the Trustee shall mail to each Securityholder, and each
other Person so entitled under TIA (Section )313(c), a brief report dated as of
such May 15 that shall comply with TIA (Section )313(a). The Trustee need not
send such report if such report is not required by TIA (Section )313(a). The
Trustee also shall comply with TIA (Section )313(b)(2).
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed with the Commission and each stock exchange,
if any, on which the Securities are listed.
The Company shall notify the Trustee if the Securities become listed on any
stock exchange prior to such listing.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee 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
Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless against,
any loss, liability or expense incurred by it including, without limitation, the
cost and expense of enforcement of this Indenture against the Company and of
defending itself against any claim (whether asserted by any Holder or the
Company or otherwise) without negligence, willful misconduct or bad faith on its
part, arising out of or in connection with the administration of this trust or
any trust created under Section 8.01 or 8.02 and its duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through negligence, wilful misconduct or bad faith.
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To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or Property held
or collected by the Trustee, in its capacity as Trustee, except money or
Property held in trust to pay principal of, premium, if any, or interest on
particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(d) or (e) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing and mailing
notice of such resignation to the Securityholders. The Holders of at least a
majority in principal amount of the outstanding Securities may remove the
Trustee by so notifying the Company and the Trustee in writing and may appoint a
successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its Property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee, unless the Holders have appointed a successor Trustee in accordance
with the previous paragraph. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08 and payment to the prior Trustee of
all sums due under Section 7.07 hereof.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the
retiring Trustee shall transfer all Property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07 hereof, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee fails to comply with Section 7.10 hereof, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 above shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (Section )310(a)(1). The Trustee shall have a combined capital and
surplus of at least $25,000,000 as set forth in its most recent published annual
report of condition. Neither the Company nor any Person directly or indirectly
controlling, controlled by, or under common control with the Company shall serve
as Trustee. The Trustee shall comply with TIA (Section )310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA (Section )311(a), excluding any creditor
relationship listed in TIA (Section )311(b). A Trustee who has resigned or been
removed shall be subject to TIA (Section )311(a) to the extent indicated.
ARTICLE EIGHT
DEFEASANCE; SATISFACTION AND DISCHARGE
SECTION 8.01. DEFEASANCE OF THE INDENTURE.
The Company shall be deemed to have terminated all of its obligations under
this Indenture (subject to Section 8.03 hereof) if:
(1) the Company irrevocably shall have deposited in trust with the
Trustee, pursuant to an irrevocable trust agreement in form and substance
reasonably satisfactory to the Trustee, as trust funds in trust solely for
the benefit of the Holders for that purpose, U.S. Legal Tender, or U.S.
Government Obligations maturing as to principal and interest in such
amounts and at such times, as are sufficient, without consideration of the
investment of any such U.S. Legal Tender or the reinvestment of the
proceeds from any such U.S. Government Obligations and after payment of all
federal, state and local taxes or other charges or
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assessments in respect thereof payable by the Trustee, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to, and in form and substance
reasonably satisfactory to, the Trustee, to pay the principal of, premium,
if any, and interest on the outstanding Securities on the dates on which
such payments are due and payable in accordance with the terms of this
Indenture and of the Securities, provided that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender and the proceeds of
such U.S. Government Obligations to the payment of said principal, premium,
if any, and interest on the Securities;
(2) no Default or Event of Default shall have occurred or be
continuing on the date of such deposit or shall occur on or before the
366th day after the date of such deposit;
(3) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other instrument or
agreement to which the Company is a party or by which it or its Property is
bound;
(4) the Company shall have delivered to the Trustee an Opinion of
Counsel in form and substance satisfactory to the Trustee to the effect
that Holders of the Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and the defeasance
contemplated hereby and will be subject to Federal income tax in the same
amounts and in the same manner and at the same time as would have been the
case if such deposit and defeasance had not occurred and that the deposit
is not subject to the control of any bankruptcy court;
(5) Such defeasance shall not cause the Securities, if then listed on
any national securities exchange registered under the Exchange Act, to be
delisted;
(6) Such deposit shall not result in the Company, the Trustee or the
irrevocable trust becoming or being deemed an "investment company" under
the Investment Company Act of 1940, as amended; and
(7) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company shall make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of notice of such
redemption or redemptions by the Trustee in the name and at the expense of the
Company.
SECTION 8.02. SATISFACTION AND DISCHARGE OF THE INDENTURE.
