<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1998
REGISTRATION NO. 333-65067
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 2
TO
REGISTRATION STATEMENT
ON
FORM S-3
(WITH RESPECT TO TOYOTA MOTOR CREDIT CORPORATION)
AND FORM S-1
----------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<TABLE>
<S> <C>
TOYOTA AUTO LEASE TRUST 1998-C 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 Certificate (Issuer with respect to the SUBI)
to, the Toyota Auto Lease Trust 1998-C)
</TABLE>
(Exact name of Registrants as specified in their charters)
<TABLE>
<S> <C> <C>
CALIFORNIA 6146 33-0755530
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Identification Identification
incorporation or organization) Classification Code Number) No.)
</TABLE>
--------------------------
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(310) 787-3541
(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:
<TABLE>
<S> <C>
DAVID J. JOHNSON, JR., ESQ. RENWICK D. MARTIN, ESQ.
AND DANIEL F. PASSAGE, ESQ. BROWN & WOOD LLP
O'MELVENY & MYERS LLP ONE WORLD TRADE CENTER, 58TH FLOOR
400 SOUTH HOPE STREET NEW YORK, NEW YORK 10048
LOS ANGELES, CALIFORNIA 90071
</TABLE>
------------------------
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. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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 434,
check the following box. / /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Automobile Lease Asset Backed Certificates,
Class A-1.................................. $189,000,000.00 100% $189,000,000.00 $52,542.00(2)
Automobile Lease Asset Backed Certificates,
Class A-2.................................. $424,500,000.00 100% $424,500,000.00 $118,011.00(2)
Automobile Lease Asset Backed Certificates,
Class A-3.................................. $72,800,000.00 100% $72,800,000.00 $20,238.40(2)
The 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) Of which $98.33 previously has been 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 1998-C), and a portion of
the SUBI will be transferred by Toyota Leasing, Inc. to Toyota Auto Lease
Trust 1998-C.
(4) The TMCC Demand Notes represent investments by the Trust of Collections in
demand notes issued from time to time by TMCC.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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 NOVEMBER 17, 1998
Prospectus
TOYOTA AUTO LEASE TRUST 1998-C
$189,000,000 ADJUSTABLE RATE AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-1
$424,500,000 ADJUSTABLE RATE AUTO LEASE ASSET BACKED CERTIFICATES, CLASS A-2
$ 72,800,000 ADJUSTABLE RATE 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 1998-C (the "Trust") formed
pursuant to a securitization trust agreement (the "Agreement") between Toyota
Leasing, Inc. (the "Transferor") and U.S. Bank National Association, as trustee
(the "Trustee"). The property of the Trust will consist primarily of a
certificate (the "SUBI Certificate") representing substantially all of a Special
Unit of Beneficial Interest (the "SUBI"), the right to receive amounts on
deposit in the Reserve Fund, and Permitted Investments of amounts held in
certain accounts (including the TMCC Demand Notes described herein) and the
rights of the Trust under the Swap Agreement described herein. The SUBI, 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 certain 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" COMMENCING ON
PAGE 30 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 HAS BEEN MADE TO LIST THE CLASS A CERTIFICATES ON THE LUXEMBOURG
STOCK EXCHANGE
<TABLE>
<CAPTION>
PRICE TO PUBLIC(1) UNDERWRITING DISCOUNTS(2)
<S> <C> <C>
Per Class A-1 Certificate......................... % %
Per Class A-2 Certificate......................... % %
Per Class A-3 Certificate......................... % %
Total............................................. $ $
<CAPTION>
PROCEEDS TO THE
<S> <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-1 Certificate, %
per Class A-2 Certificate and % 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 Transferor 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, on or about
December 1, 1998 against payment therefor in immediately available funds.
---------------------------
JOINT BOOKRUNNERS
CREDIT SUISSE FIRST BOSTON MERRILL LYNCH & CO.
CO-MANAGERS
BEAR, STEARNS & CO. INC. GOLDMAN, SACHS & CO.
LEHMAN BROTHERS J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
November 17, 1998.
<PAGE>
(CONTINUED FROM FRONT COVER)
The Certificates will consist of three classes of senior certificates, the
Adjustable Rate Auto Lease Asset Backed Certificates, Class A-1 (the "Class A-1
Certificates"), the Adjustable Rate Auto Lease Asset Backed Certificates, Class
A-2 (the "Class A-2 Certificates") and the Adjustable Rate Auto Lease Asset
Backed Certificates, Class A-3 (the "Class A-3 Certificates" and, together with
the Class A-1 Certificates and Class A-2 Certificates, the "Class A
Certificates") and one or more Classes 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
$48,700,000, and the Class B Certificates will be subordinated to the Class A
Certificates to the extent described herein. 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
$14,988,732.51.
The SUBI Assets consisting of lease contracts implicitly bear interest at
fixed interest rates and require the related obligors to make monthly payments
thereon. By contrast, the Trust generally will be obligated to make quarterly
payments with respect to interest accrued on the Class A Certificates and all or
a portion of the Class B Certificates at adjustable rates and to pay in full the
principal balances thereof only at maturity. In order to enable the Trust to
receive monthly collections on assets having principal balances that decline
monthly and to make quarterly interest payments and principal payments at
maturity on securities whose balances generally are not expected to decline
monthly, the Trust will invest certain collections in Permitted Investments
(expected to be the TMCC Demand Notes) until such amounts (and the net
investment income with respect thereto) are to be paid to Certificateholders. To
enable the Trust to satisfy its obligations to make payments on the Certificates
at the related adjustable interest rates, the Trust will enter into an interest
rate swap agreement with TMCC (the "Swap Agreement").
Interest generally will accrue on the Class A-1 Certificates at the per
annum rate equal to three-month LIBOR (determined as described herein) plus
% per annum, on the Class A-2 Certificates at a per annum rate equal to
three-month LIBOR (determined as described herein) plus % per annum and on
the Class A-3 Certificates at a per annum rate equal to three-month LIBOR
(determined as described herein) plus % per annum. In each case, payments in
respect of interest so accrued generally will be made quarterly on March 25,
June 25, September 25 and December 25 of each year (or, if such day is not a
Business Day, on the next succeeding Business Day), commencing on March 25,
1999.
The "Class A-1 Targeted Maturity Date" will be December 25, 2000 (or, if
such day is not a Business Day, on the next succeeding Business Day), the "Class
A-2 Targeted Maturity Date" will be December 25, 2001 (or, if such day is not a
Business Day, on the next succeeding Business Day), the "Class A-3 Targeted
Maturity Date" will be March 25, 2002 (or, if such day is not a Business Day, on
the next succeeding Business Day) and the "Class B Targeted Maturity Date" will
be December 25, 2003 (or if such day is not a Business Day, on the next
succeeding Business Day). Principal of any Class of Class A Certificates
generally will not be payable until the related Targeted Maturity Date. If a
Class of Class A Certificates remains outstanding after all required payments in
respect thereof have been made on the related Targeted Maturity Date, principal
thereof and interest thereon will be distributed monthly thereafter on each
Monthly Allocation Date until all required payments in respect of such Class
have been made. Under such circumstances, interest will accrue on the Class A-1
Certificates at a per annum rate equal to one-month LIBOR (determined as
described herein) plus % per annum, on the Class A-2 Certificates at a per
annum rate equal to one-month LIBOR (determined as described herein) plus %
per annum or on the Class A-3 Certificates at a per annum rate equal to
one-month LIBOR (determined as described herein) plus % per annum, rather
than at the rates specified above. The Class A Certificates will be payable
solely from the assets of the Trust, including the SUBI Certificate, the TMCC
Demand Notes and other Permitted Investments of amounts held in the SUBI
Collection Account and the Certificateholders' Account and amounts payable by
the Swap Counterparty under the Swap Agreement. Final payment of amounts due on
each Class of Certificates is due on or before the related Stated Maturity Date.
The Stated Maturity Date for the Class A-1 Certificates is December 25, 2002
(or, if such day is not a Business Day, on the next succeeding Business Day),
for the Class A-2 Certificates is February 25, 2003 (or, if such day is not a
Business Day, on the next succeeding Business Day), for the Class A-3
Certificates is February 25, 2004 (or, if such day is not a Business Day, on the
next succeeding Business Day) and for the Class B Certificates is May 25, 2006
(or, if such day is not a Business Day, on the next succeeding Business Day). In
general, the Certificates will be "sequential pay" certificates meaning that no
principal allocations, applications or payments will be made on the Class A-2
ii
<PAGE>
Certificates until the Adjusted Class A-1 Certificate Balance has been reduced
to zero, no principal allocations, applications or payments will be made on the
Class A-3 Certificates until the Adjusted Class A-2 Certificate Balance and the
Adjusted Class A-1 Certificate Balance have been reduced to zero and no
principal allocations, applications or payments will be made on the Class B
Certificates until the Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance and the Adjusted Class A-3 Certificate Balance
have been reduced to zero.
From time to time during the Revolving Period described herein (generally
expected to be the period from the Cutoff Date through the calendar day
preceding November 1, 1999, but which may terminate earlier as described
herein), 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.
In the event of any Swap Termination described herein, the Trustee will
liquidate the assets of the Trust and apply the proceeds (net of the expenses of
such liquidation and reimbursements to be made to the Transferor, Servicer,
Trustee and Titling Trustee and after giving effect to any swap termination
payment to be made by the Trust under the Swap Agreement) to effect an early
repayment of the Certificates. Under such circumstances, there can be no
assurance as to how long such liquidation might take or that such net proceeds
will be sufficient to reduce the outstanding balances of each Class of
Certificates to zero.
---------------------
It is a condition of issuance of each Class of Class A Certificates that
they be assigned an Aaa rating by Moody's Investors Service, Inc. ("Moody's")
and an AAA rating by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("Standard & Poor's" and, together with Moody's, the
"Rating Agencies"). A security rating is not a recommendation to buy, sell or
hold a security and may be subject to revision, suspension or withdrawal at any
time by the assigning rating organization. See "Summary -- Ratings".
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 bids and the purchase of
Class A Certificates to cover short positions. For a description of these
activities, see "Underwriting".
The Transferor, having made all reasonable inquiries, confirms that this
Prospectus 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.
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 the United States and certain states 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.
UNTIL FEBRUARY , 1999, 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.
iii
<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 office of
Bankers Trust Company Luxembourg S.A., 14 Boulevard F. D. Roosevelt, L-2450,
Luxembourg. 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 pursuant to which the Titling Trust was formed (the
"Titling Trust Agreement"), the UTI and the SUBI are formed, the UTI Certificate
and SUBI Certificate are issued (the "UTI Supplement" and "SUBI Supplement"),
the assets of the Titling Trust and the SUBI Assets will be serviced (the
"Servicing Agreement"), the TMCC Demand Notes will be issued (the "Indenture")
and the swap will be executed (the "Swap Agreement") are incorporated by
reference herein. Insofar as documents are incorporated herein as to which TMCC
is a party, such documents relate solely to TMCC in its capacities as Servicer,
issuer of the TMCC Demand Notes and as Swap Counterparty.
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, 1997, and
TMCC's Quarterly Reports on Form 10-Q for the quarters ended December 31, 1997,
March 31, 1998 and June 30, 1998 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. Copies of
the incorporated documents will be obtainable at no charge at the office of
Bankers Trust Company Luxembourg S.A., 14 Boulevard F. D. Roosevelt, L-2450,
Luxembourg.
iv
<PAGE>
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 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 holders of the
Certificates (the "Certificateholders" or "Holders") (which, in the case of the
Class A Certificates, 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. 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
Class A Certificates) also shall be delivered to the Luxembourg Stock Exchange
on the same date such reports are to be delivered to Certificateholders. Copies
of such reports may be obtained at no charge at the office of Bankers Trust
Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg.
v
<PAGE>
OVERVIEW OF TRANSACTION
[CHART]
vi
<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 CAPITALIZED TERMS" BEGINNING ON PAGE 125 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 has instructed 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 represents 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 a
certificate representing substantially all of the SUBI
(excluding the related rights to proceeds of the
Residual Value Insurance Policies described herein) (the
"SUBI Certificate") 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 has in the past and may in the future cause the
Titling Trust to allocate additional separate portfolios
of leases and leased vehicles and to create other
special units of beneficial interest similar to the SUBI
relating to such portfolios ("Other SUBIs") for sale 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 dated
as of December 1, 1998, between the Transferor and U.S.
Bank National Association ("U.S. Bank"), as Trustee. The
property of the Trust will consist primarily of the SUBI
Certificate, monies on deposit in certain accounts
established as described herein, the TMCC Demand Notes
(or other Permitted Investments of amounts held in the
Certificateholders' Account) and the rights of the Trust
under the Swap Agreement.
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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 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 November 1, 1998 (the "Cutoff Date") will be
allocated to the SUBI on December 1, 1998 (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
"Description of the Certificates -- Allocations,
Applications and Payments -- 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
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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 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, a branch in the
Commonwealth of Puerto Rico and a centralized customer
service center in Iowa. 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 1998-C SUBI
Servicing Supplement to the Titling Trust Agreement
among TMCC, the Titling Trustee and the Transferor dated
as of December 1, 1998 (the "Servicing Supplement" and,
together with the Titling Trust Agreement, the
"Servicing Agreement"), TMCC acts as 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 Adjustable Rate
Auto Lease Asset Backed Certificates, Class A-1 (the
"Class A-1 Certificates"), the Adjustable Rate Auto
Lease Asset Backed Certificates, Class A-2 (the "Class
A-2 Certificates") and the Adjustable Rate Auto Lease
Asset Backed Certificates, Class A-3 (the "Class A-3
Certificates" and, together with the Class A-1
Certificates and Class A-2 Certificates, the "Class A
Certificates") are senior certificates. The Adjustable
Rate Auto Lease Asset Backed Certificates, Class B (the
"Class B Certificates" and, together with the Class A
Certificates, the "Certificates") are subordinated
certificates. Only the Class A Certificates are being
offered hereby. The Class B Certificates may be
comprised of one or more Classes, each of which shall be
pari passu with the other Classes of Class B
Certificates. Certain Classes of Class B
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Certificates may not have the benefit of the Swap
Agreement and shall bear interest at fixed rates (the
"Fixed Rate Class B Certificates") while other Classes
of Class B Certificates shall have the benefit of the
Swap Agreement and shall bear interest at adjustable
rates (the "Adjustable Rate Class B Certificates").
Information herein with respect to the Class B
Certificates is provided for informational purposes only
to provide more complete information with respect to the
Class A Certificates.
Although proceeds of the SUBI will be collected and
allocated monthly, the Certificates will generally
represent the right to receive quarterly payments of
interest at the Class A-1 Rate, Class A-2 Rate, Class
A-3 Rate or Class B Adjustable Rate (other than any
Fixed Rate Class B Certificates which generally shall
represent the right to recieve quarterly payments of
interest at the Class B Fixed Rate), as the case may be,
and, to the extent described herein, payments of
principal on the related Targeted Maturity Date and
payments of principal and interest on each subsequent
Monthly Allocation Date. In addition, although the SUBI
Assets consist primarily of lease contracts that
implicitly bear interest at fixed rates, the
Certificates (other than the Fixed Rate Class B
Certificates) will bear interest at adjustable rates.
Payments will be made to the Class A 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 San Francisco, 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 by a paying agent there
located or any day on which a transfer of a Definitive
Certificate may be made at the office of a transfer
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 Closing Date, the Trust will issue $189,000,000
aggregate initial principal amount of Class A-1
Certificates (the "Initial Class A-1 Certificate
Balance"), $424,500,000 aggregate initial principal
amount of Class A-2 Certificates (the "Initial Class A-2
Certificate Balance"), $72,800,000 aggregate initial
principal amount of Class A-3 Certificates (the "Initial
Class A-3 Certificate Balance") and $48,700,000
aggregate initial principal
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amount of Class B Certificates (the "Initial Class B
Certificate Balance").
Interests in the assets of the Trust will be allocated
among (i) the Class A-1 Certificateholders, the Class
A-2 Certificateholders, the Class A-3 Certificateholders
and the Class B Certificateholders (collectively, the
"Investor Interest") and (ii) the Transferor Interest.
The Transferor Interest will represent the interest in
the Trust not represented by the Investor Interest. The
Transferor Interest will initially equal $14,988,732.51
(2.00% 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 Investor Balance. 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 Investor Balance declines. SEE
"Description of the Certificates -- General".
Amounts payable by the Trust in respect of interest on
the Class A Certificates and any Adjustable Rate Class B
Certificates will generally be limited to amounts
payable by the Swap Counterparty in accordance with the
Swap Agreement in exchange for the payments by the Trust
to the Swap Counterparty, as described herein. As
described more fully herein, the amount to be used for
any such payment to the Swap Counterparty will be
determined on the basis of calculations made each month
on the basis of (i) the Adjusted Class A-1 Certificate
Balance and the Class A-1 Notional Rate in the case of
the Class A-1 Certificates, (ii) the Adjusted Class A-2
Certificate Balance and the Class A-2 Notional Rate in
the case of the Class A-2 Certificates, (iii) the
Adjusted Class A-3 Certificate Balance and the Class A-3
Notional Rate in the case of the Class A-3 Certificates,
(iv) the portion of the Adjusted Class B Certificate
Balance represented by the Adjustable Rate Class B
Certificates and the Class B Notional Rate in the case
of the Adjustable Rate Class B Certificates and (v) the
amount of the investment income on certain of the TMCC
Demand Notes at the related Required Rates, as described
herein. The Fixed Rate Class B Certificates will not
have the benefit of the Swap Agreement and will receive
interest payments from amounts allocated in respect of
interest directly from the Trust as set forth in the
Agreement.
As used herein for such purposes:
"Class A-1 Certificate Balance" means (a) the Initial
Class A-1 Certificate Balance less all amounts paid to
Class A-1 Certificateholders on each relevant
Certificate Payment Date in respect of principal and (b)
zero, from and after the Certificate Payment Date on
which the Adjusted Class A-1 Certificate Balance is
reduced to zero.
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"Adjusted Class A-1 Certificate Balance" means the
Initial Class A-1 Certificate Balance less: (i) amounts
allocated and deposited into the Certificateholders'
Account in respect of the Adjusted Class A-1 Certificate
Balance; (ii) without duplicating the foregoing, amounts
paid to the Class A Certificateholders in respect of the
Adjusted Class A-1 Certificate Balance; and (iii) the
amount of unreimbursed Certificate Principal Loss
Amounts allocated thereto.
"Class A-1 Notional Rate" refers to the rate at which
amounts will be deemed to accrue in respect of the
Adjusted Class A-1 Certificate Balance for purposes of
calculating the Class A-1 Notional Interest Accrual
Amount to be paid to the Swap Counterparty, which rate
will be % per annum.
"Class A-2 Certificate Balance" means (a) the Initial
Class A-2 Certificate Balance less all amounts paid to
Class A-2 Certificateholders on each relevant
Certificate Payment Date in respect of principal and (b)
zero, from and after the Certificate Payment Date on
which the Adjusted Class A-2 Certificate Balance is
reduced to zero.
"Adjusted Class A-2 Certificate Balance" means the
Initial Class A-2 Certificate Balance less: (i) amounts
allocated and deposited into the Certificateholders'
Account in respect of the Adjusted Class A-2 Certificate
Balance; (ii) without duplicating the foregoing, amounts
paid to the Class A Certificateholders in respect of the
Adjusted Class A-2 Certificate Balance; and (iii) the
amount of unreimbursed Certificate Principal Loss
Amounts allocated thereto.
"Class A-2 Notional Rate" refers to the rate at which
amounts will be deemed to accrue in respect of the
Adjusted Class A-2 Certificate Balance for purposes of
calculating the Class A-2 Notional Interest Accrual
Amount to be paid to the Swap Counterparty, which rate
will be % per annum.
"Class A-3 Certificate Balance" means (a) the Initial
Class B Certificate Balance less all amounts paid to
Class A-3 Certificateholders on each relevant
Certificate Payment Date in respect of principal and (b)
zero, from and after the Certificate Payment Date on
which the Adjusted Class A-3 Certificate Balance is
reduced to zero.
"Adjusted Class A-3 Certificate Balance" means the
Initial Class A-3 Certificate Balance less: (i) amounts
allocated and deposited into the Certificateholders'
Account in respect of the Adjusted Class A-3 Certificate
Balance; (ii) without duplicating the foregoing, amounts
paid to the Class A Certificateholders in respect of the
Adjusted Class A-3 Certificate Balance; and (iii) the
amount of unreimbursed Certificate Principal Loss
Amounts allocated thereto.
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"Class A-3 Notional Rate" refers to the rate at which
amounts will be deemed to accrue in respect of the
Adjusted Class A-3 Certificate Balance for purposes of
calculating the Class A-3 Notional Interest Accrual
Amount to be paid to the Swap Counterparty, which rate
will be % per annum.
"Class B Certificate Balance" means (a) the Initial
Class B Certificate Balance less all amounts paid to
Class B Certificateholders on each relevant Certificate
Payment Date in respect of principal and (b) zero, from
and after the Certificate Payment Date on which the
Adjusted Class B Certificate Balance is reduced to zero.
"Adjusted Class B Certificate Balance" means the Initial
Class B Certificate Balance less: (i) amounts allocated
and deposited into the Certificateholders' Account in
respect of the Adjusted Class B Certificate Balance;
(ii) without duplicating the foregoing, amounts paid to
the Class B Certificateholders in respect of the
Adjusted Class B Certificate Balance; and (iii) the
amount of unreimbursed Certificate Principal Loss
Amounts allocated thereto.
"Class B Fixed Rate" refers to the rate at which
interest will accrue in respect of the portion of the
Class B Certificate Balance represented by any Fixed
Rate Class B Certificates (and on any unreimbursed
Certificate Principal Loss Amounts allocated thereto),
which rate will not exceed % per annum.
"Class B Notional Rate" refers to the rate at which
amounts will be deemed to accrue in respect of the
portion of the Adjusted Class B Certificate Balance
represented by any Adjustable Rate Class B Certificates
for purposes of calculating the Class B Notional
Interest Accrual Amount to be paid to the Swap
Counterparty, which rate will not exceed % per
annum.
"Initial Investor Balance" means 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.
"Adjusted Investor Balance" means the sum of the
Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance and the Adjusted Class B Certificate
Balance.
"Class A-1 Notional Interest Accrual Amount" means the
amount of interest that is deemed to accrue during a
Monthly Interest Period at the Class A-1 Notional Rate
on the sum of the Adjusted Class A-1 Certificate Balance
and unreimbursed Certificate Principal Loss Amounts
previously allocated thereto.
"Class A-2 Notional Interest Accrual Amount" means the
amount of interest that is deemed to accrue during a
Monthly Interest Period at the Class A-2 Notional Rate
on the sum of the
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Adjusted Class A-2 Certificate Balance and unreimbursed
Certificate Principal Loss Amounts previously allocated
thereto.
"Class A-3 Notional Interest Accrual Amount" means the
amount of interest that is deemed to accrue during a
Monthly Interest Period at the Class A-3 Notional Rate
on the sum of the Adjusted Class A-3 Certificate Balance
and unreimbursed Certificate Principal Loss Amounts
previously allocated thereto.
"Class B Fixed Rate Interest Accrual Amount" means the
amount of interest that accrues during a Monthly
Interest Period at the Class B Fixed Rate on the sum of
the portion of the Adjusted Class B Certificate Balance
represented by the Fixed Rate Class B Certificates and
unreimbursed Certificate Principal Loss Amounts
previously allocated thereto.
"Class B Notional Interest Accrual Amount" means the
amount of interest that is deemed to accrue during a
Monthly Interest Period at the Class B Notional Rate on
the sum of the portion of the Adjusted Class B
Certificate Balance represented by the Adjustable Rate
Class B Certificates and unreimbursed Certificate
Principal Loss Amounts previously allocated thereto.
"Interest Payment Period" means (i) for each Class of
Certificates (other than any Fixed Rate Class B
Certificates) and any related Certificate Payment Date,
the period from and including the preceding Certificate
Payment Date to but excluding the current Certificate
Payment Date and (ii) for any Fixed Rate Class B
Certificates and any related Certificate Payment Date,
the period from and including the 25th day of the
calendar month that includes the preceding Certificate
Payment Date to but excluding the 25th day of the
calendar month that includes the current Certificate
Payment Date, except that the first Interest Payment
Period for each Class of Certificates will be the period
from and including the Closing Date to but excluding
March 25, 1999. Prior to the related Targeted Maturity
Date, each Interest Payment Period generally will
consist of approximately three months. Thereafter, the
related Interest Payment Period generally will be
comprised of approximately one month.
"Monthly Interest Period" for each Class of Certificates
and any Monthly Allocation Date means the period from
and including the 25th day of the preceding calendar
month to but excluding the 25th day of the current
calendar month, except that the first Monthly Interest
Period for each Class of Certificates will be the period
from and including the Closing Date to but excluding
December 25, 1998.
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 25th day of each month (or, if such
day is not a Business Day, on the next succeeding
Business Day) commencing on December 28, 1998.
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As used herein: (i) "allocation" is used to connote a
calculation made to determine which, if any, Collections
are available for a stated purpose, (ii) "application"
is used to connote the actual transfer, investment,
deposit or other use of a specified amount for a stated
purpose and (iii) "payment" is used to connote the
actual transfer of money to a party. For example: On
each Monthly Allocation Date during an Interest Payment
Period, the Trustee will allocate a portion of the
Investor Percentage of Interest Collections in respect
of interest deemed to have accrued on the Adjusted Class
A-1 Certificate Balance (and unreimbursed Certificate
Principal Loss Amounts allocated thereto) at the Class
A-1 Notional Rate during the related Monthly Interest
Period, which portion of Interest Collections will be
applied to make a deposit into the Certificateholders'
Account for investment in a Permitted Investment that
will mature on or prior to the next relevant Certificate
Payment Date, on which date the proceeds thereof and
certain other amounts will be paid by the Trust to the
Swap Counterparty in exchange for an amount which the
Trust will then pay to the Class A-1 Certificateholders
in respect of the total amount of interest accrued on
the Class A-1 Certificates at the Class A-1 Rate during
the related Interest Payment Period.
Payments in respect of the Certificates of each Class
will be funded from payments received by the Trust on or
in respect of the assets of the SUBI evidenced by the
SUBI Certificate and, in certain circumstances, from
amounts 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.
All amounts allocated for payment of interest on the
Class A Certificates and any Adjustable Rate Class B
Certificates (including net investment income on certain
Permitted Investments) will be paid to the Swap
Counterparty pursuant to the Swap Agreement, and the
Swap Counterparty will pay the Trust amounts which will
be used to make the payments to such Certificateholders
in respect of interest described herein. Amounts
allocated by the Trust in respect of interest accrued on
any Fixed Rate Class B Certificates (including net
investment income on certain Permitted Investments) will
be paid by the Trust to the holders of such
Certificates.
No principal allocations, applications or payments will
be made on the Class B Certificates until the Adjusted
Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance and Adjusted Class A-3 Certificate
Balance are reduced to zero. In addition, the Class B
Certificates will be subordinated to the Class A
Certificates with respect to the allocation of losses to
the extent described herein. SEE "Description of the
Certificates -- Allocations, Applications and Payments".
The Transferor
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Interest also will be subordinated to the Investor
Interest, as described herein.
B. PAYMENTS...................... INTEREST. Payments in respect of interest on each Class
of Certificates will be made quarterly, on each Monthly
Allocation Date in March, June, September and December,
commencing in March 1999, until the related Targeted
Maturity Date, as well as (i) on the related Targeted
Maturity Date, (ii) if the Adjusted Class Certificate
Balance of such Class has not been reduced to zero on
its Targeted Maturity Date, on each Monthly Allocation
Date following such Targeted Maturity Date until such
Adjusted Class Certificate Balance is reduced to zero
and (iii) in connection with a Swap Termination and
related liquidation of the assets of the Trust or any
exercise by the Transferor of its option to repurchase
the SUBI Certificate, on the Monthly Allocation Date
following the receipt by the Trust of the proceeds of
such liquidation or sale, in each case to the extent of
amounts available therefor as described herein (each
such Monthly Allocation Date a relevant "Certificate
Payment Date" with respect to such Class). For Interest
Payment Periods commencing prior to the related Targeted
Maturity Date, interest will accrue on the Class A-1
Certificates at three-month LIBOR plus % per annum,
on the Class A-2 Certificates at three-month LIBOR plus
% per annum, on the Class A-3 Certificates at
three-month LIBOR plus % per annum and on the
Adjustable Rate Class B Certificates at three-month
LIBOR plus % per annum. For Interest Payment Periods
commencing on or after the related Targeted Maturity
Date, interest will accrue on the Class A-1 Certificates
at one-month LIBOR plus % per annum, on the Class A-2
Certificates at one-month LIBOR plus % per annum, on
the Class A-3 Certificates at one-month LIBOR plus %
per annum and on the Adjustable Rate Class B
Certificates at one-month LIBOR plus % per annum (the
"Class A-1 Rate", "Class A-2 Rate", "Class A-3 Rate" and
"Class B Adjustable Rate" respectively); provided,
however, that for the initial Interest Payment Period
the Class A-1 Rate, Class A-2 Rate, Class A-3 Rate and
Class B Adjustable Rate will be based on an interpolated
rate to be calculated two Business Days prior to the
Closing Date. For each Interest Payment Period, interest
will accrue on the Fixed Rate Class B Certificates at
the Class B Fixed Rate. SEE "Description of the
Certificates -- Calculation of Class A-1 Rate, Class A-2
Rate, Class A-3 Rate and Class B Adjustable Rate".
Interest allocations, applications and payments with
respect to each Class of Class A Certificates will have
the same priority. Under certain circumstances, the
amount available for interest allocations and
applications or payments could be less than the amount
of interest allocable and applicable or payable with
respect to the Class A Certificates on any Monthly
Allocation Date, in which case each Class of Class A
Certificates will be
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allocated or paid its ratable share (based upon the
aggregate amount of interest due thereon) of the
aggregate amount available to be allocated and applied
or paid in respect of interest on the Class A
Certificates.
As mentioned above, the amounts available to make
interest payments with respect to the Class A
Certificates and the Adjustable Rate Class B
Certificates generally will be limited to amounts
payable by the Swap Counterparty in accordance with the
Swap Agreement. Except as described herein, on each
relevant Certificate Payment Date, the Trust will be
obligated to pay to the Swap Counterparty (i) the sum of
(a) the relevant Class A-1 Notional Interest Accrual
Amounts for the Monthly Interest Periods relating to
such Certificate Payment Date, and (b) an amount equal
to interest accrued at the related Required Rate during
such Monthly Interest Periods on amounts deposited into
the Certificateholders' Account in respect of the
Adjusted Class A-1 Certificate Balance on prior Monthly
Allocation Dates (such sum, the "Class A-1 Swap Interest
Amount"), (ii) the sum of (a) the relevant Class A-2
Notional Interest Accrual Amounts for the Monthly
Interest Periods relating to such Certificate Payment
Date, and (b) an amount equal to interest accrued at the
related Required Rate during such Monthly Interest
Periods on amounts deposited into the
Certificateholders' Account in respect of the Adjusted
Class A-2 Certificate Balance on prior Monthly
Allocation Dates (such sum, the "Class A-2 Swap Interest
Amount"), (iii) the sum of (a) the relevant Class A-3
Notional Interest Accrual Amounts for the Monthly
Interest Periods relating to such Certificate Payment
Date, and (b) an amount equal to interest accrued at the
related Required Rate during such Monthly Interest
Periods on amounts deposited into the
Certificateholders' Account in respect of the Adjusted
Class A-3 Certificate Balance on prior Monthly
Allocation Dates (such sum, the "Class A-3 Swap Interest
Amount") and (iv) the sum of (a) the relevant Class B
Notional Interest Accrual Amounts for the Monthly
Interest Periods relating to such Certificate Payment
Date, and (b) an amount equal to interest accrued at the
related Required Rate during such Monthly Interest
Periods on amounts deposited into the
Certificateholders' Account in respect of the portion of
the Adjusted Class B Certificate Balance represented by
any Adjustable Rate Class B Certificates on prior
Monthly Allocation Dates (such sum, the "Class B Swap
Interest Amount") in exchange for payment by the Swap
Counterparty of amounts equal to the amount of interest
accrued on the Class A-1 Certificate Balance, Class A-2
Certificate Balance, Class A-3 Certificate Balance and
the portion of the Class B Certificate Balance
represented by the Adjustable Rate Class B Certificates,
at the Class A-1 Rate, the Class A-2 Rate, the Class A-3
Rate and the Class B Adjustable Rate, respectively,
during the related Interest Payment Period.
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If, however, the aggregate of the amounts paid or
available to be paid by the Trust to the Swap
Counterparty in respect of interest on the relevant
Certificate Payment Date, in accordance with the
priorities set forth herein, is less than such Class A-1
Swap Interest Amount, Class A-2 Swap Interest Amount,
Class A-3 Swap Interest Amount or Class B Swap Interest
Amount (the amount of any such insufficiency, a "Class
A-1 Swap Interest Shortfall Amount", "Class A-2 Swap
Interest Shortfall Amount", "Class A-3 Swap Interest
Shortfall Amount" or "Class B Swap Interest Shortfall
Amount", as the case may be), then under the Swap
Agreement the corresponding payment due from the Swap
Counterparty in exchange therefor (and, under the
Agreement, the amount payable on such date in respect of
interest accrued on the related Class of Certificates)
will be reduced in the same proportion as the proportion
that such Swap Interest Shortfall Amount represents of
such Class A-1 Swap Interest Amount, Class A-2 Swap
Interest Amount, Class A-3 Swap Interest Amount or Class
B Swap Interest Amount, as the case may be.
If on a subsequent Certificate Payment Date amounts are
available, in accordance with the priorities set forth
herein, to reimburse all or any part of any unreimbursed
Class A-1 Swap Interest Shortfall Amount, Class A-2 Swap
Interest Shortfall Amount, Class A-3 Swap Interest
Shortfall Amount or Class B Swap Interest Shortfall
Amount, then the Trust will be obligated under the Swap
Agreement to pay such amounts to the Swap Counterparty
and the corresponding payment due from the Swap
Counterparty in respect of interest (and therefore any
amounts payable on such date in respect of interest
accrued on the related Class of Certificates) will be
increased proportionately in the same proportion as such
reimbursement represents of the current Class A-1 Swap
Interest Amount, Class A-2 Swap Interest Amount, Class
A-3 Swap Interest Amount or Class B Swap Interest
Amount, as the case may be. Certificateholders will not
be entitled to receive any interest on any Swap Interest
Shortfall Amounts or corresponding reductions in amounts
payable by the Swap Counterparty whether or not
subsequently reimbursed as described above. SEE
"Description of the Certificates -- Calculation of Class
A-1 Rate, Class A-2 Rate, Class A-3 Rate and Class B
Rate" and "Additional Document Provisions -- The Swap
Agreement".
In the event that, on any Monthly Allocation Date, the
Class B Fixed Rate Interest Accrual Amount exceeds the
amount of Available Interest allocable thereto, such
deficiency may result in a Class B Interest Carryover
Shortfall. Such Class B Interest Carryover Shortfall may
be reimbursed on future Monthly Allocation Dates as
described herein and shall not bear interest prior to
such reimbursement.
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Interest will be calculated on the basis of: (i) in the
case of the Class A-1 Notional Interest Accrual Amount,
the Class A-2 Notional Interest Accrual Amount, the
Class A-3 Notional Interest Accrual Amount, the Class B
Notional Interest Accrual Amount and the Class B Fixed
Rate Interest Accrual Amount, a 360-day year consisting
of twelve 30-day months, and (ii) in the case of the
Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate
and the Class B Adjustable Rate and amounts due from the
Swap Counterparty under the Swap Agreement, the actual
number of days in the related Interest Payment Period
and a 360-day year.
PRINCIPAL. Principal of each Class of Certificates will
be payable, (i) on the related Targeted Maturity Date;
(ii) if the Adjusted Class A-1 Certificate Balance,
Adjusted Class A-2 Certificate Balance, Adjusted Class
A-3 Certificate Balance or Adjusted Class B Certificate
Balance is not reduced to zero on the related Targeted
Maturity Date, then for each such Class on each
subsequent Monthly Allocation Date until the date on
which the Adjusted Class A-1 Certificate Balance,
Adjusted Class A-2 Certificate Balance, Adjusted Class
A-3 Certificate Balance or Adjusted Class B Certificate
Balance, as the case may be, is reduced to zero; and
(iii) in connection with a Swap Termination or any
exercise by the Transferor of its option to repurchase
the SUBI Certificate, on the Monthly Allocation Date
following the receipt of proceeds from such liquidation
or sale (each such Targeted Maturity Date or Monthly
Allocation Date, a relevant "Certificate Payment Date"
with respect to such Class), in each case to the extent
of amounts available therefor as described herein.
The Targeted Maturity Date and the Stated Maturity Date
(the date on which ultimate payment of a Class of
Certificates is due) for each Class of Certificates are
as follows:
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CLASS TARGETED MATURITY DATE STATED MATURITY DATE
- --------------------- ---------------------- ----------------------
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Class A-1............ December 25, 2000 December 25, 2002
Class A-2............ December 25, 2001 February 25, 2003
Class A-3............ March 25, 2002 February 25, 2004
Class B.............. December 25, 2003 May 25, 2006
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provided, however, that if any such day is not a
Business Day, then the related Targeted Maturity Date or
Stated Maturity Date shall be the next succeeding
Business Day.
Except as described under "Description of the
Certificates -- Termination of the Trust; Retirement of
the Certificates", the Certificates will be "sequential
pay" certificates meaning that no principal allocations,
applications or payments will be made on the Class A-2
Certificates until the Adjusted Class A-1 Certificate
Balance has been reduced to zero, no principal
allocations, applications or payments will be made on
the
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Class A-3 Certificates until the Adjusted Class A-2
Certificate Balance has been reduced to zero, and no
principal allocations, applications or payments will be
made on the Class B Certificates until the Adjusted
Class A-3 Certificate Balance has been reduced to zero.
Failure to pay in full a particular Class of
Certificates on its Targeted Maturity Date because
amounts allocable thereto are insufficient therefor will
not constitute an Event of Servicing Termination or a
Swap Termination, nor will it cause the payment of
principal of or interest on other Classes of
Certificates to be made on a monthly basis.
THE REVOLVING PERIOD. The "Revolving Period" is the
period from the Cutoff Date through the calendar day
preceding the earliest to occur of December 1, 1999 (the
"Accumulation Date"), an Accumulation Event or a Swap
Termination. During the Revolving Period, all Principal
Collections and all amounts allocated and applied in
reimbursement of any Loss Amounts and Certificate
Principal Loss Amounts allocated to the Investor
Interest will be reinvested in Subsequent Contracts and
Subsequent Leased Vehicles. Thus, except to the extent
Certificate Principal Loss Amounts are allocated thereto
and not reimbursed, the Adjusted Class A-1 Certificate
Balance, Adjusted Class A-2 Certificate Balance,
Adjusted Class A-3 Certificate Balance and Adjusted
Class B Certificate Balance will not decline during the
Revolving Period.
Accumulation Events are described under "Description of
the Certificates -- Accumulation Events". Events causing
a Swap Termination under the Swap are described under
"Additional Document Provisions -- Swap Agreement". An
Accumulation Event or a Swap Termination will terminate
the Revolving Period. SEE ALSO "Description of the
Certificates -- Termination of the Trust; Retirement of
the Certificates -- SWAP TERMINATION". While an
Accumulation Event will terminate the Revolving Period,
only a Swap Termination and related liquidation of the
assets of the Trust or purchase of the SUBI Certificate
by the Transferor may cause distributions in respect of
principal with respect to a Class of Certificates prior
to the related Targeted Maturity Date.
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 (i) Principal Collections and (ii)
amounts applied to reimburse Loss Amounts and
Certificate Principal Loss Amounts allocated to the
Investor Interest 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 January 1999
the Servicer determines that the amount of Principal
Collections and
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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 Accumulation Event will be deemed to have
occurred. SEE "Description of the Certificates --
Allocations, Applications and Payments -- 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
Servicing 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 that are
Titling Trust Assets (excluding those previously
allocated to any Other SUBI). SEE "The Contracts".
With respect to any Monthly Allocation Date, the related
"Collection Period" will be the preceding calendar
month.
With respect to any Collection Period, Collections will
be allocated as "Principal Collections" up to the sum
of: (i) the principal portion of each Monthly Payment
due during such Collection Period with respect to each
Contract that has not yet reached maturity, and as to
which there has been no repossession, charge-off or
Prepayment; (ii) amounts received during such Collection
Period in connection with the Prepayment of any
Contracts that are allocable to principal thereof
(including the Residual Value thereof); and (iii)
amounts received during such Collection Period as
Liquidation Proceeds (net of Liquidation Expenses) with
respect to any Contracts not specified in (i) or (ii)
above, up to the sum of (a) the principal portion of all
unpaid Monthly Payments through the maturity date
specified in each related lease contract plus (b) the
Residual Value of each related lease contract. For
purposes of determining such Principal Collections, the
principal component of all payments (including any
payment in respect of the Residual Value thereof) made
or to be made on or in respect of a Contract (or the
related Leased Vehicle) with a Lease Rate less than
8.75% per annum will be discounted at a per annum rate
of 8.75%, 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
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represent Monthly Payments due during such Collection
Period), Prepayments, Advances, Reallocation Payments,
Reallocation Deposit Amounts, Net Matured Leased Vehicle
Proceeds, Net Charged-off Vehicle Proceeds and other Net
Liquidation Proceeds, less (i) amounts representing
Payments Ahead with respect to future Collection
Periods, (ii) Additional Loss Amounts in respect of such
Collection Period and (iii) reimbursement of Advances
(including Inventory Advances and Nonrecoverable
Advances). As described above, during the Revolving
Period, amounts otherwise allocable on the related
Monthly Allocation Date in 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, Applications and Payments
-- ALLOCATIONS AND APPLICATIONS OF COLLECTIONS".
With respect to any Collection Period "Interest
Collections" generally will equal the amount by which
Collections exceed Principal Collections. "Net
Charged-off Vehicle Proceeds" will equal Charged-off
Vehicle Proceeds net of Charged-off Vehicle Expenses,
and "Net Liquidation Proceeds" will equal Liquidation
Proceeds net of Liquidation Expenses.
Following the Revolving Period, the amount of Principal
Collections allocable to the Investor Interest in
respect of a Collection Period (the "Principal
Allocation") generally will mean the Investor Percentage
of the Principal Collections in respect of such
Collection Period allocable to the SUBI. The Investor
Percentage will be calculated as described herein under
"Description of the Certificates -- Calculation of
Investor Percentage and Transferor Percentage".
To the extent that on any Monthly Allocation Date any
portion of the Investor Percentage of Interest
Collections in respect of the related Collection Period
remains after required allocations and applications have
been made, including any required deposit into the
Reserve Fund, 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 Amount will be allocable to the
Certificateholders (or for reimbursements of Maturity
Advances) in addition to (and in the same manner and
priority as) ordinary allocations and applications of
principal of the Certificates. SEE "Description of the
Certificates -- Allocations, Applications and Payments
-- ALLOCATIONS AND APPLICATIONS OF COLLECTIONS" and
"Assets of the Trust -- The Accounts; Collections -- THE
SUBI COLLECTION ACCOUNT" and "Certain Withdrawals from
the SUBI Collection Account".
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C. ACCUMULATION PERIODS;
TMCC DEMAND NOTES................. The Accumulation Period with respect to a Class of
Certificates will commence on the earlier of the
Accumulation Date or the day on which an Accumulation
Event occurs and will end on the related Targeted
Maturity Date or on the occurrence of a Swap
Termination, if any. During the Revolving Period,
amounts allocated on any Monthly Allocation Date as the
related Class A-1 Notional Interest Accrual Amount,
Class A-2 Notional Interest Accrual Amount, Class A-3
Notional Interest Accrual Amount, Class B Notional
Interest Accrual Amount and Class B Fixed Rate Interest
Accrual Amount will be deposited into the
Certificateholders' Account and invested in Permitted
Investments maturing on or prior to the succeeding
relevant Certificate Payment Date. Following the
Revolving Period, amounts allocated as described in the
prior sentence will continue to be deposited and
invested as described in the preceding sentence, and
amounts allocated on any Monthly Allocation Date in
reduction of the Adjusted Class A-1 Certificate Balance,
the Adjusted Class A-2 Certificate Balance, the Adjusted
Class A-3 Certificate Balance and the Adjusted Class B
Certificate Balance (including reimbursements of Loss
Amounts allocated to any such Class) will be deposited
into the Certificateholders' Account and invested in
Permitted Investments maturing on or prior to the
related Targeted Maturity Date. Each such Permitted
Investment is required to bear interest at the related
Required Rate. Amounts so allocated on any Certificate
Payment Date will not be so invested in Permitted
Investments if currently payable or applicable to
another purpose on such Certificate Payment Date.
Such Permitted Investments are expected to be demand
obligations issued by TMCC (each, a "TMCC Demand Note").
The TMCC Demand Notes are demand obligations insofar as
the Trustee, on behalf of the Trust, will have the right
to demand payment of amounts due thereunder prior to
their stated maturity dates (i) if for any reason
Standard & Poor's reduces TMCC's short-term debt to a
rating less than A-1+ or TMCC's long-term debt to a
rating less than AA, or Moody's reduces TMCC's
short-term debt to a rating less than P-1 or TMCC's
long-term debt to a rating less than Aa3 and the Trustee
determines that at such time one or more Permitted
Investments having substantially the same maturities,
similar demand features and bearing interest at the
relevant Required Rates are available and investment
therein rather than in TMCC Demand Notes will not, by
itself, cause a Rating Agency to reduce or withdraw its
rating of any Class of Certificates or (ii) in
connection with a Swap Termination. The Trustee will be
required to exercise the demand feature of the TMCC
Demand Notes upon any Swap Termination.
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Because TMCC is the issuer of the TMCC Demand Notes, and
because such instruments will not be redeemable prior to
their maturity dates other than as described above, if
for any reason either Rating Agency reduces its rating
of TMCC's debt after the date hereof, such Rating Agency
may also downgrade the rating it has assigned to any
Class of Certificates. On August 20, 1998, Moody's
downgraded the long-term debt of TMC and its
subsidiaries (including TMCC) to Aa1 from Aaa. On
September 29, 1998, Standard & Poor's announced that it
had placed the long-term debt of TMCC on Credit Watch
with negative implications. The initial ratings of the
Certificates are not affected by Moody's reduction of
TMCC's rating or Standard & Poor's announcement. SEE
"Risk Factors -- Risks Associated with Ratings of the
Class A Certificates" and "Additional Document
Provisions -- TMCC Demand Notes".
D. THE SWAP...................... In order to enable the Trust to satisfy its obligations
to make payments on the Class A Certificates and the
Adjustable Rate Class B Certificates at an adjustable
rate of interest, the Trust will enter into the Swap
Agreement with TMCC, as Swap Counterparty (the "Swap
Counterparty").
Pursuant to the Swap Agreement, the Trust generally will
pay to the Swap Counterparty on each relevant
Certificate Payment Date all amounts allocable in
respect of the Class A-1 Swap Interest Amount, the Class
A-2 Swap Interest Amount, the Class A-3 Swap Interest
Amount or the Class B Swap Interest Amount, in each case
subject to the payment priorities and limitations
described herein. On each such date, the Swap
Counterparty will make payments to the Trust of amounts
due on such date under the Swap Agreement, which amounts
will be used to make payments of interest accrued on the
related Class of Certificates. As described herein, if
the Trust makes payments of less than the Class A-1 Swap
Interest Amount, Class A-2 Swap Interest Amount, Class
A-3 Swap Interest Amount or Class B Swap Interest
Amount, as the case may be, on any Certificate Payment
Date, the Swap Counterparty's corresponding payment
obligations under the Swap Agreement will be reduced
proportionately. SEE "-- Payments -- Interest" above,
and "The Swap Agreement -- Payments under the Swap
Agreement" herein.
The Swap Agreement provides for termination in
connection with the occurrence of certain Events of
Default and Termination Events. If the Swap Agreement is
terminated as a result of an Event of Default or
Termination Event (a "Swap Termination"), the principal
of the Certificates will become due and payable without
regard to their respective Targeted Maturity Dates, and
the Trustee will be obligated to liquidate the Trust
assets. In such event, the net proceeds realized from
the liquidation of the assets of the Trust, if any, to
the extent available after the payment of all other
obligations of the Trust
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in respect of any amounts reimbursable to the
Transferor, Servicer, Trustee or Swap Counterparty as
described herein, will be allocated to make payments on
the Certificates pursuant to the priorities described
herein under "Description of the Certificates --
Termination of the Trust; Retirement of the Certificates
-- SWAP TERMINATION". Such net proceeds may not be
sufficient to reduce the outstanding balances of the
Class A Certificates or Class B Certificates to zero.