In addition to its rights under Section 8.01 above, the Company may
terminate all of its obligations under this Indenture (subject to Section 8.03
hereof) if:
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(1) either
(A) all Securities theretofore authenticated and delivered
(other than Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.07 hereof)
have been delivered to the Trustee for cancellation; or
(B) all Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited in trust with the Trustee, pursuant to an
irrevocable trust agreement in form and substance reasonably
satisfactory to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, an amount of U.S. Legal
Tender sufficient, without consideration of the investment thereof and
after payment of all federal, state and local taxes or other charges
or assessments in respect thereof payable by the Trustee, to pay the
principal of, premium, if any, and interest on the outstanding
Securities on the dates on which such payments are due and payable in
accordance with the terms of this Indenture and of the Securities,
provided that the Trustee shall have been irrevocably instructed to
apply such U.S. Legal Tender to the payment of said principal,
premium, if any, and interest on the Securities;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this
Indenture pursuant to this Section 8.02 have been complied with.
SECTION 8.03. SURVIVAL OF CERTAIN OBLIGATIONS.
Notwithstanding the defeasance of this Indenture or the satisfaction and
discharge of this Indenture referred to in Section 8.01 and Section 8.02 above,
respectively, the respective obligations of the Company and the Trustee under
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.11, 2.13, 2.14,
Article Three (to the extent that the Securities are to be redeemed through the
trust established pursuant to Section 8.01 or 8.02, as the case may be),
Sections 4.01, 4.02, 4.03, 6.08,
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7.07, 7.08, 7.09, 7.10, 7.11, 8.03, 8.04, 8.05, 8.06 and 8.07, Article Nine, and
Sections 11.01, 11.02, 11.06, 11.07 and 11.08 hereof shall survive until the
Securities are no longer outstanding. Thereafter the obligations of the Company
and the Trustee under Sections 7.07, 8.05, 8.06 and 8.07 hereof shall survive.
SECTION 8.04. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
Subject to Section 8.07 below and after the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in Section 8.01 or Section 8.02, as the
case may be, relating to the defeasance or satisfaction and discharge of this
Indenture have been complied with, the Trustee upon request of the Company shall
acknowledge in writing the defeasance or the satisfaction and discharge, as the
case may be, of this Indenture and the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified in Section
8.03 above.
SECTION 8.05. APPLICATION OF TRUST MONEY.
The Trustee shall hold any U.S. Legal Tender or U.S. Government Obligations
deposited with it in the irrevocable trust established pursuant to Section 8.01
or 8.02, as the case may be. The Trustee shall apply the deposited U.S. Legal
Tender and (in the case of a deposit pursuant to Section 8.01) any U.S.
Government Obligations through the Paying Agent (other than the Company or a
Subsidiary or Affiliate of the Company), in accordance with this Indenture and
the terms of the irrevocable trust agreement, to the payment of principal of,
premium, if any, and interest on the Securities as and when the same become due
and payable. The U.S. Legal Tender and U.S. Government Obligations so held in
trust shall not be part of the trust estate under this Indenture, but shall
constitute a separate trust fund for the benefit of all Holders entitled
thereto.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.01 or the principal and interest received in
respect thereof, other than any such tax, fee or other charge which by law is
for the account of the Holders of the Securities.
SECTION 8.06. REPAYMENT TO THE COMPANY.
The Trustee and the Paying Agent shall pay to the Company upon written
request, and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 8.01 or 8.02 above, any U.S. Legal Tender or
U.S. Government Obligations held by them for the payment of principal of,
premium, if any, or interest on the Securities that remains unclaimed for two
years after the date on which such payment shall have become due; provided,
however, that, before being required to make any such payment to the Company,
the Trustee may, at the expense of the Company, cause to be mailed to the
Holders of such Securities, at their last addresses as they appear on the
Securities register, notice that such moneys or U.S. Government Securities
remain unclaimed and that, after a date specified in said notice, the balance of
such moneys then unclaimed will be returned to the Company. After payment to
the Company as aforesaid, Holders entitled to such
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moneys or U.S. Government Obligations must look to the Company for such payment
unless an applicable abandoned property law designates another Person.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or
U.S. Government Obligations in accordance with Section 8.01 or 8.02 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or Governmental Authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.01 or 8.02, as the case may be (provided, however, that any call for
redemption of the Securities pursuant to Article Three shall continue to be
effective) until such time as the Trustee or Paying Agent is permitted to apply
all such funds in accordance with Section 8.01 or 8.02, as the case may be, and
8.05; provided, however, that if the Company has made any payment of principal
of, premium, if any, or interest on any Securities because of the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the U.S. Legal Tender or U.S.