SEE "Risk Factors -- Risks Associated With Swap
Agreement". Under such circumstances, Class A
Certificateholders will have no recourse to any other
assets for payment of the Class A Certificates, and will
suffer a corresponding loss.
The long-term debt obligations of TMCC currently are
rated AAA by Standard & Poor's and Aa1 by Moody's. The
Swap Agreement will not terminate merely as a result of
a downgrade in any rating assigned to TMCC's debt
obligations. However, because the ratings of each Class
of Class A Certificates take into account the provisions
of the Swap Agreement and the ratings currently assigned
to the debt obligations of the Swap Counterparty, a
downgrade, suspension or withdrawal of any rating of the
debt of the Swap Counterparty by a Rating Agency may
result in the downgrade, suspension or withdrawal of the
rating assigned by either Rating Agency to such Class of
Class A Certificates, with adverse consequences for the
liquidity or market value thereof. SEE "Risk Factors --
Risks Associated with Swap Agreement" and "-- Risks
Associated with Ratings of the Class A Certificates".
In the event the long-term debt rating of the Swap
Counterparty is reduced to a level below Aa3 by Moody's
or AA by Standard & Poor's or the short-term debt rating
of the Swap Counterparty is reduced to a level below P-1
by Moody's or A-1+ by Standard & Poor's, the Swap
Counterparty may assign the Swap Agreement to another
party (or otherwise obtain a replacement swap agreement
on substantially the same terms as the Swap Agreement)
and thereby be released from its obligations under the
Swap Agreement; provided that (i) the new swap
counterparty, by a written instrument, accepts all of
the obligations of the Swap Counterparty under the Swap
Agreement to the reasonable satisfaction of the Trustee,
(ii) the Swap Counterparty delivers an opinion of
independent counsel of recognized standing in form and
substance reasonably satisfactory to the Trustee
confirming that such transfer or replacement will not
result in the new swap counterparty being required to
withhold or deduct for taxes under the Swap Agreement,
(iii) a Termination Event or Event of Default does not
occur under the Swap Agreement as a result of such
transfer or replacement and (iv) the ratings assigned to
the Certificates after such assignment and release will
be at least equal to the ratings assigned by Moody's and
Standard & Poor's to the Certificates at the time of the
reduction in the debt rating of the
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Swap Counterparty. Any cost of such transfer will be
borne by the Swap Counterparty or the new swap
counterparty and not by the Trust; provided, however,
that the Swap Counterparty shall not be required to make
any payment to the new swap counterparty to assign the
Swap Agreement or to obtain a replacement swap. In the
event that the Swap Counterparty does not elect to
assign the Swap Agreement or enter into a replacement
Swap Agreement, the Swap Counterparty may (but shall not
be obligated to) establish any other arrangement
satisfactory to the applicable Rating Agency, such that
the ratings of the Certificates by the applicable Rating
Agency will not be withdrawn or reduced.
E. 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 the allocations, applications
or payments required to be made in respect of principal
on such date, the Adjusted Investor Balance is less than
or equal to $74,998,873.25 (10% of the Aggregate Net
Investment Value as of the Cutoff Date) or amounts
sufficient to effectively reduce the Adjusted Investor
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 on such date. SEE "Description of the
Certificates -- Termination of the Trust; Retirement of
the Certificates".
F. FORM AND DENOMINATIONS 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
Certificates 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 Asia. SEE "Description of the
Certificates -- Book-Entry Registration" and "ANNEX I:
Global Clearance, Settlement and Tax Documentation
Procedures".
G. LISTING....................... Application has been made for listing of the Class A
Certificates on the Luxembourg Stock Exchange.
THE SUBI.......................... The SUBI will be evidenced by two certificates
collectively evidencing a 100% beneficial interest in
the SUBI Assets, one of which, the SUBI Certificate,
will be transferred by the Transferor to the Trust, and
the other of which (evidencing the rights to proceeds of
the Residual Value Insurance Policies) will be retained
by the Transferor. The SUBI will not evidence an
interest in any Titling Trust Assets other than the SUBI
Assets. Payments made on or in respect of any Titling
Trust Assets other than the SUBI Assets, as well as
proceeds of the Residual Value Insurance Policies, will
not be available to make payments on
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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".
THE CONTRACTS. The Contracts will consist of retail
closed-end lease contracts originated by the Dealers in
the Trust States having original terms of not more than
60 months. Substantially all of the Contracts will be
finance leases for accounting purposes and will have
been written for a "capitalized cost" which represents
the original principal balance of such Contract
("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").
Substantially all the Contracts 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 instructions provided to the
Dealers by TMCC) and represents the estimated wholesale
market value of the related leased vehicle at the end of
the lease term, as such estimated value may be reduced
in connection with payments received in respect of
principal due during the period of any extension granted
as described herein (the "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 34,185 lease contracts.
As of the Cutoff Date, the Initial Contracts had Lease
Rates ranging from 1.09% to 13.77% and a weighted
average Lease Rate of 6.81%. As of the Cutoff Date, the
Initial Contracts had an aggregate Outstanding Principal
Balance of $781,660,860.79, a weighted average original
term of 38.3 months and a weighted average remaining
term to scheduled maturity of 33.8 months. SEE "The
Contracts".
The "Discounted Principal Balance" for each Contract
with a Lease Rate less than 8.75% will be its remaining
Monthly Payments and Residual Value discounted by 8.75%
(each such Contract, a "Discounted Contract"), and for
each Contract with a Lease Rate at least equal to 8.75%
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 $749,988,732.51 (of which amount
approximately 68.54% represented Residual Values).
The "Aggregate Net Investment Value" as of any date will
equal the sum of (i) the Discounted Principal Balances
of all Contracts
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other than Charged-off, Liquidated, Matured and
Additional Loss Contracts, (ii) the aggregate of the
Residual Values of all Leased Vehicles covered by
Matured Contracts to the extent that such Contracts have
been terminated 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 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 or the
Titling Trustee. 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 Certificates were
recharacterized as secured loans, the Trustee would have
a perfected security interest in the SUBI Certificate,
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 SUBI Collection Account will be established and
maintained 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
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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 through the date of disposition of the related
Leased Vehicles ("Matured Leased Vehicle Proceeds"),
(iv) proceeds received in connection with the sale or
other disposition of Repossessed Leased Vehicles or
other vehicles that were covered by Charged-off
Contracts ("Charged-off Vehicle Proceeds") and (v) other
amounts received in connection with the realization of
the amounts due under any Contract through the date of
disposition of the related vehicle (together with
Matured Leased Vehicle Proceeds and Charged-off 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"), Charged-off Vehicle Proceeds ("Charged-off
Vehicle Expenses") and other Liquidation Proceeds (such
expenses, together with Matured Leased Vehicle Expenses
and Charged-off Vehicle Expenses, "Liquidation
Expenses"), to be netted from such proceeds or from
Collections or to be withdrawn from amounts on deposit
in the SUBI Collection Account. In addition, the
Servicer will be entitled to reimbursement for any
Advances from amounts collected on the Contracts and
Leased Vehicles. 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
amounts (together with any unpaid Monthly Payments under
the related Contract) will be treated as Matured Leased
Vehicle Expenses or Charged-off Vehicle Expenses, as the
case may be, and will therefore reduce Matured Leased
Vehicle Proceeds or Charged-off Vehicle Proceeds, as the
case may be, and Liquidation Proceeds.
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
made by the Transferor and (iii) Reallocation Payments
by TMCC
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(together with, under certain circumstances after the
Revolving 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, Interest Collections (and, with respect to
the Deposit Date in any month following the termination
of the Revolving Period, Principal Collections) on
deposit in the SUBI Collection Account in respect of the
related Collection Period will be available for
allocation, application or payment of required amounts
to Certificateholders and the Transferor. SEE "Assets of
the Trust -- The Accounts; Collections -- THE SUBI
COLLECTION ACCOUNT".
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 of. 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
Proceeds") exceed the aggregate Residual Value of the
related Leased Vehicles (the "Residual Value Surplus"),
such excess will be released to the Transferor and none
of the Trust, the Certificateholders or the Swap
Counterparty will have any further claim thereto or
interest therein.
THE RESERVE FUND.................. A Reserve Fund (the "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 Collections allocable to the
Investor Interest for the related Collection Period are
insufficient to allocate for or make applications or
payments in respect of, among other things, (i) the
Class A-1 Notional Interest Accrual Amounts, Class A-2
Notional Interest Accrual Amounts, Class A-3 Notional
Interest Accrual Amounts, Class B Notional Interest
Accrual Amounts or Class B Fixed Rate Interest Accrual
Amounts, (ii) Loss Amounts and Certificate Principal
Loss Amounts allocated to the Certificates and (iii) if
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such Monthly Allocation Date is a relevant Certificate
Payment Date, any remaining shortfalls in amounts
payable to the Swap Counterparty under the Swap
Agreement or any Class B Swap Interest Shortfall Amounts
or Fixed Rate Class B Interest Carryover Shortfall
Amounts (the aggregate amount of such deficiency, the
"Required Amount").
On the related Stated Maturity Date, monies on deposit
in the Reserve Fund also may be applied and paid to
reduce the Adjusted Class A-1 Certificate Balance, the
Adjusted Class A-2 Certificate Balance, the Adjusted
Class A-3 Certificate Balance or the Adjusted Class B
Certificate Balance to zero, as well as to reimburse
Loss Amounts and Certificate Principal Loss Amounts
allocated thereto, should the Collections allocable for
such purpose ultimately be insufficient to reduce any
such balance to zero and to effect such reimbursements
on such date; provided that Class B Reserve Amounts will
not be so applied other than with respect to the Class B
Certificates, except to the extent that the Class B
Reserve Amount exceeds the amount necessary both to
reduce the Adjusted Class B Certificate Balance to zero
and to make such reimbursements to the Class B
Certificateholders. Notwithstanding the foregoing, of
the amounts on deposit in the Reserve Fund, an amount
not to exceed $ (the "Class B Reserve Amount")
generally will be available exclusively for payment of
accrued and unpaid interest with respect to the Class B
Certificates and, on and after the Class B Targeted
Maturity Date, to reduce the Adjusted Class B
Certificate Balance until the Adjusted Class B
Certificate Balance is reduced to zero. Such amounts
will not be so applied if other amounts are then on
deposit in the Reserve Fund and available therefor.
Following the initial allocation of amounts to the Class
B Reserve Amount, no subsequent amounts deposited into
the Reserve Fund will be allocated to the Class B
Reserve Amount. In addition, on or after the Class B
Targeted Maturity Date, if amounts remaining on deposit
in the Reserve Fund (including Class B Reserve Amounts)
are sufficient to (i) fund any amounts payable to the
Trustee, Titling Trustee and Servicer, and (ii) reduce
the Adjusted Certificate Balance of all Classes of
outstanding Certificates to zero such funds will be so
paid. 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 on the Closing Date
with an initial deposit (the "Initial Deposit") by the
Transferor of $28,124,577.47 (3.75% of the Aggregate Net
Investment Value as of the Cutoff Date). Thereafter, on
each Monthly Allocation Date, the Reserve Fund will be
supplemented by amounts that would otherwise be released
to the Transferor after making all required allocations,
applications and payments, until the amount on deposit
therein equals the applicable Specified Reserve Fund
Balance. On each Monthly Allocation Date, all
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net investment income with respect to amounts on deposit
therein and, after giving effect to all applications of
amounts withdrawn from the Reserve Fund on such 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,
Applications and Payments -- ALLOCATIONS AND
APPLICATIONS 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 Monthly Allocation
Date (i) allocations and applications in respect of
interest on the Class B Certificates generally will not
be made until amounts have been appropriately allocated
and applied in respect of the Class A-1 Notional
Interest Accrual Amount, the Class A-2 Notional Interest
Accrual Amount, the Class A-3 Notional Interest Accrual
Amount, the Class A-1 Interest Carryover Shortfall
Amount, the Class A-2 Interest Carryover Shortfall
Amount and the Class A-3 Interest Carryover Shortfall
Amount as of such Monthly Allocation Date, (ii)
allocations, applications and payments in respect of
principal of the Class B Certificates generally will not
be made until the foregoing allocations and applications
have been made and all allocations, applications and
payments in reduction of the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate
Balance and the Adjusted Class A-3 Certificate Balance
(as well as reimbursements of Loss Amounts and
Certificate Principal Loss Amounts allocated thereto)
have been made and (iii) Loss Amounts and Certificate
Principal Loss Amounts will be allocated to the Class B
Certificates until the Adjusted Class B Certificate
Balance has been reduced to zero prior to the allocation
thereof to the Adjusted Class A-1 Certificate Balance,
the Adjusted Class A-2 Certificate Balance and the
Adjusted Class A-3 Certificate Balance.
To provide additional credit enhancement for the
Certificates, Transferor Amounts will not be paid to the
Transferor on any Monthly Allocation Date until all
allocations, applications and payments required to be
made with respect to the Adjusted Investor Balance have
been made on such date and the amount on deposit in the
Reserve Fund on such Monthly Allocation Date equals the
Specified Reserve Fund Balance as described
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under "Description of the Certificates -- Allocations,
Applications and Payments -- ALLOCATIONS AND
APPLICATIONS OF COLLECTIONS". 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.
In addition, the Servicer will have the option to make
certain Advances with respect to off-lease vehicles held
pending disposition. Each such 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, if on the related Targeted
Maturity Date the aggregate of amounts available to be
allocated, applied and paid in respect of the Adjusted
Class A-1 Certificate Balance, the Adjusted Class A-2
Certificate Balance, the Adjusted Class A-3 Certificate
Balance or the Adjusted Class B Certificate Balance are
insufficient to reduce the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate
Balance, the Adjusted Class A-3 Certificate Balance or
the Adjusted Class B Certificate Balance, as the case
may be, to zero, or to reimburse Loss Amounts and
Certificate Principal Loss Amounts allocated thereto,
the Transferor will have the option to make an advance
(a "Maturity Advance") in any amount up to the amount of
such shortfall. Any 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 and to the extent
described herein. SEE "Assets of the Trust -- The
Accounts; Collections -- THE RESERVE FUND" and "--
Advances".
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".
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ERISA CONSIDERATIONS.............. Subject to considerations described below, the Class A
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 any Class of 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 condition
will be met, the Underwriters expect that each Class of
Class A 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 also be met as of the Closing Date.
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),
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".
TAX STATUS........................ On the Closing Date, O'Melveny & Myers LLP will deliver
a legal opinion to the effect that (i) the Trust will
not be treated as an association or a publicly traded
partnership taxable as a corporation and (ii) the Class
A Certificates will properly be characterized as
indebtedness, in each case for federal income tax
purposes. SEE "Material Federal Income Tax
Considerations".
RATINGS........................... It is a condition of issuance that each of Moody's
Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's" and, together with
Moody's, the "Rating Agencies") rates the Class A-1,
Class A-2 and Class A-3 Certificates in its highest
rating category. The ratings of the Class A-1, Class A-2
and Class A-3 Certificates primarily address the
likelihood of the payment in full of interest on and
principal of the Class A-1, Class A-2 and Class A-3
Certificates pursuant to the Agreement and the Swap
Agreement. Either Rating Agency may assign any such
rating a special designation highlighting the risks
relating to the Swap Agreement. At any
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time that amounts remain invested in TMCC Demand Notes,
or so long as TMCC is the Swap Counterparty, a reduction
or withdrawal of the ratings assigned by either Rating
Agency to the debt securities of TMCC could result in
the reduction or withdrawal of its rating of the Class
A-1, Class A-2 or Class A-3 Certificates. On April 2,
1998, Moody's changed its outlook for Japan's Aaa debt
rating from "stable" to "negative". On July 23, 1998,
Moody's announced its decision to review for possible
downgrade Japan's Aaa "country ceilings" for foreign
currency-denominated debt and bank deposits as well as
the Aaa-rated yen-denominated securities issued or
guaranteed by the government of Japan. On July 3, 1998,
Moody's placed the Aaa long-term debt ratings of TMC,
TMCC's ultimate parent, and its subsidiaries (including
TMCC) under review for possible downgrade. On August 20,
1998, Moody's downgraded the long-term debt of TMC and
its subsidiaries (including TMCC) to Aa1 from Aaa and
announced the conclusion of the rating review that began
on July 3, 1998. On September 29, 1998, Standard &
Poor's announced that it had placed the long-term debt
of TMC and its subsidiaries (including TMCC) on Credit
Watch with negative implications. The initial ratings of
the Certificates are not affected by Moody's reduction
of TMCC's rating or Standard & Poor's announcement. SEE
"Risk Factors -- Risks Associated with Ratings of the
Class A Certificates". The ratings of the Class A-1,
Class A-2 and Class A-3 Certificates will not address
the likelihood of the payment in full of the principal
amount thereof on any particular date prior to the
related Stated Maturity Date.
A security rating is not a recommendation to buy, sell
or hold securities, and may be subject to revision,
suspension 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 such Class.
RISKS ASSOCIATED WITH SWAP AGREEMENT
The ability of the Trust to make payments to Class A Certificateholders at
the Class A-1 Rate, Class A-2 Rate or Class A-3 Rate, which are adjustable rates
of interest, while the SUBI Assets implicitly bear interest at fixed interest
rates, is substantially dependent on the operation of the Swap Agreement and the
performance by the Swap Counterparty of its obligations under the Swap Agreement
SEE "Additional Document Provisions -- Swap Agreement".
Certain events that are not entirely within the control of the Trust or the
Swap Counterparty may cause the termination of the Swap Agreement. Upon
termination of the Swap Agreement, the Trustee will be required to liquidate the
assets of the Trust. The proceeds of any liquidation of the assets of the Trust
in connection with a termination of the Swap Agreement may not be adequate to
pay in full the Class A-1 Certificate Balance, the Class A-2 Certificate
Balance, the A-3 Certificate Balance, the Class B Certificate Balance and
interest accrued thereon through the final Certificate Payment Date. The
proceeds of any liquidation of the assets of the Trust will be applied first to
reimburse the Transferor for any unreimbursed Maturity Advances, second to
reimburse the Trustee and Titling Trustee for any Capped or Uncapped
Administrative Expenses they have incurred, third to reimburse any unreimbursed
Advances made by, and to pay any other compensation owed to, the Servicer and,
finally, to make payments to the Certificateholders in accordance with the
allocations and applications described herein under "Description of the
Certificates -- Termination of the Trust; Retirement of the Certificates -- SWAP
TERMINATION". In addition, amounts available to make such payments will be
further reduced if the Trust is obligated to make a swap termination payment to
the Swap Counterparty.
No assurance can be made as to length of time that will be required for the
Trustee to liquidate the assets of the Trust. Upon any such liquidation, amounts
otherwise payable to the Swap Counterparty will instead be paid to the Class A
Certificateholders and the Adjustable Rate Class B Certificateholders. Such
Certificateholders will be entitled to receive only the amounts described herein
under "Description of the Certificates -- Termination of the Trust; Retirement
of the Certificates -- SWAP TERMINATION", and because such amounts will be
limited to a portion of the proceeds of such liquidation, and may or may not
include payment or receipt by the Trust of a swap termination payment (the
amount of which is not estimable at the date hereof), the holders of such
Certificates may not receive amounts equivalent to interest accrued thereon at
the Class A-1 Rate, Class A-2 Rate, Class A-3 Rate or Class B Adjustable Rate
following any such liquidation. There is no developed market for securities such
as the SUBI Certificate, which comprises the primary asset of the Trust. Any
liquidation that causes principal of a Class of Certificates to be payable
significantly later than the related Targeted Maturity Date will increase the
weighted average life of such Class and may reduce the yield to maturity
thereof. Even if actual losses or shortfalls are not realized in connection with
a liquidation, any liquidation that causes principal of a Class of Certificates
to be payable prior to the related Targeted Maturity Date will reduce the
weighted average life and may reduce the yield to maturity of such Class of
Certificates. SEE "Description of the Certificates -- Termination of the Trust;
Retirement of the Certificates" and "Additional Document Provisions -- Swap
Agreement".
Because the ratings of the Class A Certificates take into account the
provisions of the Swap Agreement and the TMCC Demand Notes and the ratings
currently assigned to TMCC's debt obligations
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(because TMCC is the Swap Counterparty and the issuer of TMCC Demand Notes), a
downgrade, suspension or withdrawal of any rating of TMCC's debt obligations by
a Rating Agency may result in the downgrade, suspension or withdrawal of the
rating assigned by either Rating Agency to such Classes of Certificates, with
adverse consequences for the liquidity or market value thereof. SEE "Risks
Associated with Ratings of the Class A Certificates". In the event the long-term
debt rating of the Swap Counterparty is reduced to a level below Aa3 by Moody's
or AA by Standard & Poor's or the short-term debt rating of the Swap
Counterparty is reduced to a level below P-1 by Moody's or A-1+ by Standard &
Poor's, the Swap Counterparty may, but shall not be obligated to, assign the
Swap Agreement to another party, obtain a replacement swap agreement on
substantially the same terms as the Swap Agreement or establish any other
arrangement satisfactory to the applicable Rating Agency, as described under
"Additional Document Provisions -- The Swap Agreement -- ASSIGNMENT". Neither
the Trust nor the Certificateholders will have any remedy against the Swap
Counterparty if the Swap Counterparty fails to do so.
STRUCTURED SECURITIES ARE SOPHISTICATED INSTRUMENTS, CAN INVOLVE A HIGH
DEGREE OF RISK AND ARE INTENDED FOR SALE ONLY TO INVESTORS CAPABLE OF
UNDERSTANDING THE RISKS ENTAILED IN SUCH INSTRUMENTS. POTENTIAL INVESTORS IN ANY
CLASS A CERTIFICATES ARE STRONGLY ENCOURAGED TO CONSULT WITH THEIR FINANCIAL
ADVISORS BEFORE MAKING ANY INVESTMENT DECISION.
RISK OF ABSENCE OF FUNDS FOR REIMBURSEMENT OF CERTAIN LOSSES
The Investor Percentage of Loss Amounts (including Certificate Principal
Loss Amounts) will be allocated first to the Adjusted Class B Certificate
Balance and then to the Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance and the Adjusted Class A-3 Certificate Balance pro
rata based on the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance and Adjusted Class A-3 Certificate Balance as of the last
day of the related Collection Period. To the extent that Loss Amounts exceed the
sources available for repayment thereof on the date so allocated, such Loss
Amounts will be allocated to the Certificates as Certificate Principal Loss
Amounts in accordance with the above priorities, temporarily or permanently
reducing the Adjusted Class B Certificate Balance or Adjusted Class A-1
Certificate Balance, Adjusted Class A-2 Certificate Balance and Adjusted Class
A-3 Certificate Balance, as the case may be. 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 after the Revolving
Period, reimbursements of Loss Amounts will be allocated or applied in respect
of the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2 Certificate
Balance and Adjusted Class A-3 Certificate Balance on a pro rata basis (based on
the outstanding amount of unreimbursed Loss Amounts and Certificate Principal
Loss Amounts allocated to the Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance and Adjusted Class A-3 Certificate Balance as of
such date) and any remainder to the Adjusted Class B Certificate Balance, in
each case as an allocation or application of Principal Collections 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.
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
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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 use also could affect the related
proceeds. 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. No assurance can be given as to the likely Residual Value Loss Amounts
that will be allocated to the Investor Interest over the life of the
Certificates. SEE, "Risks Associated with Vehicles Returned at the Termination
of the Lease" and "Risks Associated with Concentrations of Vehicle Types".
RISKS OF REDUCTION OF CERTIFICATE INTEREST PAYMENTS
Payments in respect of interest on the Certificates are subject to reduction
in certain circumstances as described under "Description of the Certificates --
Calculation of Class A-1 Rate, Class A-2 Rate, Class A-3 Rate and Class B
Adjustable Rate -- INTEREST REDUCTION".
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
Adjusted Class A-1 Certificate Balance has been reduced to zero, no principal
payments will be made on the Class A-3 Certificates until the Adjusted Class A-2
Certificate Balance has been reduced to zero, and no principal payments will be
made on the Class B Certificates until the Adjusted Class A-3 Certificate
Balance has been reduced to zero. Sequential payment of the Certificates is
likely to cause Classes of Certificates that pay later to be outstanding (and to
have relatively higher outstanding Adjusted Certificate Balances than Classes
with earlier Targeted Maturity Dates) during periods when an increasingly larger
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.
As a result, the Adjusted Class A-3 Certificate Balance may be allocated
relatively more Loss Amounts (including Residual Value Loss Amounts) as a
percentage of the Initial Class A-3 Certificate Balance than are allocated to
both the Adjusted Class A-2 Certificate Balance as a percentage of the Initial
Class A-2 Certificate Balance and the Adjusted Class A-1 Certificate Balance as
a percentage of the Initial Class A-1 Certificate Balance, because such
allocations will be made on each Monthly Allocation Date based on the
outstanding Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance and Adjusted Class A-3 Certificate Balance as of the last
day of the related Collection Period. In addition, the Adjusted Class A-2
Certificate Balance may be allocated relatively more Loss Amounts (including
Residual Value Loss Amounts) as a percentage of the Initial Class A-2
Certificate Balance than are allocated to the Adjusted Class A-1 Certificate
Balance as a percentage of the Initial Class A-1 Certificate Balance, because
such allocations will be made on each Monthly Allocation Date based on the
outstanding Adjusted Class A-1 Certificate Balance and Adjusted Class A-2
Certificate Balance as of the last day of the related Collection Period.
In addition, on any Monthly Allocation Date allocations and applications in
respect of interest on the Class B Certificates generally will not be made until
amounts have been appropriately allocated and applied in respect of the Class
A-1 Notional Interest Accrual Amount, the Class A-2 Notional Interest Accrual
Amount, the Class A-3 Notional Interest Accrual Amount, the Class A-1 Interest
Carryover Shortfall Amount, the Class A-2 Interest Carryover Shortfall Amount
and the Class A-3 Interest Carryover Shortfall Amount as of such Monthly
Allocation Date. However, because such allocations will be made monthly while
interest payments will be made quarterly for each Class of Certificates until
the related Targeted Maturity Date, it is possible that the Class B Certificates
will receive allocations with respect to
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interest for a quarterly period even though the Class A Certificates have not
been allocated the full amount of the Notional Interest Accrual Amounts, Swap
Interest Shortfall Amounts, Loss Amounts and Certificate Principal Loss Amounts
with respect to one or more Monthly Interest Periods included in the Interest
Payment Period.
MATURITY AND PREPAYMENT CONSIDERATIONS
Principal generally will not be paid to the Certificateholders until the
related Targeted Maturity Date. SEE "Description of the Certificates --
Accumulation Events" and "-- Termination of the Trust; Retirement of the
Certificates". If the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance, Adjusted Class A-3 Certificate Balance or Adjusted Class B
Certificate Balance is not reduced to zero on the related Targeted Maturity
Date, payments in reduction thereof will thereafter be made on each subsequent
relevant Monthly Allocation Date to the extent of amounts available therefor
until such amount or balance is reduced to zero or the Trust is otherwise
terminated. Events that could result in the Adjusted Class Certificate Balance
of a particular Class of Certificates not being reduced to zero on the related
Targeted Maturity Date include, without limitation, significantly higher than
expected loss experiences with respect to the Contracts, slower than expected
prepayment experiences with respect to the Contracts or the granting of
extensions or deferrals on the Contracts beyond historical levels, in each case
without a Maturity Advance or Inventory Advance being made. There can be no
assurance as to whether a Maturity Advance or Inventory Advance will be made or,
if made, will be sufficient to reduce the Adjusted Class A-1 Certificate
Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class A-3 Certificate
Balance or Adjusted Class B Certificate Balance to zero on the related Targeted
Maturity Date and, therefore, any such Class may mature significantly later than
its Targeted Maturity Date. The rate at which payments may be made will be
affected by the payment, prepayment, residual value loss, liquidation and
extension experience with respect to the Contracts, which cannot be predicted,
and may also be affected by (i) payment by TMCC of Reallocation Payments and
Reallocation Deposit Amounts, if any, (ii) the exercise by the Transferor of its
right to purchase the SUBI Certificate under certain circumstances, thereby
retiring the Certificates and (iii) the occurrence of a Swap Termination and the
amounts realized as proceeds from the sale of the SUBI Assets and possible
payment of a swap termination payment. SEE "TMCC Leasing Operations",
"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".
A Swap Termination and the accompanying liquidation of the assets of the
Trust may result in the payment of proceeds from such liquidation earlier than
the Targeted Maturity Date for any Class. Under such circumstances, the related
Certificateholders may not be able to reinvest such proceeds at a yield at least
equal to their yield on the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates or Class B Certificates, as the case may be, due to
economic conditions that may be unrelated to the cause of any such Swap
Termination. Under such circumstances there are additional risks of loss to
Class A Certificateholders related to the Swap Agreement. SEE "Risk Factors--
Risks Associated with Swap" and "Additional Document Provisions -- Swap
Agreement -- EARLY TERMINATION OF SWAP AGREEMENT". In addition, no assurance can
be made as to the length of time that will be required for the Trustee to
liquidate the assets of the Trust. There is no developed market for securities
such as the SUBI Certificate, which comprises the primary asset of the Trust.
Any liquidation that causes principal of a Class of Certificates to be payable
significantly later than the related Targeted Maturity Date will increase the
weighted average life of such Class and may reduce the yield to maturity
thereof. Even if actual losses or shortfalls are not realized in connection with
a liquidation, any liquidation that causes principal of any Class of
Certificates to be payable prior to the related Targeted Maturity Date will
reduce the weighted average life and may reduce the yield to maturity of such
Class of Certificates. SEE"Description of the Certificates -- Termination of the
Trust; Retirement of the Certificates".
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
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to either buy, trade in or refinance the related leased vehicles prior to their
scheduled maturities. TMCC estimates that, of the automobile and light duty
truck retail lease contracts in its portfolio that were scheduled to mature
during the fiscal years ended September 30, 1997 and September 30, 1998,
approximately 48% and 43%, respectively, terminated more than 30 days prior to
maturity as a result of voluntary prepayments as to which the leased vehicles
were purchased by the related lessee or a dealer or repossession of the leased
vehicles due to default by the lessees under the related lease contracts. Such
early terminations primarily were due to voluntary prepayments. No assurance can
be given that the Contracts will experience the same rates 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
and Yield Considerations".
RISKS ASSOCIATED WITH RATINGS OF THE CLASS A CERTIFICATES
Because the ratings of each Class of Certificates take into account the
provisions of the TMCC Demand Notes and the ratings currently assigned to TMCC's
debt obligations (because TMCC is the issuer of the TMCC Demand Notes and the
Swap Counterparty), a downgrade, suspension or withdrawal of any rating of the
debt of TMCC by a Rating Agency may result in the downgrade, suspension or
withdrawal of the rating assigned by such Rating Agency to such Class of
Certificates. Such downgrading, suspension or withdrawal of the rating assigned
such Class of Certificates will most likely produce adverse consequences for the
liquidity or market value thereof. SEE "Ratings of the Class A Certificates".
As of the date of this Prospectus, TMCC's long-term debt is rated Aa1 by
Moody's and AAA by Standard & Poor's. On April 2, 1998, Moody's changed its
outlook for Japan's Aaa debt rating from "stable" to "negative". On July 3,
1998, Moody's placed the Aaa long-term debt ratings of TMC, TMCC's ultimate
parent, and its subsidiaries (including TMCC) under review for possible
downgrade. On July 23, 1998, Moody's announced its decision to review for
possible downgrade Japan's Aaa "country ceilings" for foreign
currency-denominated debt and bank deposits as well as the Aaa-rated
yen-denominated securities issued or guaranteed by the government of Japan. On
August 20, 1998, Moody's downgraded the long-term debt of TMC and its
subsidiaries (including TMCC) to Aa1 from Aaa and announced the conclusion of
the rating review that began on July 3, 1998. If Japan's credit rating is
lowered below that of the then credit rating of TMC (and its subsidiaries), the
credit rating of TMC (and its subsidiaries) would likely be lowered to the same
extent. On September 29, 1998, Standard & Poor's announced that it had placed
the AAA long-term debt of TMC on Credit Watch with negative implications. The
initial ratings of the Certificates are not affected by Moody's reduction of
TMCC's rating or Standard & Poor's announcement. If TMC's credit rating is
lowered, the credit rating of TMCC would likely be lowered by either Rating
Agency to the same extent, which could lead to a lower credit rating of the
Certificates offered hereby.
RISKS ASSOCIATED WITH GEOGRAPHIC, ECONOMIC AND OTHER FACTORS
The Dealers which originated the Contracts are located in California,
Florida, Michigan, Ohio and Pennsylvania. 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.
Of the Initial Contracts, 57.65% (based on the 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 64% higher
than TMCC's loss experience with respect to its entire lease contract portfolio
over the most recent 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
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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
default on the Contracts and the ability to sell or otherwise dispose of Leased
Vehicles relating to Matured Contracts for their respective Residual Values.
Other non-economic 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
Leased vehicles returned to TMCC (as opposed to being purchased by the
related lessee or a dealer prior to return to TMCC) at the termination of the
related lease contracts must be disposed of through means that may result in net
sale proceeds which are less than the related established residual value. The
amount of such residual value risk associated with leased vehicles returned to
TMCC is impacted by the Full Term Return Ratio and the per unit loss with
respect to such returned leased vehicles. The number of returned vehicles sold
by TMCC during a specified period as a percentage of the number of lease
contracts that, as of their origination dates, were scheduled to terminate
during such period is the "Full Term Return Ratio". The Full Term Return 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 residual values) and the duration of the
lease (leased vehicles that have shorter term leases generally have a greater
likelihood of being returned rather than purchased). TMCC estimates that, during
the period from October 1, 1993 through September 30, 1998, the Full Term Return
Ratio with respect to lease contracts included in its portfolio was
approximately 47.4% for lease contracts with an original term of 24 months or
less, 26.8% for lease contracts with an original term of 25-36 months, 16.1% for
lease contracts with an original term of 37-48 months, and 5.5% for lease
contracts with an original term of 49-60 months. Approximately 1.5% of lease
contracts included in the SUBI as of the Cut-off Date have an original lease
term of 24 months or less, whereas for the fiscal year ended September 30, 1998,
approximately 4.8% of the lease contracts in TMCC's entire portfolio had an
original lease term of 24 months or less.
Per unit loss rate is a function of the contractual residual value and the
market value and net disposition proceeds received in respect of such leased
vehicle at the disposition of such leased vehicle. Each residual value is
established at the origination of the lease contract (based on the instructions
provided to the dealers by TMCC) and represents the estimated wholesale market
value of the related leased vehicle at the end of the lease term. No assurance
can be made as to how closely the residual value contractually established at
the origination of any lease contract will approximate the fair market value or
net disposition proceeds received in respect of such leased vehicle upon the
disposition of such leased vehicle. Moreover, given that each of the lessee and
the originating dealer have the option to purchase the leased vehicle upon
termination of the related lease contract at a price equal to the established
residual value plus applicable taxes and other incidental charges, TMCC expects
that, in general, if the market value of a leased vehicle exceeds the residual
value of such leased vehicle, it is likely to be purchased by the lessee or the
originating dealer rather than being returned to TMCC. Conversely, if the market
value of a leased vehicle is less than the contractually established residual
value of such leased vehicle, it is generally more likely to be returned to TMCC
resulting in a loss in respect of such leased vehicle.
A higher rate of return at the termination of leases exposes the lessor to a
higher risk of aggregate losses. TMCC's Full Term Return Ratio for its entire
portfolio of lease contracts has increased during the fiscal year ended
September 30, 1998 as compared to the previous year. SEE "TMCC's Leasing
Operations -- Delinquency, Repossession and Loss Data". The Full Term Return
Ratio for TMCC's portfolio of lease contracts for the fiscal quarter ended
September 30, 1998 was approximately 43%. TMCC believes that the increased ratio
is due in part to (i) the relatively large number of two year leases of Toyota
vehicles maturing during the 1998 fiscal year (which, as mentioned above, tend
to experience relatively higher
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return rates and losses per unit) and (ii) the impact of highly competitive new
vehicle pricing for key models (the Toyota Camry, the Toyota Corolla and the
Lexus ES300 in particular) for the fiscal years ended September 30, 1997 and
September 30, 1998, which has put downward pressure on the late model Toyota and
Lexus used vehicle prices. In addition, the large supply of late model used
vehicles in the used car market may also be affecting return rates by depressing
market prices. No assurance can be made that the Full Term Return Ratio for
Leased Vehicles included as SUBI Assets will reflect TMCC's historical
experience for its entire lease portfolio and will not increase further.
As described under "TMCC's Leasing Operations -- Establishment of Residual
Value," the contractual residual value with respect to a Leased Vehicle related
to a Contract is calculated by multiplying the related MSRP by the appropriate
residual value percentage. A relatively higher residual value percentage with
respect to a leased vehicle may expose the lessor to a higher risk of loss if
the leased vehicle is returned to the lessor. The "Residual Value Percentage"
(the contractual residual value of a leased vehicle as a percentage of the
related MSRP) with respect to TMCC's automobile and light duty truck retail
closed-end lease contracts owned or serviced by TMCC and scheduled to mature
during the relevant time periods has generally increased over the past five
fiscal years and for the fiscal year ended September 30, 1998, and, on a
weighted average basis, is higher for the Initial Contracts than for its entire
portfolio.
TMCC believes that the increases in the Residual Value Percentages during
this period are a result of a combination of factors, some of which are
interrelated. For example, during this period, the mix of leased vehicles in
TMCC's portfolio has shifted to include a greater percentage of leases with low
annual mileage allowances of 12,000 miles rather than the standard annual
allowance of 15,000 miles and to include lease contracts with relatively shorter
lease terms. Generally, lease contracts with low annual mileage allowances
and/or shorter-term leases also have relatively higher Residual Value
Percentages. In addition, the introduction of new models and a new generation of
core vehicles and the increased percentage of sport utility vehicles has also
increased the weighted average Residual Value Percentage of TMCC's lease
portfolio. TMCC expects that recent introductions of new models (such as the
Lexus LX series, the Lexus RX300, the Toyota RAV4 and the Toyota Sienna) and new
generation of certain core vehicles (in particular the Toyota Camry, the Toyota
Corolla and the Lexus ES300) have had a similar effect on the Initial Contracts.
Moreover, TMCC believes that the increases in Residual Value Percentages for
lease contracts scheduled to mature during the periods referred to above were
also due in part to TMCC's view of the relative strength of the used car market
for Toyota and Lexus vehicles, and to the increased amount of data available
relating to off-lease resale experience.
Per unit losses on disposition have increased for TMCC's entire portfolio of
leased contracts for the fiscal year ended September 30, 1998, as compared to
TMCC's fiscal year ended September 30, 1997, primarily as a result of the
factors described above with respect to higher vehicle return rates. Per unit
loss rates may also be affected by the amount of accessories or installed
optional equipment included on leased vehicles and the types of installed
optional equipment included thereon. Although per unit loss rates are typically
the result of a combination of factors, to the extent certain types of optional
equipment depreciate more quickly than the value attributable to the base leased
vehicle, leased vehicles having a greater portion of their overall MSRP
attributable to such optional equipment will experience relatively higher levels
of losses. No assurance can be made that per unit losses on Leased Vehicles
included as SUBI Assets will reflect TMCC's historical experience for its entire
lease portfolio and will not increase further.
In November 1998, TMCC implemented a new residual value setting policy for
new Toyota vehicles that separately calculates the residual value applicable to
the base vehicle and the residual value applicable to certain specified optional
accessories and optional equipment. However, none of the Initial Contracts and
none of the Subsequent Contracts have been originated under this new policy. SEE
"TMCC's Leasing Operations -- Establishment of Residual Value".
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RISKS ASSOCIATED WITH CONCENTRATIONS OF VEHICLE TYPES
The Full Term Return Ratio and losses per returned unit for Lexus vehicles
historically have been significantly higher than those for Toyota leased
vehicles. The Full Term Return Ratio for Lexus vehicles for TMCC's fiscal years
ended September 30, 1997 and September 30, 1998, were 41.59% and 57.71%,
respectively, as compared to Full Term Return Ratios for Toyota vehicles for the
same period of 12.47% and 35.20%, respectively. Although only approximately
16.96% of the leased vehicles in TMCC's entire portfolio as of October 31, 1998
were Lexus vehicles, approximately 18.59% of the Initial Contracts relate to
Lexus leased vehicles, based on the 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
thirty-two model types in its lease portfolio, of which twenty-seven model types
initially will be included as SUBI Assets. By number of vehicles, the Camry,
Corolla, 4Runner, Tacoma Pickup, Lexus ES300 and Tacoma 4x4 represent
approximately 30%, 23%, 7%, 6%, 6% and 5%, respectively, of the Initial Leased
Vehicles as compared to approximately 29%, 17%, 9%, 4%, 8% and 8%, respectively,
of leased vehicles included in TMCC's entire lease portfolio as of September 30,
1998. Any such adverse change with respect to a specific model type could result
in reduced 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 following the Revolving
Period, Reallocation Deposit Amounts) into the SUBI Collection Account and
reallocate the related Contract and Leased Vehicle out of the SUBI, as 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
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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 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 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 fails 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).
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 insurance coverage required
to be maintained by the Titling Trust is substantial, in the event that all such
insurance coverage were exhausted and/or TMCC did not satisfy its indemnity
obligations
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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
Certificates could incur a loss on their investment. SEE "Certain Legal Aspects
of the Titling Trust -- 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".
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, unreimbursed Advances made by TMCC, as Servicer, or indemnification
payments made by TMCC, as Servicer, in connection with certain deductibles under
the Excess and Contingent Liability Policies, 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. In
addition, certain events of insolvency or bankruptcy of the Transferor or TMCC
may result in a Swap Termination. SEE "Description of the Certificates --
Termination of the Trust; Retirement of the Certificates -- SWAP TERMINATION".
Certain risks associated with a Swap Termination are described above under
"Risks Associated with Swap Agreement".
On the Closing Date, O'Melveny & Myers LLP, 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, O'Melveny & Myers LLP will render an opinion to the effect
that (i) the transfer of the SUBI Certificate by TMCC to the Transferor
constitutes a sale of the SUBI Certificate and the related SUBI Assets, and (ii)
the transfer of the SUBI Certificate by the Transferor to the Trust pursuant to
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, certain 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".
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RISKS ASSOCIATED WITH LEGAL PROCEEDINGS RELATING TO LEASED VEHICLES
The Transferor is not a party to any legal proceeding. TMCC and the Titling
Trust are parties to, and are vigorously defending, various legal proceedings.
TMCC believes each such proceeding constitutes ordinary routine litigation
incidental to the business and activities conducted by TMCC and the Titling
Trust. Certain of the actions naming TMCC and/or the Titling Trust are or
purport to be class action suits. The amount of liability on pending claims and
actions as of the date of this Prospectus was 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 Agreement, the SUBI
Supplement and the Servicing Supplement. However, there can be no assurance in
this regard.
RISKS ASSOCIATED WITH YEAR 2000 DATE CONVERSION
TMCC, together with its parent TMS, has developed an action plan to
identify, evaluate and implement changes to information technology systems ("IT
systems"), including mainframe, AS/400, networks and personal computers to
address potential year 2000 systems malfunctions associated with time sensitive
programs that may not properly recognize the year 2000. In addition, the action
plan addresses year 2000 compliance of non-information technology systems
("non-IT systems"), such as security systems, automated access readers and other
machinery and equipment. The assessment of mainframe and AS/400 applications has
been completed and the conversion and testing phases are underway. Completion of
the assessment of networks, personal computers and non-IT systems and the
testing and validation phases of all IT and non-IT systems is expected by fiscal
year end 1999. Independent consultants have been retained to assist in the
development and execution of the year 2000 action plan. TMCC has initiated
communications with dealers, financial institutions, and suppliers to determine
the extent of risk created by those third parties' failure to remediate their
own year 2000 issues. At present, TMCC cannot determine the effect of failed
remediation efforts by these outside parties.
Costs associated with the year 2000 systems and software modifications are
expensed as incurred. The total estimated costs associated with the required
modifications to TMCC's IT and non-IT systems are not expected to have a
material impact on TMCC's results of operations, liquidity or capital resources.
The inability of TMCC or TMCC's outside parties to address the necessary
year 2000 modifications of IT and non-IT systems could result in a significant
adverse effect on TMCC's operations and financial results including the
inability to collect receivables, pay obligations, process new business and
occupy facilities. Any such inability could have a material adverse effect on
Certificateholders. TMCC is in the process of developing a contingency plan in
the case of failure of the year 2000 remediation efforts. Completion of the
contingency plan is expected by the end of fiscal year 1999.
The foregoing description contains various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
TMCC's expectations or beliefs concerning future events, including the
following: that completion of the assessment of networks, personal computers and
non-IT systems and validation phases on all IT and non-IT systems in connection
with year 2000 issues is expected by fiscal year end 1999; that the total cost
associated with required year 2000 issues is not expected to have a material
impact on TMCC's results of operations, liquidity or capital resources; and that
completion of the contingency plan relating to year 2000 issues is expected by
the end of fiscal year 1999.
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TMCC cautions that these statements are further qualified by important
factors that could cause actual results to differ materially from those in the
forward looking statements, including, without limitation: the failure of TMCC's
action plan to resolve timely year 2000 issues due to non-performance by outside
contractors, the failure of third parties to remediate their year 2000 issues or
other factors and the failure of TMCC to develop an adequate contingency plan
relating to year 2000 issues. Results actually achieved thus may differ
materially from expected results included in these statements.
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 Certificate 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 (which does not
include rights to proceeds of the Residual Value Insurance Policies) 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 the
Certificateholders' Account, (iii) the Trust's rights under the Swap Agreement
and (iv) the Trustee's rights as a third-party beneficiary to the Servicing
Agreement and the SUBI Supplement. 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 have an interest only in the SUBI Certificate and
the related SUBI Assets transferred to it by the Transferor, and will not have a
direct ownership interest in any Leased Vehicles. To the extent described herein
the Swap Counterparty will have a right to payment from the foregoing assets and
proceeds thereof superior to the rights of the Certificateholders. 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) as proceeds of the SUBI Certificate with respect to
all allocations, applications and payments in respect of the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate Balance and the Adjusted
Class A-3 Certificate Balance, as such amounts with respect to interest are
exchanged pursuant to the Swap Agreement, for payment of amounts due on the
Class A Certificates held thereby. In such event, certain factors, such as the
fact that the Trust will not have a direct ownership interest in the Contracts
or Leased Vehicles or a perfected security interest in the Leased Vehicles
(which will be titled in the name of the Titling Trust or Titling Trustee) may
limit the amounts realized to amounts less than the Discounted Principal
Balances of the related Contracts.
Defaults or delinquencies by lessees or depreciation in the value of the
related Leased Vehicles may cause the amounts actually realized as Collections
to be less than the amounts due from the related lessees, and may cause delays
in collection of such payments as a result of which investors in the Class A
Certificates may experience losses on the Class A Certificates. 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".
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THE SUBI
The SUBI will be issued pursuant to the 1998-C 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
the Contracts, the Leased Vehicles and all proceeds or payments related thereto
received or due on or after the related Cutoff Date and 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 and Certificate
Principal 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 (excluding rights
to proceeds of the Residual Value Insurance Policies, which rights will be
retained by 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 as of October 1, 1996,
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 may not: (i) issue interests 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, the SUBI Supplement or supplements
relating to Other SUBIs; (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
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Certificates, Certificateholders and Certificate Owners will be deemed to waive
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 are 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 specified 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 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, all Certificateholders and Certificate Owners will be deemed to waive
claims 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 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, all rights thereunder including the right to
receive proceeds of dealer repurchase obligations under the related dealer
agreements, and all monies due from lessees thereunder; (ii) the automobiles and
light duty trucks related 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; (iv) 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 (v) 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 or the Titling Trustee.
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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 or Titling Trustee 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 assignment of lease contracts to 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 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) 787-3541.
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 September 30, 1998,
TMCC had 34 branches in various locations in the United States, a branch in the
Commonwealth of Puerto Rico and a centralized customer service center in Iowa.
In addition to the Transferor, TMCC has one wholly owned subsidiary engaged,
through subsidiaries organized in various jurisdictions, 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
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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, 1998, September 30, 1997 and September 30, 1996, TMCC
had approximately 724,000, 649,000 and 624,000 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 $15 billion, $13 billion and $12 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 is
subject to the informational requirements of the Exchange Act. SEE "Documents
Incorporated by Reference".
TMCC'S LEASING OPERATIONS
LEASE CONTRACT UNDERWRITING PROCEDURES
TMCC's lease contract 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.
ESTABLISHMENT OF RESIDUAL VALUE
TMCC conducts a broad analysis of different factors that may affect the
residual values of the Toyota and Lexus vehicles that it leases. In setting
residual values, TMCC analyzes its historical lease portfolio performance
(including the wholesale value performance of terminating leases, vehicle return
rates and gain/loss performance), current used vehicle market conditions,
transaction prices, future product and price information from TMS and other
manufacturers when available and published residual value percentages from
Automotive Lease Guide ("ALG") and from other lessors. ALG is an independent
publisher of vehicle residual value percentages and is frequently used for
comparison purposes by the vehicle leasing industry. In addition, starting in
February 1993 for Lexus vehicles and March 1994 for Toyota vehicles, TMCC began
using a statistically-based residual value forecasting model developed by TMCC
and DRI/ McGraw-Hill, Inc. as one of the factors it considers in setting
residual values. This model incorporates a variety of economic and
automotive-related variables to forecast residual values and is updated
quarterly.
TMCC prepares residual value tables based upon the results of the foregoing
analysis and distributes them to its branches and franchised Dealers quarterly.
The tables provide residual value percentages for each new vehicle available
from Toyota and Lexus for lease terms of 24 through 60 months in 3 month
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increments. If a term and corresponding residual value percentage is not
published, the Dealer will use the percentage for the next longer term. The same
residual value percentages are used to set maximum allowed residual values
nationwide.
The maximum allowable residual value with respect to a new leased vehicle is
calculated by multiplying the appropriate residual value percentage from the
most recent quarterly table by the total of:
(1) the manufacturer's suggested retail price for the vehicle; plus
(2) the manufacturer's suggested retail price of certain TMCC-approved
dealer or manufacturer installed value-added optional equipment; plus
(3) the difference between the total manufacturer's suggested retail price
of each individual option contained in a value package and the discounted
price of the value package (the sum of (1), (2) and (3), the "MSRP").
In November 1998, TMCC implemented a new residual value setting policy for
new Toyota vehicles. Under the new policy guidelines, residual values with
respect to new vehicles will be calculated based on the sum of (i) the
manufacturer's suggested retail price for the base vehicle multiplied by the
applicable residual value percentage and (ii) the applicable predetermined value
for certain approved accessories and optional equipment as set by TMCC. Under
this new policy, the residual values for certain base vehicles will be higher
than under the previous policy, while the residual value for most optional
accessories will either be lower or zero for purposes of calculating the
aggregate residual values for leased vehicles.
No assurance can be given as to the impact of this new policy on the return
or loss rates with respect to TMCC's portfolio of retail lease contracts. None
of the Initial Contracts and none of the Subsequent Contracts have been
originated under this new policy. None of the statistical information included
in this Prospectus reflects lease contracts that were originated under this new
policy.
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 and
TMCC's centralized collections department in Torrance, California (which
collects recoveries of deficiencies after lease termination). 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 employs a behavioral scoring method of
collection, which statistically analyzes past performance data to predict future
payment behavior, which is used as the basis for determining when to begin
collection efforts with respect to past due accounts. TMCC recently implemented
the behavioral scoring method of collection in an effort to improve its
servicing, including its management of individual lease performance and
collection efforts.
Occasionally, situations occur in the collection process when a lessee has
become delinquent and is willing but unable to bring the related account current
(e.g., 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 specific guidelines, one or more payments
under such 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
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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. 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 by
more than sixteen months with the inclusion of any deferrals) 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 collection personnel make every commercially reasonable
effort to preserve a lease as a performing lease. As described above, TMCC has
implemented behavioral scoring for the purposes of improving its servicing
efforts, including management of individual lease performance and collection
results. However, if a delinquency cannot be satisfactorily resolved through
deferrals or otherwise, the decision to repossess a leased vehicle generally
will be made before a payment is more than 60 days past due. Lessees are
typically notified of repossession on the day thereof, or within two days after
repossession, and are informed 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.
VEHICLE DISPOSITION PROCESS
Leased Vehicles may be returned to TMCC rather than being purchased by the
lessee or a dealer at maturity or upon early termination, or may be repossessed
upon default. Currently, TMCC disposes of off-lease vehicles primarily through
regional automobile auctions. However, TMCC has recently instituted a program in
which selected off-lease vehicles are offered at set prices to Toyota and Lexus
dealers, as applicable, through an Internet site. The prices for vehicles
offered through the Internet program are set by TMCC to approximate the prices
TMCC would expect to receive at auction and may be higher or lower than the
Residual Value of the Leased Vehicle. The primary objectives of the Internet
sales program are to reduce the time between vehicle return and ultimate
disposition and to broaden the number of prospective buyers.
Off-lease Vehicles are returned to a Toyota or Lexus dealer who is
responsible for reporting the return to the relevant TMCC branch and to provide
a completed TMCC approved vehicle condition checklist. The branch arranges for
transportation of the vehicle to an auction site. Based upon the vehicle
condition checklist prepared by the dealer, the branch will determine whether to
arrange for a third party inspection of the Leased Vehicle at the auction site.
In addition, TMCC maintains a representative at each auction site who also may
order an inspection, if necessary. If an inspection is necessary and the
inspection determines that there is excess wear and tear, the lessee is
responsible for payment of these charges.
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TMCC will make repairs and refurbishments to a vehicle only if the
refurbishment or repairs are reasonably expected to increase the net proceeds
received on disposition. Generally, this practice results in only a limited
amount of basic repairs (E.G., replacement of a battery so that the vehicle will
run) and refurbishment (typically not more than an ordinary "detailing") being
performed. The return of any security deposit to a lessee will be net of any
appropriate charges for these costs and for excess mileage charges. However,
TMCC does not always require a security deposit under its Contracts.
In most cases, vehicles are transported to the auction site within
approximately 10 days of TMCC receiving notice that the vehicle has been
returned to a dealer, and the disposition of the vehicle at auction typically
occurs within approximately four weeks thereafter. However, various
circumstances can cause these periods to be longer than the norm. For example,
the failure of a dealer to report timely the return of a vehicle, the bankruptcy
of a lessee, a delay in obtaining title documentation or the decision to send a
vehicle to a more distant auction site (as described below) may delay sale of
the vehicle beyond the typical time frame. In addition, the TMCC sales
representative may decide to delay the sale of a vehicle if the bids received at
auction are not sufficient.
The regional auctions currently used by TMCC are "open" auctions, meaning
that any licensed dealer (not only Toyota and Lexus dealers) may participate.
Although a TMCC branch will typically send vehicles to the same regional auction
site(s), occasionally vehicles are sent to a more distant location if a higher
auction price is reasonably expected to be obtained after taking into account
any increased transportation costs. Currently, the auctions typically receive a
fixed fee per vehicle for their services in addition to the costs of any
transportation, repairs and refurbishment performed by them. TMCC estimates that
the average expenses associated with auction sales have ranged from $150 to $300
per vehicle.
The TMCC sales representative at the auction site, in coordination with TMCC
headquarters staff, is responsible for handling TMCC's decisions with respect to
the vehicles sold at the auction, including arranging for inspections,
authorizing the approved repairs and refurbishment and determining whether bids
received at auction should be accepted.
VEHICLE MAINTENANCE: EXCESS WEAR AND TEAR AND EXCESS MILEAGE
Each lease contract provides that the lessee is responsible for all
maintenance. repair, service and operating expenses of the leased vehicle. In
addition, the lessee is responsible under the related contract for all damage to
the leased vehicle and for its loss, seizure or theft. At the scheduled maturity
date of the contract, if the lessee does not purchase the leased vehicle, the
contract requires the lessee to pay TMCC the estimated cost to repair any damage
to the vehicle which is "excessive wear and use". Excessive wear and use
generally includes, but is not limited to: (a) inoperative mechanical and
electrical parts; (b) damage to the body, lights, trim or paint; (c) damaged,
broken or tinted glass; (d) torn, damaged or stained interior; (e) damage from
flood, water, hail or sand; (f) damage from removal of equipment or signs placed
on the vehicle; (g) missing equipment, parts and accessories; and (h) damaged,
excessively worn or missing tires.
Each lease contract also specifies a selected mileage level per year which
is one of the factors taken into account by TMCC in establishing the residual
value for a leased vehicle. If the lessee does not purchase the leased vehicle
at the end of the lease term, the contract requires the lessee to pay TMCC an
excess mileage charge generally equal to $0.10 (for leases of Toyota vehicles)
or $0.15 (for leases of Lexus vehicles) for each mile the vehicle has been
driven in excess of the selected mileage level.
DELINQUENCY, REPOSSESSION AND LOSS DATA
The following tables set forth certain delinquency, repossession and loss
data with respect to the entire automobile and light duty truck retail lease
contract portfolio owned or serviced by TMCC, including those Contracts
originated in the Trust States during the periods shown, as of and for the
periods shown.
48
<PAGE>
The data presented in the following tables are for illustrative purposes
only. Delinquency, repossession and loss experience may be influenced by a
variety of economic, social, geographic and other factors beyond the control of
TMCC which may adversely affect the experience of the portfolio. There is no
assurance that the Trust's delinquency, repossession and loss experience with
respect to its automobile and light duty truck retail closed-end lease contracts
and the related leased vehicles in the future, or the experience with respect to
the Contracts and the Leased Vehicles, will be similar to that set forth below.
ENTIRE TMCC PORTFOLIO
RETAIL VEHICLE LEASE CONTRACT DELINQUENCY INFORMATION
($ IN THOUSANDS)
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
---------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
------------------------- ------------------------- ------------------------- ------------------------
CONTRACTS UNITS % UNITS % UNITS % UNITS %
- ------------------------ ------------ ----------- ------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dollar Amount of Net
Receivables
Outstanding(1)........ $ 14,818,677 100.00% $ 13,010,832 100.00% $ 12,023,192 100.00% $ 9,382,655 100.00%
Ending Number of Lease
Contracts
Outstanding........... 723,917 100.00% 649,493 100.00% 624,184 100.00% 483,178 100.00%
Number of Delinquent
Lease Contracts(2)(3)
30-59 Days............ 7,954 1.10% 9,347 1.44% 7,000 1.12% 3,865 0.80%
60-89 Days............ 534 0.07% 681 0.10% 497 0.08% 199 0.04%
90 Days or more....... 217 0.03% 215 0.03% 134 0.02% 66 0.01%
Total............... 8,705 1.20% 10,243 1.58% 7,631 1.22% 4,130 0.85%
<CAPTION>
1994
------------------------
CONTRACTS UNITS %
- ------------------------ ----------- -----------
<S> <C> <C>
Dollar Amount of Net
Receivables
Outstanding(1)........ $ 7,597,071 100.00%
Ending Number of Lease
Contracts
Outstanding........... 387,066 100.00%
Number of Delinquent
Lease Contracts(2)(3)
30-59 Days............ 1,880 0.49%
60-89 Days............ 113 0.03%
90 Days or more....... 41 0.01%
Total............... 2,034 0.53%
</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 September 30, 1998, approximately
217 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.
49
<PAGE>
ENTIRE TMCC PORTFOLIO
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
($ IN THOUSANDS, EXCEPT AS NOTED)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Ending Number of Lease Contracts Outstanding........ 723,917 649,493 624,184 483,178 387,066
Average Number of Lease Contracts Outstanding....... 686,705 636,839 553,681 435,122 315,404
Repossessions:
Number of Repossessions........................... 13,594 12,513 8,440 6,149 3,758
Number of Repossessions as a Percentage of Ending
Number of Lease Contracts Outstanding........... 1.88% 1.93% 1.35% 1.27% 0.97%
Number of Repossessions as a Percentage of Average
Lease Contracts Outstanding..................... 1.98% 1.96% 1.52% 1.41% 1.19%
Losses:
Ending Dollar Amount of Net Receivables
Outstanding(1).................................. $14,818,677 $13,010,832 $12,023,192 $9,382,655 $7,597,071
Average Dollar Amount of Net Receivables
Outstanding(2).................................. $13,914,755 $12,517,012 $10,702,924 $8,489,863 $6,106,568
Net Repossession Losses(3)........................ $ 66,171 $ 57,550 $ 34,389 $ 23,592 $ 13,103
Average Net Repossession Loss per Liquidated
Contract(3)(4).................................. $ 4,868 $ 4,599 $ 4,075 $ 3,837 $ 3,487
Net Repossession Losses as a Percentage of Average
Net Receivables Outstanding(2).................. 0.48% 0.46% 0.32% 0.28% 0.21%
</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 and are net of
recoveries.
(4) Dollars not in thousands.
50
<PAGE>
ENTIRE TMCC PORTFOLIO
RESIDUAL VALUE LOSS EXPERIENCE(1)
($ IN THOUSANDS, EXCEPT AS NOTED)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total Number of Lease Contracts Scheduled to Terminate.... 228,370 263,488 95,401 54,258 35,130
Number of Returned Vehicles Sold by TMCC(2)............... 92,102 46,900 13,162 5,787 3,950
Full Term Return Ratio(3)................................. 40.3% 17.8% 13.8% 10.7% 11.2%
Total Losses on Returned Vehicles Sold by TMCC(4)......... $ 205,919 $ 85,628 $ 31,674 $ 11,739 $ 3,225
Average Loss Per Returned Vehicle Sold by TMCC(5)......... $ 2,236 $ 1,826 $ 2,406 $ 2,029 $ 816
Losses as a Percentage of Residual Values of Returned
Vehicles Sold by TMCC(6)................................ 13.1% 10.3% 10.5% 9.6% 6.2%
Losses as a Percentage of Residual Values of Scheduled
Terminations(7)......................................... 6.1% 2.6% 2.5% 1.8% 1.0%
</TABLE>
- ------------
(1) To the extent that average terms vary over time, the residual value loss
experience for the periods in the table may not be fully comparable.
(2) Number of Matured Contracts for which vehicles had been returned to and sold
by TMCC.
(3) The ratio of returned vehicles sold during the stated period over vehicles
scheduled (as of their origination dates) to terminate during the stated
period expressed as a percentage.
(4) Losses include expenses incurred to dispose of vehicles but exclude certain
amounts received after the sale and disposition of the vehicle.
(5) Dollars not in thousands.
(6) The ratio of total losses on returned vehicles sold by TMCC during the
stated period over the Residual Values of such vehicles expressed as a
percentage.
(7) The ratio of total losses on returned vehicles sold by TMCC during the
stated period over the Residual Values of all vehicles under lease contracts
scheduled to terminate during the stated period expressed as a percentage.
THE CONTRACTS
GENERAL
The Initial Contracts will consist of a pool of 34,185 closed-end retail
lease contracts, having an aggregate Outstanding Principal Balance as of the
Cutoff Date of $781,660,860.79, and an aggregate Discounted Principal Balance as
of such date of $749,988,732.51, selected from the Titling Trust's portfolio of
closed-end automobile and light duty truck retail lease contracts. During the
Revolving Period, Principal Collections (and reimbursements of Loss Amounts and
Certificate Principal 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,
Applications and Payments -- 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. Principal
Collections (and reimbursements of Loss Amounts) will first be reinvested in the
eligible lease contract with the earliest origination date, then in the eligible
lease contract with the next earliest origination date and so
51
<PAGE>
forth. The outstanding Other SUBIs whose revolving periods are scheduled to end
on April 1, 1999 and August 1, 1999, respectively, will have priority over the
SUBI with respect to the allocation of additional lease contracts and leased
vehicles assigned to the Titling Trust by Dealers that meet the criteria
specified in the documentation relating to such outstanding Other SUBIs.
However, the SUBI will be allocated Subsequent Contracts and Subsequent Leased
Vehicles meeting the criteria specified herein before additional contracts and
leased vehicles assigned to the Titling Trust by Dealers are assigned to any
subsequently created Other SUBI. Moreover, as of the date hereof, the Titling
Trust Assets included lease contracts and leased vehicles adequate to fulfill
all obligations with respect to the allocation of lease contracts and leased
vehicles to the Other SUBIs as well as 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 represents
the original principal balance of such Contract ("Capitalized Cost") (which may
exceed the MSRP), plus a lease charge which is based on the Lease Rate.
Substantially all of the Contracts 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. The balance of
the Contracts provide for a single payment at origination sufficient to amortize
the Capitalized Cost of the Leased Vehicle on the same basis as discussed above.
Each Residual Value is established at the origination of the lease (based on
instructions provided to the Dealers by TMCC) and represents the estimated
wholesale market value at the end of the scheduled lease term.
At the 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 Contracts involving 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 not aware of any bias in the selection of such Contracts that
would cause the delinquencies or losses on such Contracts to be materially worse
than other automobile and light duty truck retail closed-end 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
52
<PAGE>
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 prior to the scheduled lease term by paying certain miscellaneous
charges, and the Payoff Amount described below and all scheduled Monthly
Payments owed under the Contract through its original termination date.
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".
Under the Contracts, upon termination before maturity where the lessee is
not in default, does not exercise its option to purchase the Leased Vehicle, and
does not pay all remaining scheduled Monthly Payments required thereunder
through the original termination date, 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. 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 due
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 Agreement, TMCC will represent that each Leased Vehicle has been
assigned a Residual Value that (i) does not exceed an amount established by TMCC
consistent with its policies and practices, (ii) was established at the
origination of the related Contract (based on instructions provided by TMCC to
the Dealers), and (iii) represented, as of its date of origination, the
estimated wholesale market value of the Leased Vehicle at its original scheduled
termination date.
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 also may be less than the outstanding Discounted Principal Balance)
of such Contract. In the event that a Contract reaches the date on which the
vehicle is scheduled to be returned, 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 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, 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.
53
<PAGE>
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, on or after November 24, 1996, in the
case of the Initial Contracts, and on or before September 16, 1998, in the case
of the Subsequent Contracts; (iii) has an originally scheduled termination date
on or after August 23, 1999, and no later than August 24, 2003, in the case of
the Initial Contracts, and no later than October 31, 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 Lease Rate implicit in the
Contract calculated on a constant yield basis); (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.
COMPOSITION OF INITIAL CONTRACTS
<TABLE>
<S> <C>
Aggregate Outstanding Principal Balance as of Cutoff Date........... $781,660,860.79
Aggregate Discounted Principal Balance as of Cutoff Date............ $749,988,732.51
Aggregate Net Investment Value as of Cutoff Date.................... $749,988,732.51
Number of Initial Contracts......................................... 34,185
Average Outstanding Principal Balance as of Cutoff Date(2).......... $22,865.61
Average Discounted Principal Balance as of Cutoff Date.............. $21,939.12
$6,635.00 to
Range of Original Principal Balances of Initial Contracts(2)........ $68,258.84
Weighted Average Lease Rate(1)(2)................................... 6.81%
Range of Lease Rates(2)............................................. 1.09% to 13.77%
Weighted Average Original Number of Monthly Payments(1)............. 38.3 months
Range of Original Number of Monthly Payments........................ 18 months to 60 months
Weighted Average Remaining Number of Monthly Payments(1)............ 33.8 months
Range of Remaining Number of Monthly Payments....................... 9 months to 57 months
Average Original Residual Value(2).................................. $15,037.09
$1,551.00 to
Range of Original Residual Values(2)................................ $41,199.20
Aggregate of Residual Values as a Percentage of Aggregate Net
Investment Value as of Cutoff Date................................ 68.54%
Percentage of Lease Contracts for Lexus Vehicles (by Discounted
Principal Balance as of the Cutoff Date).......................... 30.94%
Percentage of Lease Contracts for Toyota Vehicles (by Discounted
Principal Balance as of the Cutoff Date).......................... 69.06%
Percentage of Lease Contracts for New Vehicles (by Outstanding
Principal Balance)(2)............................................. 98.16%
Percentage of Lease Contracts for Used Vehicles (by Outstanding
Principal Balance)(2)............................................. 1.84%
</TABLE>
- ----------
(1) Weighted by Outstanding Principal Balance as of the Cutoff Date.
(2) Without giving effect to discounting for calculation of Discounted Principal
Balances.
54
<PAGE>
INITIAL CONTRACTS
<TABLE>
<CAPTION>
AVERAGE MINIMUM MAXIMUM
------------ ---------- ------------
<S> <C> <C> <C>
Original Principal Balance............................................... $ 23,803.81 $ 6,635.00 $ 68,258.84
Outstanding Principal Balance(1)(2)...................................... $ 22,865.61 $ 6,406.01 $ 65,086.34
Residual Value(1)(2)..................................................... $ 15,037.09 $ 1,551.00 $ 41,199.20
Lease Rate(1)(3)......................................................... 6.81% 1.09% 13.77%
Seasoning (months)(1)(3)................................................. 4.5 3 24
Remaining Term (months)(1)(3)............................................ 33.8 9 57
</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.
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
NUMBER OF NUMBER OF INITIAL CUTOFF AGGREGATE CUTOFF
INITIAL INITIAL DATE OUTSTANDING DATE OUTSTANDING
LEASE RATE RANGE CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----------------------------------------- --------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
less than 2.00%.......................... 7 0.02% $ 102,990.30 0.01%
2.00% to 2.99%........................... 265 0.78 4,489,212.34 0.57
3.00% to 3.99%........................... 1,774 5.19 28,443,780.02 3.64
4.00% to 4.99%........................... 5,264 15.40 95,751,879.32 12.25
5.00% to 5.99%........................... 8,855 25.90 180,913,479.67 23.14
6.00% to 6.99%........................... 4,432 12.96 104,930,919.18 13.42
7.00% to 7.99%........................... 4,813 14.08 152,865,227.60 19.56
8.00% to 8.99%........................... 6,787 19.85 166,747,793.57 21.33
9.00% to 9.99%........................... 820 2.40 21,251,215.71 2.72
10.00% to 10.99%......................... 433 1.27 10,334,437.67 1.32
11.00% to 11.99%......................... 274 0.80 6,189,675.47 0.79
12.00% to 12.99%......................... 195 0.57 4,234,182.03 0.54
13.00% to 13.99%......................... 266 0.78 5,406,067.91 0.69
------ ------ ----------------- ------
Total(1)............................. 34,185 100.00% $ 781,660,860.79 100.00%
------ ------ ----------------- ------
------ ------ ----------------- ------
</TABLE>
- ---------
(1) Percentages may not add to 100.00% due to rounding.
55
<PAGE>
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
AGGREGATE
PERCENTAGE OF CUTOFF DATE
NUMBER OF NUMBER OF CUTOFF DATE OUTSTANDING
INITIAL INITIAL OUTSTANDING PRINCIPAL
YEARS OF MATURITY CONTRACTS CONTRACTS PRINCIPAL BALANCE BALANCE
- ------------------------------------------ --------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
1999...................................... 181 0.53% $ 3,031,790.62 0.39%
2000...................................... 1,562 4.57 35,855,469.85 4.59
2001...................................... 28,590 83.63 639,700,851.00 81.84
2002...................................... 1,809 5.29 48,396,761.53 6.19
2003...................................... 2,043 5.98 54,675,987.79 6.99
------ ------ ----------------- ------
Total(1).............................. 34,185 100.00% $ 781,660,860.79 100.00%
------ ------ ----------------- ------
------ ------ ----------------- ------
</TABLE>
- ---------
(1) Percentages may not add to 100.00% due to rounding.
DISTRIBUTION OF THE INITIAL CONTRACTS BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE
PERCENTAGE OF CUTOFF DATE
NUMBER OF NUMBER OF CUTOFF DATE OUTSTANDING
INITIAL INITIAL OUTSTANDING PRINCIPAL
STATE OF ORIGINATION(1) CONTRACTS CONTRACTS PRINCIPAL BALANCE BALANCE
- ------------------------------------------ --------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
California................................ 19,447 56.89% $ 450,591,537.28 57.65%
Ohio...................................... 6,318 18.48 125,355,080.07 16.04
Pennsylvania.............................. 3,824 11.19 80,941,030.00 10.36
Michigan.................................. 2,895 8.47 62,865,779.67 8.04
Florida................................... 1,701 4.98 61,907,433.77 7.92
------ ------ ----------------- ------
Total(2).............................. 34,185 100.00% $ 781,660,860.79 100.00%
------ ------ ----------------- ------
------ ------ ----------------- ------
</TABLE>
- ---------
(1) By Dealer location.
(2) Percentages may not add to 100.00% 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) originally scheduled termination
date; (iii) Monthly Payment; (iv) original capitalized cost; (v) Outstanding
Principal Balance and Discounted Principal Balance as of the 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
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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 Titling Trustee (or a properly completed application for such title has
been submitted to the appropriate titling authority); (l) is a closed-end lease
that requires all contract 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 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 extended by more than sixteen months
with the inclusion of any deferrals) 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 reimbursed Loss Amounts and Certificate Principal Loss Amounts)
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 36 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 original principal balances of the Contracts
(including the Subsequent Contracts), in each case as of the related dates of
origination, is not greater than 70%. 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
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foregoing payment obligation will survive any termination of TMCC as Servicer
under the Servicing Agreement.
MATURITY AND YIELD CONSIDERATIONS
The weighted average life of each Class of Certificates will depend
primarily upon whether or not a Swap Termination occurs and whether the Adjusted
Class A-1 Certificate Balance, Adjusted Class A-2 Certificate Balance, Adjusted
Class A-3 Certificate Balance or Adjusted Class B Certificate Balance, as the
case may be, is reduced to zero on the related Targeted Maturity Date (including
whether or not any Maturity Advance is made to cause such result). Whether the
amount of Principal Collections received prior to a Targeted Maturity Date will
be sufficient to reduce the Adjusted Certificate Balance of any Class of
Certificates to zero will be determined by the default, prepayment, loss,
liquidation and extension and deferral experience with respect to the Contracts,
which cannot be predicted. In the event the Adjusted Class A-1 Certificate
Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class A-3 Certificate
Balance or Adjusted Class B Certificate Balance, as the case may be, is not
reduced to zero on the related Targeted Maturity Date, the rate at which
principal is paid to related Certificateholders thereafter will depend upon the
amount of scheduled and unscheduled payments on or in respect of the Contracts
and the Leased Vehicles (including liquidations of the Contracts and payment of
the Residual Values of the related Leased Vehicles) or payment of any
Accelerated Principal Distribution Amount, the rate at which such payments are
paid through to such Certificateholders pursuant to the payment priorities
described herein and whether or not a Swap Termination or purchase of the SUBI
Certificate by the Transferor occurs thereafter. If a Swap Termination occurs
and the Certificates are to be retired prior to their Targeted Maturity Dates,
the related Certificateholders may not be able to reinvest the related payments
of principal received at yields as high as the applicable Class A-1 Rate, Class
A-2 Rate, Class A-3 Rate, Class B Adjustable Rate or Class B Fixed Rate, as the
case may be. In addition, if a Swap Termination occurs, the amount of and
liability for any swap termination payment may affect the amounts available for
payment to the holders of any such Certificates.
In general, the rate of prepayments and defaults on the Contracts may be
influenced by a variety of economic, social, geographic and other factors, such
as interest rates, the unemployment rate, the inflation rate and the demand for
and supply of new and used cars. 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 automobile and
light duty truck retail lease contracts in its portfolio that were scheduled to
mature during fiscal years 1997 and 1998, approximately 48% and 43%,
respectively, terminated more than 30 days prior to maturity as a result of
voluntary prepayments as to which the leased vehicles were purchased by the
related lessee or a dealer or repossession of the leased vehicles due to default
by the lessees under the related lease contracts. 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, 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 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 or
Inventory Advance will be made or, if made, will be sufficient to pay in full
any Class on the related Targeted Maturity Date and, therefore, any Class may
mature significantly later than its Targeted Maturity Date.
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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 Accumulation Period until the related Targeted Maturity Date or the
occurrence of a Swap Termination, after which each Certificateholder can
determine the outstanding balance of the Certificate held thereby by multiplying
the original denomination of the Certificateholder'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
free of charge at the office of the paying agent in Luxembourg or 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, the Servicing Supplement,
and the Indenture are incorporated by reference in and made a part of this
Prospectus. 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. Copies of such documents
may be obtained as described under "Documents Incorporated by Reference".
GENERAL
Each Class A Certificate generally will represent the right to receive
quarterly payments of interest at the applicable Class A-1 Rate, Class A-2 Rate
or Class A-3 Rate and, to the extent described herein, payments in respect of
principal thereof on the related Targeted Maturity Date and, if the related
Adjusted Class Certificate Balance is not reduced to zero, payments of principal
and interest on each subsequent relevant Monthly Allocation Date. Allocations
with respect to such amounts, however, will be made monthly, pursuant to the
priorities described below under "-- Allocations, Applications and Payments --
ALLOCATIONS AND APPLICATIONS OF COLLECTIONS IN RESPECT OF INTEREST". In
addition, payments of interest to Class A Certificateholders and any Adjustable
Rate Class B Certificateholders generally will be funded by and limited to
amounts payable by the Swap Counterparty in exchange for amounts allocable,
applicable and payable by the Trust and based on calculations of the portions of
Available Interest, net investment income on certain Permitted Investments,
amounts on deposit in the Reserve Fund and Transferor Amounts that are allocable
and applicable in respect of the Class A-1 Swap Interest Amount, Class A-2 Swap
Interest Amount, Class A-3 Swap Interest Amount or Class B Swap Interest Amount
and Class A-1 Swap Interest Shortfall Amounts, Class A-2 Swap Interest Shortfall
Amounts, Class A-3 Swap Interest Shortfall Amounts, Class B Swap Interest
Shortfall Amounts or Class B Interest Carryover Shortfall Amounts. Except as
described under "-- Termination of the Trust; Retirement of the Certificates",
the Certificates will be "sequential pay" certificates meaning that no principal
allocations, applications or
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payments will be made on the Class A-2 Certificates until the Adjusted Class A-1
Certificate Balance has been reduced to zero, no principal allocations,
applications or payments will be made on the Class A-3 Certificates until the
Adjusted Class A-2 Certificate Balance has been reduced to zero, and no
principal allocations, applications or payments will be made on the Class B
Certificates until the Adjusted Class A-3 Certificate Balance has been reduced
to zero.
The Class B Certificates may be comprised of one or more Classes, which
shall be pari passu with each other. Any Fixed Rate Class B Certificates shall
not have the benefit of the Swap Agreement and shall bear interest at fixed
rates while any Adjustable Rate Class B Certificates shall have the benefit of
the Swap Agreement and shall bear interest at adjustable rates. Allocations,
applications and payments in respect of interest on and principal of the Class B
Certificates will be subordinated to the extent described herein. Because
allocations in respect of interest will be made monthly while interest payments
generally will be made quarterly, it is possible that the Class B Certificates
will receive allocations and payments with respect to interest for a quarterly
period even though the Class A Certificates have not been allocated the full
amount of the related Notional Interest Accrual Amounts, Swap Interest Shortfall
Amounts, Loss Amounts and Certificate Principal Loss Amounts with respect to all
monthly periods included in the Interest Payment Period.
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 "-- Calculation of Investor Percentage and
Transferor Percentage". The Transferor Interest will be subordinated to the
Investor Interest to the extent described herein, and on any day will equal the
difference between the Aggregate Net Investment Value and the Adjusted Investor
Balance. SEE "-- Certain Payments to the Transferor".
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 Class A Certificates are issued in definitive form (the
"Definitive Certificates") 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 "-- Book-Entry Registration" and "--
Definitive Certificates" below.
GOVERNING LAW
The Certificates and the Agreement will be governed by the laws of the State
of California.
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 Certificate and the SUBI Assets
evidenced thereby (which exclude the rights retained by the Transferor to
proceeds of the Residual Value Insurance Policies that are SUBI Assets).
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.
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
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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 (other than 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 be reallocated as UTI Assets no longer
constituting SUBI 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, the Servicer will make the calculations
necessary to allow the Trustee to allocate all Interest Collections and
Principal Collections collected or received in respect of SUBI Assets during the
related Collection Period between the Investor Interest and the Transferor
Interest, based on the applicable Investor Percentage and Transferor Percentage.
In addition, similar calculations 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 (less any related Net Charged-off Vehicle Proceeds) (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 (i)
with respect to 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 Investor Balance on
the last day of the immediately preceding Collection Period (or, in the case of
the first Collection Period, the Initial Investor 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, the Cutoff Date) and (ii) with respect to Principal Collections, the
percentage equivalent of a fraction (not to exceed 100%) the numerator of which
is the Adjusted Investor 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 that commenced during the Revolving Period. The "Transferor Percentage"
will in all cases be equal to 100% minus the applicable Investor Percentage.
As a result of the foregoing, Interest Collections will be allocated based
on the relationship of the sum of the Adjusted Class A-1 Certificate Balance,
the Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3 Certificate
Balance and the Adjusted Class B Certificate Balance to the Aggregate Net
Investment Value, which relationship may change from Collection Period to
Collection Period. As described above, the Investor Percentage applicable to
allocations of Principal Collections after the Revolving Period will become
fixed 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
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following amounts (the "Transferor Amounts"): (i) if such Monthly Allocation
Date is during the Revolving Period, the Transferor Percentage of Interest
Collections and (ii) if such Monthly Allocation Date is after the Revolving
Period, 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, in each case subject to the subordination
of the Transferor Interest described herein. Amounts to be released to the
Transferor pursuant to clause (13) under "-- Allocations, Applications and
Payments -- ALLOCATIONS AND APPLICATIONS OF COLLECTIONS" below 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 and applied or paid with respect to the Investor Interest as described
under "-- Allocations, Applications and Payments -- ALLOCATIONS AND APPLICATIONS
OF COLLECTIONS" have been allocated and applied or paid 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 the Class A-1
Notional Interest Accrual Amount, the Class A-2 Notional Interest Accrual
Amount, the Class A-3 Notional Interest Accrual Amount, any Class A-1 Interest
Carryover Shortfall Amount, any Class A-2 Interest Carryover Shortfall Amount,
any Class A-3 Interest Carryover Shortfall Amount, the Class B Notional Interest
Accrual Amount, any Adjustable Rate Class B Interest Carryover Shortfall Amount,
the Class B Fixed Rate Interest Accrual Amount, any Fixed Rate Class B Interest
Carryover Shortfall Amount or any Loss Amounts or Certificate Principal Loss
Amounts allocable to the Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance, the Adjusted Class A-3 Certificate Balance or the
Adjusted Class B Certificate Balance, (b) the Adjusted Class A-1 Certificate
Balance, Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance and Adjusted Class B Certificate Balance have been reduced
to zero (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).
CALCULATION OF CLASS A-1 RATE, CLASS A-2 RATE, CLASS A-3 RATE AND CLASS B
ADJUSTABLE RATE
For the initial Interest Payment Period, the Class A-1 Rate, Class A-2 Rate,
Class A-3 Rate and Class B Adjustable Rate will be determined by straight-line
interpolation (based on the actual number of days in the initial Interest
Payment Period) between three-month LIBOR, determined as described below, and
LIBOR for U.S. Dollar deposits having maturities of four months, such rate to be
calculated two Business Days prior to the Closing Date. For each subsequent
Interest Payment Period the Trustee will make the following determinations:
(i) On the second Interest Determination Business Day (defined below)
preceding the first day of each Interest Payment Period (the "Interest
Determination Date"), for each Class of Class A Certificates and the
Adjustable Rate Class B Certificates, the Trustee will determine the London
interbank offered rate ("LIBOR") for U.S. Dollar deposits having maturities
of three months ("three-month LIBOR") or, if such Interest Payment Period
commences on or after the related Targeted Maturity Date, one month
("one-month LIBOR"), in each case as at 11:00 a.m. (London time) on the
Interest Determination Date in question. Such offered rate will be that
which appears on the display designated as Telerate Page 3750 on the Dow
Jones Telerate Service (or such other page or service as may replace it for
the purpose of displaying London interbank offered rates of major banks for
U.S. Dollar deposits).
(ii) If for any reason the relevant page is unavailable or such offered
rate does not appear, the Trustee will determine the rates at which
three-month deposits (or one-month deposits, if applicable) in U.S. Dollars
are offered by four major banks in the London interbank market (the
"Reference
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Banks") at approximately 11:00 a.m. (London time) on the Interest
Determination Date to prime banks in the London interbank market commencing
on the first day of the relevant Interest Payment Period. The Trustee will
request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two quotations are provided,
the Trustee will determine the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the Trustee will determine
the arithmetic mean of the rates quoted by major banks in New York City, at
approximately 11:00 a.m. (New York City time) on the first day of the
relevant Interest Payment Period for three-month loans (or one-month loans,
if applicable) in U.S. Dollars to leading European banks commencing on that
date. The rate so determined by the Trustee will be "three -month LIBOR" (or
"one-month LIBOR" as applicable) for such Interest Payment Period.
For purposes of these calculations, "Interest Determination Business Day"
shall mean any day on which commercial banks are open for business (including
dealings in foreign exchange and foreign currency deposits) in London.
Otherwise, as used herein, a "Business Day" is a day other than a Saturday, a
Sunday or a day on which banking institutions in New York, New York, San
Francisco, California or Chicago, Illinois are authorized or obligated by law,
regulation, executive order or decree to be closed.
INTEREST REDUCTION
If on any relevant Certificate Payment Date with respect to either the Class
A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates or any
Adjustable Rate Class B Certificates, the aggregate of amounts payable by the
Trust to the Swap Counterparty in respect of interest in accordance with the
priorities set forth herein is less than the Class A-1 Swap Interest Amount,
Class A-2 Swap Interest Amount, Class A-3 Swap Interest Amount or Class B Swap
Interest Amount, then the Trust will pay the amount allocated in respect of the
Class A-1 Swap Interest Amount, Class A-2 Swap Interest Amount, Class A-3 Swap
Interest Amount and Class B Swap Interest Amount as described below under "--
Allocations, Applications and Payments" to the Swap Counterparty and the
corresponding payment due from the Swap Counterparty (and therefore the amount
payable on such date on the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates or any Adjustable Rate Class B Certificates in respect of
interest accrued thereon) will be reduced in the same proportion as the
proportion that such Class A-1 Swap Interest Shortfall Amount, Class A-2 Swap
Interest Shortfall Amount, Class A-3 Swap Interest Shortfall Amount or Class B
Swap Interest Shortfall Amount represents of such Class A-1 Swap Interest
Amount, Class A-2 Swap Interest Amount, Class A-3 Swap Interest Amount or Class
B Swap Interest Amount. If on a subsequent Certificate Payment Date amounts are
available, in accordance with the priorities set forth herein, to reimburse all
or any part of such Class A-1 Swap Interest Shortfall Amount, Class A-2 Swap
Interest Shortfall Amount, Class A-3 Swap Interest Shortfall Amount or Class B
Swap Interest Shortfall Amount, then the Trust will be obligated under the Swap
Agreement to pay such amounts to the Swap Counterparty and the corresponding
payment due from the Swap Counterparty (and therefore any amounts payable on
such date on the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates or any Adjustable Rate Class B Certificates in respect of interest
accrued thereon) will be increased proportionally in the same proportion as such
reimbursement of such Class A-1 Swap Interest Shortfall Amount, Class A-2 Swap
Interest Shortfall Amount, Class A-3 Swap Interest Shortfall Amount or Class B
Swap Interest Shortfall Amount represents of the current Class A-1 Swap Interest
Amount, Class A-2 Swap Interest Amount, Class A-3 Swap Interest Amount or Class
B Swap Interest Amount. Certificateholders will not be entitled to receive any
interest on any Swap Interest Shortfall Amounts or the corresponding reductions
in amounts payable in respect of interest by the Swap Counterparty. Any Fixed
Rate Class B Certificates will not have the benefit of the Swap Agreement.
Amounts payable to holders thereof will not be subject to the foregoing
proportional reductions or increases in the amounts of interest payable thereon
on any Certificate Payment Date.
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CALCULATION AND REPORTING OF INTEREST PAYMENT AMOUNTS
The Trustee will as soon as practicable after 11:00 a.m. (London time) on
each Interest Determination Date determine the Class A-1 Rate, Class A-2 Rate,
Class A-3 Rate and Class B Adjustable Rate, the actual number of days in the
related Interest Payment Period and the amount of interest that will accrue on
each Certificate during such Interest Payment Period. Separately, on each
Interest Determination Date, the amount of interest payable on the next relevant
Certificate Payment Date for each Class of Certificates (the "Interest Payment
Amount") shall be calculated by, to the extent necessary, applying any
proportional reduction calculated as described above to the amount of interest
determined by the Trustee to have accrued on each Certificate at the Class A-1
Rate, Class A-2 Rate, Class A-3 Rate, Class B Fixed Rate or Class B Adjustable
Rate, as applicable, as described above in accordance with the methods of
calculation set forth in the Agreement.
The Trustee will cause the applicable Class A-1 Rate, Class A-2 Rate, Class
A-3 Rate and Class B Adjustable Rate and the amount of interest payable on each
Class of Certificates for each Interest Payment Period to be included in the
Statement to Certificateholders to be delivered on the next succeeding Monthly
Allocation Date as described herein, and thereby to be notified to each Paying
Agent and the Luxembourg Stock Exchange. The amount of interest payable on each
Class of Certificates so reported may subsequently be amended (or appropriate
alternative arrangements made with the consent of the Trustee by way of
adjustment) without notice in the event of an extension or shortening of any
Interest Payment Period (E.G. in connection with a Swap Termination). The
Luxembourg Stock Exchange will be notified separately of any change in a
Certificate Payment Date in connection with any such extension or shortening of
an Interest Payment Period.
The foregoing determinations by the Trustee shall (in the absence of
manifest error) be final and binding upon all parties.
ALLOCATIONS, APPLICATIONS AND PAYMENTS
GENERAL
On the nineteenth day of each month (or if such day is not a Business Day,
then the next succeeding Business Day) (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 preceding Collection Period and related
Monthly Allocation Date. On or prior to each Determination Date, the Servicer
shall also determine the Specified Reserve Fund Balance and the amounts to be
allocated and applied or paid in respect of the Investor Interest and Transferor
Interest and in respect of other amounts to be released from the Trust.
ALLOCATIONS AND APPLICATIONS OF COLLECTIONS IN RESPECT OF INTEREST
Except as set forth below under "-- Termination of the Trust; Retirement of
the Certificates", on each Monthly Allocation Date, based solely upon the
information set forth in the Servicers' Certificate, the Trustee will make the
following allocations of Available Interest (to the extent sufficient therefor)
in the following order of priority:
(1) an amount equal to the sum of the Class A-1 Notional Interest
Accrual Amount, Class A-2 Notional Interest Accrual Amount and Class A-3
Notional Interest Accrual Amount for the related Monthly Interest Period (on
a pro rata basis);
(2) an amount equal to the amount of any unreimbursed Class A-1 Interest
Carryover Shortfall Amount, Class A-2 Interest Carryover Shortfall Amount
and Class A-3 Interest Carryover Shortfall Amount (on a pro rata basis);
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(3) an amount equal to the Class B Notional Interest Accrual Amount and
the Class B Fixed Rate Interest Accrual Amount for the related Monthly
Interest Period, plus any Adjustable Rate Class B Interest Carryover
Shortfall Amount and any Fixed Rate Class B Interest Carryover Shortfall
Amount (such amounts to be allocated as between any Fixed Rate Class B
Certificates and any Adjustable Rate Class B Certificates as set forth in
the Agreement);
(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 (or the Servicer if such amounts were
previously advanced by the Servicer), the Investor Percentage of Capped
Titling Trust Administrative Expenses;
(7) to the Trustee (or the Servicer if such amounts were previously
advanced by the Servicer), the Investor Percentage of Capped Trust
Administrative Expenses;
(8) an amount equal to the amount, if any, of Loss Amounts allocable to
the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2 Certificate
Balance and Adjusted Class A-3 Certificate Balance on such Monthly
Allocation Date, plus the aggregate amount of Certificate Principal Loss
Amounts allocated thereto on any prior Monthly Allocation Date (on a pro
rata basis based on the amount of such Loss Amounts and Certificate
Principal Loss Amounts previously allocated to each such Class), in each
case to the extent not reimbursed on such date through the application of
amounts withdrawn from the Reserve Fund or Transferor Amounts and not
reimbursed pursuant to this clause on any prior date;
(9) an amount equal to the aggregate amount of Loss Amounts allocable to
the Adjusted Class B Certificate Balance on such Monthly Allocation Date and
not reimbursed pursuant to this clause or through the application of amounts
withdrawn from the Reserve Fund and Transferor Amounts, plus the aggregate
amount of Certificate Principal Loss Amounts allocated to the Adjusted Class
B Certificate Balance and not reimbursed prior to such date (such amounts to
be allocated as between any Fixed Rate Class B Certificates and any
Adjustable Rate Class B Certificates as set forth in the Agreement);
(10) for deposit into the Reserve Fund, until the amount on deposit
therein equals the Specified Reserve Fund Balance;
(11) to the Titling Trustee (or the Servicer if such amounts previously
were advanced by the Servicer), the Investor Percentage of Uncapped Titling
Trust Administrative Expenses;
(12) to the Trustee (or the Servicer, if such amounts previously were
advanced by the Servicer), the Investor Percentage of Uncapped Trust
Administrative 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.
PAYMENTS IN RESPECT OF PRINCIPAL AND INTEREST
Payments will be made to Certificateholders of record as of the Record Date
preceding each relevant Certificate Payment Date. With respect to each Interest
Payment Period, interest will accrue on the Class A-1 Certificate Balance at the
Class A-1 Rate, on the Class A-2 Certificate Balance at the Class A-2 Rate, on
the Class A-3 Certificate Balance at the Class A-3 Rate, on the portion of the
Class B Certificate Balance represented by any Adjustable Rate Class B
Certificates at the Class B Adjustable Rate and on the portion of the Class B
Certificate Balance represented by any Fixed Rate Class B Certificates at the
Class B Fixed Rate, as applicable. On each Certificate Payment Date, the Swap
Counterparty will make payments to the Trust of amounts due on such date under
the Swap Agreement, which amounts will be used to make payments to the related
Class A Certificateholders and to Adjustable Rate Class B
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Certificateholders of interest accrued on the related Class of Certificates. If
the Trust makes payments of less than the Class A-1 Swap Interest Amount, Class
A-2 Swap Interest Amount, Class A-3 Swap Interest Amount or Class B Swap
Interest Amount, as the case may be, on any Certificate Payment Date, the Swap
Counterparty's corresponding payment obligations under the Swap Agreement will
be reduced proportionately as described above under "Description of the
Certificates -- Calculation of the Class A-1 Rate, Class A-2 Rate, Class A-3
Rate and Class B Adjustable Rate -- INTEREST REDUCTION". Interest will be
calculated on the basis of: (i) in the case of the Adjusted Class A-1 Notional
Interest Accrual Amount, the Adjusted Class A-2 Notional Interest Accrual
Amount, the Adjusted Class A-3 Notional Interest Accrual Amount, the Adjusted
Class B Notional Interest Accrual Amount and any Class B Fixed Rate Interest
Accrual Amounts, a 360-day year consisting of twelve 30-day months, and (ii) in
the case of interest accrued on each Class of Class A Certificates, any
Adjustable Rate Class B Certificates and amounts due from the Swap Counterparty
under the Swap Agreement, the actual number of days in the related Interest
Payment Period and a 360-day year.
Payments to the Swap Counterparty of Swap Interest Amounts with respect to
the Class A Certificates will be funded out of (A) Available Interest allocated
therefor pursuant to clauses (1) and (2) above (whether held in the SUBI
Collection Account or Certificateholders' Account) and (B) amounts constituting
the net investment income earned on Permitted Investments with respect to funds
deposited into the Certificateholders' Account on prior Monthly Allocation Dates
in respect of the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance or Adjusted Class A-3 Certificate Balance, as the case may
be. As noted above, the Swap Counterparty will make corresponding payments to
the Trust of amounts due thereto under the Swap Agreement for distribution to
Certificateholders. Interest will be payable to the Class A Certificateholders
by the Trust (i) on each Monthly Allocation Date in March, June, September and
December commencing in March 1999 until all required payments in respect of such
Class have been made, and (ii) on the related Targeted Maturity Date and each
succeeding relevant Monthly Allocation Date until the Adjusted Class A-1
Certificate Balance, Adjusted Class A-2 Certificate Balance or Adjusted Class
A-3 Certificate Balance, as the case may be, is reduced to zero.
Payments (i) to any Fixed Rate Class B Certificateholders of any Fixed Rate
Class B Interest Accrual Amounts or, (ii) to the Swap Counterparty of Swap
Interest Amounts with respect to the Adjustable Rate Class B Certificates will
in each case be funded out of (A) Available Interest allocated therefor pursuant
to clause (3) above (whether held in the SUBI Collection Account or
Certificateholders' Account) and (B) amounts constituting net investment income
earned on Permitted Investments with respect to funds deposited into the
Certificateholders' Account on prior Monthly Allocation Dates in respect of the
Adjusted Class B Certificate Balance. As noted above, the Swap Counterparty will
make corresponding payments to the Trust of amounts due thereto under the Swap
Agreement for distribution to any Adjustable Rate Class B Certificateholders.