Government Obligations held by the Trustee.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company, when authorized by a resolution of its Board of Directors, and
the Trustee, together, may amend or supplement this Indenture or the Securities
without notice to or consent of any Securityholder for any one or more of the
following:
(1) to cure any ambiguity, defect or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture, provided that such action does not adversely affect the rights
or interests of any Holder of Securities;
(2) to add to or change or eliminate any provision of this Indenture
as shall be necessary or desirable in accordance with any amendments to the
Trust Indenture Act, provided such action does not adversely affect the
rights or interests of any Holder of Securities;
(3) to provide for uncertificated Securities in addition to
certificated Securities;
(4) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation
of the covenants, agreements and obligations of the Company pursuant to
Article Five;
(5) to secure all of the Securities;
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(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities;
(7) to comply with the rules or regulations of any securities
exchange on which any of the Securities may be listed; or
(8) to add to the covenants and agreements of the Company such
further covenants and agreements as the Board of Directors of the Company
shall consider to be for the protection or benefit of the Holders or to add
any Events of Default or to surrender any right or power reserved to or
conferred upon the Company.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.08 and the next succeeding paragraph, the Company,
when authorized by a resolution of its Board of Directors, and the Trustee,
together, with the written consent of the Holders of at least a majority in
aggregate principal amount of the outstanding Securities may amend or supplement
this Indenture or the Securities without notice to any other Securityholders;
provided that, subject to Section 6.08 and the next succeeding paragraph,
Holders of at least 66 2/3% in aggregate principal amount of the outstanding
Securities shall be required to amend or supplement, this provision or the
provision to the next sentence. Subject to Section 6.08 and the next succeeding
paragraph, the Holders of at least a majority in aggregate principal amount of
the outstanding Securities may waive compliance by the Company with any
provision of or obligation under this Indenture or the Securities without notice
to any other Securityholders.
Notwithstanding anything to the contrary in the foregoing provisions of
this Section 9.02, without the consent of each Securityholder affected, no
amendment, supplement or waiver, including a waiver pursuant to Section 6.02,
may:
(1) reduce the percentage in principal amount of the outstanding
Securities the consent of whose Holders is required for any amendment or
supplement to this Indenture, for any waiver (of compliance with any
obligation or provision of this Indenture or of certain Defaults or Events
of Default hereunder or their consequences) provided for in this Indenture,
or for a rescission of acceleration of the Securities pursuant to Section
6.02, or reduce the requirements pursuant to Section 10.05 for a quorum or
voting;
(2) reduce the rate or change the time for payment of interest on any
Security;
(3) reduce the principal amount of or premium on any Security;
(4) alter the redemption or repurchase provisions of any Security in
a manner adverse to any Holder thereof, or change the Stated Maturity of
any Security;
(5) waive any default in the payment of the principal of, premium, if
any, or interest on any Security;
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(6) impair the right of Holders to institute suit for the enforcement
of any payment of the principal of, premium, if any, or interest on the
Securities on or after the respective due dates therefor;
(7) make any changes in Section 6.02, 6.08 or this second paragraph
of Section 9.02;
(8) change any obligation of the Company to maintain an office or
agency in the place and for the purpose specified in Section 4.02 or make
the Securities payable in any coin or currency other than U.S. Legal
Tender; or
(9) make any change to or modify the priority between the Holders of
the Securities and any other creditors of the Company.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, supplement or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment to or waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
such Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives
written notice of revocation before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented to the amendment, supplement or waiver.
Such amendment, waiver or supplement, as the case may be, shall be effective
upon receipt by the Trustee of such Officers' Certificate.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
two sentences of the immediately preceding paragraph, those Persons who were
Holders at the close of business on such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given,
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whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 90 days after such record
date.
All Holders that consent to such modification, waiver or action in the
manner and within the time period requested shall be entitled to receive the
consideration, if any, offered for such consent.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
has so determined, the Company in exchange for the Security may execute and the
Trustee shall authenticate a new Security of like kind that reflects the changed
terms.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise. In signing or
refusing to sign such amendment or supplement, the Trustee shall be entitled to
receive and, subject to Section 7.01 hereof, shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that such amendment or supplement is authorized or permitted by this Indenture,
that it is not inconsistent herewith, and that it will be valid and binding upon
the Company in accordance with its terms. The Company shall not sign an
amendment or supplement until its Board of Directors approves thereof.
SECTION 9.07. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplement or amendment to this Indenture in
accordance with this Article, this Indenture shall be modified in accordance
therewith and such supplement or amendment shall form a part of the Indenture
for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered shall be bound thereby. Any Holder and every
subsequent Holder of a Security (or portion thereof) shall be bound by any
waivers authorized or obtained by this Article.