Interest will be payable to the Class B Certificateholders by the Trust (i) on
each Monthly Allocation Date in March, June, September and December, commencing
in March 1999 and (ii) on the Class B Targeted Maturity Date and each succeeding
Monthly Allocation Date until the Adjusted Class B Certificate Balance is
reduced to zero.
Amounts allocated for the foregoing purposes and not paid on any Monthly
Allocation Date that is not a relevant Certificate Payment Date will be
deposited into the Certificateholders' Account and invested in Permitted
Investments pending payment as described above.
In addition to the foregoing, Certificateholders will receive payments (i)
in connection with any exercise by the Transferor of its option to repurchase
the SUBI Certificate, on the Monthly Allocation Date following the receipt by
the Trust of proceeds from such sale and (ii) in connection with the liquidation
of the assets of the Trust following the occurrence of a Swap Termination, on
the Monthly Allocation Date following the receipt by the Trust of the proceeds
of such liquidation.
Amounts allocated in reduction of the Adjusted Class A-1 Certificate
Balance, the Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance or the Adjusted Class B Certificate Balance pursuant to
clauses (8) or (9) above and not either (i) reinvested in Subsequent Contracts
and
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Subsequent Leased Vehicles on a particular Monthly Allocation Date (because such
Monthly Allocation Date is not a relevant Certificate Payment Date) or (ii) paid
to the Certificateholders on any Monthly Allocation Date will be deposited into
the Certificateholders' Account and invested in Permitted Investments pending
such payment as described below under "-- Investment of Available Amounts".
On each Monthly Allocation Date, the Trustee will withdraw from the Reserve
Fund the amount, if any, by which the aggregate of amounts allocable and
applicable or payable pursuant to clauses (1), (2), (3), (8) or (9) above
exceeds the amount of Available Interest available to make such allocation and
application or payment based on the foregoing priorities. In addition, if such
Monthly Allocation Date is on or after the Class B Targeted Maturity Date, and
amounts remaining on deposit in the Reserve Fund (including Class B Reserve
Amounts, if necessary) are sufficient to fund all amounts then payable to the
Trustee, Titling Trustee and Servicer as well as to reduce the Adjusted
Certificate Balance of all Classes of outstanding Certificates to zero, then
such amounts shall be so applied and paid. On the related Stated Maturity Date,
amounts on deposit in the Reserve Fund will be applied to reduce the Adjusted
Class A-1 Certificate Balance, the Adjusted Class A-2 Certificate Balance, the
Adjusted Class A-3 Certificate Balance or the Adjusted Class B Certificate
Balance to zero, including to reimburse Certificate Principal Loss Amounts
previously allocated thereto, should the Collections allocable for such purposes
ultimately be insufficient to reduce any such balance to zero and to effect such
reimbursements on such date; provided that Class B Reserve Amounts will not be
so applied other than with respect to the Class B Certificates, except to the
extent that the Class B Reserve Amount exceeds the amount necessary both to
reduce the Adjusted Class B Certificate Balance to zero and to make such
reimbursements to the Class B Certificateholders. Except as described above, the
Class B Reserve Amount shall be available exclusively for payment of accrued and
unpaid interest with respect to the Class B Certificates. SEE "Assets of the
Trust -- The Accounts; Collections -- THE RESERVE FUND".
To the extent Available Interest is insufficient therefor, the amount of any
deficiency in amounts allocable and applicable or payable pursuant to clauses
(1) through (9) above will be covered, first, from amounts withdrawn from the
Reserve Fund, to the extent set forth in the preceding paragraph, that are
available therefor and, second, from Transferor Amounts.
Notwithstanding the foregoing, Available Interest, amounts withdrawn from
the Reserve Fund and Transferor Amounts allocated to reimburse Loss Amounts or
Certificate Principal Loss Amounts pursuant to clauses (8) and (9) above on a
Monthly Allocation Date that occurs during the Revolving Period will be treated
as Principal Collections for the Collection Period in which such Monthly
Allocation Date occurs and, unless an Accumulation Event or a Swap Termination
occurs prior to the related Transfer Date, will be available to be reinvested in
Subsequent Contracts and Subsequent Leased Vehicles.
Payments of principal shall be made in the following manner. On each Monthly
Allocation Date, the Investor Percentage of 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 for payment in respect of the Adjusted Class A-1
Certificate Balance (until the Adjusted Class A-1 Certificate Balance is reduced
to zero), Adjusted Class A-2 Certificate Balance (until the Adjusted Class A-2
Certificate Balance is reduced to zero), Adjusted Class A-3 Certificate Balance
(until the Adjusted Class A-3 Certificate Balance is reduced to zero) or
Adjusted Class B Certificate Balance (until the Adjusted Class B Certificate
Balance is reduced to zero), in that order on any relevant Certificate Payment
Date. On each Certificate Payment Date that coincides with or follows the
Targeted Maturity Date for a particular Class of Certificates all amounts on
deposit in the SUBI Collection Account and the Certificateholders' Account in
respect of principal for such Class (after giving effect to any application of
amounts withdrawn from the Reserve Fund and available for such application and
Transferor Amounts described above and after the Adjusted Certificate Balance of
any senior Class of Certificates has been reduced to zero) will be paid to the
Certificateholders of such Class as described herein.
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Principal of each Class of Certificates will be payable (i) on the related
Targeted Maturity Date and (ii) if the Adjusted Class A-1 Certificate Balance,
Adjusted Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance
or Adjusted Class B Certificate Balance is not reduced to zero on the related
Targeted Maturity Date, then for each such Class on each subsequent Monthly
Allocation Date until the date on which the Adjusted Class A-1 Certificate
Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class A-3 Certificate
Balance or Adjusted Class B Certificate Balance, as the case may be, is reduced
to zero and (iii) in connection with a Swap Termination or any exercise by the
Transferor of its option to repurchase the SUBI Certificate, on the Monthly
Allocation Date following the receipt of proceeds from such liquidation or sale.
To the extent that the Adjusted Certificate Balance of a Class of Certificates
is not reduced to zero on the related Targeted Maturity Date, the Transferor
will have the option to make a Maturity Advance in any amount up to the amount
of such deficiency. Notwithstanding the foregoing, payments in reduction of the
Adjusted Class A-1 Certificate Balance, Adjusted Class A-2 Certificate Balance,
Adjusted Class A-3 Certificate Balance or Adjusted Class B Certificate Balance
may be made prior to the related Targeted Maturity Date if the assets of the
Trust are liquidated following a Swap Termination as described below under "--
Termination of the Trust -- SWAP TERMINATION".
"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 plus (ii) investment income (net of investment
losses) on Permitted Investments of amounts deposited into the
Certificateholders' Account in respect of the Class A-1 Notional Interest
Accrual Amount, Class A-2 Notional Interest Accrual Amount, Class A-3 Notional
Interest Accrual Amount, Class B Notional Interest Accrual Amount and the Class
B Fixed Rate Interest Accrual Amount, and on any Interest Carryover Shortfall
Amounts allocated to any Class.
The "Class A-1 Interest Carryover Shortfall Amount" with respect to any
Monthly Allocation Date will equal the excess, if any, of (x) the Class A-1
Notional Interest Accrual Amount, plus any outstanding Class A-1 Swap Interest
Shortfall Amount from the immediately preceding Monthly Allocation Date, over
(y) the aggregate of the amounts of Available Interest allocated and applied or
paid for the benefit of Class A-1 Certificateholders in respect of interest on
such Monthly Allocation Date.
The "Class A-2 Interest Carryover Shortfall Amount" with respect to any
Monthly Allocation Date will equal the excess, if any, of (x) the Class A-2
Notional Interest Accrual Amount, plus any outstanding Class A-2 Interest
Carryover Shortfall Amount from the immediately preceding Monthly Allocation
Date, over (y) the aggregate of the amounts of Available Interest allocated and
applied or paid for the benefit of Class A-2 Certificateholders in respect of
interest on such Monthly Allocation Date.
The "Class A-3 Interest Carryover Shortfall Amount" with respect to any
Monthly Allocation Date will equal the excess, if any, of (x) the Class A-3
Notional Interest Accrual Amount, plus any outstanding Class A-3 Interest
Carryover Shortfall Amount from the immediately preceding Monthly Allocation
Date, over (y) the aggregate of the amounts of Available Interest allocated and
applied or paid for the benefit of Class A-3 Certificateholders in respect of
interest on such Monthly Allocation Date.
The "Adjustable Rate Class B Interest Carryover Shortfall Amount" with
respect to any Monthly Allocation Date will equal the excess, if any, of (x) the
Class B Notional Interest Accrual Amount, plus any outstanding Adjustable Rate
Class B Interest Carryover Shortfall Amount from the immediately preceding
Monthly Allocation Date, over (y) the aggregate of the amounts of Available
Interest allocated and applied or paid for the benefit of Adjustable Rate Class
B Certificateholders in respect of interest on such Monthly Allocation Date.
The "Fixed Rate Class B Interest Carryover Shortfall Amount" with respect to
any Monthly Allocation Date will equal the excess, if any, of (x) the Class B
Fixed Rate Interest Accrual Amount, plus any outstanding Fixed Rate Class B
Interest Carryover Shortfall Amount from the immediately preceding Monthly
Allocation Date, over (y) the aggregate of the amounts of Available Interest
allocated and applied or paid for the benefit of Fixed Rate 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 definition
of Capped Titling Trust Administrative Expenses.
"Capped 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 associated with the Certificates
up to but not exceeding $75,000 in any calendar year (or $125,000 in a calendar
year in which a Swap Termination occurs).
"Uncapped 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 associated with the Certificates
not subject to the limitations set forth in the definition of Capped Trust
Administrative Expenses.
"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.
"Excess Amounts" with respect to any Monthly Allocation Date are the
Interest Collections distributable to the Transferor pursuant to clause (14)
above.
ALLOCATIONS OF LOSSES
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 reduce the Adjusted Class B
Certificate Balance and then, on any Monthly Allocation Date on which the
Adjusted Class B Certificate Balance is reduced to zero, to reduce the Adjusted
Class A-1 Certificate Balance, the Adjusted Class A-2 Certificate Balance and
the Adjusted Class A-3 Certificate Balance pro rata (based on such amounts as of
the last day of the related Collection Period). With respect to any Monthly
Allocation Date, the Loss Amounts allocated to the Adjusted Class B Certificate
Balance, the Adjusted Class A-1 Certificate Balance, the Adjusted Class A-2
Certificate Balance or the Adjusted Class A-3 Certificate Balance, as the case
may be, on such date less any reimbursement thereof on such date from Available
Interest, amounts withdrawn from the Reserve Fund that are available therefor
and Transferor Amounts will become "Certificate Principal Loss Amounts".
Certificate Principal Loss Amounts will be reimbursable on future Monthly
Allocation Dates as described above; provided, however, that no such
reimbursements will be made after the first relevant Certificate Payment Date on
which the Adjusted Class B Certificate Balance, the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate Balance or the Adjusted
Class A-3 Certificate Balance, as the case may be, is reduced to zero.
Certificate Principal Loss Amounts which are not reimbursed as provided herein
will bear interest at the Class B Notional Rate, the Class B Fixed Rate, the
Class A-1 Notional Rate, the Class A-2 Notional Rate or the Class A-3 Notional
Rate as the case may be, until reimbursed or until the Adjusted Class B
Certificate Balance, the Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance or the Adjusted Class A-3 Certificate Balance, as
the case may be, is reduced to zero. Loss Amounts and Certificate Principal Loss
Amounts and any reimbursements thereof that are allocated to the Class B
Certificates will be allocated between any Fixed Rate Class B Certificates and
any Adjustable Rate Class B Certificates as set forth in the Agreement.
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REVOLVING PERIOD
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 or Certificate Principal 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 or Certificate Principal Loss Amounts) equal to the
aggregate Discounted Principal Balance of such Subsequent Contracts to make such
reinvestment.
Principal Collections and reimbursements of Loss Amounts and Certificate
Principal Loss Amounts allocated to the Investor Interest 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 January 1999 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 Accumulation Event will occur,
the Revolving Period will terminate and all unreinvested Principal Collections
and reimbursements of Loss Amounts will be allocated as described herein. SEE
"-- Accumulation Events" below.
ACCUMULATION PERIODS
The Accumulation Period with respect to each Class shall commence on the
earlier of the Accumulation Date or the day on which an Accumulation Event
occurs, and will end on the earlier of the related Targeted Maturity Date or the
occurrence of a Swap Termination, if any. Upon the commencement of the
Accumulation Period, Principal Collections and reimbursed Loss Amounts and
Certificate Principal Loss Amounts will no longer be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles. Rather, during any Accumulation
Period, such amounts will be deposited in the Certificateholders' Account and
invested in Permitted Investments maturing on the next relevant Certificate
Payment Date on which date such amounts will be payable as described herein.
INVESTMENT OF AVAILABLE AMOUNTS
During the Revolving Period, Available Interest allocated and applied
pursuant to clauses (1), (2) and (3) above will be deposited into the
Certificateholders' Account on such Monthly Allocation Date and invested in
Permitted Investments maturing on or prior to the succeeding relevant
Certificate Payment Date and bearing interest at the related Required Rates.
Following the termination of the Revolving Period and prior to the occurrence of
any Swap Termination on any Monthly Allocation Date that is not a Certificate
Payment Date, both Available Interest allocated and applied pursuant to clauses
(1), (2), (3), (8) and (9) above and all amounts allocable and applicable in
respect of the Adjusted Class A-1 Certificate Balance, the Adjusted Class A-2
Certificate Balance, the Adjusted Class A-3 Certificate Balance and the Adjusted
Class B Certificate Balance (including reimbursements of Loss Amounts or
Certificate Principal Loss Amounts) will be deposited into the
Certificateholders' Account on such Monthly Allocation Date and invested in
Permitted Investments maturing on or prior to the succeeding relevant
Certificate Payment
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Date and bearing interest at the related Required Rates. Such Permitted
Investments are expected to be 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 TMCC Demand Note will mature on or prior to the next succeeding relevant
Certificate Payment Date. Pursuant to the terms of the TMCC Demand Notes, the
Trustee, on behalf of the Trust, will have the right to demand payment of
amounts due thereunder prior to their stated maturity dates if for any reason
Standard & Poor's reduces TMCC's short-term debt to a rating less than A-1+ or
Standard & Poor's reduces TMCC's long-term debt to a rating of less than AA,
Moody's reduces TMCC's short term debt to a rating less than P-1 or Moody's
reduces TMCC's long-term debt to a rating less than Aa3 and the Trustee
determines that at such time one or more Permitted Investments having
substantially the same maturities and similar demand features and bearing
interest at the relevant Required Rates are available and investment therein
rather than in TMCC Demand Notes will not, by itself, cause a Rating Agency to
reduce or withdraw its rating of any Class of Certificates.
ACCUMULATION EVENTS
As described above, the Accumulation Period with respect to each Class of
Certificates will commence on the earlier to occur of the Accumulation Date or
an Accumulation Event and will continue until the earlier of the related
Targeted Maturity Date or the occurrence of a Swap Termination, if any.
"Accumulation 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 or the Certificates under the Agreement or the
Servicing Agreement within ten 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 Certificate 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 the holders of the SUBI Certificate or
Certificateholders and which continues uncured and to have such a material
adverse effect for 60 days after notice is given as described in clause (ii)
above; provided that an Accumulation 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) 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;
(v) if the Servicer determines on the last day of any calendar month
commencing in January 1999 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;
(vi) an Event of Servicing Termination occurs; or
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(vii) 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
$1,874,972 (i.e., 0.25% of the Aggregate Net Investment Value as of the
Cutoff Date).
TERMINATION OF THE TRUST; RETIREMENT OF THE CERTIFICATES
OPTIONAL PURCHASE OF THE SUBI CERTIFICATE
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 the allocations, applications and
payments in respect of principal required to be made on such Monthly Allocation
Date, the Investor Balance is less than or equal to $74,998,873.25 (10% of the
Aggregate Net Investment Value as of the Cutoff Date) or amounts sufficient to
effectively reduce the Investor 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 Adjusted Class A-1 Certificate Balance, the
Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3 Certificate
Balance and the Adjusted Class B Certificate Balance, in each case plus accrued
and unpaid interest thereon and on all unreimbursed Certificate Principal Loss
Amounts allocated thereto, plus certain other accrued and unpaid amounts, if
any, due to the Trustee, the Titling Trustee and the Servicer, and (ii) the
Aggregate Net Investment Value as of the last day of the preceding Collection
Period.
SWAP TERMINATION
Notwithstanding the payment priorities described above under "Description of
the Certificates -- Allocations, Applications and Payments", following any Swap
Termination the assets of the Trust will be liquidated in a commercially
reasonable manner. The net proceeds of the liquidation of the assets of the
Trust will be allocated and applied or paid on the Monthly Allocation Date
following the receipt of such proceeds in the following amounts and order of
priority:
(1) to pay to the Transferor, an amount equal to the amount of any
unreimbursed Maturity Advances;
(2) to pay to the Trustee and Titling Trustee, an amount equal to the
amount of any Capped or Uncapped Administrative Expense not yet reimbursed;
(3) to pay to the Servicer, an amount equal to the amount of any
unreimbursed Advances made by it or any Capped or Uncapped Administrative
Expenses advanced by it and not yet reimbursed, and any other Servicing
compensation due to it;
(4) to pay to the Class A Certificateholders, as applicable, on a
pro-rata basis, an amount equal to the sum of the Class A-1 Swap Interest
Amount, any Class A-1 Swap Interest Shortfall Amount, the Class A-2 Swap
Interest Amount, any Class A-2 Swap Interest Shortfall Amount, the Class A-3
Swap Interest Amount and any Class A-3 Swap Interest Shortfall Amount
through the date of such payment (with a single corresponding Interest
Payment Period from the most recent relevant Certificate Payment Date for
each Class of Class A Certificates through such date) to be paid to Class A
Certificateholders in respect of interest on a pro rata basis based on the
respective amounts of interest so accrued on each such Class at the
applicable Class A-1 Rate, Class A-2 Rate and Class A-3 Rate respectively;
(5) to pay to the Adjustable Rate Class B Certificateholders an amount
equal to the sum of the Class B Swap Interest Amount and any Class B Swap
Interest Shortfall Amount through the date of such payment (with a single
corresponding Interest Payment Period from the most recent Certificate
Payment Date for such Class of Certificates through such date), and to pay
to the Fixed Rate Class B Certificateholders, an amount equal to the sum of
the Class B Fixed Rate Interest Accrual Amount and any Fixed Rate Class B
Interest Carryover Shortfall Amount through the date of such payment
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(with a single corresponding Interest Payment Period from the most recent
relevant Certificate Payment Date through such date), plus an amount equal
to interest accrued at the related Required Rate during such period on
amounts deposited in the Certificateholders' Account in respect of the
Adjusted Class B Certificate Balance on prior Monthly Allocation Dates;
(6) an amount equal to the sum of (i) the Adjusted Class A-1 Certificate
Balance plus any unreimbursed Certificate Principal Loss Amounts allocated
thereto, (ii) the Adjusted Class A-2 Certificate Balance plus any
unreimbursed Certificate Principal Loss Amounts allocated thereto, and (iii)
the Adjusted Class A-3 Certificate Balance plus any unreimbursed Certificate
Principal Loss Amounts allocated thereto to be paid to the Class A-1
Certificateholders, Class A-2 Certificateholders and Class A-3
Certificateholders on a pro rata basis, based on the amounts described in
clauses (i), (ii) and (iii) above;
(7) to pay to the Class B Certificateholders, an amount equal to the
Adjusted Class B Certificate Balance plus any unreimbursed Certificate
Principal Loss Amounts allocated thereto; and
(8) to pay to the Transferor any remaining proceeds.
Any swap termination payment payable by the Swap Counterparty to the Trust
pursuant to the Swap Agreement in respect of the Class A Certificates will be
applied, first, to cover any shortfall in the amounts allocable and payable
pursuant to the foregoing clauses (1), (2), (3) and (4). Next, any remaining
portion of such swap termination payment will be applied to cover the amount, if
any, by which the amount of interest that would have accrued on the Class A-1
Certificates at the Class A-1 Rate, the Class A-2 Certificates at the Class A-2
Rate and the Class A-3 Certificates at the Class A-3 Rate during the period
specified in clause (4) above exceeds the amount payable to each such Class as
set forth in clause (4) above, on a pro rata basis based on each such excess
amount. Thereafter, any remaining portion of such swap termination payment will
be applied to cover any shortfall in the amounts allocable and payable pursuant
to clauses (6), (5) and (7), in that order, with any remainder to be paid
pursuant to clause (8) above. Notwithstanding the foregoing priorities, to the
extent that the Trust is required to make any swap termination payment to the
Swap Counterparty in respect of the Class A Certificates, the amount thereof
shall be made available from (and therefore shall reduce) amounts otherwise
allocable and payable pursuant to the foregoing clauses (6), (4), (8), (7), (5),
(3), (2) and (1) in that order.
Any swap termination payment payable by the Swap Counterparty to the Trust
pursuant to the Swap Agreement in respect of the Adjustable Rate Class B
Certificates will be applied, first, to cover any shortfall in the amounts
allocable and payable pursuant to the foregoing clauses (1), (2), (3) and (5)
(to the extent allocable and payable to the Adjustable Rate Class B
Certificates). Next, any remaining portion of such swap termination payment will
be applied to cover the amount, if any, by which the amount of interest that
would have accrued on the Adjustable Rate Class B Certificates at the Class B
Adjustable Rate during the period specified in clause (5) above exceeds the
amount payable to such Class as set forth in clause (5) above. Thereafter, any
remaining portion of such swap termination payment will be applied to cover any
shortfall in the amounts allocable and payable pursuant to clauses (7) (to the
extent allocable and payable to the Adjustable Rate Class B Certificates), (4),
(5) (to the extent allocable and payable to the Fixed Rate Class B
Certificates), (6) and (7) (to the extent allocable and payable to the Fixed
Rate Class B Certificates), in that order, with any remainder to be paid
pursuant to clause (8) above. Notwithstanding the foregoing priorities, to the
extent that the Trust is required to make any swap termination payment to the
Swap Counterparty in respect of the Adjustable Rate Class B Certificates, the
amount thereof shall be made available from (and therefore shall reduce) amounts
otherwise allocable and payable pursuant to the foregoing clauses (7) (to the
extent allocable and payable to the Adjustable Rate Class B Certificates), (5)
(to the extent allocable and payable to the Adjustable Rate Class B
Certificates), (8), (7) (to the extent allocable and payable to the Fixed Rate
Class B Certificates), (6), (5) (to the extent allocable and payable to the
Fixed Rate Class B Certificates), (4), (3), (2) and (1) in that order.
The net proceeds of any such liquidation may not be sufficient to pay in
full the Initial Class A-1 Certificate Balance, Initial Class A-2 Certificate
Balance, Initial Class A-3 Certificate Balance or Initial
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Class B Certificate Balance in accordance with the foregoing payment priorities.
Under such circumstances, Holders will have no recourse to any other assets for
payment of the Certificates, and will suffer corresponding losses.
The Trustee will give notice of termination of the Trust as described below
under "Notices" and by delivery to the Titling Trustee, Swap Counterparty and
the Luxembourg Stock Exchange. 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.
VOTING INTERESTS AND CERTIFICATEHOLDER ACTION
The "Voting Interests" of (a) the Class A Certificates and Class B
Certificates, respectively, will be allocated among the certificateholders pro
rata, based on the Adjusted Class A-1 Certificate Balance, the Adjusted Class
A-2 Certificate Balance, the Adjusted Class A-3 Certificate Balance and the
Adjusted Class B Certificate Balance and (b) the Class A-1, Class A-2 and Class
A-3 Certificates, respectively, will be allocated among the related
Certificateholders pro rata based on the denominations of the outstanding
Certificates held thereby. Notwithstanding the foregoing, in certain
circumstances, any Class A 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 Determination Date, commencing in December 1998, the Servicer will
prepare and forward to the Titling Trustee, Trustee and the Luxembourg Stock
Exchange, and on each Monthly Allocation Date the Trustee will make available to
each Certificateholder, a statement (the "Statement to Certificateholders"),
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;
(ii) the aggregate amount being allocated and applied or paid to the
Certificateholders of each Class (the "Certificate Distribution Amount");
(iii) the amount of the Certificate Distribution Amount allocable to (i)
the Class A-1 Notional Interest Accrual Amount, the Class A-2 Notional
Interest Accrual Amount, the Class A-3 Notional Interest Accrual Amount, the
Class B Notional Interest Accrual Amount and the Class B Fixed Rate Interest
Accrual Amount, (ii) any unreimbursed Class A-1 Swap Interest Shortfall
Amount, Class A-2 Swap Interest Shortfall Amount, Class A-3 Swap Interest
Shortfall Amount, Class B Swap Interest Shortfall Amount and Class B
Interest Carryover Shortfall Amount, (iii) the Class A-1 Swap Interest
Amount, Class A-2 Swap Interest Amount, Class A-3 Swap Interest Amount and
Class B Swap Interest Amount and (iv) the reduction of the Adjusted Class
A-1 Certificate Balance the Adjusted Class A-2 Certificate Balance, the
Adjusted Class A-3 Certificate Balance, and the Adjusted Class B Certificate
Balance, separately identifying any Maturity Advances;
(iv) the Adjusted Class A-1 Certificate Balance, the Adjusted Class A-2
Certificate Balance, the Adjusted Class A-3 Certificate Balance and Adjusted
Class B Certificate Balance, in each case as of such Monthly Allocation Date
and after giving effect to the allocation and application or payment of the
Certificate Distribution Amount;
(v) the aggregate amount, if any, of the reimbursement of Loss Amounts
included in the Certificate Distribution Amount and the amount thereof
allocated to the Adjusted Class A-1 Certificate Balance, the Adjusted Class
A-2 Certificate Balance, the Adjusted Class A-3 Certificate Balance and the
Adjusted Class B Certificate Balance;
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(vi) the amount of the Certificate Distribution Amount allocable to
reimbursement of Certificate Principal Loss Amounts and the amount thereof
allocated to the Adjusted Class A-1 Certificate Balance, the Adjusted Class
A-2 Certificate Balance, the Adjusted Class A-3 Certificate Balance and the
Adjusted Class B Certificate Balance;
(vii) the amount, if any, of the remaining unreimbursed Certificate
Principal Loss Amounts, after giving effect to the allocation and
application or payment of the Certificate Distribution Amount;
(viii) the Investor Percentage of the Servicing Fee; and any amounts
remaining unpaid in respect thereof from any prior Monthly Allocation Date;
(ix) the amount of any Required Amount included in the Certificate
Distribution Amount and the balance on deposit in the Reserve Fund 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 as of the date of such report;
(x) the amount of Transferor Amounts, if any, included in the
Certificate Distribution Amount;
(xi) the Aggregate Net Investment Value as of the end of such Collection
Period;
(xii) 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;
(xiii) the amount of Advances and Maturity Advances made, and the amount
of unreimbursed Advances and Maturity Advances outstanding after giving
effect to the allocation or distribution of the Certificate Distribution
Amount; and
(xiv) certain information used in determining the Specified Reserve Fund
Balance.
Statements in respect of the Class A Certificates will also provide the
Class A-1 Rate, Class A-2 Rate, Class A-3 Rate and Class B Adjustable Rate in
effect for the related Interest Period and the amount of any proportional
reduction or increase in interest paid to the Class A Certificateholders or any
Adjustable Rate Class B Certificateholders on such Certificate Payment Date
pursuant to the Swap Agreement. Additionally, reports will be prepared by the
Servicer during the Revolving Period that report certain statistical information
with respect to Subsequent Lease Contracts and Subsequent Leased Vehicles
allocated as SUBI Assets during the Revolving Period. Such reports will be
delivered by the Servicer at the intervals specified in the Agreement to the
Trustee and the Luxembourg Stock Exchange, will be filed with the Commission and
will be made available at the offices of each Paying Agent.
In addition, within a reasonable period of time after the end of each
calendar year during the term of the Agreement, the Servicer will prepare and
forward to the Titling Trustee, Trustee, Swap Counterparty and the Luxembourg
Stock Exchange, and the Trustee will make available to each Certificateholder, a
statement, setting forth the amounts described in clauses (ii) through (viii)
above on an aggregate or annualized basis.
Copies of all such statements may be obtained at the office of any Paying
Agent or by making a request in writing to the Trustee.
NOTICES
For so long as any Class A Certificates are listed on the Luxembourg Stock
Exchange, and such Exchange so requires, 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 LUXEMBOURGER WORT. In addition, if
Definitive Certificates are issued, such notices will be mailed to the addresses
of holders thereof as they appear in the
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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.
PRESCRIPTION
In the event that any Certificateholder shall not surrender its Certificates
for retirement within six months after the date specified in any notice
published by the Trustee of the date for final payment thereof, the Trustee
shall publish a second notice to Certificateholders to surrender their
Certificates for retirement and receive the final payment 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 the Agreement. Any funds remaining
in the Trust after exhaustion of such remedies shall be returned to the
Transferor as specified in the Agreement.
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) 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
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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 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
ommunicate 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
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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.
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
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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.
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.
ISSUES RELATED TO YEAR 2000 DATE CONVERSION
DTC management has advised that DTC is aware that some computer
applications, systems and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on and after January 1,
2000, may encounter "Year 2000 problems". DTC has informed its Participants and
other members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform its services properly is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as DTC's direct and indirect participants and third party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to
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contact) third party vendors from whom DTC acquires services to: (i) impress
upon them the importance of such services being year 2000 compliant; and (ii)
determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
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, or (ii) the
Transferor, at its option, elects to terminate the book-entry system through
DTC.
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 and, in addition, 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 of principal and interest 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, which shall
include the office of the Paying Agent in Luxembourg if at such date any Class A
Certificates are listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange so require.
A Definitive Certificate may be transferred in whole or in part upon the
surrender of the Definitive Certificate to be transferred, together with the
completed and executed assignment, at the specified office of the registrar or
any transfer agent (which shall include a transfer agent having its specified
office in Luxembourg so long as any Class A Certificates are listed on the
Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so
require). In the case of a permitted transfer of only part of a Certificate, a
new Certificate in respect of the balance not transferred will be issued to the
transferor. Each new Definitive Certificate to be issued upon the transfer of a
Definitive Certificate will, upon the effective receipt of such completed
assignment by the registrar or a transfer agent at its respective specified
office, be available for delivery at such specified office, or at the request of
the Holder requesting such transfer, will, within three Business Days of receipt
of such completed assignment, be mailed at the risk of the transferee entitled
to the new Definitive Certificate to such address as may be specified in such
completed assignment. For these purposes, a completed assignment received by the
registrar or a transfer agent during the period between a Record Date and the
related Certificate Payment Date shall be deemed not to be effectively received
by such registrar or transfer agent until the day following such Certificate
Payment Date. Neither the registrar nor any transfer agent shall register the
transfer of or exchange of any Definitive Certificates following the exercise by
the Transferor of the option to purchase the SUBI Certificate.
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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. Holders of Definitive
Certificates in Luxembourg will be able to effect transfers by delivery of the
Definitive Certificates to Bankers Trust Company Luxembourg S.A. with
instructions for the transfer of all or part thereof to the proposed transferee
thereof.
Bankers Trust Company Luxembourg S.A., 14 Boulevard F.D. Roosevelt, L-2450,
Luxembourg, has been appointed as paying agent and transfer agent in Luxembourg
in relation to the Class A Certificates. The Transferor will maintain a paying
agent (the "Paying Agent") and transfer 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. Payments and transfers of the Class A
Certificates issued in definitive form, if any, will be made at the offices of
the paying agent and transfer agent in Luxembourg.
ASSETS OF THE TRUST
GENERAL
The property of the Trust will primarily consist of the SUBI Assets
evidenced by the SUBI Certificate (which exclude the right to proceeds of the
Residual Value Insurance Policies retained by the Transferor). 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, investments with
respect to such amounts and the net income therefrom, the Trust's rights under
the Swap Agreement and the Trustee's rights as third party beneficiary to the
SUBI Supplement and the SUBI Servicing Supplement. 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 Certificate
to the Trust as a transfer for security, the Trustee may instead be deemed to
have a perfected security interest in the SUBI Certificate and 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 "Certain Legal Aspects of the Titling Trust -- Structural
Considerations".
THE ACCOUNTS; COLLECTIONS
THE SUBI COLLECTION ACCOUNT
On or prior to the Closing Date, one or more accounts will be established as
the SUBI Collection Account (the "SUBI Collection Account" and, together with
the Certificateholders' Account and the Reserve Fund, the "Accounts") as trust
accounts 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, Charged-off 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 following the Revolving Period, Reallocation Deposit
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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. Deposits also will be made to the SUBI
Collection Account from, among other sources, (i) monies on deposit in the
Reserve Fund, (ii) the proceeds of any liquidation of the assets of the Trust
following a Swap Termination and (iii) 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 $74,998,873.25 (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.
"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
the Residual Value Insurance Policies, 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, Charged-off
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 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 that is not a relevant Certificate Payment Date in the amounts
described above under "Description of the Certificates-- Allocations,
Applications and Payments". Amounts so deposited will be invested in Permitted
Investments (which are expected to be 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. From and after the
occurrence of a Swap Termination, no further deposits will be made to
Certificateholders' Accounts but instead all such investments will be liquidated
and amounts on deposit therein will be deposited into the
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SUBI Collection Account for application or payment on the next relevant
Certificate Payment Date as described herein.
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 cover
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, Applications and Payments", monies on deposit in
the Reserve Fund will be available to make payments to the Certificateholders
should Collections ultimately be insufficient to reduce the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate Balance, the Adjusted
Class A-3 Certificate Balance or the Adjusted Class B Certificate Balance to
zero on the related Stated Maturity Date. Of the amounts on deposit in the
Reserve Fund, an amount not in excess of $-shall be allocated to the Class B
Reserve Amount and generally will be available exclusively for payment of Class
B Notional Interest Accrual Amounts, Class B Fixed Rate Interest Accrual
Amounts, Class B Swap Interest Shortfall Amounts and Fixed Rate Class B Interest
Carryover Shortfall Amounts with respect to the Class B Certificates and for
reimbursement of Loss Amounts allocated to the Class B Certificates. Such
amounts will not be so applied unless no other amounts are then on deposit in
the Reserve Fund and available therefor. In addition, on or after the Class B
Targeted Maturity Date, if amounts remaining on deposit in the Reserve Fund
(including Class B Reserve Amounts) are sufficient to (i) fund any amounts
payable to the Trustee, Titling Trustee and Servicer, and (ii) reduce the
Adjusted Class Certificate Balance of all Classes of outstanding Certificates to
zero, such funds will be so paid. Following the initial allocation of amounts to
the Class B Reserve Amount, no subsequent amounts deposited into the Reserve
Fund will be allocated to the Class B Reserve Amount.
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. Thereafter, on each Monthly Allocation Date, the Reserve Fund will be
supplemented by certain Collections in excess of those amounts required to be
allocated and applied or paid pursuant to clauses (1) through (9) above under
"Description of the Certificates -- Allocations, Applications and Payments --
ALLOCATIONS AND APPLICATIONS OF COLLECTIONS" and from 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 $41,249,380.29 (5.50% 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 $48,749,267.61 (6.50% 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 Adjusted
Investor Balance.
The "Charge-off Rate" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Contracts that became Charged-off
Contracts during such Collection Period 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
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Charged-off Contracts and (y) the portion of amounts subsequently received in
respect of Contracts charged-off 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 last day of such Collection
Period (excluding Contracts as to which the Leased Vehicle has been sold or
otherwise disposed of during such Collection Period) determined in accordance
with the Servicer's normal practices, plus (b) the number of Repossessed Leased
Vehicles that have not been sold or otherwise disposed of (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 relating to Matured Contracts and sold 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 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. 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.
"Matured Contract" means any Contract that (i) has been terminated not more
than 30 days prior to the termination date specified therein, as such
termination date may have been extended or deferred as described herein or (ii)
has been terminated 31 or more days prior to the termination date specified
therein, as such termination date may have been extended or deferred as
described herein, and as to which all scheduled Monthly Payments have been made
by or on behalf of the lessee.
"Repossessed Leased Vehicle" means any Leased Vehicle actually repossessed
by the Servicer or its agent or returned by the related lessee 31 or more days
prior to the termination date specified in the related Contract, as such
termination date may have been deferred as described herein, but as to which one
or more scheduled Monthly Payments has not been made by or on behalf of the
lessee.
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 A 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 therefor, and deposit in
the SUBI Collection Account or Certificateholders' Account, as appropriate, an
aggregate amount equal to the amount to be applied in reduction of unreimbursed
Maturity Advances, plus the Required Amount. Certain amounts on deposit in the
Reserve Fund will also be available to make certain other payments on the Stated
Maturity Date or for release to the Transferor on such date if not so applied or
paid. 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
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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 Certificateholders, nor shall the Transferor be required to
refund any amount it has properly received.
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) a long-term unsecured debt rating from
Moody's of at least Baa3 and (b) 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 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 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 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 (except as set forth in the following
paragraph) and bearing interest at the related Required Rate (except that
certain overnight investments need not bear 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 debt securities issued by highly rated U.S.
corporations, (including 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
Certificate Payment Date or Monthly Allocation Date, as the case may be; (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; and (c) investments of
amounts on deposit in the Certificateholders' Account may mature on the day
immediately preceding the next Certificate Payment Date that is a day other than
a Saturday or Sunday or a day on which banking institutions in New York, New
York and San Francisco, California are not authorized or obligated by law,
regulation or executive order to be closed; PROVIDED, HOWEVER, that any
Permitted Investments consisting of TMCC Demand Notes may mature as late as such
Certificate Payment Date.
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 and the Certificateholders' Account generally being treated
as Interest Collections received in respect of the related Collection
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Period; provided, however, that income or other gain from amounts deposited in
respect of the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance, Adjusted Class A-3 Certificate Balance or Adjusted Class B
Certificate Balance will be included as amounts allocable as interest with
respect to the Certificates but will otherwise not be treated as Interest
Collections. Any loss resulting from such investments shall be charged to the
related Account. Income or other gain from such investments of amounts on
deposit in the Reserve Fund will be distributed to the Transferor on each
Monthly Allocation Date, and income or other gain from certain overnight
investments of amounts in the Certificateholders' Account will be distributed to
TMCC on relevant Certificate Payment Dates.
The "Required Rate" with respect to any Permitted Investment of amounts held
in the Certificateholders' Account in respect of (i) the Adjusted Class A-1
Certificate Balance will be the Class A-1 Notional Rate, (ii) the Adjusted Class
A-2 Certificate Balance will be the Class A-2 Notional Rate, (iii) the Adjusted
Class A-3 Certificate Balance will be the Class A-3 Notional Rate (iv) the
portion of the Adjusted Class B Certificate Balance represented by the
Adjustable Rate Class B Certificates will be the Class B Notional Rate, (v) the
portion of the Adjusted Class B Certificate Balance represented by the Fixed
Rate Class B Certificates will be the Class B Fixed Rate and (vi) in respect of
the Class A-1 Notional Interest Accrual Amount or any Class A-1 Interest
Carryover Shortfall Amount, the Class A-2 Notional Interest Accrual Amount or
any Class A-2 Interest Carryover Shortfall Amount, the Class A-3 Notional
Interest Accrual Amount or any Class A-3 Interest Carryover Shortfall Amount,
the Class B Notional Interest Accrual Amount or any Adjustable Rate Class B Swap
Interest Carryover Shortfall Amount or Class B Fixed Rate Interest Accrual
Amount or Fixed Rate Class B Interest Carryover Shortfall Amount will be the one
month commercial paper rate, which rate will be 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 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"). Currently,
these insurance policies collectively provide insurance coverage of $200 million
per occurrence, and permit multiple claims in any policy period (with no annual
or aggregate cap on the number of claims thereunder), but such coverages may be
reduced as described below. 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
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 has been 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", "Certain Legal Aspects of the
Titling Trust -- 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".
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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 in an amount of at least
$10 million per occurrence as 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 Class B Certificates will be subordinated to the Class A Certificates so
that on any Monthly Allocation Date (i) allocations and applications in respect
of interest on the Class B Certificates generally will not be made until amounts
have been appropriately allocated and applied in respect of the Class A-1
Notional Interest Accrual Amount and any Class A-1 Interest Carryover Shortfall
Amount, the Class A-2 Notional Interest Accrual Amount and any Class A-2 Swap
Interest Carryover Shortfall Amount and the Class A-3 Notional Interest Accrual
Amount and any Class A-3 Swap Interest Carryover Shortfall Amount as of such
Monthly Allocation Date, (ii) allocations and applications in respect of
principal of the Class B Certificates generally will not be made until the
foregoing allocations, applications and payments and all allocations and
applications in reduction of the Adjusted Class A-1 Certificate Balance, the
Adjusted Class A-2 Certificate Balance and the Adjusted Class A-3 Certificate
Balance (including reimbursements of Loss Amounts allocated thereto) have been
made and (iii) Loss Amounts and Certificate Principal Loss Amounts will be
allocated to the Class B Certificates until the Adjusted Class B Certificate
Balance has been reduced to zero prior to the allocation of any Loss Amounts or
Certificate Principal Loss Amounts to the Adjusted Class A-1 Certificate
Balance, the Adjusted Class A-2 Certificate Balance and the Adjusted Class A-3
Certificate Balance. Payments of interest on the Class B Certificates to the
extent of collections on Contracts allocable to interest will not be
subordinated to the payment of principal of or reimbursements of Loss Amounts
allocable to the Class A Certificates. In addition, because allocations of
interest will be made monthly while interest payments will be made quarterly, it
is possible that the Class B Certificates will receive allocations and payments
with respect to interest for a quarterly period even though the Class A
Certificates have not received the full amount of the related Notional Interest
Accrual Amounts, Swap Interest Shortfall Amounts, Loss Amounts and Certificate
Principal Loss Amounts with respect to all Monthly Interest Periods included in
the Interest Payment Period.
In addition, the rights of the Certificateholders to receive certain
payments with respect to the Contracts will be subordinated to the rights of the
Swap Counterparty to receive any Swap Termination payment due to it, the rights
of the Transferor to be reimbursed for any Maturity Advances, the rights of the
Trustee and the Titling Trustee to be reimbursed for Capped and Uncapped Trust
Administrative Expenses and 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, the Swap Agreement
and the Indenture do not purport to be complete and are qualified in their
entirety by reference to such agreements, which are incorporated by reference in
this Prospectus and copies of which may be obtained as described under
"Available Information" and "Documents Incorporated by Reference". Capitalized
terms used but not defined in such summaries have the meanings given to them in
the respective agreements.
ADDITIONAL AGREEMENT PROVISIONS
Certain additional provisions of the Agreement are summarized below.
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NO PETITION
The Trustee will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Transferor, the Titling Trust or the Titling
Trustee until one year and one day after payment of the Certificates in full.
Whether or not the Trustee institutes or joins in any such proceeding, certain
events of insolvency or bankruptcy with respect to TMCC or the Transferor will
be Events of Default under the Swap Agreement that may cause the termination of
the Swap Agreement and liquidation of the assets of the Trust.
AMENDMENT
The Agreement may be amended by the Transferor and the Trustee, without the
consent of the Certificate Owners, to cure any ambiguity, mistake or error, to
correct or supplement any provision therein which may be inconsistent with any
other provision therein, to add, change or eliminate 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 Certificate Owner.
The Agreement may also be amended from time to time by the Transferor and
the Trustee 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 (including, without
limitation, 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 Certificates, voting together as a single class;
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 payments that shall be required to be made
to the Holders of Certificates 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.
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.
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
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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 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 Certificates, considered 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 security or indemnity satisfactory to it
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 and the Certificates will be governed by the laws of the State
of California.
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 SUBI,
and the Other SUBI Assets evidenced by any Other SUBI will not be available to
make payments on, or pay expenses relating to, the SUBI, the UTI or any Other
SUBI.
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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.
The Titling Trust has obtained insurance policies (the "Residual Value
Insurance Policies"), naming TMCC 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 may become SUBI Assets. The proceeds of such
policies 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 allocations and applications in respect of 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.
SPECIAL OBLIGATIONS OF TMCC AS UTI 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, among other things, to (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
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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 Certificates, voting together as a single class, will, exercise its powers
under the Titling Trust Agreement to cause the Titling 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 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 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, a "Trust 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 Trust 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,
Applications and Payments -- ALLOCATIONS AND APPLICATIONS 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
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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 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.
AMENDMENT
The Titling Trust Agreement may be amended by written agreement between TMCC
and the Titling Trustee, subject to the approval of the Trustee if such
amendment affects the rights or interests of the holders of the SUBI Certificate
or the Certificateholders (and which approval 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 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.
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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
interests 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 "Certain 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 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 under a Contract (having the practical effect of
extending the Maturity Date of any Contract), 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 preceding
the Stated Maturity Date for the Class B Certificates. 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 by
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more than twelve months in the aggregate (or by more than sixteen months with
the inclusion of any deferrals) or beyond the last day of the Collection Period
relating to the Class B Stated Maturity Date. 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. Also, with
respect to each Monthly Allocation Date, the Servicer will have the option to
advance an amount not to exceed the aggregate amount of Liquidation Proceeds
that the Servicer reasonably expects to realize (based on criteria set forth in
the Agreement) upon disposition of all or any Leased Vehicles in its possession
and pending disposition during the related Collection Period (such Advance, an
"Inventory Advance").
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 and Inventory
Advances, the Servicer will assist in maintaining a regular flow of scheduled
principal and interest payments on such delinquent, deferred and matured
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 amounts collected on the Contracts and Leased
Vehicles.
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
(including when 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
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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 is made
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 fails 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.
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 repair Leased Vehicles
in connection with their disposition to the extent that it would do so in
connection with the sale or disposition of vehicles subject to lease contracts
that are its own property. 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 Charged-off 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
Charged-off Vehicle Proceeds and will be deposited into the SUBI Collection
Account. The Servicer will be entitled to reimbursement of all related
Charged-off Vehicle Expenses, and Principal Collections in respect of a
Collection Period will include all Net Charged-off Vehicle Proceeds collected
during such Collection Period.
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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 originating dealer will have the option
to purchase such vehicle for the same price. TMCC currently disposes of
Repossessed Leased Vehicles and off-lease vehicles not purchased by the related
lessee or the originating dealer through regional automobile auctions that are
not open to the public and an Internet site accessible to Toyota and Lexus
dealers. Leased Vehicles covered by Matured Contracts, to the extent that such
Contracts have been terminated within the three immediately preceding Collection
Periods but which, 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, 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 not 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 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 with the
servicing of the Contracts for at least two 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 the information necessary to make all
allocations, applications and payments 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.
Except (i) in connection with a liquidation of the assets of the Trust upon
Swap Termination and (ii) for the determination of interest accrued on the Class
A-1, Class A-2 and Class A-3 Certificates and any Adjustable Rate Class B
Certificates during any Monthly Interest Period as described under "Description
of the Certificates -- Calculation of Adjustable Rate -- Calculation and
Reporting of Interest
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Payment Amounts", the amount of any allocation, application or payment to be
made by the Trustee shall be calculated by the Servicer and specified in the
Servicer's Certificate.
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 1999, 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 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. 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 (other than from amounts on deposit
in the Reserve Fund) 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 DEPOSIT". 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 advancing certain
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 Vehicle or reasonable
expenses under an applicable insurance policy, or to the extent that Uncapped
Titling Trust Administrative Expenses are reimbursed out of Available Interest.
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
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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 officers, directors,
employees and 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 allocation and application or
payment to holders of interests in the SUBI or to the Trustee for any required
payments in respect of the Certificates 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 Certificates, voting together as a single class, or
failure, for any reason, of the Trust to pay in full any Class of Certificates
on the related Stated Maturity Date not cured within ten Business Days; (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.
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 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 be empowered to appoint a successor servicer to 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) subject to approval by each
Rating Agency. Any successor 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.
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Holders of Certificates evidencing not less than 51% of the Voting Interests
of the 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 any uncured default in making any required deposits
to or payments from an Account in accordance with the Servicing Agreement (after
giving effect to any applicable grace period) 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 all of the Certificateholders. 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
any 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 allocations and applications or
payments 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.
AMENDMENT
The Servicing Agreement may be amended from time to time in a writing signed
by the Titling Trustee, the Trust Agent 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
Amounts deposited into the Certificateholders' Account on any Monthly
Allocation Date will be invested in Permitted Investments maturing on or prior
to the succeeding relevant Certificate Payment Date. 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
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and with variable maturities that bear the required interest rates, 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 December 1, 1998, 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 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 $1.2 billion.
The TMCC Demand Notes will bear interest at the related Required Rates 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 be paid on each
Certificate Payment Date and at Maturity with respect to such TMCC Demand Notes.
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 amounts allocated pursuant
to clauses (1), (2) and (3) above under "Description of the Certificates --
Allocations, Applications and Payments -- ALLOCATIONS AND APPLICATIONS OF
COLLECTIONS", on or prior to the next succeeding Certificate Payment Date, and
in the case of the TMCC Demand Notes issued with respect to the investment of
amounts allocated pursuant to clauses (8) and (9) above under "Description of
the Certificates -- Allocations, Applications and Payments -- ALLOCATIONS AND
APPLICATIONS OF COLLECTIONS" or otherwise in reduction of the Adjusted Class A-1
Certificate Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class A-3
Certificate Balance or Adjusted Class B Certificate Balance, on or prior to the
related Targeted Maturity Date and (y) on the date on which the Trustee demands
payment thereof in connection with (i) the reduction by Standard & Poor's of
TMCC's short-term debt to a rating less than A-1+ or the reduction by Standard &
Poor's of TMCC's long-term debt to a rating less than AA, the reduction by
Moody's of TMCC's short-term debt to a rating less than P-1 or the reduction by
Moody's of TMCC's long-term debt to a rating of less than Aa3 and the
determination by the Trustee that at such time one or more Permitted Investments
having substantially the same maturities, similar demand features and bearing
interest at the relevant Required Rates are available and investment therein
rather than in TMCC Demand Notes will not, by itself, cause a Rating Agency to
reduce or withdraw its rating of any Class of Certificates or (ii) any Swap
Termination. SEE "Risk Factors -- Risks Associated with the Ratings of the Class
A Certificates".
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.
The TMCC Demand Notes will be issued only in fully registered form without
interest 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, on behalf of the Trust, 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, on behalf of the Trust, shall be permitted to seek the direction of the
Certificateholders before taking any such action. 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.
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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 without the consent of the holder of the TMCC Demand Notes (a) to cure
any ambiguity, to correct or supplement any provisions thereof that may be
inconsistent with any other provision thereof or to add any other provision with
respect to matters or questions arising under the Indenture which are not
inconsistent with the provisions thereof, provided that any such action will
not, in the good faith judgment of the parties, materially and adversely affect
the interest of any holder of TMCC Demand Notes or any Certificateholder and the
Indenture Trustee shall be furnished an opinion of counsel to the effect that
such amendment will not materially and adversely affect the interest of any
Certificateholder, and (b) for purposes of appointing a successor trustee
thereunder or in connection with any merger or consolidation of TMCC or the
transfer or lease of the assets of TMCC in their entirety, in each case in
accordance with the provisions of the Indenture. In addition, supplemental
indentures may be entered into by TMCC and the Indenture Trustee with the
consent of the holder of the TMCC Demand Notes (which consent will not be given
except at the written direction of Holders of at least 25% in aggregate
principal amount of the Class A Certificates), for the purpose of adding any
provisions to or changing in any manner or eliminating any other 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,
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.
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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 and continuance of such default for a period
of 10 days; (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 of
TMCC Demand Notes, unless such holders have offered to the Indenture Trustee
indemnity or security satisfactory to it 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
TMCC 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 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 TMCC'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,
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however, that if the Indenture Trustee acquires any conflicting interest 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 California.
THE SWAP AGREEMENT
The following summary describes certain terms of the Swap Agreement. The
summary does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the provisions of the Swap Agreement. Any Fixed Rate
Class B Certificates will not have the benefit of the Swap Agreement.
PAYMENTS UNDER THE SWAP AGREEMENT
On the Closing Date the Trust will enter into a 1992 International Swaps and
Derivatives Association, Inc. ("ISDA") Master Agreement (Multi Currency-Cross
Border) (such agreement, the "1992 Master Agreement") with the Swap
Counterparty, as modified to reflect the transactions described below (the 1992
Master Agreement, as so modified, the "Swap Agreement"). The Swap Agreement will
incorporate certain relevant standard definitions published by ISDA.
Under the Swap Agreement, the Trust will generally pay to the Swap
Counterparty amounts equal to the Class A-1 Swap Interest Amount, the Class A-2
Swap Interest Amount, the Class A-3 Swap Interest Amount and the Class B Swap
Interest Amount due on each Certificate Payment Date and the Swap Counterparty
will generally pay to the Trust amounts equal to the interest payable on each
Class of Class A Certificates and any Adjustable Rate Class B Certificates;
provided that if the Trust is unable to make any payment due to be made by it to
the Swap Counterparty under the Swap Agreement, the Swap Counterparty will not
be obligated to make its corresponding payment to the Trust under the Swap
Agreement.
More specifically, if on any Certificate Payment Date, the amount allocated
under the Agreement and paid by the Trust to the Swap Counterparty is less than
the Class A-1 Swap Interest Amount due on such date, the obligation of the Swap
Counterparty to pay an amount equal to the interest otherwise due on the Class
A-1 Certificates on such Certificate Payment Date will be reduced in the same
proportion as the proportion that such Class A-1 Swap Interest Shortfall Amount
represents of the Class A-1 Swap Interest Amount otherwise due on such date. If
on a subsequent Certificate Payment Date, amounts are available under the
Agreement and are paid by the Trust to the Swap Counterparty to reimburse all or
any part of such Class A-1 Swap Interest Shortfall Amount, then the obligation
of the Swap Counterparty to pay an amount equal to the interest otherwise due on
the Class A-1 Certificates on such Certificate Payment Date will be increased in
the same proportion as the proportion that the amount of such reimbursement
represents of the Class A-1 Swap Interest Amount otherwise due on such date.
If on any Certificate Payment Date, the amount allocated under the Agreement
and paid by the Trust to the Swap Counterparty is less than the Class A-2 Swap
Interest Amount due on such date, the obligation of the Swap Counterparty to pay
an amount equal to the interest otherwise due on the Class A-2 Certificates on
such Certificate Payment Date will be reduced in the same proportion as the
proportion that such Class A-2 Swap Interest Shortfall Amount represents of the
Class A-2 Swap Interest Amount otherwise due on such date. If on a subsequent
Certificate Payment Date, amounts are available under the Agreement and are paid
by the Trust to the Swap Counterparty to reimburse all or any part of such Class
A-2 Swap Interest Shortfall Amount, then the obligation of the Swap Counterparty
to pay an amount equal to the interest otherwise due on the Class A-2
Certificates on such Certificate Payment Date will be
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increased in the same proportion as the proportion that the amount of such
reimbursement represents of the Class A-2 Swap Interest Amount otherwise due on
such date.
If on any Certificate Payment Date, the amount allocated under the Agreement
and paid by the Trust to the Swap Counterparty is less than the Class A-3 Swap
Interest Amount due on such date, the obligation of the Swap Counterparty to pay
an amount equal to the interest otherwise due on the Class A-3 Certificates on
such Certificate Payment Date will be reduced in the same proportion as the
proportion that such Class A-3 Swap Interest Shortfall Amount represents of the
Class A-3 Swap Interest Amount otherwise due on such date. If on a subsequent
Certificate Payment Date, amounts are available under the Agreement and are paid
by the Trust to the Swap Counterparty to reimburse all or any part of such Class
A-3 Swap Interest Shortfall Amount, then the obligation of the Swap Counterparty
to pay an amount equal to the interest otherwise due on the Class A-3
Certificates on such Certificate Payment Date will be increased in the same
proportion as the proportion that the amount of such reimbursement represents of
the Class A-3 Swap Interest Amount otherwise due on such date.
If on any Certificate Payment Date, the amount allocated under the Agreement
and paid by the Trust to the Swap Counterparty is less than the Class B Swap
Interest Amount due on such date, the obligation of the Swap Counterparty to pay
an amount equal to the interest otherwise due on any Adjustable Rate Class B
Certificates on such Certificate Payment Date will be reduced in the same
proportion as the proportion that such Class B Swap Interest Shortfall Amount
represents of the Class B Swap Interest Amount otherwise due on such date. If on
a subsequent Certificate Payment Date, amounts are available under the Agreement
and are paid by the Trust to the Swap Counterparty to reimburse all or any part
of such Class B Swap Interest Shortfall Amount, then the obligation of the Swap
Counterparty to pay an amount equal to the interest otherwise due on any
Adjustable Rate Class B Certificates on such Certificate Payment Date will be
increased in the same proportion as the proportion that the amount of such
reimbursement represents of the Class B Swap Interest Amount otherwise due on
such date.
The Trust will not be obligated to pay interest to the Swap Counterparty on
any Class A-1 Swap Interest Shortfall Amount, Class A-2 Swap Interest Shortfall
Amount, Class A-3 Swap Interest Shortfall Amount or Class B Swap Interest
Shortfall Amount and, correspondingly, Certificateholders will not be entitled
to receive interest on any Class A-1, Class A-2, Class A-3 or Class B Swap
Interest Shortfall Amounts.
Unless the Swap Agreement is terminated early as described under "-- EARLY
TERMINATION OF SWAP AGREEMENT", the Swap Agreement will terminate on the earlier
of (i) the Class B Stated Maturity Date and (ii) the date on which the Adjusted
Class A-1 Certificate Balance, the Adjusted Class A-2 Certificate Balance, the
Adjusted Class A-3 Certificate Balance and the portion of the Adjusted Class B
Certificate Balance represented by the Adjustable Rate Class B Certificates,
have been reduced to zero.
CONDITIONS PRECEDENT
The respective obligations of the Swap Counterparty and the Trust to pay
certain amounts due under the Swap Agreement will be subject to the following
conditions precedent: (i) no Event of Default (as defined below under "--
DEFAULTS UNDER SWAP AGREEMENT") or event that with the giving of notice or lapse
of time or both would become an Event of Default shall have occurred and be
continuing and (ii) no Early Termination Date (as defined below under "-- EARLY
TERMINATION OF SWAP AGREEMENT") shall have occurred or been effectively
designated.
DEFAULTS UNDER SWAP AGREEMENT
"Events of Default" under the Swap Agreement (each, an "Event of Default")
are limited to: (i) the failure of the Trust or the Swap Counterparty to pay any
amount when due under the Swap Agreement after giving effect to the applicable
grace period, if any; (ii) the occurrence of certain events of insolvency or
bankruptcy of the Trust or the Swap Counterparty and (iii) certain other
standard events of default under the 1992 Master Agreement including "Breach of
Agreement" (not applicable to the Trust),
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"Misrepresentation" (not applicable to the Trust) and "Merger without
Assumption", as described in Sections 5(a)(ii), 5(a)(iv) and 5(a)(viii) of the
1992 Master Agreement.
TERMINATION EVENTS
"Termination Events" under the Swap Agreement consist of the following: (i)
certain events of insolvency or bankruptcy of the Transferor; (ii) the Trust or
the Transferor becomes subject to registration as an "investment company" under
the Investment Company Act of 1940; and (iii) certain standard termination
events under the 1992 Master Agreement including "Illegality" (which generally
relates to changes in law causing it to become unlawful for either of the
parties to perform its obligations under the Swap Agreement), "Tax Event" (which
generally relates to either party to the Swap Agreement receiving payments
thereunder from which an amount has been deducted or withheld for or on account
of certain taxes) and "Tax Event Upon Merger" (which generally relates to a
party to the Swap Agreement receiving a payment under the Swap Agreement from
which an amount has been deducted or withheld for or on account of certain taxes
as a result of a party merging with another entity), each as more fully
described in Sections 5(b)(i), 5(b)(ii) and 5(b)(iii) of the 1992 Master
Agreement; provided, however, that the occurrence of a "Tax Event" or "Tax Event
Upon Merger" will only constitute a Termination Event if at least 51% by Voting
Interests of the Class A Certificateholders and any Adjustable Rate Class B
Certificateholders directs the Trustee to terminate the Swap Agreement and
liquidate the assets of the Trust.
EARLY TERMINATION OF SWAP AGREEMENT
Upon the occurrence of any Event of Default under the Swap Agreement, the
non-defaulting party will have the right to designate an Early Termination Date
(as defined in the Swap Agreement) upon the occurrence and continuance of such
Event of Default. On the Early Termination Date, the Swap Agreement will
terminate. With respect to Termination Events, an Early Termination Date may be
designated by one or both of the parties (as specified in the Swap Agreement
with respect to each Termination Event) and will occur only upon notice and, in
certain cases, after the party causing the Termination Event has used reasonable
efforts to transfer its rights and obligations under such Swap Agreement to a
related entity within a limited period after notice has been given of the
Termination Event, all as set forth in the Swap Agreement. The occurrence of an
Early Termination Date under the Swap Agreement will constitute a "Swap
Termination".
Upon any Swap Termination, the Trust or the Swap Counterparty may be liable
to make a termination payment to the other (regardless, if applicable, of which
of such parties may have caused such termination). Such termination payment will
be calculated on the basis that the Trust is the Affected Party (as defined in
the Swap Agreement), subject to certain exceptions. The amount of any such
termination payment will be based on the market value of the Swap Agreement
computed on the basis of market quotations of the cost of entering into swap
transactions with the same terms and conditions that would have the effect of
preserving the respective full payment obligations of the parties, in accordance
with the procedures set forth in the Swap Agreement (assuming, for purposes of
such calculation, that all outstanding Class A-1 Swap Interest Shortfall
Amounts, Class A-2 Swap Interest Shortfall Amounts, Class A-3 Swap Interest
Shortfall Amounts and Class B Swap Interest Shortfall Amounts are due and
payable on the first Certificate Payment Date that would have occurred after the
Early Termination Date). Any such termination payment could, if interest rates
have changed significantly, be substantial.
If the Swap Agreement is terminated as a result of (i) certain events of
insolvency or bankruptcy of the Swap Counterparty or (ii) the Swap
Counterparty's failure to pay amounts due under the Swap Agreement, the Swap
Counterparty will not be entitled to any portion of the termination payment
related to the market value of the Swap Agreement.
If a Swap Termination occurs, the principal of each Class of Certificates
will become immediately payable and the Trustee will be obligated to liquidate
the assets of the Trust as described under "Description of the Certificates --
Termination of the Trust; Retirement of the Certificates -- Swap Termination".
In any such event, the ability of the Trust to pay interest on each Class of
Certificates will
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depend on (a) the price at which the assets of the Trust are liquidated, (b) the
amount of the swap termination payment, if any, which may be due to the Swap
Counterparty from the Trust under the Swap Agreement and (c) the amount of the
swap termination payment, if any, which may be due to the Trust from the Swap
Counterparty under the Swap Agreement. In the event that the net proceeds of the
liquidation of the assets of the Trust are not sufficient to make all payments
due in respect of the Certificates and for the Trust to meet its obligations, if
any, in respect of the termination of the Swap Agreement, then such amounts will
be allocated and applied in accordance with the priority of payments described
herein and the claims of the Swap Counterparty in respect of such net proceeds
will rank higher in priority than the claims of the Class A Certificateholders
and any Adjustable Rate Class B Certificates. See "Description of the
Certificates -- Termination of the Trust; Retirement of the Certificates -- Swap
Termination".
The Agreement provides that upon the occurrence of (i) any Event of Default
arising from any action taken, or failure to act, by the Swap Counterparty, or
(ii) a Termination Event (except as described in the following sentence) with
respect to which the Swap Counterparty is an Affected Party, the Trustee may and
will, at the direction of 51% by Voting Interest of the Class A
Certificateholders and any Adjustable Rate Class B Certificates, by notice to
the Swap Counterparty, designate an Early Termination Date with respect to the
Swap Agreement. If a Termination Event occurs (i) as a result of the insolvency
or bankruptcy of the Transferor or (ii) because the Trust or the Transferor
becomes subject to registration as an "investment company" under the Investment
Company Act of 1940, the Trustee will be required by the terms of the Agreement
to terminate the Swap Agreement.
TAXATION
Neither the Trust nor the Swap Counterparty is obligated under the Swap
Agreement to gross up if withholding taxes are imposed on payments made under
the Swap Agreement.
In the event that any withholding or similar tax is imposed on payments by
the Trust to the Swap Counterparty under the Swap Agreement, the Swap
Counterparty will be entitled to deduct amounts in the same proportion (as
calculated in accordance with the Swap Agreement) from subsequent payments due
from it. In the event that the Swap Counterparty is required to withhold amounts
from payments by the Swap Counterparty under the Swap Agreement, the payment
obligations of the Swap Counterparty will be reduced by such amounts and the
payment obligations of the Trust under the Swap Agreement will remain the same.
In either such event, payments on the Certificates will be subject to reduction
in proportion to the amount so deducted or withheld. In either such event, 51%
by Voting Interests of the Certificateholders may direct the Trustee to
terminate the Swap Agreement and liquidate the assets of the Trust, as described
above under "-- Termination Events".
ASSIGNMENT
Except as provided below, neither the Trust nor the Swap Counterparty is
permitted to assign, novate or transfer as a whole or in part any of its rights,
obligations or interests under the Swap Agreement. The Swap Counterparty may
transfer the Swap Agreement to another party on ten Business Days' prior written
notice, provided that (i) such notice will be accompanied by a guarantee of the
Swap Counterparty of such transferee's obligations in form and substance
reasonably satisfactory to the Trustee, (ii) the Swap Counterparty delivers an
opinion of independent counsel of recognized standing in form and substance
reasonably satisfactory to the Trustee confirming that as of the date of such
transfer the transferee will not, as a result of such transfer, be required to
withhold or deduct on account of tax under the Swap Agreement, (iii) a
Termination Event or Event of Default does not occur under the Swap Agreement as
a result of such transfer and (iv) the then current ratings of the Certificates
are not adversely affected as a result of such transfer. In addition, in the
event the long-term debt rating of the Swap Counterparty is reduced to a level
below Aa3 by Moody's or AA by Standard & Poor's or the short-term debt rating of
the Swap Counterparty is reduced to a level below P-1 by Moody's or A-1+ by
Standard & Poor's, the Swap Counterparty may assign the Swap Agreement to
another party (or otherwise obtain a replacement swap agreement on substantially
the same terms as the Swap Agreement) and thereby be released from its
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obligations under the Swap Agreement; provided that (i) the new swap
counterparty, by a written instrument, accepts all of the obligations of the
Swap Counterparty under the Swap Agreement to the reasonable satisfaction of the
Trustee, (ii) the Swap Counterparty delivers an opinion of independent counsel
of recognized standing in form and substance reasonably satisfactory to the
Trustee confirming that as at the date of such transfer the new swap
counterparty will not, as a result of such transfer or replacement, be required
to withhold or deduct on account of tax under the Swap Agreement, (iii) a
Termination Event or Event of Default does not occur under the Swap Agreement as
a result of such transfer and (iv) the ratings assigned to the Certificates
after such assignment and release will be at least equal to the ratings assigned
by Moody's and Standard & Poor's to the Certificates at the time of such
reduction of the rating of the Swap Counterparty's long-term debt. Any cost of
such transfer or replacement will be borne by the Swap Counterparty or the new
swap counterparty and not by the Trust; provided, however that the Swap
Counterparty shall not be required to make any payment to the new swap
counterparty to obtain an assignment or replacement swap. The Swap Counterparty
shall have no obligation to assign the Swap Agreement or obtain a replacement
swap agreement in the event of a ratings downgrade and neither the Trust nor the
Certificateholders will have any remedy against the Swap Counterparty if the
Swap Counterparty fails to make such an assignment or obtain a replacement swap
agreement. In the event that the Swap Counterparty does not elect to assign the
Swap Agreement or obtain a replacement swap agreement the Swap Counterparty may
(but shall not be obligated to) establish any other arrangement satisfactory to
the applicable Rating Agency, in each case such that the ratings of the
Certificates by the applicable Rating Agency will not be withdrawn or reduced.
MODIFICATION AND AMENDMENT OF SWAP AGREEMENT
The Agreement contains provisions permitting the Trustee to enter into any
amendment of the Swap Agreement (i) to cure any ambiguity or mistake, (ii) to
correct any defective provisions or to correct or supplement any provision
therein which may be inconsistent with any other provision therein or with the
Agreement or (iii) to add any other provisions with respect to matters or
questions arising under the Swap Agreement; provided, in the case of clause
(iii) that such amendment will not adversely affect in any material respect the
interest of any Certificateholder. Any such amendment shall be deemed not to
adversely affect in any material respect the interests of any Certificateholder
if the Trustee receives written confirmation from each rating agency rating the
Certificates that such amendment will not cause such Rating Agency to reduce the
then current rating thereof.
THE SWAP COUNTERPARTY
A description of the Swap Counterparty is provided under "TMCC" herein.
Information regarding the Swap Counterparty is publicly available as described
under "Documents Incorporated by Reference" herein. Where indicated by the
context, as used herein "Swap Counterparty" includes any party that replaces
TMCC as Swap Counterparty as described above under "-- Assignment".
GOVERNING LAW
The Swap Agreement will be governed by and construed in accordance with the
laws of the State of New York.
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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, the
SUBI Certificate or any Other SUBI Certificate). The Trust will own the assets
of the Trust, the primary asset of which will be the SUBI Certificate evidencing
a beneficial interest in substantially all of 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.
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 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
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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 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. 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
assets of 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,
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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 a "financial asset" under the UCC and 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, New York 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
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 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
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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, New York 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 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
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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 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 Charged-off 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 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 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
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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 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
following the Revolving 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 O'Melveny &
Myers LLP, special federal income tax counsel to the Transferor, as to certain
United States 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 Certificate to the Trust, for financial accounting
purposes, as a sale of an ownership interest in the related 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,
O'Melveny & Myers LLP 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 ORIGINAL ISSUE 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 Certificate Owners have reasonable remedies to
compel payment of interest deficiencies (E.G.,default and acceleration rights).
Because Class A Certificate Owners will not be entitled to penalty payments of
interest on interest deficiencies, and Class A Certificate Owners 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 Certificate Owner'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 Certificate Owner 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. Certificate Owners 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
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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 Certificate
Owner purchases a Class A Certificate issued with OID 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 Certificate Owner 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, currently more
than 12 months, 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.
Long-term capital gains will be taxable to non-corporate Certificate Owners at a
reduced tax rate of 20%, 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 term "Foreign Investor"
means any person other than (i) a citizen or resident of the United States who
is a
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natural person, (ii) a corporation or partnership (or an entity treated as a
corporation or partnership) organized in or under the laws of the United States
or any state thereof, including the District of Columbia (unless, in the case of
a partnership, Treasury Regulations are adopted that provide otherwise), (iii)
an estate, the income of which is subject to United States Federal income
taxation, regardless of its source or (iv) a trust, if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons (as such term is defined in the Code
and Treasury Regulations) have the authority to control all substantial
decisions of the trust. Notwithstanding the preceding sentence, to the extent
provided in Treasury Regulations, certain trusts in existence prior to August
20, 1996 which elected to be treated as United States persons prior to such date
also shall not be Foreign Investors. The term "United States person" means a
beneficial owner of a Certificate that is not a Foreign Investor.
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, payments of principal
and interest (including original issue discount) on a Class A Certificate by the
Trust or any of its Paying Agents to a Foreign Investor, will not be subject to
United States withholding tax; provided, however, that in the case of interest
and original issue discount (1) such Investor does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Transferor entitled to vote, (2) such Investor is not a
controlled foreign corporation for United States tax purposes that is related to
the Transferor through stock ownership, (3) such Investor is not a bank
extending credit pursuant to a loan agreement entered into in the ordinary
course of its trade or business, and (4) the Investor provides the appropriate
forms establishing its Foreign Investor status.
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 or substantially similar form 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
Certain payments to noncorporate persons of interest on and principal of
obligations, and of the proceeds from the sale of obligations, are subject to
information reporting and may be subject to a backup withholding tax at a rate
of 31%. Under current United States federal income tax law and regulations
payments of interest on and principal of a Class A Certificate by the Trust or
any of its paying agents, and payment of the proceeds of the sale of a Class A
Certificate, made outside the United States, will not be subject to information
reporting or backup withholding unless the Trustee or any Paying Agents have
actual knowledge that the beneficial owner of the Class A Certificate is a
United States person (as defined above). However, if payments of interest on or
principal of, or the proceeds of the sale of, a Class A Certificate are
collected outside the United States by the foreign office of a custodian,
nominee or other
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agent acting on behalf of the beneficial owner of a Class A Certificate, and, if
such custodian, nominee or other agent acting on behalf of the beneficial owner
of a Class A Certificate is a (i) United States person, (ii) a controlled
foreign corporation for United States tax purposes, or (iii) a foreign person
50% or more of whose gross income is from a United States trade or business,
payments of interest and principal in respect of the Class A Certificates, or
the proceeds of a sale of the Class A Certificates, made by such custodian,
nominee or agent to the beneficial owner may be subject to information reporting
unless such custodian, nominee or agent has sufficient documentary evidence in
its records that the beneficial owner is not a United States person or the
beneficial owner otherwise establishes an exemption. Currently, such payments
are not subject to backup withholding. If payments of interest, principal or the
proceeds of the sale of a Class A Certificate are collected by the United States
office of a custodian, agent or nominee acting on behalf of the beneficial
owner, information reporting and backup withholding will apply to payments made
by such custodian, agent or nominee to the beneficial owner unless such owner
certifies under penalty of perjury that it is not a United State person or
otherwise established an exemption.
On October 6, 1997, the Internal Revenue Service issued regulations (the
"Final Regulations") which could affect the procedures to be followed by a
Foreign Investor in establishing such Foreign Investor's status as a Foreign
Investor for the purposes of the withholding rules. The Final Regulations
generally are effective for payments made after December 31, 1999, subject to
certain transition rules. Prospective investors should consult their tax
advisors concerning the potential effect of such Final Regulations on their
ownership of Class A Certificates.
POSSIBLE ALTERNATIVE TREATMENT OF THE CLASS A CERTIFICATES
Although, as described above, it is the opinion of O'Melveny & Myers LLP
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 Certificate Owners 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 Foreign Investors
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 term "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
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"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 and 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.
Equity participation in an entity by "benefit plan investors" (I.E., Benefit
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 any person (or
its affiliates) which has discretionary authority or control or provides
investment advice for a fee, with respect to the 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.
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 applicability of 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 November , 1998 (the "Underwriting Agreement"), among the
Transferor, TMCC and the Underwriters named below (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>
Credit Suisse First Boston Corporation.......
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................
Bear, Stearns & Co. Inc......................
Goldman, Sachs & Co..........................
Lehman Brothers Inc..........................
J.P. Morgan Securities Inc...................
Morgan Stanley & Co. Incorporated............
NationsBanc Montgomery Securities LLC........
Salomon Smith Barney Inc. ...................
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 Certificate, Class A-2 Certificate 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 Certificate, Class
A-2 Certificate and Class A-3 Certificate, respectively, on sales to certain
other dealers.
The Transferor and TMCC have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
The Class A-1, Class A-2 and Class A-3 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 the 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 the Class A-1 Certificates, Class A-2 Certificates or Class A-3
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-1
Certificates, Class A-2 Certificates or Class A-3 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
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the purchase of Class A-1 Certificates, Class A-2 Certificates or Class A-3
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-1 Certificates, Class A-2 Certificates or Class
A-3 Certificates 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
representation that the Underwriters will engage in any such transactions or
that, once commenced, any such transactions will not be discontinued without
notice.
Certain of the Underwriters and their affiliates engage in transactions
with, and perform services for, TMCC and affiliates of TMCC in the ordinary
course of business and have engaged, and may in the future engage, in commercial
banking and investment banking transactions with TMCC and affiliates of TMCC.
The Trust may, from time to time, invest the funds in the Accounts in
Permitted Investments acquired from one or more of the Underwriters, an
affiliate thereof or the Servicer or engage one or more of the Underwriters or
affiliates thereof as Swap Counterparties in replacement of TMCC.
It is expected that delivery of the Class A Certificates will be made
against payment therefor on or about the Closing Date, which is expected to be
the business day following the date hereof. Under Rule 15c6-1 under the
Exchange Act, trades in the secondary market generally are required to settle
within three business days, unless the parties thereto expressly agree
otherwise. Accordingly, purchasers who wish to trade Class A-1 Certificates,
Class A-2 Certificates or Class A-3 Certificates on the date hereof will be
required, by virtue of the fact that the Class A-1 Certificates, Class A-2
Certificates or Class A-3 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.
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
LISTING
Application will be made for listing the Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates on the Luxembourg Stock Exchange.
In connection with the listing application made to the Luxembourg Stock
Exchange, the Articles of Incorporation and Bylaws of the Transferor, the
Agreement, the Agency Agreement and a legal notice relating to the issuance of
each Class of 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.
REPRESENTATIONS
UNITED KINGDOM
Each Manager 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 ordinary 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 Class A Certificates to a
person who is of a kind described in Article 11(3) of the Financial
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Services Act 1986 (Investment Advertisements) (Exemptions) Order 1997 or is a
person to whom the document can otherwise lawfully be issued or passed on.
GENERAL
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 where action for that purpose is required unless
such action is taken. Accordingly, 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 Manager will represent and agree that it will comply with all
applicable laws and regulations in each jurisdiction in which it purchases,
offers or sells any 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 any 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
Manager 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.
EUROCLEAR AND CEDEL
The Class A-1 Certificates, Class A-2 Certificates and Class A-3
Certificates have been accepted for clearance through the Cedel Bank and
Euroclear systems. The Class A-1 Certificates have been assigned the ISIN number
US892317AK46. The Class A-2 Certificates have been assigned the ISIN number
US892317AL29. The Class A-3 Certificates have been assigned the ISIN number
US892317AM02.
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, the Agency Agreement and the Indenture will be available for
inspection during the term of the Class A-1 Certificates, Class A-2 Certificates
and Class A-3 Certificates at the offices of Bankers Trust Company Luxembourg
S.A., 14 Boulevard F.D. Roosevelt, L-2450, Luxembourg. For so long as any Class
A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates are listed on
the Luxembourg Stock Exchange, copies of the reports to Certificateholders to be
delivered to the Trustee will be obtainable at no charge at such location.
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) 787-3541.
AUTHORIZATION
The execution and delivery of the Agreement, the Titling Trust Agreement,
the SUBI Supplement, the Servicing Supplement, the Indenture and the Swap
Agreement and the sale of each Class of Class A Certificates were authorized by
the Boards of Directors of the Transferor and/or TMCC, as appropriate, on July
29, 1997, August 15, 1997, June 9, 1998 and September 30, 1998.
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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 June 30, 1998, 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
PricewaterhouseCoopers LLP of Los Angeles, California are independent public
accountants of TMCC.
UNITED STATES LAW
O'Melveny & Myers LLP, a law firm licensed in the states of California and
New York and in the District of Columbia, in the United States, has given and
has not withdrawn its consent to the inclusion in this Prospectus of the
descriptions of its opinions regarding matters of 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.
RATINGS OF THE CLASS A CERTIFICATES
It is a condition of issuance that each of Moody's and Standard & Poor's
rate 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, the terms of the Transferor Interest
and Class B Certificates, and the current ratings assigned to the debt
obligations of TMCC in its capacity as issuer of the TMCC Demand Notes. A
reduction, suspension or withdrawal of a rating assigned by either Rating Agency
to the debt securities of TMCC could result in the reduction, suspension or
withdrawal of its rating of either Class of Class A Certificates. Even absent
any such reduction, suspension or withdrawal of a rating assigned to the debt
obligations of TMCC, there can be no assurance that any such rating will not be
reduced, suspended, withdrawn or otherwise qualified by the assigning Rating
Agency if, in its judgment, other circumstances so warrant. In the event that a
rating with respect to either Class of Class A Certificates is reduced,
suspended, withdrawn or otherwise qualified, no person or entity will be
obligated to provide any additional credit enhancement with respect thereto. The
ratings of each Class of Class A Certificates will not address the likelihood of
the payment in full of the principal amount of such Class A Certificates on any
particular date prior to the Stated Maturity Date. Notice of any change in the
ratings of the Class A Certificates will be provided to the Luxembourg Stock
Exchange, and will be given by publication to Certificateholders in accordance
with the rules of the Luxembourg Stock Exchange. SEE "Description of the
Certificates -- Notices".
The ratings of each Class of 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 any 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 address 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 either Class of Class A Certificates, or, if one
does, what rating will be assigned by such other rating agency. A rating on
either Class of Class A Certificates by another rating agency, if assigned at
all, may be lower than the ratings assigned thereto by Moody's or Standard &
Poor's. SEE "Risk Factors -- Risks Associated with Ratings of the Class A
Certificates".
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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 O'Melveny & Myers LLP, Los Angeles, California. Brown & Wood LLP
will act as counsel for the Underwriters and has performed certain legal
services for TMCC, including 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, 1997 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said 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, 1997 and
1996, the six-month periods ended March 31, 1998 and 1997, and the nine-month
periods ended June 30, 1998 and 1997 incorporated by reference in this
Prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports dated February 12, 1998, May 7,
1998 and August 13, 1998 incorporated by reference herein state that they did
not audit and they do not express an opinion on that unaudited consolidated
financial information. PricewaterhouseCoopers 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. PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP within the meaning of section 7 and 11
of the Securities Act.
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INDEX OF CAPITALIZED TERMS
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
1992 Master Agreement............................................................................... 103
Accelerated Principal Distribution Amount........................................................... 16
Accounts............................................................................................ 81
Accumulation Date................................................................................... 14
Accumulation Event.................................................................................. 71
Additional Loss Amounts............................................................................. 89
Additional Loss Contract............................................................................ 84
Adjustable Rate Class B Certificates................................................................ 4
Adjustable Rate Class B Interest Carryover Shortfall Amount......................................... 68
Adjusted Class A-1 Certificate Balance.............................................................. 6
Adjusted Class A-2 Certificate Balance.............................................................. 6
Adjusted Class A-3 Certificate Balance.............................................................. 6
Adjusted Class B Certificate Balance................................................................ 7
Adjusted Investor Balance........................................................................... 7
Advance............................................................................................. 27
Aggregate Net Investment Value...................................................................... 21
Aggregate Net Losses................................................................................ 83
Agreement........................................................................................... i
ALG................................................................................................. 45
allocation.......................................................................................... 8
application......................................................................................... 8
Available Interest.................................................................................. 68
Benefit Plans....................................................................................... 118
Business Day........................................................................................ 4, 63, 77
Capitalized Cost.................................................................................... 21, 52
Capped Contingent and Excess Liability Premiums..................................................... 69
Capped Titling Trust Administrative Expenses........................................................ 69
Capped Trust Administrative Expenses................................................................ 69
Cedel Bank.......................................................................................... 20
Cedel Bank Participants............................................................................. 78
Certificate Distribution Amount..................................................................... 74
Certificate Factor.................................................................................. 59
Certificate Owners.................................................................................. 20
Certificate Payment Date............................................................................ 10, 13
Certificate Principal Loss Amounts.................................................................. 69
Certificateholders.................................................................................. v
Certificateholders' Account......................................................................... 82
Certificates........................................................................................ i, 3
Charged-off Amount.................................................................................. 61
Charged-off Contract................................................................................ 61
Charged-off Vehicle Expenses........................................................................ 23
Charged-off Vehicle Proceeds........................................................................ 23
Charge-off Rate..................................................................................... 83
Claims.............................................................................................. 91
Class A Certificates................................................................................ i, 3
Class A-1 Certificate Balance....................................................................... 5
Class A-1 Certificates.............................................................................. i, 3
Class A-1 Notional Interest Accrual Amount.......................................................... 7
Class A-1 Interest Carryover Shortfall Amount....................................................... 68
Class A-1 Notional Rate............................................................................. 6
Class A-1 Rate...................................................................................... 10
Class A-1 Swap Interest Amount...................................................................... 11
Class A-1 Swap Interest Shortfall Amount............................................................ 12
</TABLE>
125
<PAGE>
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Class A-1 Targeted Maturity Date.................................................................... ii
Class A-2 Certificate Balance....................................................................... 6
Class A-2 Certificates.............................................................................. i, 3
Class A-2 Interest Carryover Shortfall Amount....................................................... 68
Class A-2 Notional Interest Accrual Amount.......................................................... 7
Class A-2 Notional Rate............................................................................. 6
Class A-2 Rate...................................................................................... 10
Class A-2 Swap Interest Amount...................................................................... 11
Class A-2 Swap Interest Shortfall Amount............................................................ 12
Class A-2 Targeted Maturity Date.................................................................... ii
Class A-3 Certificate Balance....................................................................... 6
Class A-3 Certificates.............................................................................. i, 3
Class A-3 Interest Carryover Shortfall Amount....................................................... 68
Class A-3 Notional Interest Accrual Amount.......................................................... 8
Class A-3 Notional Rate............................................................................. 7
Class A-3 Rate...................................................................................... 10
Class A-3 Swap Interest Amount...................................................................... 11
Class A-3 Swap Interest Shortfall Amount............................................................ 12
Class A-3 Targeted Maturity Date.................................................................... ii
Class B Certificate Balance......................................................................... 7
Class B Certificates................................................................................ i, 3
Class B Adjustable Rate............................................................................. 10
Class B Fixed Rate.................................................................................. 7
Class B Fixed Rate Interest Accrual Amount.......................................................... 8
Class B Interest Carryover Shortfall Amount......................................................... 68
Class B Notional Interest Accrual Amount............................................................ 8
Class B Notional Rate............................................................................... 7
Class B Reserve Amount.............................................................................. 25
Class B Swap Interest Amount........................................................................ 11
Class B Swap Interest Shortfall Amount.............................................................. 12
Class B Targeted Maturity Date...................................................................... ii
Closing Date........................................................................................ 2
Code................................................................................................ 28, 114
Collection Period................................................................................... 15
Collections......................................................................................... 15, 94
Commission.......................................................................................... iv
Contingent and Excess Liability Insurance Policies.................................................. 86
Contract Rights..................................................................................... 109
Contracts........................................................................................... 2
Cooperative......................................................................................... 78
Current Contract.................................................................................... 84
Cutoff Date......................................................................................... 2
Dealers............................................................................................. 1
Deferral Fee........................................................................................ 45
Definitive Certificates............................................................................. 60
Delinquency Percentage.............................................................................. 84
Deposit Date........................................................................................ 22
Determination Date.................................................................................. 64
Discounted Contract................................................................................. 21
Discounted Principal Balance........................................................................ 21
DOL................................................................................................. 118
DTC................................................................................................. 20
DTC Participants.................................................................................... 77
DTC Services........................................................................................ 79
ERISA............................................................................................... 28, 118
</TABLE>
126
<PAGE>
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
ERISA Compliance Test............................................................................... 99
Euroclear........................................................................................... 20
Euroclear Operator.................................................................................. 78
Euroclear Participants.............................................................................. 78
Event of Default.................................................................................... 104
Events of Servicing Termination..................................................................... 98
Excess Amounts...................................................................................... 69
Exchange Act........................................................................................ iv
Final Regulations................................................................................... 117
Fixed Rate Class B Certificates..................................................................... 4
Fixed Rate Class B Interest Carryover Shortfall Amount.............................................. 68
Foreign Investor.................................................................................... 116
Foreign Investors................................................................................... 116
Full Term Return Ratio.............................................................................. 35
Global Securities................................................................................... A-1
Holders............................................................................................. v
Indenture........................................................................................... iv, 100
Indenture Trustee................................................................................... 100
Independent Investors............................................................................... 118
Indirect DTC Participants........................................................................... 76
Industry............................................................................................ 79
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................................................................. 5
Initial Contracts................................................................................... 2
Initial Deposit..................................................................................... 25
Initial Investor Balance............................................................................ 7
Initial Leased Vehicles............................................................................. 2
Insolvency Laws..................................................................................... 39
Interest Collections................................................................................ 16
Interest Determination Business Day................................................................. 63
Interest Determination Date......................................................................... 62
Interest Payment Amount............................................................................. 64
Interest Payment Period............................................................................. 8
Inventory Advance................................................................................... 94
Investor Interest................................................................................... 5
Investor Percentage................................................................................. 60
IRS................................................................................................. 113
ISDA................................................................................................ 103
IT systems.......................................................................................... 40
Lease Rate.......................................................................................... 21
Leased Vehicles..................................................................................... 2
Lemon Law........................................................................................... 112
LIBOR............................................................................................... 61
Liquidated Contract................................................................................. 83
Liquidation Expenses................................................................................ 23
Liquidation Proceeds................................................................................ 22
Loss Amounts........................................................................................ 60
Matured Contract.................................................................................... 84
Matured Leased Vehicle Expenses..................................................................... 22
Matured Leased Vehicle Inventory.................................................................... 22
Matured Leased Vehicle Proceeds..................................................................... 23
Maturity Advance.................................................................................... 27
Maturity Date....................................................................................... 52
</TABLE>
127
<PAGE>
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Monthly Allocation Date............................................................................. 8
Monthly Interest Period............................................................................. 8
Monthly Payment..................................................................................... 21
Moody's............................................................................................. iii, 28
MSRP................................................................................................ 45
Net Charged-off Vehicle Proceeds.................................................................... 16
Net Insurance Proceeds.............................................................................. 81
Net Liquidation Proceeds............................................................................ 15
Net Matured Leased Vehicle Proceeds................................................................. 24
non-IT systems...................................................................................... 40
Nonrecoverable Advance.............................................................................. 93
Non-U.S. Person..................................................................................... A-4
OID................................................................................................. 114
Omnibus Proxy....................................................................................... 78
one-month LIBOR..................................................................................... 61
Other SUBI Assets................................................................................... 108
Other SUBI Certificates............................................................................. 41
Other SUBI Supplement............................................................................... 90
Other SUBIs......................................................................................... 1
Outstanding Principal Balance....................................................................... 20
Paying Agent........................................................................................ 81
payment............................................................................................. 8
Payment Ahead....................................................................................... 23
Payoff Amount....................................................................................... 52
Permitted Investments............................................................................... 85
Prepayment.......................................................................................... 81
Principal Allocation................................................................................ 16
Principal Collections............................................................................... 15
Rating Agencies..................................................................................... iii, 28
Realized Value...................................................................................... 52
Reallocation Deposit Amount......................................................................... 60
Reallocation Payment................................................................................ 56
Record Date......................................................................................... 4
Reference Banks..................................................................................... 61
Registration Statement.............................................................................. iv
Regulation.......................................................................................... 118
Repossessed Leased Vehicle.......................................................................... 84
Required Amount..................................................................................... 25
Required Rate....................................................................................... 86
Reserve Fund........................................................................................ 24
Residual Value...................................................................................... 21
Residual Value Insurance Policies................................................................... 90
Residual Value Loss Amount.......................................................................... 31
Residual Value Percentage........................................................................... 35
Residual Value Surplus.............................................................................. 24
Residual Value Test................................................................................. 84
Revolving Period.................................................................................... 14
Schedule of Contracts and Leased Vehicles........................................................... 55
Securities Act...................................................................................... iv
Security Deposits................................................................................... 94
Servicer............................................................................................ 3
Servicer's Certificate.............................................................................. 96
Servicing Agreement................................................................................. iv, 3
Servicing Fee....................................................................................... 27
Servicing Supplement................................................................................ 3
</TABLE>
128
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Specified Reserve Fund Balance...................................................................... 83
Standard & Poor's................................................................................... iii, 28
Stated Maturity Date................................................................................ ii, 13
Statement to Certificateholders..................................................................... 73
SUBI................................................................................................ i, 1
SUBI Assets......................................................................................... i, 2
SUBI Certificate.................................................................................... i, 1
SUBI Collection Account............................................................................. 81
SUBI Supplement..................................................................................... iv, 41
Subsequent Contracts................................................................................ 2
Subsequent Leased Vehicles.......................................................................... 2
Systems............................................................................................. 79
Swap Agreement...................................................................................... ii, iv, 103
Swap Counterparty................................................................................... 18
Swap Termination.................................................................................... 18, 105
Termination Events.................................................................................. 105
Terms and Conditions................................................................................ 79
three-month LIBOR................................................................................... 61
Titling Trust....................................................................................... i
Titling Trust Agreement............................................................................. iv, 2
Titling Trust Assets................................................................................ i, 92
Titling Trustee..................................................................................... 2
TMA................................................................................................. 3
TMC................................................................................................. 3
TMCC................................................................................................ i, 43
TMCC Demand Note.................................................................................... 17
TMS................................................................................................. 3
Transfer Date....................................................................................... 14
Transferor.......................................................................................... i
Transferor Amounts.................................................................................. 61
Transferor Interest................................................................................. i, 1
Transferor Percentage............................................................................... 60
Trust............................................................................................... i
Trust Agency Agreement.............................................................................. 91
Trust Agent......................................................................................... 2, 91
Trust States........................................................................................ 1
Trustee............................................................................................. i
U. S. Bank.......................................................................................... 1
U.S. Person......................................................................................... A-4
UCC................................................................................................. 109
Unallocated Principal Collections................................................................... 61
Uncapped Titling Trust Administrative Expenses...................................................... 68
Uncapped Trust Administrative Expenses.............................................................. 68
Underwriters........................................................................................ 120
Underwriting Agreement.............................................................................. 120
United States person................................................................................ 122
UTI................................................................................................. 1
UTI Assets.......................................................................................... 108
UTI Certificates.................................................................................... 41
UTI Supplement...................................................................................... iv
Voting Interests.................................................................................... 73
</TABLE>
129
<PAGE>
ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A
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 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
A-1
<PAGE>
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 Participant's 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 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
A-2
<PAGE>
(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) or
substantially similar form. 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).
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
A-3
<PAGE>
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 who is a natural person, (ii) a
corporation or partnership (or an entity treated as a corporation or
partnership) organized in or under the laws of the United States or any state
thereof, including the District of Columbia (unless, in the case of a
partnership, Treasury Regulations are adopted that provide otherwise), (iii) an
estate, the income of which is subject to United States Federal income taxation,
regardless of its source or (iv) a trust, if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons (as such term is defined in the Code and
Treasury Regulations) have the authority to control all substantial decisions of
the trust. Notwithstanding the preceding sentence, to the extent provided in
Treasury Regulations, certain trusts in existence prior to August 20, 1996 which
elected to be treated as United States persons prior to such date also shall be
U.S. Persons. 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
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<TABLE>
<S> <C> <C>
PRINCIPAL OFFICES OF THE TRANSFEROR
AND NOTICE ADDRESS OF TRUST
Toyota Leasing, Inc.
9001 South Western Avenue
Torrance, California 90509
United States
</TABLE>
<TABLE>
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JOINT BOOKRUNNERS
Credit Suisse First Boston Merrill Lynch & Co.
</TABLE>
<TABLE>
<S> <C>
CO-MANAGERS
Bear, Stearns & Co. Inc. J.P. Morgan & Co.
Goldman, Sachs & Co. Morgan Stanley Dean Witter
Lehman Brothers NationsBanc Montgomery Securities LLC
Salomon Smith Barney
</TABLE>
<TABLE>
<S> <C> <C>
LUXEMBOURG LISTING AGENT, TRANSFER AGENT
AND PAYING AGENT
Bankers Trust Luxembourg S.A.
14 Boulevard F.D. Roosevelt
L-2450, Luxembourg
TRUSTEE
U.S. Bank National Association
One Illinois Center
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
United States
INDEPENDENT PUBLIC ACCOUNTANTS
OF TMCC
PricewaterhouseCoopers LLP
400 South Hope Street, 22nd Floor
Los Angeles, California 90071-2889
United States
</TABLE>
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LEGAL ADVISORS
TO TMCC AND THE TRANSFEROR AS TO TO THE UNDERWRITERS AS TO
MATTERS
MATTERS OF UNITED STATES LAW OF UNITED STATES LAW
O'Melveny & Myers LLP Brown & Wood LLP
400 South Hope Street, 15th One World Trade Center
Floor
Los Angeles, California 90071 New York, New York 10048-0557
United States United States
</TABLE>
<PAGE>
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- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY 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
HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED THEREBY 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 THE 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
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Page
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Available Information.......................... iv
Documents Incorporated by Reference............ iv
Reports to Certificateholders.................. v
Overview of Transaction........................ vi
Summary........................................ 1
Risk Factors................................... 30
The Trust and the SUBI......................... 41
The Titling Trust.............................. 42
Use of Proceeds................................ 44
The Transferor................................. 44
TMCC........................................... 44
TMCC's Leasing Operations...................... 45
The Contracts.................................. 51
Maturity and Yield Considerations.............. 58
Reports to Class A Certificateholders.......... 59
Description of the Certificates................ 59
Assets of the Trust............................ 81
Additional Document Provisions................. 87
Certain Legal Aspects of the Titling Trust..... 108
Certain Legal Aspects of the Contracts and the
Leased Vehicles.............................. 110
Material Federal Income Tax Considerations..... 114
ERISA Considerations........................... 118
Underwriting................................... 120
Listing and General Information................ 121
Ratings of the Class A Certificates............ 123
Legal Matters.................................. 124
Experts........................................ 124
Index of Capitalized Terms..................... 125
Global Clearance, Settlement and Tax
Documentation Procedures..................... A-1
</TABLE>
TOYOTA AUTO LEASE TRUST 1998-C
$189,000,000 ADJUSTABLE RATE AUTO LEASE
ASSET BACKED CERTIFICATES, CLASS A-1
$424,500,000 ADJUSTABLE RATE AUTO LEASE
ASSET BACKED CERTIFICATES, CLASS A-2
$72,800,000 ADJUSTABLE RATE AUTO LEASE
ASSET BACKED CERTIFICATES, CLASS A-3
TOYOTA LEASING, INC.