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ARTICLE TEN
MEETINGS OF AND ACTIONS BY SECURITYHOLDERS
SECTION 10.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article Ten for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to waive or to consent to the waiving of
any Default or Event of Default hereunder and its consequences, or to take
any other action authorized to be taken by Securityholders pursuant to any
of the provisions of Article Six;
(b) to remove the Trustee or appoint a successor Trustee pursuant to
the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant to the
provisions of Section 9.02; or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of the
Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate
in connection with the administration of this Indenture.
SECTION 10.02. MANNER OF CALLING MEETINGS.
The Trustee may at any time call a meeting of Securityholders to take any
action specified in Section 10.01 hereof, to be held at such time and at such
place in The City of New York or elsewhere as the Trustee shall determine.
Notice of every meeting of Securityholders, setting forth the time and place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed by the Trustee, first-class postage prepaid, to the
Company, and to the Holders of the Securities at their last addresses as they
shall appear on the registration books of the Registrar, not less than 10 nor
more than 60 days prior to the date fixed for a meeting.
Any meeting of Securityholders shall be valid without notice if the Holders
of all Securities then outstanding are present in Person or by proxy, or if
notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 10.03. CALL OF MEETINGS BY COMPANY OR HOLDERS.
In case at any time the Company, pursuant to a Certified Resolution of its
Board of Directors delivered to the Trustee, or the Holders of not less than
10% in aggregate principal amount of the
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Securities then outstanding, shall have requested the Trustee to call a
meeting of Securityholders to take any action specified in Section 10.01 hereof,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within 20 days after receipt of such request, then the Company or the
Holders of Securities in the amount above specified may determine the time and
place in The City of New York or elsewhere for such meeting and may call such
meeting for the purpose of taking such action, by notice given as provided in
Section 10.02.
SECTION 10.04. WHO MAY ATTEND AND VOTE AT MEETINGS.
To be entitled to vote at any meeting of Securityholders, a Person shall
(a) be a registered Holder of one or more Securities, or (b) be a Person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only Persons who shall be entitled to be present or
to speak at any meeting of Securityholders shall be the Persons entitled to vote
at such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
SECTION 10.05. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE MEETING;
VOTING RIGHTS; ADJOURNMENT.
Notwithstanding any other provision of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Securities
entitled to vote at such meeting, in which case those and only those Persons who
are Holders of Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 10.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall be entitled to vote with
respect to the outstanding Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Securities challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman of the meeting shall not have the
right to vote other than by virtue of Securities held by him or instruments in
writing as aforesaid duly designating him as the proxy to vote on behalf of
other Securityholders. At any meeting of Securityholders, the presence of
Persons holding or representing a majority of the principal amount of the
outstanding Securities shall be sufficient for a quorum. Any meeting of
Securityholders duly
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called pursuant to the provisions of Sections 10.02 or 10.03 may be adjourned
from time to time by vote of the Holders of a majority in aggregate principal
amount of the Securities represented at the meeting and entitled to vote, and
the meeting may be held as so adjourned without further notice.
Except as limited by Sections 6.02 and 6.08 and the second paragraph of
Section 9.02, any resolution presented to a meeting at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the outstanding Securities; provided however, that,
except as limited by Section 6.08 and the second paragraph of Section 9.02, any
resolution with respect to any matter as to which this Indenture or the
Securities require the consent of the Holders of at least 662/3% in principal
amount of the outstanding Securities may be adopted at such meeting only by the
affirmative vote of the Holders of at least 662/3% in principal amount of the
outstanding Securities.
SECTION 10.06. VOTING AT THE MEETING AND RECORD TO BE KEPT.
The vote upon any resolution submitted to any meeting of Securityholders
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities or of their representatives by proxy and the principal
amount of the Securities voted by the ballot. The permanent chairman of the
meeting shall appoint two inspectors of votes, who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to such record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons
having knowledge of the facts, setting forth a copy of the notice of the meeting
and showing that such notice was mailed as provided in Section 10.02 or Section
10.03. The record shall be signed and verified by the affidavits of the meeting
and one of the duplicates shall be delivered to the Company and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 10.07. EXERCISE OF RIGHTS OF TRUSTEE OR SECURITYHOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING.
Nothing contained in this Article Ten shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
SECTION 10.08. EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS.