TRANSFEROR
TOYOTA MOTOR CREDIT CORPORATION
SERVICER
-------------------
PROSPECTUS
-------------------
JOINT BOOKRUNNERS
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
CO-MANAGERS
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
---------------------
NOVEMBER 17, 1998
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<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.......................................... $ 190,791.40*
Legal fees and expenses....................................... $ 400,000.00
Accounting fees and expenses.................................. $ 80,000.00
Blue sky fees and expenses.................................... $ 10,000.00
Rating agency fees............................................ $ 210,000.00
Trustee fees and expenses..................................... $ 45,000.00
Printing...................................................... $ 120,000.00
Miscellaneous................................................. $ 54,208.60
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Total......................................................... $1,100,000.00
</TABLE>
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* Of which $295.00 previously has been paid.
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.
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 U.S.
Bank National Association ("U.S. Bank"), as Trustee (including forms of Class A
Certificates)
5.1 Opinion of O'Melveny & Myers LLP with respect to legality
8.1 Opinion of O'Melveny & Myers LLP with respect to federal income tax matters
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.1 Amended and Restated Trust and Servicing Agreement among Toyota Motor Credit
Corporation ("TMCC"), TMTT, Inc., as Titling Trustee and U.S. 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 Titling Trustee and U.S. Bank, as Trust Agent, dated October 1,
1996 (including form of UTI Certificate)
10.3 Form of 1998-C SUBI Supplement to Amended and Restated Trust Agreement among
TMCC, TMTT, Inc., as Titling Trustee and U.S. Bank, as Trust Agent, Trustee and
SUBI Securities Intermediary (including form of SUBI Certificate)
10.4 Form of 1998-C 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 Indenture Trustee
10.7 Form of Swap Agreement between U.S. Bank, as Trustee and TMCC, as Swap
Counterparty
15.1 Awareness Letter of PricewaterhouseCoopers LLP
23.1 Consent of O'Melveny & Myers LLP (included as part of Exhibit 5.1)
23.2 Consent of O'Melveny & Myers LLP (included as part of Exhibit 8.1)
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Powers of Attorney*
25.1 Statement of Eligibility on Form T-1 of U.S. Bank
</TABLE>
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* Previously filed with the initial Registration Statement on September 30,
1998 and on pages II-6 and II-7.
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 agreements certificates in such denominations and registered in
such names as required by the Underwriters to permit 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 the 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 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.
II-2
<PAGE>
(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 shall 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 post-effective amendment that contains a form of prospectus 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.
(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) or 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 undertake:
(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 highend 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) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment 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.
(3) 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
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-1 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Torrance, State of California, on
November 17, 1998.
<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. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GREGORY WILLIS Director and Principal November 17, 1998
- ------------------------------ Executive Officer of
Gregory Willis Toyota Leasing, Inc.
/s/ NOBU SHIGEMI* Director and Principal November 17, 1998
- ------------------------------ Financial Officer and
Nobu Shigemi Principal Accounting
Officer of Toyota
Leasing, Inc.
/s/ WILLIAM LATHAM, III* Director of Toyota November 17, 1998
- ------------------------------ Leasing, Inc.
William Latham, III
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ GREGORY WILLIS November 17, 1998
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-1 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Torrance, State of California, on
November 17, 1998.
<TABLE>
<S> <C> <C>
TOYOTA AUTO LEASE TRUST 1998-C
By: TOYOTA LEASING, INC., solely as originator
of Toyota Auto Lease Trust 1998-C
By: /s/ GREGORY WILLIS
-----------------------------------------
Gregory Willis,
DIRECTOR AND PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GREGORY WILLIS Director and Principal November 17, 1998
- ------------------------------ Executive Officer of
Gregory Willis Toyota Leasing, Inc.
/s/ NOBU SHIGEMI* Director and Principal November 17, 1998
- ------------------------------ Financial Officer and
Nobu Shigemi Principal Accounting
Officer of Toyota
Leasing, Inc.
/s/ WILLIAM LATHAM, III* Director of Toyota November 17, 1998
- ------------------------------ Leasing, Inc.
William Latham, III
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ GREGORY WILLIS November 17, 1998
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Torrance, State of California, on
November 17, 1998.
<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
</TABLE>
Know all men by these presents, that Yale Gieszl constitutes and appoints
Gregory Willis, Jerome Lienhard and Dian Ogilvie as his true and lawful
attorney-in-fact and agent, with full powers of substitution, for him and in his
name, place and stead, in any and all capacities, to sign and to file any and
all amendments, including post-effective amendments to this Registration
Statement, with the Securities and Exchange Commission granting to said
attorney-in-fact power and authority to perform any other act on behalf of the
undersigned required to be done in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GEORGE BORST Director, Senior Vice November 17, 1998
- ------------------------------ President and General
George Borst Manager of TMCC
(principal executive
officer)
/s/ ROBERT PITTS* Director and Secretary of November 17, 1998
- ------------------------------ TMCC
Robert Pitts
/s/ NOBU SHIGEMI* Director, Senior Vice November 17, 1998
- ------------------------------ President and Treasurer
Nobu Shigemi of TMCC (principal
financial officer)
/s/ DOUGLAS WEST* Director of TMCC November 17, 1998
- ------------------------------
Douglas West
/s/ YALE GIESZL Director of TMCC November 17, 1998
- ------------------------------
Yale Gieszl
/s/ GREGORY WILLIS Vice President of Finance November 17, 1998
- ------------------------------ and Administration of
Gregory Willis TMCC (principal
accounting officer)
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ GREGORY WILLIS November 17, 1998
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-1 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Torrance, State of California, on
November 17, 1998.
<TABLE>
<S> <C> <C>
TOYOTA LEASE TRUST
By: TOYOTA MOTOR CREDIT CORPORATION, solely as
originator of the Toyota Lease Trust
By: /s/ GEORGE BORST
-----------------------------------------
George Borst
DIRECTOR, SENIOR VICE PRESIDENT AND
GENERAL MANAGER
</TABLE>
Know all men by these presents, that Yale Gieszl constitutes and appoints
Gregory Willis, Jerome Lienhard and Dian Ogilvie as his true and lawful
attorney-in-fact and agent, with full powers of substitution, for him and in his
name, place and stead, in any and all capacities, to sign and to file any and
all amendments, including post-effective amendments to this Registration
Statement, with the Securities and Exchange Commission granting to said
attorney-in-fact power and authority to perform any other act on behalf of the
undersigned required to be done in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GEORGE BORST Director, Senior Vice November 17, 1998
- ------------------------------ President and General
George Borst Manager of TMCC
(principal executive
officer)
/s/ ROBERT PITTS* Director and Secretary of November 17, 1998
- ------------------------------ TMCC
Robert Pitts
/s/ NOBU SHIGEMI* Director, Senior Vice November 17, 1998
- ------------------------------ President and Treasurer
Nobu Shigemi of TMCC (principal
financial officer)
/s/ DOUGLAS WEST* Director of TMCC November 17, 1998
- ------------------------------
Douglas West
/s/ YALE GIESZL Director of TMCC November 17, 1998
- ------------------------------
Yale Gieszl
/s/ GREGORY WILLIS Vice President of Finance November 17, 1998
- ------------------------------ and Administration of
Gregory Willis TMCC (principal
accounting officer)
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ GREGORY WILLIS November 17, 1998
-------------------------
Gregory Willis
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<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 U.S. Bank National Association
("U.S. Bank"), as Trustee (including forms of Class A Certificates)
5.1 Opinion of O'Melveny & Myers LLP with respect to legality
8.1 Opinion of O'Melveny & Myers LLP 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 Titling Trustee and U.S. 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 Titling
Trustee and U.S. Bank, as Trust Agent, dated October 1, 1996 (including form of UTI Certificate)
10.3 Form of 1998-C SUBI Supplement to Amended and Restated Trust Agreement among TMCC, TMTT, Inc., as Titling
Trustee and U.S. Bank, as Trust Agent, Trustee and SUBI Securities Intermediary (including form of SUBI
Certificate)
10.4 Form of 1998-C 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 Indenture Trustee
10.7 Form of Swap Agreement between U.S. Bank, as Trustee and TMCC, as Swap Counterparty
15.1 Awareness Letter of PricewaterhouseCoopers LLP
23.1 Consent of O'Melveny & Myers LLP (included as part of Exhibit 5.1)
23.2 Consent of O'Melveny & Myers LLP (included as part of Exhibit 8.1)
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Powers of Attorney*
25.1 Statement of Eligibility on Form T-1 of U.S. Bank
</TABLE>
- ---------
* Previously filed with the initial Registration Statement on September 30,
1998 and on pages II-6 and II-7.
<PAGE>
TOYOTA AUTO LEASE TRUST 1998-C
$[ ]
Adjustable Rate Auto Lease Asset Backed Certificates, Class A-1
$[ ]
Adjustable Rate Auto Lease Asset Backed Certificates, Class A-2
$[ ]
Adjustable Rate Auto Lease Asset Backed Certificates, Class A-3
UNDERWRITING AGREEMENT
November [ ], 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Representative of the Several Underwriters
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
1. INTRODUCTORY. Toyota Leasing, Inc., a California corporation (the
"Transferor"), and Toyota Motor Credit Corporation, a California corporation
("TMCC"), hereby confirm their respective agreements with you and each of the
other underwriters named in Schedule I hereto (the "Underwriters"), for whom
you are acting as representative (the "Representative"), with respect to the
sale by the Transferor to the Underwriters of $[ ] aggregate
principal amount of Adjustable Rate Auto Lease Asset Backed Certificates,
Class A-1 (the "Class A-1 Certificates"), $[ ] aggregate principal
amount of Adjustable Rate Auto Lease Asset Backed Certificates, Class A-2
(the "Class A-2 Certificates") and $[ ] aggregate principal amount of
Adjustable Rate Auto 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") of the Toyota Auto Lease Trust
1998-C (the "Securitization Trust") under the terms and conditions herein
contained. Simultaneously with the issuance of the Class A Certificates, the
Transferor will cause the Trust to issue $[ ] aggregate principal
amount of
<PAGE>
Adjustable Rate Auto Lease Asset Backed Certificates, Class B (the
"Adjustable Rate Class B Certificates"), and $[ ] aggregate
principal amount of Fixed Rate Auto Lease Asset Backed Certificates, Class B
(the "Fixed Rate Class B Certificates" and, together with the Adjustable Rate
Class B Certificates, the "Class B Certificates"). The Class B Certificates
and the Class A Certificates are collectively referred to herein as the
"Investor Certificates". The Investor Certificates will be issued pursuant
to a securitization trust agreement, dated as of [November ], 1998 (the
"Securitization Trust Agreement"), between the Transferor and U.S. Bank
National Association ("U.S. Bank"), as trustee (in such capacity, the
"Securitization Trustee"). The Investor Certificates will represent
undivided interests in the Securitization Trust. The Transferor will own the
undivided interest in the Securitization Trust not evidenced by the Investor
Certificates (the "Transferor Interest"). The Class B Certificates will be
subordinated to the Class A Certificates, and the certificate evidencing the
Transferor Interest (the "Transferor Certificate" and, together with the
Investor Certificates, the "Certificates") will be subordinated to the
Investor Certificates, in each case to the extent described in the
Securitization Trust Agreement. Capitalized terms used herein that are not
otherwise defined herein shall have the meanings ascribed thereto in the
Securitization Trust Agreement.
The property of the Securitization Trust will consist primarily of a
certificate representing substantially all of a special unit of beneficial
interest (the "1998-C SUBI"), which, in turn, will evidence a beneficial
interest in certain specified assets of Toyota Lease Trust, a Delaware
business trust (the "Titling Trust"), monies on deposit in the SUBI
Collection Account, and the right to receive payments from the Reserve Fund
in certain circumstances (collectively, the "1998-C SUBI Assets"). The
assets of the Titling Trust (the "Titling Trust Assets") will consist
primarily of retail closed-end lease contracts assigned to the Titling Trust
by motor vehicle dealers pursuant to dealer agreements with the Titling
Trust, the automobiles and light duty trucks relating thereto and the
proceeds thereof, and payments made under certain insurance policies relating
to such lease contracts, the related lessees or such leased vehicles. The
1998-C SUBI Insurance Certificate, representing interests in certain residual
value insurance policies that are part of the 1998-C SUBI, will not be
property of the Securitization Trust.
The Titling Trust is expected to invest certain collections on the
Contracts and Leased Vehicles in certain demand notes ("TMCC Demand Notes")
issued by TMCC pursuant to an indenture (the "Indenture") dated as of
[November ], 1998, between TMCC and U.S. Bank, as trustee (in such
capacity, the "Indenture Trustee").
The 1998-C SUBI (other than interests in certain Residual Value
Insurance Policies) will be evidenced by a certificate (the "1998-C SUBI
Certificate") issued to TMCC by the Titling Trust pursuant to the 1998-C
Supplement (the "1998-C SUBI Supplement") dated [November ], 1998, to the
Amended and Restated Trust and Servicing Agreement (the "Titling Trust
Agreement") dated as of October 1, 1996, in each case, among TMCC, as
grantor, initial beneficiary and servicer, TMTT, Inc., as trustee (the
"Titling Trustee") and U.S. Bank, as trust agent (in such capacity, the
"Trust Agent"). TMCC will transfer the 1998-C SUBI Certificate to the
Transferor pursuant to the 1998-C SUBI Certificate Purchase and Sale
Agreement between
2
<PAGE>
them (the "1998-C SUBI Certificate Sale Agreement"). The 1998-C SUBI
Certificate will be transferred and assigned by the Transferor to the
Securitization Trustee pursuant to the Securitization Trust Agreement. The
Titling Trust Assets (including the 1998-C SUBI Assets) will be serviced by
TMCC pursuant to the Titling Trust Agreement and the Series 1998-C SUBI
Servicing Supplement to the Titling Trust Agreement dated as of September 1,
1998 (the "1998-C SUBI Servicing Supplement") among the Titling Trustee, TMCC
and the Transferor. The Securitization Trust Agreement, the Titling Trust
Agreement, the 1998-C SUBI Supplement, the 1998-C SUBI Servicing Supplement,
the 1998-C SUBI Certificate Sale Agreement, the UTI Supplement (as defined
herein), the TMCC SUBI Account Control Agreement, the 1998-C SUBI Account
Control Agreement, the TLI SUBI Account Control Agreement, a swap agreement
in the form of an ISDA master agreement and schedule thereto and
confirmations relating thereto (together the "Swap Agreement") between the
Securitization Trust and TMCC as swap counterparty (in such capacity the
"Swap Counterparty"), the Indenture and the TMCC Demand Notes are referred to
herein collectively as the "Basic Agreements".
2. Representations and Warranties of the Transferor and TMCC.
(a) Each of the Transferor and TMCC, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-1 and Form S-3 (No.
333-65067), including a form of prospectus, relating to the Class A
Certificates has been filed with the Securities and Exchange Commission
(the "Commission") and either (A) has been declared effective under the
Securities Act of 1933, as amended (the "Act"), and is not proposed to
be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If the Transferor does not propose to amend
such registration statement and if any post-effective amendment to such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent such
post-effective amendment has been declared effective by the Commission.
The Commission has not instituted any stop order proceedings in respect
of the Registration Statement. For purposes of this Agreement,
"Effective Time" means (A) if the Transferor has advised the
Representative that it does not propose to amend such registration
statement, the date and time as of which such registration statement, or
the most recent post-effective amendment thereto, if any, filed prior to
the execution and delivery of this Agreement, was declared effective by
the Commission or (B) if the Transferor has advised the Representative
that it proposes to file an amendment or post-effective amendment to
such registration statement, the date and time as of which such
registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission.
"Effective Date" means the date of the Effective Time. Such
registration statement, as amended at the Effective Time (including all
information, if any, deemed to be a part of such registration statement
as of the Effective Time pursuant to Rule 430A(b) under the Act, the
exhibits thereto and all documents incorporated by reference therein),
is hereinafter referred to as the
3
<PAGE>
"Registration Statement", and the form of prospectus (including all
documents incorporated therein or deemed to be incorporated therein)
relating to the Class A Certificates, in the form transmitted to the
Commission for filing pursuant to and in accordance with Rule 424(b)
under the Act ("Rule 424(b)"), or, if no such filing is required, as
included in the Registration Statement at the Effective Time, is
hereinafter referred to as the "Prospectus". The Prospectus delivered
to you for use in connection with the offering of the Class A
Certificates is identical to the electronically transmitted copies
thereof filed with the Commission pursuant to Rule 424(b) or, as of the
Effective Date, as the case may be, pursuant to its Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") system, except to the extent
permitted by Regulation S-T. All references in this Agreement to
financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement or the
Prospectus (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and
include the filing of any document under the Securities Exchange Act of
1934, as amended (the "1934 Act") which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
(ii) If the Effective Time is prior to the execution and delivery
of this Agreement: (A) on the Effective Date, the Registration Statement
conformed, and on the date of this Agreement the Registration Statement
conforms, in all material respects with the requirements of the Act and the
rules and regulations of the Commission promulgated under the Act (the
"Rules and Regulations") and at such times did not and does not include any
untrue statement of a material fact, and did not and does not omit to state
any material fact required to be stated therein or necessary to make the
statements therein, not misleading, and (B) at the time of the filing of
the Prospectus pursuant to Rule 424(b) and at the Closing Date (as such
term is defined in Section 3 hereof), the Prospectus does and will conform
in all material respects to the requirements of the Act and the Rules and
Regulations and does not and will not include any untrue statement of a
material fact and does not and will not omit any material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading except that the representations
and warranties set forth in this subsection (ii) do not apply to statements
or omissions in the Prospectus based upon information furnished to the
Transferor in writing by any Underwriter through the Representative
expressly for use therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information
in the Prospectus appearing in the fifth, sixth and seventh textual
paragraphs under the caption "Underwriting" and the information in the
first paragraph on page (iii). If the Effective Time is subsequent to the
execution and delivery of this Agreement: (A) on the Effective Date, the
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the
4
<PAGE>
Rules and Regulations, and the Registration Statement will not include
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) on the Effective Date or at the time of
the filing of the Prospectus pursuant to Rule 424(b), if required, as
the case may be, and at the Closing Date, the Prospectus will not
include any untrue statement of a material fact or omit to state any
aterial fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The two immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement or Prospectus based upon
written information furnished to the Transferor by any Underwriter
through the Representative specifically for use therein.
(iii) The consummation of the transactions contemplated by this
Agreement, the Purchase Agreement, among the Transferor, Toyota Motor
Credit Corporation, the Representative and Credit Suisse First Boston
Corporation in their capacities as the initial purchasers of the Class B
Certificates (together, the "Initial Purchasers"), in connection with the
purchase by the Initial Purchasers of the Class B Certificates (the
"Purchase Agreement"), and the Basic Agreements, and the fulfillment of the
terms thereof, will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation of any lien, charge, or encumbrance upon any of the property or
assets of the Transferor or TMCC pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing
agreement or similar agreement or instrument under which the Transferor or
TMCC is a debtor or guarantor.
(iv) No consent, approval, authorization, or order of, or filing
with, any court or governmental agency or body is required to be obtained
or made by the Transferor or TMCC for the consummation of the transactions
contemplated by this Agreement, the Purchase Agreement and the Basic
Agreements, including without limitation (A) the issuance of the 1998-C
SUBI Certificate, the 1998-C SUBI Insurance Certificate or the UTI
Certificates, (B) the issuance of the Certificates or the offering and sale
of the Investor Certificates, or (C) the execution, delivery and
performance by each of the Transferor or TMCC of this Agreement or any
Basic Agreement to which it is a party and the Certificates, except such as
have been obtained and made under the Act or the Rules and Regulations and
such as may be required under securities laws of any state or foreign
jurisdiction.
(v) Neither the Transferor nor TMCC is in violation of its charter
or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any agreement or
instrument to which it is a party or by which it or its properties are
bound which could have a material adverse effect on the transactions
contemplated herein, in the Purchase Agreement or in the Basic Agreements.
The execution, delivery and performance of this Agreement, the Purchase
Agreement and the Basic Agreements and the issuance and sale of the
Certificates and compliance with the
5
<PAGE>
terms and provisions of the Certificates will not, subject to obtaining
any consents or approvals as may be required under the securities laws
of various jurisdictions (in the United States and elsewhere), result in
a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, rule, regulation or order of
any governmental agency or body or any court having jurisdiction over
the Transferor or TMCC or any of their respective properties or any
agreement or instrument to which the Transferor or TMCC is a party or by
which the Transferor or TMCC is bound or to which any of their
respective properties is subject, or with the charter or by-laws of the
Transferor or TMCC, and each of the Transferor and TMCC has full
corporate power and authority to enter into this Agreement, the Purchase
Agreement and the Basic Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. Each of
the Transferor and TMCC is duly qualified or registered as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification or registration is required,
whether by reason of the ownership of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on its condition, financial or otherwise, or the
enforceability of the Basic Agreements or the Contracts.
(vi) This Agreement has been duly authorized, executed and
delivered by the Transferor and TMCC.
(vii) The Basic Agreements, the 1998-C SUBI Certificate, the 1998-C
SUBI Insurance Certificate and the certificate or certificates representing
the Titling Trust Assets not allocated to a SUBI (the "UTI Certificates")
conform in all material respects to the respective descriptions thereof and
the statements in relation thereto contained in the Prospectus; 1998-C the
SUBI Certificate, the 1998-C SUBI Insurance Certificate and the UTI
Certificates have been duly and validly authorized and, when executed,
issued, authenticated and delivered in accordance with the 1998-C SUBI
Supplement, the Titling Trust Agreement and the UTI Supplement to the
Titling Trust Agreement (the "UTI Supplement"), will be duly and validly
issued and outstanding and entitled to the benefits of the 1998-C SUBI
Supplement, the UTI Supplement and the Titling Trust Agreement.
(viii) The Certificates conform in all material respects to the
description thereof and the statements in relation thereto contained in the
Prospectus; the Certificates have been duly and validly authorized and,
when executed, issued, authenticated and delivered in accordance with the
Securitization Trust Agreement and, in the case of the Class A
Certificates, when delivered to the Underwriters against payment of the
consideration specified herein, and in the case of the Class B
Certificates, when delivered to the Initial Purchasers against payment of
the consideration specified in the Purchase Agreement, will be duly and
validly issued and outstanding and entitled to the benefits of the
Securitization Trust Agreement.
6
<PAGE>
(ix) None of the Transferor, TMCC, the Titling Trust or the
Securitization Trust is now or, as a result of the transactions
contemplated by this Agreement, will become, an "investment company", nor
is any of them "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(x) At or prior to the Closing Date, the Titling Trustee will have
allocated as 1998-C SUBI Assets, Contracts and Leased Vehicles that have an
Aggregate Net Investment Value as of the Cutoff Date equal to
$[ ].
(xi) The representations and warranties of each of the Transferor
and TMCC in each Basic Agreement to which it is a party will be true and
correct in accordance with the terms of such Basic Agreement; provided,
however, that with respect to representations or warranties made with
respect to any Contracts or SUBI Assets, the sole remedy for any breach
thereof is, as provided in the related agreement, the repurchase by either
TMCC or the Transferor, as the case may be, of any such Contract or SUBI
Asset.
(xii) All of the issued and outstanding capital stock of the
Transferor is owned by TMCC free and clear of any lien, mortgage, pledge,
charge, encumbrance, adverse claim or other security interest
(collectively, "Liens") except as permitted by the Basic Agreements.
(xiii) All filings required to be made in respect of the Titling
Trust's status as a business trust under the laws of each state in which
such filings are required have been made and are in full force and effect
on the Closing Date, except where the failure so to file would not have a
material adverse effect on its condition, financial or otherwise, or its
ability to perform its obligations under each Basic Agreement to which it
is a party or on the enforceability of the Contracts.
(xiv) The accountants who certified the financial statements and
supporting schedules incorporated by reference in the Registration
Statement are independent public accountants with respect to TMCC as
required by the Act and the Rules and Regulations.
(xv) The financial statements and supporting schedules incorporated
by reference in the Registration Statement and the Prospectus present
fairly the financial position of TMCC and its consolidated subsidiaries as
of the dates indicated and the results of their operations for the periods
specified; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and the
supporting schedules incorporated by reference in the Registration
Statement present fairly the information required to be stated therein.
7
<PAGE>
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein or contemplated thereby, (A) there has been no material adverse
change in the condition, financial or otherwise, of TMCC and its
subsidiaries considered as one enterprise or in the earnings, business
affairs or business prospects of TMCC and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business,
(B) there have been no transactions entered into by TMCC or any of its
subsidiaries, other than those in the ordinary course of business (which
includes, but is not limited to, Euromarket, EuroAsian, or global financing
and domestic private placement and public financing), which are material
with respect to TMCC and its subsidiaries considered as one enterprise, and
(C) since the date of the most recent audited financial statements of TMCC,
there has been no dividend or distribution of any kind declared, paid or
made by TMCC on any class of its capital stock, except as otherwise
disclosed in the Registration Statement and the Prospectus.
(xvii) Except as disclosed in the Registration Statement and
Prospectus, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of TMCC, threatened against TMCC or any of its subsidiaries
which might, in the opinion of TMCC, result in any material adverse change
in the condition, financial or otherwise, of TMCC and its subsidiaries
considered as one enterprise, or in the earnings, business affairs or
business prospects of TMCC and its subsidiaries considered as one
enterprise.
(xviii) An application has been made on behalf of the Transferor
for the Class A Certificates to be listed on the Luxembourg Stock Exchange.
(xix) All payments of principal and interest in respect of the
Certificates and all payments by the Securitization Trust under the Swap
Agreement may be made free and clear of, and without withholding or
deduction for, any taxes, duties, assessments or governmental charges of
whatsoever nature imposed, levied collected withheld or assessed by the
United States or any political subdivision or authority thereof or therein
having power to tax.
(b) Any Officer's Certificate signed by any officer of TMCC or the
Transferor and delivered to the Representative or counsel for the Underwriters
shall be deemed a representation and warranty of TMCC or the Transferor, as the
case may be, to each Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Class A Certificates. On the basis
of and in reliance on the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Transferor agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter, severally and not jointly, agrees to purchase from the
Transferor, the aggregate principal amount of each Class of Class A Certificates
set forth in
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Schedule I opposite the name of such Underwriter, at a purchase price equal
to the following percentages of the aggregate initial principal balances
thereof, (i) in the case of the Class A-1 Certificates, [ ]%, (ii) in
the case of the Class A-2 Certificates, [ ]% and (iii) in the case of
the Class A-3 Certificates, [ ]%; PROVIDED that in the case of sales to
certain non-institutional investors, the underwriting discount shall equal
[ ]% of the aggregate initial principal balances of the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates sold
to such non-institutional investors.
Each Class of Class A Certificates will initially be represented by one or
more certificates registered in the name of Cede & Co., as the nominee of The
Depository Trust Company ("DTC"). The interests of beneficial owners of each
Class of Class A Certificates will be represented by book entries on the records
of DTC and participating members thereof.
The Transferor will deliver the Class A Certificates to the Representative
for the respective securities accounts of the Underwriters, against payment of
the purchase price therefor in immediately available funds payable to the order
of the Transferor, at the office of O'Melveny & Myers LLP, 400 South Hope
Street, Los Angeles, California 90071-2899 (or at such other location as agreed
upon among the Transferor, TMCC and the Representative) at 10:00 A.M., Los
Angeles time, on [December 1], 1998, or at such other time not later than five
full business days thereafter, as the Transferor, TMCC and the Representative
determine, such time being herein referred to as the "Closing Date". The
certificates evidencing the Class A Certificates will be made available for
inspection at the above offices of O'Melveny & Myers LLP (or at such other
location agreed upon among the Transferor, TMCC and the Representative) at least
24 hours prior to the Closing Date.
4. Offering by the Underwriters. It is understood that the several
Underwriters propose to offer the Class A Certificates for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Transferor and TMCC. Each of the Transferor
and TMCC, as the case may be, jointly and severally, covenants and agrees with
each of the Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Transferor will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by the Representative, subparagraph (4)) of Rule
424(b), not later than the second business day following the execution and
delivery of this Agreement. The Transferor will advise the Representative
promptly of any such filing pursuant to Rule 424(b).
(b) The Transferor and TMCC will advise the Representative
promptly of any proposal to amend or supplement the registration statement as
filed or the related prospectus or the Registration Statement or the Prospectus
(whether pursuant to the Act or the 1934 Act) and will not effect any such
amendment or supplement without the consent of the Representative.
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The Transferor will advise the Representative promptly of the effectiveness
of the Registration Statement (if the Effective Time is subsequent to the
execution and delivery of this Agreement), of any amendment or supplement of
the Registration Statement or the Prospectus and of the institution by the
Commission of any stop order proceedings in respect of the Registration
Statement. The Transferor will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued. In connection with the issuance and sale of the Certificates, the
Transferor and TMCC agree to comply with all applicable laws and regulations.
(c) If, at any time when a prospectus relating to the Class A
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to amend
or supplement the Prospectus to comply with the Act, the Transferor and TMCC
will promptly notify the Representative and, with the consent of the
Representative (which consent shall not be unreasonably withheld), will promptly
prepare and file, or cause to be prepared and filed, with the Commission an
amendment or supplement which will correct such statement or omission, or an
amendment or supplement that will effect such compliance. Neither the consent
of the Representative to, nor the delivery to or by the Representative of, any
such amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6 hereof.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Transferor will cause the
Securitization Trustee to make generally available to the Class A
Certificateholders an earnings statement with respect to the Securitization
Trust covering a period of at least 12 months beginning after the Effective Date
that will satisfy the provisions of Section 11(a) of the Act. For the purpose
of the preceding sentence, "Availability Date" means the 45th day after the end
of the fourth fiscal quarter following the Transferor's fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal quarter is the
last quarter of the Transferor's fiscal year, "Availability Date" means the 90th
day after the end of such fourth fiscal quarter.
(e) The Transferor will furnish to the Representative copies
of the registration statement as originally filed with the Commission and each
amendment thereto (in each case including a photocopy of the originally executed
copy and one with all exhibits), each related preliminary prospectus, the
Prospectus and all amendments and supplements to such documents, in each case as
soon as available and in such quantities as the Representative may reasonably
request.
(f) The Transferor will arrange for the qualification of the
Class A Certificates for sale under the laws of such jurisdictions in the United
States as the Representative may reasonably designate and will continue such
qualifications in effect so long as required for the distribution of the Class A
Certificates, provided that the Transferor shall not be obligated to
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qualify to do business or become subject to service of process generally, but
only to the extent required for such qualification, in any jurisdiction in
which it is not currently so qualified.
(g) So long as any Investor Certificates are outstanding, the
Transferor or TMCC, as the case may be, will deliver or cause to be delivered to
the Representative copies of (i) each statement relating to the Investor
Certificates delivered to Certificateholders pursuant to Section [3.03] of the
Securitization Trust Agreement, (ii) the annual statement as to compliance and
the annual statement of a firm of independent public accountants furnished
pursuant to Sections [5.02] or [5.03] of the 1998-C SUBI Servicing Supplement,
(iii) each certificate or notice delivered by the Servicer pursuant to
Section 9.03 of the Titling Trust Agreement and Section [7.04] of the 1998-C
SUBI Servicing Supplement, (iv) copies of each document filed with the
Luxembourg Stock Exchange, (v) each periodic report required to be filed by the
Transferor with the Commission pursuant to the Exchange Act, or any order of the
Commission thereunder, and (vi) such other information concerning the
Transferor, TMCC, the Titling Trustee (in its capacity as trustee of the Titling
Trust), the Titling Trust, the Trust or the Certificates as the Representative
may reasonably request from time to time.
(h) The Transferor and TMCC will pay all expenses incident to
the performance of their respective obligations under this Agreement, including
without limitation, (i) expenses incident to the word processing, printing,
reproduction and distribution of the registration statement as originally filed
with the Commission and each amendment thereto, preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto), (ii) the fees and
disbursements of the Titling Trustee, the Securitization Trustee, the Trust
Agent and their respective counsel, (iii) the fees and disbursements of counsel
and the independent public accountants of the Transferor and TMCC, (iv) the fees
charged by each of Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services ("Standard & Poor's" and, together with Moody's, the
"Rating Agencies") in connection with the rating of each Class of Class A
Certificates, (v) the fees of DTC in connection with the book-entry registration
of the Class A Certificates, (vi) listing fees, (vii) the fees and expenses of
U.S. Bank and (viii) expenses incurred in distributing preliminary prospectuses
and the Prospectus (including any amendments and supplements thereto) to the
Underwriters, and will reimburse the Underwriters for any expenses (including
reasonable fees and disbursements of counsel) incurred by the Underwriters in
connection with the qualification of the Class A Certificates for sale under the
laws of such jurisdictions in the United States as the Representative may
designate pursuant to Section 5(f) hereof. If this Agreement is terminated by
the Representative in accordance with the provisions of Section 6 or clause (i)
or clause (ii) of Section 9 hereof, the Transferor and TMCC shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel to the Underwriters, reasonably incurred by
them in the offering of the Class A Certificates.
(i) For a period of 30 days from the date hereof, none of the
Transferor, TMCC or any of their respective affiliates will, without the prior
written consent of the Representative, directly or indirectly, offer, sell or
contract to sell or announce the offering of, in a public or
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private transaction, any other asset-backed auto lease securities similar to
the Class A Certificates other than the Class B Certificates and notes the
payments of which are secured by assets other than SUBI Assets or lease
contracts, even if payments thereon reflect the performance of a pool or
pools of lease contracts.
(j) So long as any Class A Certificates are outstanding, the
Transferor and TMCC will cause to be delivered to the Representative a reliance
letter relating to each Opinion of Counsel delivered to the Securitization
Trustee or any Rating Agency by counsel to the Transferor or counsel to TMCC
pursuant to the Basic Agreements.
(k) To the extent, if any, that the rating provided with
respect to any Class of Class A Certificates by any Rating Agency is conditional
upon the furnishing of documents or the taking of any other actions by the
Transferor or TMCC, the Transferor or TMCC, as the case may be, shall furnish
such documents and take any such other actions.
(l) The Transferor will file with the Commission such report
on Form SR as may be required pursuant to Rule 463 under the Act.
(m) TMCC will promptly notify the Representative if it has
knowledge of any reduction or proposed reduction by any nationally recognized
statistical rating organization of its or TMC's current long-term or
short-term debt ratings.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Class A Certificates will
be subject to the accuracy of the respective representations and warranties on
the part of the Transferor and TMCC herein, to the accuracy of the statements of
the Transferor and TMCC made in any officers' certificate pursuant to the
provisions hereof, to the performance by the Transferor and TMCC of their
respective obligations hereunder and to the following additional conditions
precedent:
(a) On (i) the date of this Agreement, the Representative, the Transferor
and TMCC shall have received two letters (one of which relates to the Contracts
and related information and one of which relates to the financial statements of
TMCC), dated the date of delivery thereof (which, if the Effective Time is prior
to the execution and delivery of this Agreement, shall be on or prior to the
date of this Agreement or, if the Effective Time is subsequent to the execution
and delivery of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed shortly prior
to the Effective Time), of PriceWaterhouseCoopers LLP ("PWC") confirming that
they are independent public accountants with respect to the Transferor and TMCC
within the meaning of the Act and the Rules and Regulations, substantially in
the form of the drafts to which the Representative has previously agreed and
otherwise in form and in substance satisfactory to the Representative and
counsel for the Underwriters, and (ii) on the Closing Date, the Representative,
the Transferor and TMCC shall have received a letter, dated as of the Closing
Date, from PWC, updating the letter
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delivered pursuant to clause (i) above that relates to the financial
statements of TMCC, in form and substance satisfactory to the Representative
and counsel for the Underwriters.
(b) If the Effective Time has not occurred prior to the date of this
Agreement, the Effective Time shall have occurred not later than 5:30 p.m. New
York City time on the date of execution and delivery of this Agreement, or such
later date as shall have been consented to by the Representative. If the
Effective Time is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) hereof. Prior to the Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Transferor, TMCC or the Representative, shall be
contemplated by the Commission.
(c) The Representative shall have received a certificate dated the Closing
Date of the President, any Vice President or a principal accounting or financial
officer of the Transferor and the President, any Vice President or a principal
accounting or financial officer of TMCC in which such officer shall state (i) in
the case of the Transferor, that (A) to the best knowledge of such officer after
reasonable investigation, the representations and warranties of the Transferor
in this Agreement are true and correct, (B) to the best knowledge of such
officer after reasonable investigation, the Transferor has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are contemplated by the Commission and
(C) subsequent to the date of this Agreement, there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Transferor except as set forth in or
contemplated by the Prospectus and (ii) in the case of TMCC, that (A) to the
best knowledge of such officer after reasonable investigation, the
representations and warranties of TMCC in this Agreement are true and correct,
(B) to the best knowledge of such officer after reasonable investigation, TMCC
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder and (C) subsequent to the date of this
Agreement, there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of TMCC
that would materially and adversely affect the performance by TMCC of its
obligations under this Agreement or the Basic Documents to which it is a party.
(d) The Representative shall have received:
(i) the favorable opinion, dated the Closing Date, of Alan F.
Cohen, Esq., General Counsel of TMCC and counsel to the Transferor, in form
and scope satisfactory to the Representative and its counsel, to the effect
that:
(A) Each of the Transferor and TMCC is a corporation duly organized,
existing and in good standing under the laws of the State of
California.
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(B) Each of the Transferor and TMCC is duly incorporated or qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which their respective ownership or lease of
substantial properties or the conduct of their respective businesses
requires such qualification and in which the failure to so qualify and
be in good standing would materially adversely affect their respective
businesses or financial condition.
(C) To such counsel's knowledge (A) there are no legal or governmental
proceedings pending or threatened against TMCC or in connection with
the origination and servicing of the Contracts by TMCC which are
required to be disclosed in the registration statement, other than
those disclosed therein, (B) there are no legal or governmental
proceedings to which TMCC is a party or to which any of its property
is subject which are not described in TMCC's Annual Report on Form
10-K for the year ended September 30, 1997, or its Quarterly Report
for the quarter ended June 30, 1998, which are required to be
disclosed therein other than those disclosed therein and (C) there
are no pending legal or governmental proceedings to which the
Transferor is a party or to which any of its property is subject.
(D) To such counsel's knowledge (1) no default exists in the due
performance or observance by TMCC of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a
party or by which it may be bound, which default would have a material
adverse effect on the financial condition, earnings, business affairs,
business prospects, properties or results of operations of TMCC and
its subsidiaries considered as one enterprise, and (2) other than the
agreements related to the Toyota Auto Lease Trust 1997-A, the Toyota
Auto Lease Trust 1998-A the 1998-C Toyota Auto Lease Trust and this
Agreement, the Purchase Agreement, the Basic Agreements and the
Subordinated Note payable to TMCC, the Transferor is not a party to
any material contract, indenture, mortgage, loan agreement, note,
lease or other instrument.
(E) The execution, delivery and performance of this Agreement, the
Purchase Agreement and the Basic Agreements and the consummation of
the transactions herein and therein contemplated will not (1) conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any Lien upon any property or assets of TMCC
or any of its subsidiaries pursuant to, any material contract,
indenture, mortgage, loan agreement, note, lease or other instrument
known to such counsel to which
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TMCC or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of
TMCC or any of its subsidiaries is subject, (2) result in any
violation of the provisions of the charter or bylaws of TMCC or the
Transferor or (3) to such counsel's knowledge, result in any
violation of any applicable law, administrative regulation or
administrative or court decree.
(F) Each of the Transferor and TMCC has obtained all necessary
authorizations and approvals under the federal law of the United
States and the laws of the State of California to conduct their
respective businesses in which the failure to obtain such
authorizations and approvals would render any Contract or any other
material part of the corpus of the Titling Trust unenforceable or
would materially and adversely affect the ability of either the
Transferor or TMCC to perform any of their respective obligations
under, or the enforceability of, any Basic Agreement; provided,
however, that such counsel need express no opinion with respect to any
consent or approval relating to the authority to lease motor vehicles,
originate lease contracts or to service such leased motor vehicles and
lease contracts.
(ii) The favorable opinions of O'Melveny & Myers LLP, special counsel
to the Transferor and TMCC, dated the Closing Date and satisfactory in
form and substance to the Representative and counsel for the Underwriters
and to the effect that:
(A) Each of the Transferor and TMCC has corporate power to own, lease and
operate its properties and assets, to carry on its business as
described in the Prospectus and to enter into and to perform its
obligations under this Agreement and each Basic Agreement to which it
is a party.
(B) The execution, delivery and performance of this Agreement and each
Basic Agreement to which each of TMCC or the Transferor is a party,
have been duly authorized by all necessary corporate actions on the
part of TMCC and the Transferor and each of TMCC and the Transferor
has duly executed and delivered this Agreement and each Basic
Agreement to which it is a party.
(C) Each Basic Agreement to which the Transferor or TMCC is a party,
constitutes a legally valid and binding obligation of the Transferor
or TMCC, as applicable, enforceable against the Transferor or TMCC, as
applicable, in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance laws) and by general
principles of
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equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding at equity or at
law.
(D) The Certificates have been duly authorized by all necessary corporate
action on the part of the Transferor and, when executed and
authenticated by the Trustee as specified in the Securitization Trust
Agreement and, in the case of the Class A Certificates, delivered
against payment of the consideration specified in this Agreement and,
in the case of the Class B Certificates, paid for pursuant to the
Purchase Agreement will be validly issued and outstanding and entitled
to the benefits of the Securitization Trust Agreement, except as
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by
general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding at equity or at law.
(E) No order, consent, permit or approval of any California, New York or
federal governmental authority that such counsel has recognized as
applicable to TMCC or the Transferor, or to transactions of the type
contemplated by this Agreement or any Basic Agreement, including the
issuance of the 1998-C SUBI Certificate, the 1998-C SUBI Insurance
Certificate and Class A Certificates, is required on the part of TMCC
or the Transferor for the execution and delivery of, and performance
of its obligations under this Agreement and any Basic Agreement,
except for such as have been obtained or made and are in full force
and effect as of the Closing Date; provided that such counsel need
express no opinion with respect to any orders, consents, permits,
approvals, filings or licenses relating to the authority to lease
motor vehicles, originate lease contacts or to service lease
contracts or leased vehicles or any state or foreign securities laws
or as may be required by any regional or local governmental authority.
(F) To such counsel's knowledge, there are no actions, proceedings or
investigations pending or threatened, to which the Transferor or TMCC
is a party or of which any property of the Transferor or TMCC is the
subject that are required to be disclosed in the Registration
Statement, other than those disclosed therein, or (A) asserting the
invalidity of this Agreement, any Basic Agreement or the Certificates,
(B) seeking to prevent the
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issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any Basic Agreement,
(C) that would, if determined adversely to TMCC or the Transferor,
materially and adversely affect the performance by the Transferor
or TMCC of its respective obligations under, or the validity or
enforceability of, this Agreement, any Basic Agreement or the
Certificates or (D) seeking adversely to affect the federal income
tax attributes of the Certificates as described in the Prospectus
under the heading "Material Federal Income Tax Consequences" or the
California income and franchise tax attributes of the Class A
Certificates.
(G) The Certificates and the Basic Agreements each conform in all material
respects with the respective descriptions thereof contained in the
Registration Statement and the Prospectus.
(H) The statements in the Prospectus under the captions "Summary", "Risk
Factors", "Description of the Certificates", "Assets of the Trust" and
"Additional Document Provisions", insofar as such statements purport
to summarize certain provisions of the 1998-C SUBI, the UTI
Certificates, the Certificates, the Basic Agreements and the
Contingent and Excess Liability Insurance Policies, provide a fair
summary of such provisions.
(I) The statements in the Prospectus under "Risk Factors -- Risks
Associated with Swap Agreement", -- Risks Associated with Consumer
Protection Laws", "-- Risks Associated with ERISA Liabilities",
"-- Risks Associated with Vicarious Tort Liability with respect to
Leased Vehicles", "-- Risks Associated with Possible Insolvency of
TMCC; Substantive Consolidation with TMCC" and "-- Legal Proceedings
Relating to Leased Vehicles", "Additional Document Provisions",
"Certain Legal Aspects of the Titling Trust", "Certain Legal Aspects
of the Contracts and the Leased Vehicles", "Material Federal Income
Tax Consequences" and "ERISA Considerations", to the extent that they
constitute matters of law or legal conclusions relating to U.S.
federal law or the laws of the States of California and New York, have
been reviewed by such counsel and are correct in all material
respects.
(J) The Registration Statement has become effective under the Act, and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Act and no proceedings for that purpose have been initiated or
threatened by the Commission under the Act, and the Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates, appeared on
its face to be appropriately
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responsive in all material respects to the applicable requirements
of the Act and the Rules and Regulations, except that such counsel
need not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration
Statement or the Prospectus except for those as contemplated by
clauses (H) and (I) of Section 6(d)(ii), in each case to the extent
set forth therein, and such counsel need not opine as to the
financial statements and related notes, schedules and other
financial and statistical data included or incorporated by
reference therein.
(K) None of the Titling Trust Agreement, the 1998-C SUBI Supplement, or
the Securitization Trust Agreement are required to be qualified under
the Trust Indenture Act of 1939, as amended (the "1939 Act"); and the
Indenture has been duly qualified under the 1939 Act.
(L) None of the Transferor, TMCC, the Titling Trust or the Securitization
Trust is an "investment company" within the meaning of the Investment
Company Act.
(M) If TMCC were to become a debtor in a case under the Bankruptcy Code,
neither the 1998-C SUBI Certificate nor the 1998-C SUBI Insurance
Certificate would be part of the bankruptcy estate of TMCC and it
would not be a proper exercise by a federal bankruptcy court of its
equitable jurisdiction to substantively consolidate the assets of the
Titling Trust, the Transferor or the Securitization Trust with the
assets and liabilities of TMCC. The transfer of the 1998-C SUBI
Certificate and the 1998-C SUBI Insurance Certificate by TMCC to the
Transferor constitutes a sale of the 1998-C SUBI Certificate, the
1998-C SUBI Insurance Certificate and the 1998-C SUBI Assets evidenced
thereby. The transfer of the 1998-C SUBI Certificate by the
Transferor to the Securitization Trust either (A) constitutes a sale
of the 1998-C SUBI Certificate and the 1998-C SUBI Assets evidenced
thereby or (B) if such transfer does not constitute a sale, then the
Securitization Trust Agreement and the delivery to and possession by
the Securitization Trustee of the 1998-C SUBI Certificate creates a
valid first priority perfected security interest, for the benefit of
the Securitization Trustee on behalf of the Certificateholders, in the
Transferor's right, title and interest in the 1998-C SUBI Certificate
and the proceeds thereof and, upon taking the actions specified in
such opinion, in the specified items of collateral in the Reserve Fund
and the proceeds thereof.
In addition, such counsel shall state that such counsel has
participated in conferences with the officers and other representatives of
TMCC and the Transferor, representatives of their independent public
accountants and the representatives of the
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Underwriters and their counsel, at which the Registration Statement and
the Prospectus were discussed and, although such counsel has not
independently verified their accuracy, completeness or fairness and does
not assume any responsibility for the accuracy, completeness or fairness
of the Registration Statement or the Prospectus (relying in such
counsel's determination as to materiality to an extent upon the opinions
of officers and other representatives of TMCC and the Transferor), such
counsel does not believe that the Registration Statement, at the
Effective Time, or any such amendment or supplement, as of its effective
date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, not misleading, or that the Prospectus, at the
date thereof (or any such amendment or supplement, as of its respective
date) or at the Closing Date included or includes an untrue statement of
a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; it being
understood that such counsel need not express any opinion or belief as
to any financial statements, schedules or other financial, numerical or
statistical data contained or incorporated by reference in any
Registration Statement or the Prospectus or the Indenture Trustee's
Statement of Qualification on Form T-1.
Such counsel's opinion in paragraph (C) above as to the enforceability
of the Basic Agreements is subject to the unenforceability under certain
circumstances: (1) of waivers of rights granted by law where the waivers
are against public policy or prohibited by law: (2) of waivers of vaguely
or broadly stated rights or future rights; (3) of any indemnification
provisions; (4) of any provisions that rights or remedies are not
exclusive, that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy or that the election of some
particular remedy or remedies does not preclude recourse to one or more
other remedies; (5) the unforceability under certain circumstances of
choice of law provisions; and (6) the unenforceability under certain
circumstances of severability provisions.
With respect to the opinion expressed in paragraph (C), such counsel
may assume the matters set forth in the opinion of Richards, Layton &
Finger dated the Closing Date, as to matters of Delaware law.
(iii) The opinion as to tax and related matters, dated the Closing
Date, of O'Melveny & Myers LLP, special counsel to TMCC and the Transferor,
in form and substance satisfactory to the Representative and to counsel for
the Underwriters.
(iv) Reliance letters relating to each legal opinion relating to
the transactions contemplated by this Agreement and the Basic Agreements
rendered by counsel to the Transferor or TMCC to the Securitization
Trustee, the Titling Trustee and each Rating Agency.
19
<PAGE>
(v) The favorable opinion of Richards, Layton & Finger, special
Delaware counsel to the Titling Trust, dated the Closing Date and
satisfactory in form and substance to the Representative and counsel for
the Underwriters, to the effect that:
(A) The Titling Trust Agreement is the legal, valid and binding
agreement of TMCC, the Titling Trustee and U.S. Bank,
enforceable against each of them in accordance with its terms.
(B) The Titling Trust has been duly formed and validly existing as a
business trust under the Delaware Business Trust Act, 12 DEL C.
Section 3801 ET SEQ. (the "Delaware Act").
(C) The Titling Trust has the power and authority under the Delaware
Act and the Titling Trust Agreement, and the Titling Trust
Agreement authorizes the Titling Trustee, to execute, deliver
and perform its obligations under each Basic Agreement to which
it is a party.
(D) To the extent that Article 9 of the Uniform Commercial Code as in
effect in the State of Delaware (the "UCC") is applicable (without
regard to conflict of laws principles), and assuming that a security
interest in the 1998-C Contracts created by the Securitization Trust
Agreement has been duly created and has attached, upon the filing of
the Financing Statement with the Secretary of State of the State of
Delaware, the Securitization Trustee will have a perfected security
interest in the Titling Trust's rights in the 1998-C Contracts and the
proceeds thereof, and such security interest will be prior to any
other security interest granted by the Titling Trust that is
perfected solely by the filing of financing statements under the
UCC, excluding purchase money security interests under Section
9-312(4) of the UCC and temporarily perfected security interests in
proceeds under Section 9-306(3) of the UCC.
(E) No re-filing or other action is necessary under the UCC in the State
of Delaware in order to maintain the perfection of such security
interest except for the filing of continuation statements at five year
intervals.
(F) The 1998-C SUBI Certificate, the 1998-C SUBI Insurance Certificate and
the UTI Certificates have been duly and validly authorized and, when
executed, authenticated and delivered pursuant to the SUBI Supplement,
the UTI Supplement and the Titling Trust Agreement, will be duly and
validly issued and outstanding and entitled to the benefits of the
SUBI Supplement, the UTI Supplement and the Titling Trust Agreement.
20
<PAGE>
(G) Under 12 DEL. C. Section 3805(b), no creditor of any holder of a SUBI
Certificate or a UTI Certificate (including creditors of TMCC, as the
holder of the UTI Certificate) shall have any right to obtain
possession of, or otherwise exercise legal or equitable remedies with
respect to, the property of the Titling Trust except in accordance
with the terms of the Titling Trust Agreement.
(vi) The favorable opinion of Hudson Cook LLP, special counsel to
TMCC and the Titling Trust, with respect to various licensing, consumer
protection and other state law matters in the form previously agreed on
with the Representative and counsel for the Underwriters.
(vii) The favorable opinion of Dorsey & Whitney LLP, counsel to the
Securitization Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and counsel to the Underwriters, to the
effect that:
(A) U.S. Bank has been duly incorporated and is validly existing as a
national banking association, in good standing under the laws of
United States with full power and authority (corporate and other) to
own its properties and conduct its business, as presently conducted by
it, and to enter into and perform its obligations as Securitization
Trustee and Trust Agent under each Basic Agreement to which U.S. Bank
is a party.
(B) Each Basic Agreement to which U.S. Bank is a party has been duly
authorized, executed and delivered by U.S. Bank and, assuming the due
authorization, execution and delivery thereof by the other parties
thereto, will constitute a legal, valid and binding obligation of U.S.
Bank enforceable 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
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(C) The Certificates have been duly executed, authenticated and delivered
by the Securitization Trustee.
(D) Neither the execution nor delivery by U.S. Bank of each Basic
Agreement to which it is a party nor the consummation of any of the
transactions by U.S. Bank contemplated thereby require the consent or
approval of, the giving of notice to, the registration with or the
taking of any other action with respect to, any governmental authority
or agency under any existing federal or state law governing the
banking or trust powers of U.S. Bank.
21
<PAGE>
(E) The execution and delivery of each Basic Agreement to which U.S. Bank
is a party and the performance by U.S. Bank of its terms do not
conflict with or result in a violation of (A) any federal or state law
or regulation governing the banking or trust powers of U.S. Bank (B)
the Articles of Association or By-Laws of U.S. Bank, or (C) to the
best knowledge of such counsel, any indenture, lease, or material
agreement to which U.S. Bank is a party or to which its assets are
subject.
(F) All of the issued and outstanding capital stock of the Titling Trustee
is owned by U.S. Bank, free and clear of any Liens.
(viii) The favorable opinion of Dorsey & Whitney LLP counsel to the
Titling Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and counsel for the Underwriters, to the
effect that:
(A) The Titling Trustee has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate
its properties, to conduct its business as described in the
Registration Statement and to enter into and perform its obligations
under each Basic Agreement to which it is a party; to the best of
their knowledge and information, the Titling Trustee is duly qualified
as a foreign corporation to transact business and is in good standing
in California, Florida, Michigan, Pennsylvania and Ohio; and the
shares of issued and outstanding capital stock of the Titling Trustee
have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by U.S. Bank.
(B) Each Basic Agreement to which the Titling Trustee is a party has been
duly authorized, executed and delivered by the Titling Trustee and,
assuming the due authorization, execution and delivery thereof by the
other parties thereto, will constitute legal, valid and binding
obligations of the Titling Trustee enforceable in accordance with
their respective 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 (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(C) The 1998-C SUBI Certificate, the 1998-C SUBI Insurance Certificate and
the UTI Certificates have been duly executed, authenticated and
delivered Neither the execution nor delivery by the Titling Trustee of
each Basic Agreement to which it is a party nor the consummation of
any of the transactions by the Titling Trustee contemplated thereby
require the
22
<PAGE>
consent or approval of, the giving of notice to, the registration
with or the taking of any other action with respect to, any person
or entity, including any governmental authority or agency under any
existing federal or state law.
(D) The execution and delivery of each Basic Agreement to which the
Titling Trustee is a party and the performance by the Titling Trustee
of their respective terms do not conflict with or result in a
violation of its articles of incorporation or bylaws of the Titling
Trustee or, to the best of such counsel's knowledge, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party, by which it may be bound or to which any of
its property or assets is subject.
(ix) The favorable opinion of Brown & Wood LLP, counsel for the
Underwriters, dated the Closing Date, with respect to the existence of the
validity of the Certificates and such other related matters as the
Representative shall request. In rendering such opinion, Brown & Wood LLP
may rely on the opinions of counsel referred to above.
(x) Such other documents, opinions and certificates as the
Underwriters, or counsel to the Underwriters, may reasonably require.
(e) Each Class of Class A Certificates shall be rated in the highest
rating category by each of Moody's and Standard & Poor's.
(f) Each of the Transferor and TMCC confirms that it has caused to be made
an application on the Transferor's behalf for the Class A Certificates to be
listed on the Luxembourg Stock Exchange.
(g) On or prior to the Closing Date, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance of the
Certificates and sale of the Class A Certificates as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the parties to the Basic
Agreements in connection with the issuance of the Certificates and sale of the
Class A Certificates as herein contemplated shall be reasonably satisfactory in
form and substance to the Representative and counsel for the Underwriters.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Transferor and TMCC at any time at or prior to
the Closing Date, and such termination shall be without liability of any party
to any other party except as provided in Section 5(h) hereof.
7. Indemnification and Contribution.
23
<PAGE>
(a) The Transferor and TMCC will, jointly and severally, indemnify and
hold harmless each Underwriter and its directors and officers against any
losses, claims, damages or liabilities, joint or several, as incurred, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that neither the Transferor nor TMCC will be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Transferor or TMCC by any Underwriter
through the Representative specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information in the Prospectus appearing in the fifth, sixth and seventh
textual paragraphs under the caption "Underwriting" and the information in the
first paragraph on page (iii); provided that neither TMCC nor the Transferor
shall be liable under this subsection (a) to the extent that such losses,
claims, damages or liabilities arose out of or are based upon an untrue
statement or omission made in any preliminary prospectus that is corrected in
the Prospectus (or any amendmen or supplement thereto) if the person asserting
such loss, claim, damage or liability was not sent or given the Prospectus (or
any amendment or supplement thereto) on or prior to the confirmation of the sale
of the Certificates.
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Transferor and TMCC and their respective directors and officers
against any losses, claims, damages or liabilities, joint or several, as
incurred, to which the Transferor or TMCC may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Transferor or TMCC by any Underwriter through the Representative specifically
for use therein, it being understood and agreed that the only such information
furnished by any Underwriters consists of the information in the Prospectus
appearing in the fifth, sixth and seventh textual paragraphs under the caption
"Underwriting" and the information in the first paragraph on page (iii) and will
reimburse any legal or other expenses reasonably incurred by the Transferor or
TMCC in
24
<PAGE>
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does ot include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in Section 7(a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Transferor and
TMCC on the one hand and the Underwriters on the other from the offering of the
Class A Certificates or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Transferor and TMCC on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Transferor and
TMCC on the one hand and the Underwriters on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Class A
Certificates (before deducting expenses) received by the Transferor and TMCC
bear to the total underwriting discounts and commissions and the service fee
specified in Section 5(h) received by the Underwriters in respect of the Class A
Certificates. The relative fault shall be
25
<PAGE>
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Transferor or
TMCC or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
Section 7(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section 7(d). Notwithstanding the provisions of this Section 7(d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Class A Certificates
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section
7(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Transferor and TMCC under this Section shall be
in addition to any liability which the Transferor or TMCC may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Transferor or TMCC, to each
officer of the Transferor or TMCC who has signed the Registration Statement and
to each person, if any, who controls the Transferor or TMCC within the meaning
of the Act.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Transferor and TMCC or their respective officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the Transferor, TMCC or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Class A Certificates. If for any
reason the purchase of the Class A Certificates by the Underwriters is not
consummated, the Transferor and TMCC shall remain responsible for the expenses
to be paid or reimbursed by them pursuant to Section 5(h) hereof and the
respective obligations of the Transferor, TMCC and the Underwriters pursuant to
Section 7 hereof shall remain in effect.
9. Termination of Agreement. The Representative may terminate this
Agreement, by notice to the Transferor and TMCC, at any time prior to or at the
Closing Date (a) if there has been any material adverse change in the condition,
financial or otherwise, or in the business affairs or business prospects of the
Transferor, TMCC or the Titling Trust which, in the
26
<PAGE>
reasonable judgment of the Representative (after consultation with the
Underwriters), materially impairs the investment quality of the Class A
Certificates, or makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Class A Certificates; (b) if,
subsequent to the date of this Agreement, there has occurred any downgrading
in the rating of the debt securities of TMCC or Toyota Motor Sales, U.S.A.,
Inc. or any of their direct or indirect subsidiaries by any "nationally
recognized statistical rating organization" (as such term is defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (c) if, subsequent to the date of this Agreement, there has occurred
any outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by the United States Congress or any other
substantial national or international calamity or emergency if, in the
reasonable judgment of the Representative (after consultation with the
Underwriters), the effect of any such outbreak, escalation, declaration
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Class A Certificates; (d) if,
subsequent to the date of this Agreement, there has occurred any suspension
or limitation of trading in securities generally on the New York Stock
Exchange or the Luxembourg Stock Exchange or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any securities
of TMCC on any exchange or in the over-the-counter market; or (e) if,
subsequent to the date of this Agreement, a banking moratorium has been
declared by either federal, New York or California authorities.
10. Default By One or More of the Underwriters. If one or more of the
Underwriters shall fail at the Closing Date to purchase the Class A Certificates
which it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, but not the obligation,
within 24 hours thereafter, to make arrangements for one or more of the non-
defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representative shall not
have completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the total aggregate principal amount of the Class A Certificates,
the non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in such proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities exceeds 10%
of the total aggregate principal amount of the Class A Certificates, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter.
No action pursuant to this Section shall relieve any defaulting Underwriter
from liability in respect of its default.
27
<PAGE>
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Transferor shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangement.
11. Notices. All communications hereunder will be in writing and, if sent
to (i) the Underwriters, shall be directed to the Representative and will be
mailed, delivered or sent by facsimile and confirmed to it at Merrill Lynch,
Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, New
York, New York 10281, Attention: Ted Breck, Director, Asset Backed Securities
Group (facsimile number 212-449-9015); (ii) the Transferor, will be mailed,
delivered or sent by facsimile and confirmed to it at Toyota Leasing, Inc.,
19001 South Western Avenue, Torrance, California 90501, Attention: Treasury
Department (facsimile number 310-787-6194); or (iii) TMCC, will be mailed,
delivered or sent by facsimile and confirmed to it at 19001 South Western
Avenue, Torrance, California 90501, Attention: Treasury Department (facsimile
number 310-787-6194).
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
13. Representations, Warranties and Agreements of Underwriters. (a) With
respect to any offers or sales of the Class A Certificates outside the United
States (and solely with respect to any such offers and sales) each Underwriter
severally and not jointly makes the following representations and agrees that:
(i) United Kingdom
(A) in relation to the Class A Certificates, it has not offered or sold
and, prior to the expiry of the period of six months from the Closing
Date in respect of any such Class A Certificates, will not offer or
sell any such the Class A Certificates to persons in the United
Kingdom except to persons whose ordinary 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 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;
(B) 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
28
<PAGE>
(C) 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
issue of any 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 such document may otherwise lawfully be issued or
passed on.
(ii) General
(A) Each Underwriter represents and agrees 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 the 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 none of the
Transferor, TMCC or any other Underwriter shall have any
responsibility therefor;
(B) No action has been or will be taken by such Underwriter that would
permit a public offering of the Class A Certificates or possession or
distribution of any offering material in relation to the Class A
Certificates in any jurisdiction where action for that purpose is
required unless the Transferor or TMCC has agreed to such actions and
such actions have been taken; and
(C) Each Underwriter represents and agrees 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
or TMCC or the Underwriters. Such Underwriter acknowledges that it is
not authorized to give any information or make any representations in
relation to the Class A Certificates other than those contained or
incorporated by reference in the Prospectus for the Class A
Certificates and such additional information, if any, as the
Transferor or TMCC shall, in writing, provide to and authorize such
Underwriter so to use and distribute to actual and potential
purchasers of Class A Certificates;
(b) The Underwriters agree to provide a letter as soon as practicable
after the Closing Date substantially to the effect that, based on a thorough
survey of the distribution of the Class A-1, Class A-2 and Class A-3
Certificates, the Underwriters have calculated that each Class of
29
<PAGE>
such Certificates has been distributed to more than 100 investors that are not
affiliates of the Securitization Trust, the Titling Trust, the Transferor and
TMCC.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to any
otherwise applicable principles of conflicts of laws.
30
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us one of the counterparts duplicate hereof, whereupon
it will become a binding agreement between the Transferor and TMCC and the
Underwriters in accordance with its terms.
Very truly yours,
TOYOTA MOTOR CREDIT CORPORATION
By: ____________________________________
Name:
Title:
TOYOTA LEASING, INC.
By: ____________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:____________________________________
Name:
Title:
For itself and as Representative of the other Underwriters named in Schedule I
hereto.
31
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of Principal Amount of
Name of Underwriter Class A-1 Certificates Class A-2 Certificates Class A-3 Certificates
- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Merrill Lynch, Pierce,
Fenner & Smith Incorporated [ ] [ ] [ ]
Credit Suisse First Boston
Corporation [ ] [ ] [ ]
Total . . . . . . . . . . . . $[ ] $[ ] $[ ]
</TABLE>
<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 shares of $100.00 par
value stock. No shareholder shall have any preemptive right to acquire
additional shares of the Corporation.
2
<PAGE>
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, further, that the
Corporation shall not amend or change any article so as to be inconsistent
with the Restricted Articles.
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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
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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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<PAGE>
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 adjourned meeting
other than by announcement at the meeting at which such adjournment is taken.
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<PAGE>
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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<PAGE>
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
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.
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<PAGE>
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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<PAGE>
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.
-5-
<PAGE>
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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<PAGE>
(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 Directors. Any
two or more of such offices, except those of President and Secretary, may be
held by the same person.
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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 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.
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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 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.
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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 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.
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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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TOYOTA LEASING, INC.
AND
U.S. BANK NATIONAL ASSOCIATION, AS 1998-C SECURITIZATION TRUSTEE
TOYOTA AUTO LEASE TRUST 1998-C
AUTO LEASE ASSET-BACKED CERTIFICATES
1998-C SECURITIZATION TRUST AGREEMENT
Dated as of December 1, 1998
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.02 Article and Section References. . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II CREATION OF TRUST; ESTABLISHMENT OF SUBI SECURITIES
ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.01 Creation of Trust; Establishment of SUBI Securities Account . . . . . . .3
2.02 Conveyance of 1998-C SUBI Certificate . . . . . . . . . . . . . . . . . .3
2.03 Acceptance by 1998-C Securitization Trustee . . . . . . . . . . . . . . .4
2.04 Transfer of Collections . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE III ALLOCATIONS, APPLICATIONS AND PAYMENTS; THE
RESERVE FUND; STATEMENTS TO CERTIFICATEHOLDERS. . . . . . . . . . . . .5
3.01 Allocations, Applications and Payments. . . . . . . . . . . . . . . . . .5
3.02 1998-C SUBI Certificateholders' Account; The Reserve Fund . . . . . . . 20
3.03 Statements to Certificateholders. . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.01 The Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.02 Authentication and Delivery of Certificates . . . . . . . . . . . . . . 29
4.03 Registration of Transfer and Exchange of Certificates . . . . . . . . . 30
4.04 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . 34
4.05 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.06 Access to List of Certificateholders' Names and Addresses . . . . . . . 34
4.07 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . 35
4.08 Temporary Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 35
4.09 Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.11 Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . 37
4.12 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.13 ERISA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V THE TRANSFEROR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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5.01 Representations of Transferor . . . . . . . . . . . . . . . . . . . . . 39
5.02 Liability of Transferor: Indemnities. . . . . . . . . . . . . . . . . . 41
5.03 Merger or Consolidation of, or Assumption of the Obligations
of, Transferor; Certain Limitations . . . . . . . . . . . . . . . . . . 41
5.04 Limitation on Liability of Transferor and Others. . . . . . . . . . . . 43
5.05 Transferor May Own Investor Certificates. . . . . . . . . . . . . . . . 43
5.06 No Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.07 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.08 Maturity Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI THE 1998-C SECURITIZATION TRUSTEE. . . . . . . . . . . . . . . . . . . 44
6.01 Duties of the 1998-C Securitization Trustee . . . . . . . . . . . . . . 44
6.02 Certain Matters Affecting the 1998-C Securitization Trustee . . . . . . 45
6.03 1998-C Securitization Trustee Not Liable for Certificates or
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.04 1998-C Securitization Trustee May Own Certificates. . . . . . . . . . . 48
6.05 1998-C Securitization Trustee's Fees and Expenses . . . . . . . . . . . 48
6.06 Eligibility Requirements for 1998-C Securitization Trustee. . . . . . . 48
6.07 Resignation or Removal of 1998-C Securitization Trustee . . . . . . . . 48
6.08 Successor 1998-C Securitization Trustee . . . . . . . . . . . . . . . . 49
6.09 Merger or Consolidation of 1998-C Securitization Trustee. . . . . . . . 50
6.10 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . 50
6.11 Representations and Warranties of Trustee . . . . . . . . . . . . . . . 51
6.12 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.13 Trustee May Enforce Claims Without Possession of Certificates . . . . . 52
6.14 Suit for Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.15 Rights of Certificateholders to Direct Trustee. . . . . . . . . . . . . 52
6.16 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.17 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.01 Termination of the 1998-C Securitization Trust. . . . . . . . . . . . . 53
7.02 Optional Purchase of 1998-C SUBI. . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII ACCUMULATION EVENTS AND SWAP TERMINATIONS. . . . . . . . . . . . . . 56
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8.01 Accumulation Events . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.02 Swap Terminations, Events of Default and Termination Events . . . . . . 56
ARTICLE IX MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 57
9.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.02 Protection of Title to Trust. . . . . . . . . . . . . . . . . . . . . . 59
9.03 Limitation on Rights of Certificateholders. . . . . . . . . . . . . . . 60
9.04 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.06 Severability of Provisions: Counterparts. . . . . . . . . . . . . . . . 62
9.07 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.08 Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . 62
9.09 Inventory Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X AGENT FOR SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.01 Agent for Service of Transferor . . . . . . . . . . . . . . . . . . . . 63
10.02 Agent of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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EXHIBITS:
Exhibit A-1 Form of Class A-1 Certificate. . . . . . . . . . . . . . . . .A-1
Exhibit A-2 Form of Class A-2 Certificate. . . . . . . . . . . . . . . .A-2-1
Exhibit A-3 Form of Class A-3 Certificate. . . . . . . . . . . . . . . .A-3-1
Exhibit B Form of Class B Certificate. . . . . . . . . . . . . . . . . .B-1
Exhibit C Form of Transferor Certificate . . . . . . . . . . . . . . . .C-1
Exhibit D Form of Rule 144A Transferee Certificate . . . . . . . . . . .D-1
Exhibit E Form of Non-Rule 144A Transferee Certificate . . . . . . . . .E-1
</TABLE>
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1998-C SECURITIZATION TRUST AGREEMENT
THIS 1998-C SECURITIZATION TRUST AGREEMENT, dated as of December 1,
1998, is made with respect to the formation of the TOYOTA AUTO LEASE TRUST
1998-C (the "1998-C Securitization Trust"), between TOYOTA LEASING, INC. a
California corporation ("Transferor" or, in its capacity as transferor
hereunder, the "Transferor"), U.S. Bank National Association, a national
banking association, as trustee (the "1998-C 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., a Delaware
corporation, as trustee (the "Titling Trustee") and, for the limited purposes
stated therein, First Bank National Association (now known as U.S. Bank
National Association), a national banking association, as trust agent.
Pursuant to the Co-Trustee Agreement, Delaware Trust Capital Management, Inc.
will act as co-trustee of the Titling Trust. 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 U.S. Bank National
Association (formerly known as First Bank National Association) ("U.S. Bank")
have entered into the 1998-C SUBI Supplement to the Titling Trust Agreement
dated as of December 1, 1998 (the "1998-C SUBI Supplement") pursuant to which
the Titling Trust, at the direction of TMCC, will create and issue a special
unit of beneficial interest in the Titling Trust (the "1998-C SUBI"), whose
beneficiaries generally will be entitled to the net cash flow arising from
the related SUBI Portfolio (such SUBI Portfolio, the "1998-C SUBI
Portfolio"). The 1998-C SUBI will be evidenced by (i) one certificate (the
"1998-C SUBI Certificate") evidencing beneficial interests in the assets of
the 1998-C SUBI other than proceeds of the Residual Value Insurance Policies,
(whether or not such proceeds are attributable to the 1998-C Leased Vehicles
and the 1998-C Contracts) and (ii) one certificate (the "1998-C SUBI
Insurance Certificate") evidencing beneficial interests in the assets of the
1998-C SUBI that are proceeds of the Residual Value Insurance Policies
attributable to the 1998-C Leased Vehicles and the 1998-C Contracts (which
assets are net of claims adjustment expenses). The 1998-C SUBI Certificate
and the 1998-C SUBI Insurance Certificate collectively represent a 100%
beneficial interest in the 1998-C SUBI.
C. Concurrently herewith, the Titling Trustee (on behalf of the
Titling Trust), and the Servicer and U.S. Bank also have entered into a
1998-C SUBI Servicing Supplement to the Titling Trust Agreement dated as of
December 1, 1998 (the "1998-C SUBI Servicing Supplement"), pursuant to which
the terms of the Titling Trust Agreement will be supplemented insofar as they
apply to the 1998-C SUBI Portfolio, providing for further servicing
obligations that will benefit the holders of the 1998-C SUBI Certificate.
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D. Concurrently herewith, TMCC and the Transferor have entered into
the 1998-C SUBI Certificate Purchase and Sale Agreement dated as of December
1, 1998 (the "SUBI Certificate Purchase and Sale Agreement"), pursuant to
which TMCC sold to the Transferor, without recourse, all of TMCC's right,
title and interest in and to the 1998-C SUBI, the 1998-C SUBI Certificate and
the 1998-C SUBI Insurance Certificate, all monies due thereon and the right
to realize on any property subject to the 1998-C SUBI, and all proceeds
thereof, for the consideration stated therein. The parties hereto
acknowledge that the Transferor is not transferring or conveying to the
1998-C Securitization Trust or the 1998-C Securitization Trustee any right to
or interest in the 1998-C SUBI Insurance Certificate.
E. The parties hereto desire that U.S. Bank, as securities
intermediary (the "SUBI Securities Intermediary"), establish a securities
account (as defined in Section 8-102 of the UCC) in the name of U.S. Bank, as
1998-C Securitization Trustee (the "1998-C SUBI Securities Account") to which
the 1998-C SUBI Certificate will be transferred pursuant to this 1998-C
Securitization Trust Agreement.
F. The parties desire to enter into this 1998-C Securitization Trust
Agreement to create the 1998-C Securitization Trust, to provide for the
issuance by the 1998-C Securitization Trust of certain Certificates and to
provide for the exchange of those Certificates for the 1998-C 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 I
DEFINITIONS
1.01 DEFINITIONS.
For all purposes of this 1998-C 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 attached to the
Titling Trust Agreement or the Annex of Supplemental Definitions attached to the
1998-C SUBI Supplement; PROVIDED, HOWEVER, that in the event a term is defined
both in the Annex of Definitions and in the Annex of Supplemental Definitions,
the definition in the Annex of Supplemental Definitions shall prevail, (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 1998-C Securitization Trust Agreement as a whole and not to
any particular article or section within this 1998-C 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".
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1.02 ARTICLE AND SECTION REFERENCES.
Except as otherwise specified herein, all article and section references
shall be to Articles and Sections in this 1998-C Securitization Trust Agreement.
ARTICLE II
CREATION OF TRUST; ESTABLISHMENT OF SUBI SECURITIES ACCOUNT
2.01 CREATION OF TRUST; ESTABLISHMENT OF SUBI SECURITIES ACCOUNT.
(a) CREATION OF TRUST. Upon the execution of this 1998-C
Securitization Trust Agreement by the parties hereto, there is hereby created
the Toyota Auto Lease Trust 1998-C.
(b) ESTABLISHMENT OF 1998-C SUBI SECURITIES ACCOUNT.
(i) Pursuant to a separate agreement dated December 1, 1998,
between the 1998-C Securitization Trust and the SUBI Securities
Intermediary, a securities account (as such term is defined in
Section 8-501(a) of the UCC) (the "1998-C SUBI Securities Account") will
be established and maintained with U.S. Bank, in its capacity as SUBI
Securities Intermediary, for the benefit of the Toyota Auto Lease Trust
1998-C.
(ii) The Transferor shall direct the SUBI Securities
Intermediary to credit to the 1998-C SUBI Securities Account the
interests in the 1998-C SUBI Certificate transferred, assigned, or
otherwise conveyed by the Transferor as described in Section 2.02 of this
1998-C Securitization Trust Agreement.
2.02 CONVEYANCE OF 1998-C SUBI CERTIFICATE.
(a) CONVEYANCE TO 1998-C SECURITIZATION TRUSTEE. In consideration of
the 1998-C Securitization Trustee's delivery to the Transferor of executed and
authenticated Investor Certificates, in authorized denominations in the
aggregate equal to the Initial Class A-1 Certificate Balance, Initial Class A-2
Certificate Balance, Initial Class A-3 Certificate Balance and Initial Class B
Certificate Balance, and of the executed and authenticated Transferor
Certificate, the Transferor does hereby transfer, assign and otherwise convey to
the 1998-C 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 of the right, title and interest of the Transferor in
and to the 1998-C SUBI Certificate, the rights in and benefits of the
1998-C SUBI evidenced by the 1998-C SUBI Certificate 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 foregoing;
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(iii) all rights accruing to the holder of the 1998-C SUBI
Certificate under the Titling Trust Agreement, the 1998-C SUBI Supplement
and the 1998-C SUBI Servicing Supplement; and
(iv) all proceeds of the foregoing; provided that all monies and
payments due or payable under any Residual Value Insurance Policies
applicable to the 1998-C Leased Vehicles and the 1998-C Contracts and the
right to receive such payments and monies, as evidenced by the 1998-C
SUBI Insurance Certificate, are retained by the Transferor and are not
hereby transferred, assigned or otherwise conveyed to the 1998-C
Securitization Trustee nor will they, under any circumstances, be subject
to the lien of the 1998-C Securitization Trust or any claim by 1998-C
Securitization Trustee.
(b) GRANT OF SECURITY INTEREST. The Transferor also does hereby grant
to the 1998-C Securitization Trustee a security interest in all of the foregoing
(exclusive of the monies and payments referred to in the proviso in Section
2.02(a)(iv)), and the 1998-C Securitization Trustee shall have all the rights,
powers and privileges thereto and therein of a secured party under the New York
UCC.
(c) TERMINATION. The rights and powers granted herein to the
1998-C Securitization Trustee have been granted in order to perfect its
security interests in the assets referred to in Section 2.02(a), are powers
coupled with an interest and will neither be affected by the bankruptcy of
any other person or entity nor by the lapse of time. The obligations of the
SUBI Securities Intermediary hereunder shall continue in effect until the
security interests of the 1998-C Securitization Trustee in the 1998-C SUBI
Securities Account have been terminated pursuant to the terms of this
Securitization Trust Agreement and the 1998-C Securitization Trustee has
notified the SUBI Securities Intermediary of such termination in writing. In
the event of a termination of this 1998-C Securitization Trust Agreement
pursuant to Section 7.01(a)(i) or (iii), or upon repurchase of the 1998-C
SUBI pursuant to Section 7.02, the 1998-C Securitization Trustee is hereby
authorized to convey all interests in the 1998-C SUBI Certificate and in the
1998-C SUBI evidenced thereby to the Transferor. In the event of a
termination of this 1998-C Securitization Trust Agreement pursuant to Section
7.01(a)(iv) or (v), the 1998-C Securitization Trustee is hereby authorized to
convey all interests in the 1998-C SUBI Certificate and in the 1998-C SUBI
evidenced thereby to the purchaser thereof. The 1998-C Securitization
Trustee is hereby authorized and directed to seek a buyer for the 1998-C SUBI
Certificate on the occurrence of a Swap Termination in connection with the
related liquidation of the 1998-C Securitization Trust, in each case pursuant
to Section 8.02. The 1998-C Securitization Trustee shall not be responsible
for or have any liability with respect to any losses incurred in connection
with any such liquidation, other than as a result of its own negligence or
willful misfeasance.
2.03 ACCEPTANCE BY 1998-C SECURITIZATION TRUSTEE.
The 1998-C Securitization Trustee does hereby accept all consideration
conveyed by the Transferor pursuant to Section 2.02 and declares that the 1998-C
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 1998-C Securitization Trust Agreement.
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In accepting the 1998-C SUBI Certificate, the 1998-C Securitization
Trustee does hereby release all claims to the Titling Trust Assets allocated to
the UTI Sub-Trust or to any Other SUBI Sub-Trust and, in the event that such
release is not given effect, to fully subordinate all claims it may be deemed to
have against the Titling Trust Assets allocated thereto.
2.04 TRANSFER OF COLLECTIONS.
The parties hereto acknowledge that the Titling Trustee, on behalf of the
Titling Trust, has made a complete transfer to the 1998-C Securitization Trustee
of the Collections in respect of the 1998-C SUBI Assets contained in all
accounts maintained by the Titling Trustee (excluding proceeds of the Residual
Value Insurance Policies, as evidenced by the 1998-C SUBI Insurance Certificate,
which are the sole property of the Transferor) and, except as provided in this
1998-C SUBI Securitization Trust Agreement, the 1998-C SUBI Supplement and the
1998-C SUBI Servicing Supplement, neither the Titling Trustee nor the Servicer
has any right to direct such funds to a third party or to receive such funds
(other than to receive such funds pursuant to an investment thereof in Permitted
Investments on which such party is the obligor).
ARTICLE III
ALLOCATIONS, APPLICATIONS AND PAYMENTS; THE RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
3.01 ALLOCATIONS, APPLICATIONS AND PAYMENTS.
(a) DETERMINATION OF INTEREST RATES; DETERMINATION OF INTEREST PAYMENT
AMOUNTS; SERVICER'S CERTIFICATES.
(i) For the initial Interest Payment Period, the Class A-1
Rate, Class A-2 Rate, Class A-3 Rate and Class B Rate shall be determined
by straight line interpolation (based on the actual number of days in the
initial Interest Payment Period) such rate to be calculated by the
[Trustee] two Business Days prior to the Closing Date. For each
subsequent Interest Payment Period the 1998-C Securitization Trustee will
make the following determinations:
(A) On the second Interest Determination Business Day
(defined below) preceding the first day of each Interest Payment
Period, (the "Interest Determination Date"), for each Class of
Class A Certificates, the 1998-C Securitization Trustee will
determine the London interbank offered rate for U.S. Dollar
deposits having maturities of three months ("three month LIBOR")
or, if such Interest Payment Period commences on or after the
related Targeted Maturity Date, one month ("one-month LIBOR"), in
each case as at 11:00 a.m. (London time) on the Interest
Determination Date in question. Such offered rate will be that
which appears on the display designated as Telerate Page 3750 on
the Dow Jones Telerate Service (or such other page or service as
may replace it for the purpose of displaying London interbank
offered rates of major banks for U.S. Dollar deposits).
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(B) If for any reason the relevant page is unavailable
or such offered rate does not appear, the 1998-C Securitization
Trustee shall determine the rates at which three-month deposits
(or one-month deposits, if applicable) in U.S. Dollars are offered
by four major banks in the London interbank market (the "Reference
Banks") at approximately 11:00 a.m. (London time) on the Interest
Determination Date to prime banks in the London interbank market
commencing on the first day of the relevant Interest Payment
Period. The 1998-C Securitization Trustee shall request the
principal London office of each of the Reference Banks to provide
a quotation of its rate. If at least two quotations are provided
as requested, the 1998-C Securitization Trustee shall determine
the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the 1998-C Securitization
Trustee shall determine the arithmetic mean of the rates quoted by
major banks in New York City, at approximately 11:00 a.m. (New
York City time) on the first day of the relevant Interest Payment
Period for three-month loans (or one-month loans, if applicable)
in U.S. Dollars to leading European banks commencing on that date.
The rate so determined by the 1998-C Securitization Trustee will
be "three-month LIBOR" (or "one-month LIBOR" as applicable) for
such Interest Payment Period.
(ii) The 1998-C Securitization Trustee shall as soon as
practicable after 11:00 a.m. (London time) on each Interest Determination
Date determine the Class A-1 Rate, Class A-2 Rate, Class A-3 Rate and
Class B Rate, the actual number of days in the related Interest Payment
Period and the Interest Payment Amount for each Class of Certificates.
(iii) If on any relevant Certificate Payment Date for the Class
A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates
or the Class B Certificates, the aggregate of amounts payable to the Swap
Counterparty as described below in Section 3.01(e)(i)(A) is less than the
relevant Class A-1 Swap Interest Amount, Class A-2 Swap Interest Amount,
Class A-3 Swap Interest Amount or Class B Swap Interest Amounts as the
case may be, then on the relevant Determination Date, the Servicer shall
calculate the Class A-1 Interest Payment Amount, Class A-2 Interest
Payment Amount, Class A-3 Interest Payment Amount or Class B Interest
Payment Amount, as the case may be, during the relevant Interest Payment
Period by reducing such amounts by the same proportion as the related
Class A-1 Swap Interest Shortfall Amount, Class A-2 Swap Interest
Shortfall Amount, Class A-3 Swap Interest Shortfall Amount or Class B
Swap Interest Shortfall Amount, as the case may be, represents of such
Class A-1 Swap Interest Amount, Class A-2 Swap Interest Amount, Class A-3
Swap Interest Amount and/or Class B Swap Interest Amount.
(iv) If on any Certificate Payment Date subsequent to a
Certificate Payment Date upon which a Proportional Reduction occurred, as
defined in Section 3.01(a)(iii), amounts have been or are allocable
pursuant to Section 3.01(c)(ii) on Monthly Allocation Dates after
preceding Certificate Payment Date (including on the current Certificate
Payment Date), the Servicer shall calculate the Class A-1 Interest
Payment Amount, Class A-2 Interest Payment Amount, Class A-3 Interest
Payment Amount and Class B Interest Payment Amount for the current
Certificate Payment Date by (1) multiplying the percentages that amounts
allocated pursuant to Section 3.01(c)(ii) represent of the current Class
A-1 Swap
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Interest Amount, Class A-2 Swap Interest Amount, Class A-3 Swap
Interest Amount and/or Class B Swap Interest Amount times (2) the amount
of interest the 1998-C Securitization Trustee has calculated has accrued
during the related Interest Payment Period on the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates or Class B Certificates,
as the case may be (without regard for the availability of amounts so
allocable pursuant to Section 3.01(c)(ii), and (3) adding such product to
the amount of interest so calculated to have accrued during such Interest
Payment Period. The Servicer shall include the Class A-1 Interest
Payment Amount, Class A-2 Interest Payment Amount, Class A-3 Interest
Payment Amount and Class B Interest Payment Amount in the Servicer's
Certificate for each relevant Certificate Payment Date as provided in
Section 3.01(a)(v) below.
(v) On each Determination Date, the Servicer shall deliver to
the 1998-C Securitization Trustee a Servicer's Certificate which sets
forth, among other things, the amount of Interest Collections and
Principal Collections allocable to the 1998-C SUBI, the Investor
Percentage, the Transferor Percentage, the Certificate Factor for each
Class, the amount of Advances (which includes Inventory 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 preceding Collection Period and related
Monthly Allocation Date. On or prior to each Determination Date, the
Servicer shall also determine the Specified Reserve Fund Balance and the
amounts to be allocated and applied or paid in respect of the Investor
Interest and Transferor Interest and in respect of other amounts to be
released from the Trust.
(b) SOURCE OF DEPOSITS.
(i) If, based on the Servicer's Certificate prepared by the Servicer,
funds are to be deposited into the 1998-C SUBI Certificateholders' Account, the
1998-C Securitization Trustee shall make such deposit from the following
sources, in the following order of priorities:
(A) from net investment earnings on Permitted Investments made
on prior Monthly Allocation Dates of funds in the 1998-C SUBI
Certificateholders' Account in respect of the Class A-1 Notional Interest
Accrual Amount, the Class A-2 Notional Interest Accrual Amount, the Class
A-3 Notional Interest Accrual Amount and the Class B Notional Interest
Amount; and
(B) applicable amounts in the 1998-C SUBI Collection Account or
the Reserve Fund, as applicable.
(ii) Provided that (A) the Transferor has not exercised its option to
repurchase the 1998-C SUBI and (B) a Swap Termination has not occurred, on each
relevant Monthly Allocation Date that is a Certificate Payment Date, all amounts
to be paid to Certificateholders, the Transferor or other Persons, shall be made
from the 1998-C SUBI Collection Account. On each Monthly Allocation Date, the
1998-C Securitization Trustee will withdraw, to the extent necessary, the
amounts specified herein from the 1998-C SUBI Certificateholders' Account and/or
the Reserve
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Fund and deposit such amounts into the 1998-C SUBI Collection Account in
order to make the applications and payments indicated herein.
(c) ALLOCATIONS AND APPLICATIONS IN RESPECT OF INTEREST. The
Certificates of each Class will bear interest at the rate specified therein,
and such interest will accrue for each related Interest Period on the basis
of twelve months, each assumed to consist of thirty days, and a year assumed
to consist of 360 days. Provided that the Transferor has not exercised its
option to repurchase the 1998-C SUBI pursuant to Section 7.02 herein, and
provided that the Trust has not been liquidated, pursuant to Section 7.01
herein, on each Monthly Allocation Date, based solely upon the information
set forth in the Servicer's Certificate, the 1998-C Securitization Trustee
shall make the following allocations of Available Interest in the following
amounts (to the extent sufficient therefor) and in the following order of
priority:
(i) an amount equal to the amount of the Class A-1 Notional
Interest Accrual Amount, the Class A-2 Notional Interest Accrual Amount
and the Class A-3 Notional Interest Accrual Amount for the related
Monthly Interest Period, on a pro rata basis;
(ii) an amount equal to the amount of any unreimbursed Class A-1
Interest Carryover Shortfall Amount, Class A-2 Interest Carryover
Shortfall Amount and Class A-3 Interest Shortfall Amount, on a pro rata
basis.
(iii) an amount equal to the [Class B Notional Interest Accrual
Amount] [during the related Monthly Interest Period, plus any [Adjustable
Rate] [Fixed Rate] Class B Interest Carryover Shortfall Amount;
(iv) to the Servicer, an amount equal to the Investor Percentage
of (a) the Servicing Fee for the related Collection Period and (b) the
aggregate of the Investor Percentage of the accrued but unpaid Servicing
Fees in respect of any prior Collection Periods;
(v) to the Servicer, an amount equal to the Investor Percentage
of the Capped Contingent and Excess Liability Premiums that have not yet
been reimbursed to the Servicer;
(vi) to the Titling Trustee (or the Servicer, if such amounts
were previously advanced by the Servicer), an amount equal to the
Investor Percentage of Capped Titling Trust Administrative Expenses;
(vii) to the 1998-C Securitization Trustee (or the Servicer, if
such amounts were previously advanced by the Servicer), an amount equal
to the Investor Percentage of Capped Securitization Trust Administrative
Expenses;
(viii) an amount equal to the sum of (a) the aggregate Loss
Amounts allocable to the Adjusted Class A-1 Certificate Balance, the
Adjusted Class A-2 Certificate Balance and the Adjusted Class A-3
Certificate Balance on such Monthly Allocation Date plus (b) the
aggregate Certificate Principal Loss Amounts allocated to the Adjusted
Class A-1
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Certificate Balance, the Adjusted Class A-2 Certificate Balance
and the Adjusted Class A-3 Certificate Balance on any prior Monthly
Allocation Date (on a pro rata basis based on the aggregate amounts of
such Loss Amounts and Certificate Principal Loss Amounts previously
allocated to each such Class), in each case to the extent not reimbursed
on such date through the application of amounts withdrawn from the
Reserve Fund or Transferor Amounts and not reimbursed pursuant to this
clause (viii) on any prior date;
(ix) an amount equal to the aggregate amount of Loss Amounts
allocable to the Adjusted Class B Certificate Balance on such Monthly
Allocation Date and not reimbursed pursuant to this clause or through the
application of amounts withdrawn from the Reserve Fund and Transferor
Amounts, plus the aggregate amount of Certificate Principal Loss Amounts
allocated to the Adjusted Class B Certificate Balance on any prior
Monthly Allocation Date and not previously reimbursed pursuant to this
clause (x);
(x) an amount equal to the excess of the Specified Reserve Fund
Balance over the amount then on deposit in the Reserve Fund;
(xi) to the Titling Trustee (or the Servicer, if such amounts
were previously advanced by the Servicer), an amount equal to the
Investor Percentage of Uncapped Titling Trust Administrative Expenses;
(xii) to the 1998-C Securitization Trustee (or the Servicer, if
such amounts were previously advanced by the Servicer), an amount equal
to the Investor Percentage of Uncapped Securitization Trust
Administrative Expenses; and
(xiii) the balance, if any, shall constitute Excess Amounts.
(d) SOURCES OF APPLICATIONS AND PAYMENTS. Applications and/or
payments of amounts allocated pursuant to the priorities set forth in Section
3.01(c) above will be made from the following sources in the following order of
priority:
(i) Available Interest, to the extent thereof;
(ii) in the case of Section 3.01(c) clauses (i), (ii), (iii),
(viii), (ix) or (ix), amounts withdrawn from the Reserve Fund to the
extent of the lesser of (A) the amount on deposit in the Reserve Fund on
the related Deposit Date and available therefor and (B) the amount, if
any, by which the aggregate of amounts allocable and applicable or
payable pursuant to such clauses (i), (ii), (iii), (viii) or (ix) exceeds
the amount of Available Interest available to make such allocation and
application or payment based on the foregoing priorities; PROVIDED,
HOWEVER, that amounts allocated to the Class B Reserve Amount shall be
utilized only if there are no other amounts then on deposit in the
Reserve Fund and shall be available exclusively for payment of accrued
and unpaid interest with respect to the Class B Certificates, and on the
Class B Targeted Maturity Date, for reduction of the Adjusted Class B
Certificate Balance until the Adjusted Class B Certificate Balance has
been reduced to zero; and PROVIDED, FURTHER, that if such Monthly
Allocation Date is a relevant Certificate Payment Date that is on or
after the Class B Targeted Maturity Date, amounts then
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remaining amounts on deposit in the Reserve Fund shall be used to repay
any unreimbursed Maturity Advances and to reduce the Adjusted Certificate
Balance of each Class of Investor Certificates then outstanding to zero,
to the extent available therefor; and
(iii) in the case of Section 3.01(c) clauses (i) through (ix)
and, to the extent set forth in Sections 3.01(i)(ii) and 3.01(i)(iii),
Transferor Amounts.
(e) INTEREST PAYMENTS TO CLASS A CERTIFICATEHOLDERS.
(A) Subject to Sections 3.01(i), (k) and (l), the 1998-C
Securitization Trustee shall make payments to the Swap
Counterparty of (1) amounts allocated pursuant to clauses (i) and
(ii) of Section 3.01(c) above (whether from amounts held in the
1998-C SUBI Collection Account or 1998-C SUBI Certificateholders'
Account) and (2) the net investment income earned on Permitted
Investments with respect to funds deposited into the 1998-C
Certificateholders' Account on prior Monthly Allocation Dates in
respect of the Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance or Adjusted Class A-3 Certificate
Balance, as the case may be, (a) on each Monthly Allocation Date
in March, June, September and December, commencing in March 1999,
until the related Targeted Maturity Date, as well as (b) on the
related Targeted Maturity Date and (c) if the Adjusted Class
Certificate Balance of such Class has not been reduced to zero on
its Targeted Maturity Date, on each Monthly Allocation Date
following such Targeted Maturity Date until such Adjusted Class
Certificate Balance is reduced to zero, in each case to the extent
of amounts available therefor.
In exchange for amounts so paid to the Swap Counterparty
pursuant to the Swap Agreement, the Swap Counterparty generally is
obligated to pay to or as directed by the 1998-C Securitization
Trustee (on behalf of and for the benefit of the Class A-1
Certificateholders, the Class A-2 Certificateholders and/or the
Class A-3 Certificateholders, as the case may be) amounts equal to
the amount of interest calculated by the 1998-C Securitization
Trustee to have accrued on the Class A-1 Certificates, Class A-2
Certificates or Class A-3 Certificates, as the case may be, during
the relevant Interest Period ) (subject .to any Proportional
Reduction or Proportional Increase as provided below).
(B) Upon receipt of such amounts from the Swap
Counterparty, the 1998-C Securitization Trustee shall pay such
amounts to the Class A-1 Certificateholders, Class A-2
Certificateholders and Class A-3 Certificateholders (subject to
any Proportional Reduction or Proportional Increase as provided
below), (1) on each Monthly Allocation Date in March and
September, commencing in March 1999, until the related Targeted
Maturity Date, as well as (2) on the related Targeted Maturity
Date and (3) if the Adjusted Class Certificate Balance of such
Class has not been reduced to zero on its Targeted Maturity Date,
on each Monthly Allocation Date following such Targeted Maturity
Date until such Adjusted Class Certificate Balance is reduced to
zero, in each cash to the extent of amounts
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available therefor. Subject to Sections 3.01(i), (k) and (l), in
connection with a Swap Termination or any exercise by the
Transferor of its option to repurchase the 1998-C SUBI Certificate
pursuant to Section 7.02, on the Monthly Allocation Date following
the receipt by the 1998-C Securitization Trustee of the proceeds
of such liquidation or sale to the Transferor, payments of
interest will be made to the Class A-1 Certificateholders,
Class A-2 Certificateholders and Class A-3 Certificateholders,
respectively, from such proceeds, to the extent available therefor
pursuant to Section 3.01(o).