(a) In addition to the foregoing provisions of this Article Ten, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be
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given or taken by Securityholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
in person or by agent duly appointed in writing, or by combination of such
instrument or instruments and the record of a meeting of Securityholders duly
called and held in accordance with this Article Ten. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this Indenture and
(subject to Section 7.01) conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Article.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other action of the Holder of any Security in accordance with this Section
10.08 shall bind every future Holder of the same Security and the Holder of
every Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
(c) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action in accordance
with this Section 10.08, the Company may, at its option, by or pursuant to an
Officers' Certificate delivered to the Trustee, fix in advance a record date for
the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or such other act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other act
may be given before or after such record date, but only those Persons who were
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
percentage of outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
act, and for that purpose the outstanding Securities shall be computed as of
such record date; provided, that no such authorization, agreement or consent by
the Holders on the record date shall be deemed effective unless such request,
demand, authorization, direction, notice, consent, waiver or other act shall
become effective pursuant to the provisions of paragraph (a) of this Section
10.08 not later than 90 days after the record date.
SECTION 10.09. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
SECURITIES.
The execution of any instrument by a Securityholder or his agent or proxy
may be proved in accordance with such reasonable rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee, and the holding of Securities shall be proved by the Security register
or by a certificate of the Registrar.
SECTION 10.10. RIGHT OF REVOCATION OF ACTION TAKEN.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 10.08, of the taking of any action by the Holders of the
percentage in aggregate principal amount of the Securities specified in this
Indenture in connection with such action, any Holder of a Security
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the serial number of which is shown by the evidence to be included among the
serial numbers of the Securities the Holders of which have consented to such
action may, by filing written notice at the Corporate Trust Office and upon
proof of holding as provided in this Article, revoke such action so far as
concerns such Security. After such time, such action shall be conclusive and
binding upon such Holder and the Securities issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Security.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
SECTION 11.02. NOTICES.
Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
telecopier or registered or certified mail, postage prepaid, return receipt,
addressed as follows:
if to the Company:
Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90501
Attention: Treasury Department
if to the Trustee:
U.S. Bank National Association
c/o First Trust of Illinois, National Association
One Illinois Center
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attention: -
The Company or the Trustee by notice to the other may designate additional
or different addresses as shall be furnished in writing by either party. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
receipt is acknowledged, if telecopied; and five days after mailing if sent
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by registered or certified mail (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
register of the Registrar and shall be sufficiently given to such Holder if so
mailed within the time prescribed. If the Company mails a notice or
communication to Securityholders, it shall simultaneously mail a copy to the
Trustee.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with (and, if applicable, setting
forth in reasonable detail any financial calculations providing the basis
of such opinion); and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each Officers' Certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
At the request of the Trustee, any Officers' Certificate or Opinion of
Counsel shall address any particular condition precedent to such action.
SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 11.07. LEGAL HOLIDAYS.
If a payment date is a Legal Holiday at a particular place where the
principal of, premium, if any, or interest on the Securities is payable, payment
may be made on the next succeeding day that is not a Legal Holiday at such place
of payment, and no interest shall accrue for the intervening period.
SECTION 11.08. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD (TO THE EXTENT
PERMITTED BY LAW) TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or incorporator, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such Persons from such liability. Such
waivers and releases are part of the consideration for the issuance of the
Securities.
36
<PAGE>
SECTION 11.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 11.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.13. SEVERABILITY.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or enforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim thereunder for or against any party hereto.
SECTION 11.14. HEADINGS AND TABLE OF CONTENTS.
The headings, Table of Contents and Cross-Reference Table in this Indenture
are for convenience of reference only and shall not be deemed a part of this
Indenture or limit or otherwise affect the meaning hereof.
37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the date first written above.
TOYOTA MOTOR CREDIT CORPORATION
[Seal]
By:
----------------------------------------
Name:
Title:
Attest:
By:
----------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION as Trustee
[Seal]
By:
----------------------------------------
Name:
Title:
Attest:
By:
----------------------
Name:
Title:
38
<PAGE>
State of __________________________ )
) ss.
County of _________________________ )
On -, 1997, before me, ________________________________, Notary Public,
personally appeared _________________________________, personally known to me to
be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
State of __________________________ )
) ss.
County of _________________________ )
On -, 1997, before me, ________________________________, Notary Public,
personally appeared _________________________________, personally known to me to
be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
39
<PAGE>
ANNEX I
TO
INDENTURE
DATED AS OF AUGUST 1, 1997
BETWEEN
TOYOTA MOTOR CREDIT CORPORATION
AND
U.S. BANK NATIONAL ASSOCIATION
as Trustee
Definitions
The following terms have the respective meanings set forth below for all
purposes of the Indenture, and Section and Article references are to Sections
and Articles in the Indenture.
"Affiliate" means, as to any Person, any other Person which directly or
indirectly controls or is controlled by, or is under direct or indirect common
control with, such Person. For the purposes of this definition, "control", when
used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar or other agent of
the Company acting under the Indenture.
"Board of Directors" means the board of directors of the Company or any
committee thereof authorized with respect to any particular matter to exercise
the power of the board of directors of the Company.
"Business Day" means a day that is not a Saturday, Sunday or other day on
which banking institutions in New York, New York, Los Angeles, California, or
Chicago, Illinois are not authorized or required to be open.
"Certified Resolution" means a copy of a resolution of the Board of
Directors of the Company, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted and to be in full force and effect on
the date of such certification.
"Commission" means the Securities and Exchange Commission, or any successor
thereto.
"Company" means Toyota Motor Credit Corporation, a California corporation,
the issuer of the Securities under the Indenture, until a successor replaces it
pursuant to the Indenture and thereafter means such successor.
I-1
<PAGE>
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
at the date of execution of the Indenture is located at One Illinois Center, 111
E. Wacker Drive, Suite 3000, Chicago, Illinois 60601
"Default" means any event that is or with the passing of time or giving of
notice or both would be an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.12.
"Event of Default" has the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor thereto, and the regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in the United States
which are applied by the Company as of the date of the Indenture.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Indenture" means the Indenture dated as of September -, 1997 between the
Company and U.S. Bank National Association, as trustee, relating to $- aggregate
principal amount of the Company's TMCC Demand Notes, including Exhibit A and
this Annex I thereto, as the same may be amended or supplemented from time to
time in accordance with its terms.
"Interest Payment Date" with respect to any principal amount means the
Stated Maturity Date with respect to such amount specified on the attached
Schedule.
"Maturity", with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and
payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officer" means the Chairman, the President, any Vice Chairman or Vice
President, the Chief Financial Officer, the Treasurer or the Controller of the
Company.
"Officers' Certificate" means a certificate signed by any two Officers of
the Company, and otherwise complying with the applicable requirements of
Sections 11.04 and 11.05 of the Indenture.
"Opinion of Counsel" means a written opinion from legal counsel who, in the
case of an Opinion of Counsel addressed to the Trustee, is reasonably acceptable
to the Trustee. The counsel
I-2
<PAGE>
may be an employee of or counsel to the Company. Each opinion shall comply with
the applicable requirements of Sections 11.04 and 11.05 of the Indenture.
"Paying Agent" has the meaning specified in Section 4.02.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture or
governmental authority.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For purposes of this definition, any Security
authenticated and delivered under Section 2.07 in exchange for or in lieu of a
defaced, mutilated, lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the defaced, mutilated, lost, destroyed or stolen
Security.
"Record Date" means August 1 and February 1 of each year (whether or not a
Business Day), in each case next preceding the applicable Interest Payment Date.
"Registrar" has the meaning specified in Section 4.02.
"Required Rate" with respect to any Monthly Allocation Date is the weighted
average of the Certificate Rates (in each case expressed as the equivalent of
monthly rates of interest rate rather than as semi-annual coupon rates) for each
Class of Certificates outstanding at the close of business on such date,
weighted on the basis of their respective Class Certificate Balances.
"Securities" means the Company's TMCC Demand Notes.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor thereto, and the regulations promulgated thereunder.
"Special Record Date" has the meaning specified in Section 2.12.
"Stated Maturity," when used with respect to any security (including the
Securities) or Indebtedness or any installment of interest thereon, means the
date specified in such security or with respect to such Indebtedness as the
fixed date on which the principal thereof or such installment of interest is due
and payable, including pursuant to mandatory redemption provisions; with respect
to the Securities, the Stated Maturity thereof means each date specified in the
Schedule attached to such Security.
"Subsidiary" means any Corporation of which at the time of determination
the Company or one or more Subsidiaries owns or controls directly or indirectly
more than 50% of the shares of Voting Stock.
"TIA" and "Trust Indenture Act" mean the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from
I-3
<PAGE>
time to time by rules or regulations adopted by the Commission under or in
furtherance of the purposes of such Act or provision, as the case may be.
"Trustee" means U.S. Bank National Association, as trustee under the
Indenture until a successor replaces it in accordance with the provisions of the
Indenture, and thereafter means such successor.
"Trust Officer," when used with respect to the Trustee, means any officer
within the Corporate Trust Office of the Trustee, or any other officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers or to whom any corporate trust
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"United States" and "U.S." each mean the United States of America.
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
on or principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of interest on or principal of the U.S. Government Obligation evidenced
by such depository receipt.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
I-4
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
TOYOTA MOTOR CREDIT CORPORATION
TMCC Demand Notes
No. ________________
Toyota Motor Credit Corporation, a California corporation (the "Company,"
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay to ,
or registered assigns, the principal sum of U.S. Dollars as shall be set forth
on the Schedule attached hereto as of the date of Maturity, and to pay interest
on the outstanding amount of principal, as set forth on the Schedule from time
to time, from the date such principal amount is originally issued and
outstanding (or from the most recent Interest Payment Date to which interest has
been paid or duly provided for), on the date of Maturity with respect to such
principal amount (each an "Interest Payment Date"), at then applicable Interest
Rate , until the principal hereof is paid or duly provided for. Interest on
this Security will be computed on the basis of a 360-day year of twelve 30-day
months. The interest so payable and punctually paid or duly provided for on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the date that is one Business Day, next
preceding such Interest Payment Date (each, a "Record Date"). Any such interest
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date shall forthwith cease to be payable to the Holder on such
Record Date by virtue of having been such Holder, and may be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to the Holder of this Security not less than 10 days prior to such Special
Record Date or may be paid in any other lawful manner, all as more fully
provided in the Indenture. Payment of the principal of, premium, if any, and
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in -, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that, except as otherwise provided in the
Indenture, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the register of
Securities maintained by the Registrar.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: TOYOTA MOTOR CREDIT CORPORATION
By:
----------------------------------------
Name:
Title:
Attest:
- -------------------------
Secretary
[Corporate Seal]
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned Indenture.
-, -,
as Trustee OR as Trustee
By: By:
-------------------------------- --------------------------------
Authorized Signatory as Authenticating Agent
By:
--------------------------------
Authorized Signatory
A-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
TOYOTA MOTOR CREDIT CORPORATION
TMCC DEMAND NOTES
1. INDENTURE.
This Security is one of the duly authorized issue of the Company's TMCC
Demand Notes (the "Securities"), issued by the Company under an Indenture dated
as of August 1, 1997 (as the same may be amended or supplemented from time to
time, the "Indenture") between the Company and The First National Bank of
Boston, as Trustee (the "Trustee," which term includes any successor trustee
under the Indenture). The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. Holders are referred to the Indenture and the Trust Indenture
Act for a statement of such terms and for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of Securities.
The Securities are general obligations of the Company, limited to an
aggregate principal amount of $-, except as otherwise provided in the Indenture.
No reference herein to the Indenture and no provision of this Security or
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the times, places and rate and in the coin and
currency herein and in the Indenture prescribed.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to: -, Attention:-.
2. CAPITALIZED TERMS.
Capitalized terms used in this Security have the meanings assigned to them
in the Indenture unless otherwise defined in this Security.
3. PAYING AGENT AND REGISTRAR.
- has been appointed to act as initial Paying Agent and Registrar for the
Securities in-. The Company may appoint additional Paying Agents and
co-Registrars, and may change any Paying Agent, Registrar or co-Registrar, all
as provided in the Indenture. Except as otherwise provided in the Indenture,
the Trustee, the Company or any of its Subsidiaries may act as Paying Agent,
Registrar or co-Registrar.
4. REDEMPTION.
A-3
<PAGE>
The Securities are not redeemable prior to their respective maturities at
the option of the Company, in whole or from time to time in part.
5. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are issuable only in registered form, without coupons, in
denominations of U.S.. A Holder may register the transfer of or exchange
Securities in accordance with the Indenture, subject to the limitations provided
therein. The Registrar or a co-Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents in form
satisfactory to the Registrar and the Trustee. No service charge shall be made
to a Holder for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith, except as otherwise
provided in the Indenture. The Company will maintain in -, an office or agency
where Securities may be surrendered for registration of transfer or exchange.
6. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any Agent may treat the Person in whose name such
Security is registered as the owner of such Security for all purposes.
7. UNCLAIMED MONEY.
The Trustee and the Paying Agent shall pay to the Company upon written
request any U.S. Legal Tender or U.S. Government Obligations held by them for
the payment of the principal of, premium, if any, or interest on the Securities
which remains unclaimed for two years after the date on which such payment shall
have become due. After payment to the Company as aforesaid, Holders entitled to
such moneys or U.S. Government Obligations must look to the Company for such
payment unless an applicable abandoned property law designates another Person.
8. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Company irrevocably deposits with the Trustee U.S. Legal Tender or,
in certain cases, U.S. Government Obligations sufficient to pay the principal
of, premium, if any, and interest on the Securities to redemption or maturity,
or if all the outstanding Securities have been delivered to the Trustee for
cancellation, and in either case if the Company complies with the other
provisions of the Indenture relating thereto, the Company will be discharged
from certain provisions of the Indenture and the Securities (including the
financial covenants, but excluding its obligation to pay the principal of,
premium, if any, and interest on the Securities).
9. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions and limitations set forth in the Indenture,
the Indenture or the Securities may be amended or supplemented with the consent
of the Holders of at least a majority (or, in certain cases, 66 2/3%) in
aggregate principal amount of the Securities then outstanding, and
A-4
<PAGE>
compliance with any provision or obligation under the Indenture or the
Securities may be waived with the consent of the Holders of a majority (or, in
certain cases, 66 2/3%) in aggregate principal amount of the Securities then
outstanding. The Indenture also permits the Company and the Trustee, without
notice to or consent of any Holder, to enter into certain amendments or
supplements to the Indenture or the Securities.
10. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee, or the
Holders of at least 25% in principal amount of the outstanding Securities, may
declare all unpaid principal of and accrued interest on the Securities to be due
and payable immediately in the manner and with the effect provided in the
Indenture. The Indenture provides that the Holders of a majority in principal
amount of the Securities outstanding may rescind an acceleration of the
Securities and its consequences on the terms and subject to the conditions set
forth in the Indenture. The Indenture also provides that the Holders of a
majority (or, in certain cases, 66 2/3%) in principal amount of the outstanding
Securities may waive an existing Default or Event of Default and its
consequences except, among other things, a default in the payment of the
principal of or interest on any of the Securities.
11. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee, in its individual or any other capacity, may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Subsidiaries or Affiliates with the same rights it would have if it were not the
Trustee. The Trustee, however, must comply with the provisions of the Trust
Indenture Act, including those relating to the Trustee acquiring any
"conflicting interest" as defined therein.
12. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or incorporator, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such Persons from such liability. Such waiver
and release are part of the consideration for the issuance of the Securities.
13. AUTHENTICATION.
This Security and the entries on the Schedule shall not be valid unless the
Trustee or an authenticating agent has signed the certificate of authentication
on this Security and such Schedule by manual signature.
14. ABBREVIATION.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM ( = tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint
A-5
<PAGE>
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
15. GOVERNING LAW; HEADINGS.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD (TO THE EXTENT PERMITTED BY LAW) TO
PRINCIPLES OF CONFLICTS OF LAW.
The headings in this Security are for convenience of reference only and
shall not be deemed a part of this Security or limit or otherwise affect the
meaning hereof.
A-6
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (insert social security or other identifying number of
assignee)
(Please print or typewrite name and address, including zip code, of assignee)
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing attorney to transfer said Security on the books of the Company
with full power of substitution in the premises.
Dated: _____________ Signed:____________________________________________________
(Sign exactly as name(s) appear(s)
on the face of this Security)
A-7
<PAGE>
SCHEDULE TO
TMCC DEMAND NOTE
<TABLE>
<CAPTION>
ADVANCES PAYMENTS
-------- --------
Date of Initial Effective Principal
Advance or Advance Principal Required Stated Principal Interest Balance
Payment No. Amount Rate Maturity Amount Amount Outstanding
--------- ------- ---------- --------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
*
**
***
</TABLE>
- -------------------
* -%
** -%
*** -%
A-8
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
F.K.A. FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer Identification No.)
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
(Address of Principal Executive Offices) (Zip Code)
TOYOTA MOTOR CREDIT CORPORATION
(Exact name of registrant as specified in its charter)
California
(State of Incorporation) (I.R.S. Employer Identification No.)
19001 South Western Avenue
Torrance, California 90509
(Address of Principal Executive Offices) (Zip Code)
Demand Notes
(Title of the Indenture Securities)
<PAGE>
GENERAL
1. GENERAL INFORMATION Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
(Yes)
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this
statement of eligibility and qualification.
*1. Copy of Articles of Association.
*2. Copy of Certificate of Authority to commence Business.
*3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).
*4. Copy of existing By-Laws.
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
**7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
---------
* INCORPORATED BY REFERENCE TO FILE NUMBER 333-30939
** INCORPORATED BY REFERENCE TO FILE NUMBER 333-26679
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within
three years prior to the date of filing this statement, or what persons are
owners of 10% or more of the voting securities of the obligors or affiliates,
are based upon information furnished to the Trustee by the obligors. While
the Trustee has no reason to doubt the accuracy of any such information, it
cannot accept any responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and
existing under the laws of the United States, has duly caused this statement
of eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto affixed
and attested, all in the City of Chicago and State of Illinois on the 26th
day of August, 1997.
U.S. BANK NATIONAL ASSOCIATION
/s/ Steven E. Charles
----------------------------------
Steven E. Charles
Vice President
/s/ Michael T. Goodwin
- -----------------------
Michael T. Goodwin
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.
Dated: August 26, 1997
U.S. BANK NATIONAL ASSOCIATION
/s/ Steven E. Charles
----------------------------------
Steven E. Charles
Vice President