(C) If on any relevant Certificate Payment Date for the
Class A-1 Certificates, the Class A-2 Certificates or the Class
A-3 Certificates, the aggregate of amounts payable to the Swap
Counterparty as described above in Section 3.01(e)(i)(A) is less
than the relevant Class A-1 Swap Interest Amount, Class A-2 Swap
Interest Amount or Class A-3 Swap Interest Amount, as the case may
be, the 1998-C Securitization Trustee shall pay the Class A-1
Certificateholders, Class A-2 Certificateholders and/or Class A-3
Certificateholders, as the case may be, amounts reduced in
proportion to the calculation of Proportional Reduction in Section
3.01(a)(iii) above.
(D) If on any Certificate Payment Date subsequent to a
Certificate Payment Date upon which a Proportional Reduction
occurred, the corresponding payment due from the Swap Counterparty
to the 1998-C Securitization Trust (under the Swap Agreement) on
any Certificate Payment Date in exchange for amounts payable by
the 1998-C Securitization Trust to the Swap Counterparty in
respect of interest on the Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates will be increased
proportionately in the same proportion as such reimbursement of
such Swap Interest Shortfall Amount represents of such Class A-1
Swap Interest Amount, Class A-2 Swap Interest Amount or Class A-3
Swap Interest Amount, as the case may be. The 1998-C
Securitization Trustee shall pay the Class A-1 Certificateholders,
Class A-2 Certificateholders and/or Class A-3 Certificateholders,
as the case may be, such amounts increased in proportion to the
calculation of Proportional Increase in Section 3.01(a)(iv) above.
(f) INTEREST PAYMENTS TO CLASS B CERTIFICATEHOLDERS.
(A) Subject to Sections 3.01(i), (k) and (l), the 1998-C
Securitization Trustee shall make payments to the Swap
Counterparty, of (1) amounts allocated pursuant to clauses (iii)
and (iv) of Section 3.01(c) above and (2) the net investment
income earned on Permitted Investments with respect to funds
deposited into the 1998-C Certificateholders' Account on prior
Monthly Allocation Dates in respect of the Adjusted Class B
Certificate Balance, (a) on each Monthly Allocation Date in March,
June, September and December, commencing in March 1999, until the
related Targeted Maturity Date, as well as (b) on the related
Targeted Maturity Date and (c) if the Adjusted Class B Certificate
Balance has not been reduced to zero on its Targeted Maturity
Date, on each Monthly Allocation Date following such
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Targeted Maturity Date until such Adjusted Class B Certificate
Balance is reduced to zero, in each case to the extent of amounts
available therefor.
In exchange for amounts so paid to the Swap Counterparty
pursuant to the Swap Agreement, the Swap Counterparty generally is
obligated to pay to or as directed by the 1998-C Securitization
Trustee (on behalf of and for the benefit of the Class B
Certificateholders) amounts equal to the amount of interest
calculated by the 1998-C Securitization Trustee payable as
interest calculated by the 1998-C Securitization Trustee to have
accrued on the Class B Certificates during the relevant Interest
Period, subject to any Proportional Reduction or Proportional
Increase as provided below.
(B) Upon receipt of such amounts from the Swap
Counterparty, the 1998-C Securitization Trustee shall pay such
amounts to the Class B Certificateholders, subject to any
Proportional Reduction or Proportional Increase as provided below,
(1) on each Monthly Allocation Date in March and September,
commencing in March 1999, until the related Targeted Maturity
Date, as well as (2) on the related Targeted Maturity Date and (3)
if the Adjusted Class B Certificate Balance has not been reduced
to zero on its Targeted Maturity Date, on each Monthly Allocation
Date following such targeted Maturity Date until the Adjusted
Class B Certificate Balance is reduced to zero, in each case to
the extent of amounts available therefor. Subject to Sections
3.01(i), (k) and (l), in connection with a Swap Termination or any
exercise by the Transferor of its option to repurchase the 1998-C
SUBI Certificate pursuant to Section 7.02, on the Monthly
Allocation Date following the receipt by the 1998-C Securitization
Trustee of the proceeds of such liquidation or sale to the
Transferor, payments of interest will be made to the Class B
Certificateholders from such proceeds, to the extent available
therefor pursuant to Section 3.01(o).
(C) If on any relevant Certificate Payment Date for the
Class B Certificates, the aggregate of amounts payable to the Swap
Counterparty as described above in Section 3.01(e)(i)(A) is less
than the relevant Class B Swap Interest Amount, the 1998-C
Securitization Trustee shall pay the Class B Certificateholders
amounts reduced in proportion to the calculation of Proportional
Reduction in Section 3.01(a)(iii) above.
(D) If on any Certificate Payment Date subsequent to a
Certificate Payment Date upon which a Proportional Reduction
occurred, the corresponding payment due from the Swap Counterparty
to the 1998-C Securitization Trust (under the Swap Agreement) on
any Certificate Payment Date in exchange for amounts payable by
the 1998-C Securitization Trust to the Swap Counterparty in
respect of interest on the Class B Certificates will be increased
proportionately in the same proportion as such reimbursement of
such Swap Interest Shortfall Amount represents of such Class B
Swap Interest Amount. The 1998-C Securitization
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Trustee shall pay the Class B Certificateholders such amounts
increased in proportion to the calculation of Proportional
Increase in Section 3.01(a)(iv) above.
(g) PAYMENTS TO SERVICER, SECURITIZATION TRUSTEE AND TITLING TRUSTEE.
On each Monthly Allocation Date, the 1998-C Securitization Trustee shall pay to
the Servicer the amounts allocated pursuant to clauses (iv) and (v) of Section
3.01(c) above. On each Monthly Allocation Date, the 1998-C Securitization
Trustee shall pay to the Titling Trustee the amounts allocated pursuant to
clauses (vi) and (xi) of Section 3.01(c) above, except that if the Servicer
previously has made Advances in respect of such amounts, such payment will
instead be made to the Servicer up to the amount of such Advances not previously
reimbursed. On each Monthly Allocation Date, the 1998-C Securitization Trustee
will be entitled to withdraw from the 1998-C SUBI Collection Account for its own
benefit and use, the amounts allocated pursuant to clauses (vii) and (xii) of
Section 3.01(c) above, except that if the Servicer previously has made Advances
in respect of such amounts, the 1998-C Securitization Trustee shall instead pay
such amounts to the Servicer up to the amount of such Advances not previously
reimbursed.
Notwithstanding the foregoing, in accordance with the provisions of
Section 7.01(c) of the Titling Trust Agreement and Section 4.02(a) of the 1998-C
SUBI Servicing Supplement, for so long as TMCC is the Servicer and each Monthly
Remittance Condition is satisfied, the Servicer will be entitled to make
deposits of Collections into the 1998-C SUBI Collection Account net of amounts
payable or reimbursable to the Servicer as compensation amounts, in respect of
Advances or otherwise (including in respect of amounts advanced by the Servicer
in respect of amounts otherwise payable to the 1998-C Securitization Trustee or
to the Titling Trustee or Trust Agent), and net of amounts payable or
reimbursable (and actually so paid or reimbursed directly by the Servicer) in
respect of Titling Trust. To the extent the Servicer makes deposits net of any
such amounts, the Servicer will cause each relevant Servicer's Certificate to
correctly and accurately account for such amounts in providing all information
with respect to allocations, applications and payments to be made pursuant to
Section 3.01 of the 1998-C Securitization Trust Agreement on the same basis as
though such amounts were in fact deposited into the 1998-C SUBI Collection
Account. Moreover, the Servicer will, in each relevant Servicer's Certificate,
instruct the 1998-C Securitization Trustee not to make any distribution to the
Servicer, Transferor or Titling Trustee to the extent that the Servicer has made
any deposit net of a corresponding amount. The 1998-C Securitization Trustee
will have no obligation with respect to or liability for following any such
instruction by the Servicer.
(h) DEPOSITS INTO AND RELEASES FROM THE RESERVE FUND.
(i) On each Monthly Allocation Date, the 1998-C Securitization
Trustee shall withdraw from the 1998-C SUBI Collection Account and
deposit into the Reserve Fund the amount allocated pursuant to clause
(xi) of Section 3.01(c) above.
(ii) On each Monthly Allocation Date, the 1998-C Securitization
Trustee shall distribute to the Transferor, to the extent thereof, (A)
any net investment income from investment of funds in the Reserve Fund
and (B) any amounts in excess of the Specified Reserve Fund Balance on
such date; provided that no such release will be made if
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Transferor Amounts are being held in the Reserve Fund because the
Servicer is required to deliver certifications concerning ERISA matters
as set forth in Section 3.01(i) below.
(i) PAYMENTS TO TRANSFEROR; TRANSFEROR AMOUNTS. (i) On each Monthly
Allocation Date, the 1998-C Securitization Trustee shall make the following
payments in respect of the Transferor Interest in the following order of
priority:
(A) to the Transferor, from and in reduction of the amounts of
Principal Collections otherwise to be deposited into the 1998-C SUBI
Collection Account or 1998-C SUBI Certificateholders' Account, an amount
equal to the aggregate amount of any unreimbursed Maturity Advances, as
specified in the related Servicer's Certificate (notwithstanding anything
herein to the contrary, such payment is to be made prior to any other
application or payment of amounts described in Section 3.01(e), Section
3.01(f) or Section 3.01(l));
(B) to the Transferor, an amount as Transferor Amounts equal to
the Transferor Percentage of Collections, to the extent any portion of
such amount is not required to be applied to cover certain shortfalls as
described in this Section, or in Sections 3.01(d), 3.01(l) or 3.01(n)
below;
(C) to the Transferor, Excess Amounts, payable as follows:
(1) if such Monthly Allocation Date relates to a
Collection Period the last day of which is during the Revolving
Period, the amount allocated as Excess Amounts pursuant to clause
(xiv) of Section 3.01(c) PROVIDED, HOWEVER, that in the event TMCC
is and continues to be required to deliver the certifications
concerning ERISA matters specified in Section 5.03(b) of the
1998-C SUBI Servicing Supplement, any such Excess Amounts that
would be released to the Transferor as described above shall
instead be deposited into the Reserve Fund, whether or not the
then applicable Specified Reserve Fund Balance has been met; and
(2) if such Monthly Allocation Date relates to a
Collection Period the last day of which is after the Revolving
Period, the balance of any such Excess Amounts after the 1998-C
Securitization Trustee has first deposited such amounts, up to but
not exceeding the Accelerated Principal Distribution Amount, into
the 1998-C SUBI Certificateholders' Account or SUBI Collection
Account (if such Monthly Allocation Date is a relevant Certificate
Payment Date) PROVIDED, HOWEVER, that in the event TMCC is and
continues to be required to deliver the certifications concerning
ERISA matters specified in Section 5.03(b) of the 1998-C SUBI
Servicing Supplement, any such Excess Amounts that would be
released to the Transferor as described above shall instead be
deposited into the Reserve Fund, whether or not the then
applicable Specified Reserve Fund Balance has been met.
(ii) Notwithstanding the foregoing, on each Monthly Allocation
Date for which there is a Required Amount, after giving effect to all
allocations, applications and payments required to be made and all
required deposits to or withdrawals from the Reserve Fund on
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such Monthly Allocation Date, amounts that otherwise would be payable
to the Transferor in respect of Transferor Amounts will be deposited in
the Reserve Fund until the amount on deposit therein equals the Specified
Reserve Fund Balance with the remainder to be paid to the Transferor by
the 1998-C Securitization Trustee as follows:
(A) if such Monthly Allocation Date relates to a
Collection Period the last day of which is during the Revolving
Period, Transferor Amounts relating to the Transferor Percentage
of Interest Collections; and
(B) if such Monthly Allocation Date relates to a
Collection Period the last day of which is after the Revolving
Period, (I) the Transferor Amounts relating to the Transferor
Percentage of Interest Collections and (II) if and to the extent
that the Transferor Interest will be equal to or greater than
zero, after all required allocations, applications and payments
have been made on such Monthly Allocation Date, the remaining
Transferor Amounts relating to the Transferor Percentage of
Principal Collections.
(C) Any amounts that would otherwise be payable to the
Transferor pursuant to the preceding paragraph, but not paid to
the Transferor because the Transferor Interest would be less than
or equal to zero, shall instead be held in the 1998-C SUBI
Collection Account until:
(1) applied to cover the Class A-1
Notional Interest Accrual Amount, the Class A-2 Notional
Interest Accrual Amount, the Class A-3 Notional Interest
Accrual Amount, any Class A-1 Swap Interest Carryover
Shortfall Amount, Class A-2 Swap Interest Carryover
Shortfall Amount, Class A-3 Swap Interest Carryover
Shortfall Amount, interest accrued on the Adjusted Class B
Certificate Balance, any Class B Swap Interest Carryover
Shortfall Amount or any interest accrued on unreimbursed
Certificate Principal Loss Amounts previously allocated to
the Adjusted Class B Certificate Balance;
(2) applied in reduction of the Adjusted
Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance, Adjusted Class A-3 Certificate Balance
and the Adjusted Class B Certificate Balance until each
such Certificate Balance has been reduced to zero;
(3) the Transferor Interest again exceeds
zero.
(iii) Amounts properly received by the Transferor pursuant to
this Section 3.01 shall be free of any claim of the 1998-C Securitization
Trust, the 1998-C Securitization Trustee or the Investor
Certificateholders and shall not be available to the 1998-C
Securitization Trustee or the 1998-C 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.
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(j) INVESTMENT OF AVAILABLE AMOUNTS. Amounts allocated pursuant to
Section 3.01(c) and to be applied or paid to the Class A Certificates and the
Class B Certificates pursuant to Sections 3.01(e), (f) and (l) and not paid
on any Monthly Allocation Date will be deposited into the 1998-C
Certificateholders' Account on such date and invested in Permitted
Investments as follows:
(i) during the Revolving Period, amounts allocated and applied
pursuant to clauses (i), (ii), (iii), (viii) and (ix) of Section 3.01(c)
above will be invested in Permitted Investments maturing on or prior to
the succeeding relevant Certificate Payment Date and bearing interest at
the related Required Rates;
(ii) following the termination of the Revolving Period on any
Monthly Allocation Date that is not a Certificate Payment Date, both
Available Interest allocated and applied pursuant to clauses (i), (ii),
(iii), (viii) and (ix) of Section 3.01(c) above and all amounts allocable
and applicable in respect of the Adjusted Class A-1 Certificate Balance,
the Adjusted Class A-2 Certificate Balance, Adjusted Class A-3
Certificate Balance and the Adjusted Class B Certificate Balance
(including reimbursements of Loss Amounts or Certificate Principal Loss
Amounts) will be invested in Permitted Investments maturing on or prior
to the succeeding relevant Certificate Payment Date, and bearing interest
at the related Required Rates.
(k) INVESTMENT IN SUBSEQUENT CONTRACTS AND SUBSEQUENT LEASED VEHICLES.
Notwithstanding anything in this Agreement to the contrary, on any Monthly
Allocation Date related to a Collection Period the last day of which is during
the Revolving Period:
(i) The amounts to be applied or paid pursuant to the
priorities set forth in clauses (viii) and (ix) of Section 3.01(c) above
that are allocated to reimburse Loss Amounts or Certificate Principal
Loss Amounts (whether from Available Interest, amounts withdrawn from the
Reserve Fund or Transferor Amounts) and amounts allocated for deposit
into the 1998-C Certificateholders' Account from Principal Collections
pursuant to Section 3.01(l)(ii) below shall not be deposited in the
1998-C SUBI Certificateholders' Account, but shall be treated as and be
deemed to be Principal Collections that are part of the Investor
Percentage of Principal Collections for purposes of Section 3.02 of the
1998-C SUBI Servicing Supplement and this Section 3.01 and available for
reinvestment in Subsequent Contracts and Subsequent Leased Vehicles; and
(ii) Transferor Amounts relating to the Transferor Percentage of
Principal Collections (other than such amounts allocated to cover
shortfalls as described above under Sections 3.01(d) and 3.01(i) above)
shall be available for reinvestment in Subsequent Contracts and
Subsequent Leased Vehicles; provided, however, that on any Monthly
Allocation Date related to a Collection Period the last day of which is
after the Revolving Period, such amounts will constitute Transferor
Amounts and shall be applied and paid as described in Section 3.01(i)
above.
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(l) ALLOCATIONS IN RESPECT OF ADVANCES; APPLICATIONS AND PAYMENTS OF
PRINCIPAL.
(i) Provided that a Swap Termination has not occurred, on each Monthly
Allocation Date, based on the related Servicer's Certificate, the 1998-C
Securitization Trustee shall allocate an amount equal to the amount of any
unreimbursed Advances (which includes Inventory Advances) and Nonrecoverable
Advances and shall pay to the Servicer the amount of any unreimbursed Advances
and Nonrecoverable Advances so allocated (unless the Servicer has deposited
Collections net of such amounts pursuant to Section 3.01(g) above) from (i)
Principal Collections, to the extent available therefor and (ii) Interest
Collections, to the extent of any insufficiency.
(ii) After the above allocations have been made, on any relevant
Monthly Allocation Date, the 1998-C Securitization Trustee shall apply the
Investor Percentage of remaining Principal Collections plus any Accelerated
Principal Distribution Amount (A) in reimbursement to the Transferor for
unreimbursed Maturity Advances and (B) for deposit into the 1998-C SUBI
Certificateholders' Account in respect of the Adjusted Class A-1 Certificate
Balance (until the Adjusted Class A-1 Certificate Balance is reduced to zero),
the Adjusted Class A-2 Certificate Balance (until the Adjusted Class A-2
Certificate Balance is reduced to zero), the Adjusted Class A-3 Certificate
Balance (until the Adjusted Class A-3 Certificate Balance is reduced to zero) or
the Adjusted Class B Certificate Balance (until the Adjusted Class B Certificate
Balance is reduced to zero), in that order.
(iii) On each Certificate Payment Date that coincides with or follows
the related Targeted Maturity Date for any Class of Certificates, payments in
reduction of the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance, Adjusted Class A-3 Certificate Balance or Adjusted Class B
Certificate Balance shall be made as follows and in the following order of
priority:
(A) with respect to the Class A-1 Certificates, all amounts on
deposit in the 1998-C SUBI Collection Account and the 1998-C SUBI
Certificateholders' Account from amounts allocated for reduction of the
Adjusted Class A-1 Certificate Balance in accordance with Section 3.01(c)
(after giving effect to any application of amounts withdrawn from the
Reserve Fund or Transferor Amounts available for such application
pursuant to Section 3.01(d)) will be paid to the Class A-1
Certificateholders until the Adjusted Class A-1 Certificate Balance is
reduced to zero;
(B) with respect to the Class A-2 Certificates, all amounts on
deposit in the 1998-C SUBI Collection Account and the 1998-C SUBI
Certificateholders' Account from amounts allocated for reduction of the
Adjusted Class A-2 Certificate Balance in accordance with Section 3.01(c)
(after giving effect to any application of amounts withdrawn from the
Reserve Fund and Transferor Amounts available for such application
pursuant to Section 3.01(d)) will be paid to Class A-2 Certificateholders
until the class A-2 Certificate Balance is reduced to zero;
(C) with respect to the Class A-3 Certificates, all amounts on
deposit in the 1998-C SUBI Collection Account and the 1998-C SUBI
Certificateholders' Account from amounts allocated for reduction of the
Adjusted Class A-3 Certificate Balance in
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accordance with Section 3.01(c) (after giving effect to any application
of amounts withdrawn from the Reserve Fund and Transferor Amounts
available for such application pursuant to Section 3.01(d)) will be paid
to Class A-3 Certificateholders until the Adjusted Class A-3 Certificate
Balance is reduced to zero; and
(D) with respect to the Class B Certificates, all amounts on
deposit in the 1998-C SUBI Collection Account and the 1998-C SUBI
Certificateholders' Account from amounts allocated for reduction of the
Adjusted Class B Certificate Balance in accordance with Section 3.01(c)
(after giving effect to any application of amounts withdrawn from the
Reserve Fund and Transferor Amounts available for such application
pursuant to Section 3.01(d)) will be paid to the Class B
Certificateholders.
(iv) Notwithstanding the foregoing, (A) if the assets of the Trust
are liquidated following a Swap Termination pursuant to Sections 7.01 and
8.02, payments in reduction of the Adjusted Class A-1 Certificate Balance,
the Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance or the Adjusted Class B Certificate Balance shall be made
from the proceeds of such liquidation based upon the priorities set forth in
Section 3.01(o) on the Monthly Allocation Date following the receipt by the
1998-C Securitization Trustee of the proceeds of such liquidation (which date
may be prior to the related Targeted Maturity Date) and (B) in connection
with the exercise by the Transferor of its option to repurchase the 1998-C
SUBI Certificate pursuant to Section 7.02, payments in reduction of the
Adjusted Class B Certificate Balance shall be made from the proceeds of such
sale to the Transferor on the Monthly Allocation Date following the receipt
by the 1998-C Securitization Trustee of the proceeds of such sale (which date
may be prior to the related Targeted Maturity Date).
(m) MATURITY ADVANCES. To the extent that the Adjusted Class A-1
Certificate Balance is not reduced to zero on the Class A-1 Targeted Maturity
Date, the Adjusted Class A-2 Certificate Balance is not reduced to zero on the
Class A-2 Targeted Maturity Date, the Adjusted Class A-3 Certificate Balance is
not reduced to zero on the Class A-3 Targeted Maturity Date or the Adjusted
Class B Certificate Balance is not reduced to zero on the Class B Targeted
Maturity Date, the Transferor will have the option to make a Maturity Advance in
any amount up to the amount of such deficiency; PROVIDED, HOWEVER that the
Transferor must give the Servicer and the 1998-C Securitization Trustee no fewer
than two Business Days' written notice of its intention to do so. Amounts
received by the Servicer or 1998-C Securitization Trustee in respect of any
Maturity Advance shall be deposited promptly by such recipient into the 1998-C
SUBI Collection Account for application on the relevant Certificate Payment Date
that follows the date such Maturity Advance is made and such notice is given.
(n) LOSS AMOUNTS AND CERTIFICATE PRINCIPAL LOSS AMOUNTS. (i) Loss
Amounts allocated to the Investor Certificates on any Monthly Allocation Date
will be allocated in the following order of priority:
(A) in reduction of the Adjusted Class B Certificate
Balance, until the Adjusted Class B Certificate Balance is reduced
to zero; and
(B) in reduction of the Adjusted Class A-1 Certificate
Balance, the Adjusted Class A-2 Certificate Balance and the
Adjusted Class A-3 Certificate Balance pro rata (based on such
Adjusted Class A-1 Certificate Balance, Adjusted Class A-2
Certificate Balance and Adjusted Class A-3 Certificate Balance as
of the
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last day of the related Collection Period) until the Adjusted
Certificate Balance of each such Class is reduced to zero.
(ii) Loss Amounts will be reimbursable on the Monthly Allocation
Date on which they are allocated, and Certificate Principal Loss Amounts
will be reimbursable on future Monthly Allocation Dates, in each case
from Available Interest, amounts withdrawn from the Reserve Fund and
Transferor Amounts pursuant to Sections 3.01(c), (d) and (i); PROVIDED,
HOWEVER, that no such reimbursements will be made for any Class of
Certificates after the first relevant Certificate Payment Date on which
the Adjusted Class B Certificate Balance, the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate Balance, the
Adjusted Class A-3 Certificate Balance or the Adjusted Class B
Certificate Balance, as the case may be, is reduced to zero.
(iii) Certificate Principal Loss Amounts which are not reimbursed
as provided herein will bear interest at the Class A-1 Rate, Class A-2
Rate, Class A-3 Rate or Class B Rate, as the case may be, until
reimbursed or until the Adjusted Class B Certificate Balance, the
Adjusted Class A-1 Certificate Balance, the Adjusted Class A-2
Certificate Balance or the Adjusted Class A-3 Certificate Balance, as the
case may be, is reduced to zero, and allocations and payments in respect
thereof will be made pursuant to Section 3.01(c).
(o) PAYMENTS FOLLOWING SWAP TERMINATION. (i) Notwithstanding the
priorities set forth in Section 3.01 above, following any Swap Termination and
liquidation of the assets of the 1998-C Securitization Trust pursuant to Section
8.02, the net proceeds of the liquidation of the assets of the 1998-C Trust will
be paid pursuant to the following payment priorities on the Monthly Allocation
Date following the receipt of such proceeds:
(1) to pay to the Transferor, an amount equal to the
amount of any unreimbursed Maturity Advances;
(2) to pay to the 1998-C Securitization Trustee and
Titling Trustee, an amount equal to the amount of any Capped or
Uncapped Administrative Expense not yet reimbursed;
(3) to pay to the Servicer, an amount equal to the
amount of any unreimbursed Advances made by it or any Capped or
Uncapped Administrative Expenses advanced by it and not yet
reimbursed, and any other Servicing compensation due to it;
(4) to pay to the Class A Certificateholders, as
applicable, on a pro rata basis, based on the respective amounts
of interest so accrued on each such Class, an amount equal to the
sum of the Class A-1 Swap Interest Amount, the Class A-2 Swap
Interest Amount and the Class A-3 Swap Interest Amount through the
date of such payment (with a single corresponding Interest Payment
Period from the most recent relevant Certificate Payment Date for
each Class of Class A Certificates through such date) and an
amount equal to the sum of the unreimbursed Class A-1 Swap
Interest Carryover Shortfall Amount, Class A-2 Swap Interest
Carryover
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Shortfall Amount and Class A-3 Swap Interest Carryover Shortfall
Amount through the date of such payment (with a single
corresponding Interest Payment Period from the most recent
relevant Certificate Payment Date for each Class of Class A
Certificates through such date);
(5) to pay to the Class B Certificateholders, an amount
equal to the [Class B Swap Interest Amount and any Class B Swap
Shortfall Amount] [Class B Fixed Rate Interest Accrual Amount and
any Fixed Rate Class B Interest Carryover Shortfall Amount]
through the date of such payment (with a single corresponding
Interest Payment Period from the most recent relevant Certificate
Payment Date through such date) plus an amount equal to interest
received at the related Required Rate during such period on
amounts deposited in the Certificateholder's Account in respect of
the Adjusted Class B Certificate Balance on prior Monthly
Allocation Dates;
(6) to pay to the Class A Certificateholders, an amount
equal to the sum of (i) the Adjusted Class A-1 Certificate Balance
plus any unreimbursed Certificate Principal Loss Amounts allocated
thereto, (ii) the Adjusted Class A-2 Certificate Balance plus any
unreimbursed Certificate Principal Loss Amounts allocated thereto
and (iii) the Adjusted Class A-3 Certificate Balance plus any
unreimbursed Certificate Principal Loss Amounts allocated thereto
to be paid to the Class A-1 Certificateholders, Class A-2
Certificateholders and Class A-3 Certificateholders on a pro rata
basis, based on the amounts described in clauses (1), (2) and (3)
above;
(7) to pay to the Class B Certificateholders, an amount
equal to the Adjusted Class B Certificate Balance plus any
unreimbursed Certificate Principal Loss Amounts allocated thereto;
and
(8) to pay to the Transferor any remaining proceeds.
(ii) Any swap termination payment payable by the Swap
Counterparty to the Trust pursuant to the Swap Agreement in respect of
the Class A Certificates will be applied to cover any shortfall in the
amounts allocable and payable pursuant to the foregoing clauses (1), (2),
(3), (4), (6), (5) and (7), in that order, with any remainder to be paid
pursuant to clause (8) above. Notwithstanding the foregoing priorities,
to the extent that the Trust is required to make any swap termination
payment to the Swap Counterparty in respect of the Class A Certificates,
the amount thereof shall be made available from (and therefore shall
reduce) amounts otherwise allocable and payable pursuant to the foregoing
clauses (6), (4), (8), (7), (5), (3), (2) and (1) in that order.
(iii) Any swap termination payment payable by the Swap
Counterparty to the Trust pursuant to the Swap Agreement in respect of
the Adjustable Rate Class B Certificates will be applied to cover any
shortfall in the amounts allocable and payable pursuant to the foregoing
clauses (1), (2), (3), (5) (to the extent allocable and payable to the
Adjustable Rate Class B Certificates), (7) (to the extent allocable and
payable to the Adjustable Rate Class B Certificates), (4), (5) (to the
extent allocable and payable to the
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Fixed Rate Class B Certificates), (6) and (7) (to the extent allocable
and payable to the Fixed Rate Class B Certificates), in that order,
with any remainder to be paid pursuant to clause (8) above.
Notwithstanding the foregoing priorities, to the extent that the Trust
is required to make any swap termination payment to the Swap Counterparty
in respect of the Adjustable Rate Class B Certificates, the amount
thereof shall be made available from (and therefore shall reduce) amounts
otherwise allocable and payable pursuant to the foregoing clauses (7)
(to the extent allocable and payable to the Adjustable Rate Class B
Certificates), (5) (to the extent allocable and payable to the Adjustable
Rate Class B Certificates), (8), (7) (to the extent allocable and payable
to the Fixed Rate Class B Certificates), (6), (5) (to the extent
allocable and payable to the Fixed Rate Class B Certificates), (4) (3),
(2) and (1) in that order.
(p) SUBORDINATION. The rights of the Class B Certificateholders to
receive allocations, applications and payments in respect of certain amounts of
Available Interest, amounts withdrawn from the Reserve Fund and Transferor
Amounts 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 the allocations, applications and payments in
respect thereof to the extent dictated by the payment priorities set forth in
this Section 3.01.
(q) PROCEEDS OF RESIDUAL VALUE INSURANCE POLICIES. In the event that
any proceeds of the Residual Value Insurance Policies are transferred to an
account maintained by the Titling Trustee or the 1998-C Securitization Trustee,
such amounts shall be distributed to the holder of the 1998-C SUBI Insurance
Certificate by the Titling Trustee, or the 1998-C Securitization Trustee, as
applicable, on the succeeding Monthly Allocation Date as directed in writing by
the Servicer.
3.02 1998-C SUBI CERTIFICATEHOLDERS' ACCOUNT; THE RESERVE FUND.
(a) ESTABLISHMENT OF 1998-C SUBI CERTIFICATEHOLDERS' ACCOUNT. A
separate trust account to be known as the "1998-C SUBI Certificateholders'
Account" will be established and shall be maintained with the 1998-C
Securitization Trustee which will include the money and other property deposited
and held therein pursuant to Section 3.01 and this Section. The 1998-C SUBI
Certificateholders' Account shall be an Eligible Account. If for any reason the
1998-C SUBI Certificateholders' Account is no longer an Eligible Account, the
1998-C Securitization Trustee shall promptly cause the 1998-C SUBI
Certificateholders' Account to be moved to another institution or otherwise
changed so that the 1998-C SUBI Certificateholders' Account becomes an Eligible
Account.
Pursuant to Section 4.02(j) of the 1998-C SUBI Servicing Supplement, on
each Monthly Allocation Date the Servicer shall direct the 1998-C Securitization
Trustee in writing to cause the funds in the 1998-C SUBI Certificateholders'
Account to be invested in Permitted Investments bearing interest at the
applicable Required Rates, which are expected to be TMCC Demand Notes so long as
the TMCC Demand Notes are Permitted Investments. Such Permitted Investments
shall mature in such a manner that the amount required to be distributed on the
next succeeding Certificate Payment Date will be available on such next
succeeding Certificate Payment Date. If such investments mature prior to the
succeeding relevant Monthly Allocation Date, the Servicer
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will direct the 1998-A Securitization Trustee to invest such amounts in
Permitted Investments that are not TMCC Demand Notes and that will mature on
the succeeding relevant Monthly Allocation Date, and the net investment
income with respect to such investments, but only such investments, will be
distributable to the Transferor on such succeeding relevant Monthly
Allocation Date. All amounts held in the 1998-C SUBI Certificateholders'
Account shall be invested by the 1998-C Securitization Trustee in Permitted
Investments at the written direction of the Servicer until distributed or
otherwise applied in accordance with the 1998-C Securitization Trust
Agreement.
Except as provided in the preceding paragraph, earnings (net of
investment losses) on the investment of funds deposited into the 1998-C SUBI
Certificateholders' Account in respect of the Class A-1 Notional Interest
Accrual Amount, any Class A-1 Swap Interest Carryover Shortfall Amounts, the
Class A-2 Notional Interest Accrual Amount, any Class A-2 Swap Interest
Carryover Shortfall Amounts, the Class A-3 Notional Interest Accrual Amount,
any Class A-3 Swap Interest Carryover Shortfall Amounts, the Class B Notional
Interest Accrual Amount and any Class B Swap Interest Shortfall Amount, shall
be part of Available Interest. Such net investment earnings need not be
withdrawn from the 1998-C SUBI Certificateholders' Account and redeposited as
Available Interest, but may be retained in the 1998-C SUBI
Certificateholders' Account and applied as provided in this 1998-C
Securitization Trust Agreement. The 1998-C Securitization Trustee shall
incur no liability relating to any investments made pursuant to this Section
3.02(a) absent its own negligence or willful misfeasance.
In the event that a Trust Officer of the 1998-C Securitization Trustee
has actual knowledge that Standard & Poor's has downgraded TMCC's short-term
debt to a rating less than A-1+ or Standard & Poor's has downgraded TMCC's
long-term debt to a rating of less than AA, Moody's has downgraded TMCC's
short-term debt to a rating less than P-1 or Moody's downgrades TMCC's
long-term debt to a rating less than Aa3, the 1998-C Securitization Trustee
shall determine whether (i) at such time one or more Permitted Investments
other than TMCC Demand Notes having substantially the same maturities and
similar demand features as the TMCC Demand Notes and bearing interest at the
relevant Required Rates are available and (ii) investment in such other
Permitted Investments rather than in TMCC Demand Notes will not cause a
Rating Agency to reduce or withdraw its rating of any Class of Investor
Certificates. In making such determinations, the 1998-C Securitization
Trustee shall be entitled to rely (as to clause (i)) on the advice of Morgan
Stanley & Co. Incorporated, or a nationally recognized firm of independent
accountants, and (as to clause (ii)) shall inquire directly of the Rating
Agencies based on the specific securities, if any, identified pursuant to the
foregoing. If the 1998-C Securitization Trustee concludes that both
conditions are satisfied, or a Trust Officer of the 1998-C Securitization
Trustee has actual knowledge that a Swap Termination has occurred, the 1998-C
Securitization Trustee will exercise its right under the Indenture to demand
payment in full of all outstanding TMCC Demand Notes.
(b) ESTABLISHMENT OF THE RESERVE FUND. The Transferor shall
establish and maintain with the 1998-C 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(c) and
this Section. Funds in the Reserve Fund shall be the property of the
Transferor and not the property of the 1998-C Securitization Trust. The
Transferor hereby grants to the 1998-C Securitization Trustee for the benefit
of the Investor Certificateholders a security interest in all
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funds (including Permitted Investments) in the Reserve Fund (including the
Reserve Fund Initial Deposit) and the proceeds thereof, and the 1998-C
Securitization Trustee shall have all of the rights of a secured party under
the UCC with respect thereto; provided that all income from the investment of
funds in the Reserve Fund and the right to receive such income are retained
by the Transferor and are not transferred, assigned or otherwise conveyed to
the 1998-C Securitization Trustee hereunder. The Reserve Fund shall be an
Eligible Account and initially shall be established with the 1998-C
Securitization Trustee. If for any reason the Reserve Fund is no longer an
Eligible Account, the 1998-C 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.
All amounts held in the Reserve Fund shall be invested by the 1998-C
Securitization Trustee, as directed in writing by the Servicer pursuant to
Section 4.02(j) of the 1998-C SUBI Servicing Supplement, in Permitted
Investments. Earnings on investment of funds in the Reserve Fund shall be
paid to the Transferor on each Monthly Allocation Date, subject to Section
3.01(h)(ii), and losses and any investment expenses shall be charged against
the funds on deposit therein. The 1998-C Securitization Trustee shall incur
no liability for the selection of investments or for losses thereon absent
its own negligence or willful misfeasance. The 1998-C Securitization Trustee
shall have no liability in respect of losses incurred as a result of the
liquidation of any investment prior to its stated maturity date or the
failure of the Servicer to provide timely written investment directions.
(c) RESERVE FUND SECURITIES INTERMEDIARY. The 1998-C
Securitization Trustee hereby confirms that (i) the 1998-C Securitization
Trustee is acting, with respect to its duties under this Section 3.02, as a
"securities intermediary" as defined in Section 8-102 of the UCC (in such
capacity, the "Reserve Fund Securities Intermediary"), (ii) has established
the Reserve Fund as a "securities account" as such term is defined in Section
8-501(a) of the UCC, (iii) the Reserve Fund Securities Intermediary shall,
subject to the terms of this Agreement, treat the 1998-C Securitization
Trustee as entitled to exercise the rights that comprise any financial asset
credited to the Reserve Fund, and (iv) all securities or other property
underlying any financial assets credited to the Reserve Fund shall be
registered in the name of the Reserve Fund Securities Intermediary, endorsed
to the Reserve Fund Securities Intermediary or in blank or credited to
another securities account maintained in the name of the Reserve Fund
Securities Intermediary for the benefit of 1998-C Securitization Trustee and
in no case will any financial asset credited to the Reserve Fund be
registered in the name of any other person, payable to the order of any other
person, or specially endorsed to any other person, except to the extent the
foregoing have been specially endorsed by the Transferor to the 1998-C
Securitization Trustee. The 1998-C Securitization Trustee shall incur no
liability relating to any investments made pursuant to this Section 3.02(c)
absent its own negligence or willful misfeasance.
(d) FINANCIAL ASSETS ELECTION. The 1998-C Securitization Trustee
hereby agrees that the Reserve Fund and each item of property (whether
investment property, financial asset, security or instrument), other than
cash, credited to the Reserve Fund shall be treated as a "financial asset"
within the meaning of Section 8-102(A)(9) of the UCC.
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(e) ENTITLEMENT ORDERS. If at any time the Reserve Fund Securities
Intermediary shall receive an "entitlement order" (within the meaning of
Section 8-102(A)(8) of the UCC) issued by the 1998-C Securitization Trustee
and relating to the Reserve Fund, the Reserve Fund Securities Intermediary
shall comply with such entitlement order without further consent by any other
person. The 1998-C Securitization Trustee hereby agrees only to issue
entitlement orders at the written direction of the Servicer. The Reserve
Fund Securities Intermediary shall have no obligation to act, and shall be
fully protected in refraining from acting, in respect of the financial assets
credited to the Reserve Fund in the absence of such an entitlement order.
(f) SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event that
the 1998-C Securitization Trustee has or subsequently obtains a security
interest in the Reserve Fund or any security entitlement credited thereto by
agreement, operation of law or otherwise, the 1998-C Securitization Trustee
hereby agrees that such security interest shall be subordinate to the
security interest of the Transferor. The financial assets and other items
deposited to the Reserve Fund will not be subject to deduction, set-off,
banker's lien, or any other right in favor of any person other than the
Transferor provided, however, that notwithstanding anything herein to the
contrary, the 1998-C Securitization Trustee shall have a lien senior to that
of the Transferor for any and all amounts required for the payment of the
purchase price of a financial asset, which purchase has been placed but not
yet cleared or settled. Any such deductions shall not be deemed to refer to
deductions for payment of the purchase price in securities transactions not
yet settled or cleared.
(g) CONFLICTING ORDERS. The 1998-C Securitization Trustee, in such
capacity, has not entered into and, until termination of this 1998-C
Securitization Trust Agreement, will not enter into, any agreement with any
other person relating to the Reserve Fund or any financial assets credited
thereto pursuant to which it has agreed to comply with entitlement orders (as
defined in Section 8-102(a)(8) of the UCC) of such person. No financial
asset will be registered in the name of the 1998-C Securitization Trustee, in
such capacity, payable to its order, or specially endorsed to it, except to
the extent such financial asset has been endorsed to the Reserve Fund
Securities Intermediary or in blank.
(h) DEPOSITS INTO THE RESERVE FUND. On or prior to the Closing
Date, the Transferor shall deposit an amount equal to the Reserve Fund
Initial Deposit into the Reserve Fund, of which amount $__________ shall be
allocated as the Class B Reserve Amount. Amounts on deposit in the Reserve
Fund shall be supplemented from time to time by the deposit therein of
amounts described in Section 3.01(c)(x), and under section 3.01(i); PROVIDED,
HOWEVER, that no such subsequent amounts shall be allocated to the Class B
Reserve Amount. On each Monthly Allocation Date the amounts on deposit in
the Reserve Fund shall be available for allocation and application or payment
as provided in Section 3.01; PROVIDED THAT, subject to the provisions of
Section 3.01, on each Certificate Payment Date, if the amount on deposit in
the Reserve Fund (after giving effect to all deposits thereto or withdrawals
therefrom on such Monthly Allocation Date) is greater than the Specified
Reserve Fund Balance, the 1998-C Securitization Trustee will pay any such
excess amount to the Transferor as and to the extent described in Section
3.01, whereupon such excess amount shall no longer be available to the 1998-C
Securitization Trustee or the Investor Certificateholders.
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(i) PAYMENTS FOLLOWING TERMINATION OF TRUST. On each related
Stated Maturity Date and upon termination of the 1998-C 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 on such date to reimburse
Maturity Advances or other unreimbursed Advances or pay accrued and unpaid
compensation payable to the Servicer through such date, for payment to the
Investor Certificateholders, and for payment of any remaining amounts due to
the 1998-C Securitization Trustee or the Titling Trustee. Upon termination
of the 1998-C Securitization Trust pursuant to Section 7.01, after payment of
such amounts due, any amounts remaining on deposit in the Reserve Fund shall
be paid to the Transferor. Upon termination of the 1998-C Securitization
Trust, the 1998-C Securitization Trustee shall release from the lien of this
1998-C Securitization Trust Agreement the Reserve Fund and any financial
assets held therein, and shall execute any requisite filing under the UCC as
provided by the Transferor to evidence such release and the release of any
security interest of the 1998-C Securitization Trust or the 1998-C
Securitization Trustee therein.
(j) The Securities Intermediary undertakes to perform such duties
and only such duties as are specifically set forth in this Section 3.02. The
Reserve Fund Securities Intermediary, in such capacity, shall not have any
duties or responsibilities except those expressly set forth in this Section
3.02 or be a trustee for or have any fiduciary obligation to any party hereto.
(k) The duties and obligations of the Reserve Fund Securities
Intermediary, in such capacity, shall be determined solely by the express
provisions of this Section 3.02, and the Reserve Fund Securities Intermediary
shall take such action with respect to this Section 3.02 as it shall be
directed hereunder, and the Reserve Fund Securities Intermediary, in such
capacity, shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Section 3.02 and as
specifically directed by the 1998-C Securitization Trustee, and no implied
covenants or obligations shall be read into this Section 3.02 against the
Reserve Fund Securities Intermediary; and in the absence of bad faith on the
part of the Reserve Fund Securities Intermediary, the Reserve Fund Securities
Intermediary 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 Reserve Fund Securities Intermediary which conform
to the requirements of this Section 3.02.
(l) The Reserve Fund Securities Intermediary, in such capacity,
shall not be liable for any error of judgment made in good faith by an
officer or officers of the Reserve Fund Securities Intermediary, acting as
such, unless it shall be determined that the Reserve Fund Securities
Intermediary, or any such officer or officers, was negligent in ascertaining
the pertinent facts, or otherwise acted with negligence or willful
misfeasance, and the Reserve Fund Securities Intermediary shall not be liable
with respect to any action taken or omitted to be taken by it in good faith
in accordance with any direction of the 1998-C Securitization Trustee given
under this 1998-C Securitization Trust Agreement.
(m) None of these provisions of this 1998-C Securitization Trust
Agreement shall require the Reserve Fund Securities Intermediary to expend or
risk its own funds or otherwise to incur any liability, financial or
otherwise, 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
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repayment of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it.
(n) The Reserve Fund Securities Intermediary may conclusively rely
and shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval or other paper or document actually
believed by it to be genuine and to have been signed or presented by the
proper party or parties.
(o) Whenever in the administration of the provisions of this
Section 3.02, the Reserve Fund Securities Intermediary shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering any action to be taken hereunder, the Reserve Fund Securities
Intermediary shall be entitled to receive from the Transferor a certificate
of an officer thereof stating that the matter is established as fact and such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Reserve Fund Securities Intermediary, be deemed to be conclusively proved and
established by a certificate signed by one of the Trust Officers of the
1998-C Securitization Trustee and delivered to the Reserve Fund Securities
Intermediary, and such certificate, in the absence of negligence or willful
misfeasance on the part of the Reserve Fund Securities Intermediary, shall be
full warrant to the Reserve Fund Securities Intermediary for any action
taken, suffered or omitted by it under the provisions of this Section 3.02 on
the basis thereof.
(p) The Reserve Fund Securities Intermediary may consult with
counsel and the advice or any opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or omitted by it
hereunder in good faith and in accordance with such advice or opinion of
counsel.
(q) The Reserve Fund Securities Intermediary shall not be bound to
make any investigation into the facts or matters stated in any resolution,
order, certificate, statement, instrument, opinion, report, notice, request,
consent, entitlement order, approval or other paper or document.
(r) The Reserve Fund Securities Intermediary shall have no
obligation to invest or reinvest any cash held in the Reserve Fund in the
absence of timely and specific written investment direction from the 1998-C
Securitization Trustee. In no event shall the Reserve Fund Securities
Intermediary be liable for the selection of investments or for investment
losses incurred as a result of the liquidation of any investment prior to its
stated maturity or the failure of the 1998-C Securitization Trustee to
provide timely written investment direction.
(s) The Reserve Fund Securities Intermediary may at any time resign
by giving 30 days written notice of resignation to the 1998-C Securitization
Trustee and the Transferor. Upon receiving such notice of resignation, the
1998-C Securitization Trustee shall promptly appoint a successor and, upon
the acceptance by the successor of such appointment, release the resigning
Reserve Fund Securities Intermediary from its obligations hereunder by
written instrument, a copy of which instrument shall be delivered to each of
the 1998-C Securitization Trustee, the resigning Reserve Fund Securities
Intermediary and the successor. If no successor shall have been so appointed
and have accepted appointment within 45 days after the giving of such notice
of
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resignation, the resigning Reserve Fund Securities Intermediary may petition
any court of competent jurisdiction for the appointment of a successor.
(t) The parties each (for itself and any person or entity claiming
through it) hereby release, waive, discharge, exculpate and covenant not to
sue the Reserve Fund Securities Intermediary for any action taken or omitted
under this Section 3.02 except to the extent caused by the Reserve Fund
Securities Intermediary's negligence or willful misfeasance. Anything in
this 1998-C Securitization Trust Agreement to the contrary notwithstanding,
in no event shall the Reserve Fund Securities Intermediary be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Reserve Fund
Securities Intermediary has been advised of the likelihood of such loss or
damage (unless so advised prior to taking any such action) and regardless of
the form of action.
(u) The Servicer, in its capacity as such, shall indemnify, defend
and hold harmless the Reserve Fund Securities Intermediary and its officers,
directors, employees, representatives and agents, from and against and
reimburse the Reserve Fund Securities Intermediary for any and all claims,
expenses, obligations, liabilities, losses, damages, injuries (to person,
property, or natural resources), penalties, stamp or other similar taxes,
actions, suits, judgments, reasonable costs and expenses (including
reasonable attorney's and agent's fees and expenses) directly or indirectly
relating to, or arising from, claims against the Reserve Fund Securities
Intermediary by reason of its participation in the transactions contemplated
by this Section 3.02, including without limitation all reasonable costs
required to be associated with claims for damages to persons or property, and
reasonable attorneys' and consultants' fees and expenses and court costs
except to the extent caused by the Reserve Fund Securities Intermediary's
negligence or willful misfeasance. The provisions of this Section 3.02(u)
shall survive the termination of this 1998-C Securitization Trust Agreement
or the earlier resignation or removal of the Reserve Fund Securities
Intermediary.
3.03 STATEMENTS TO CERTIFICATEHOLDERS.
(a) On each Determination Date, commencing in October, 1998, the
Servicer will prepare and forward to the Titling Trustee, the 1998-C
Securitization Trustee and the Luxembourg Stock Exchange, and the 1998-C
Securitization Trustee will make available to each Certificateholder on each
Monthly Allocation Date, a statement setting forth with respect to the
related 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;
(ii) the Certificate Distribution Amount);
(iii) the amount of the Certificate Distribution Amount allocable
to (A) the Class A-1 Notional Interest Accrual Amount, the Class A-2
Notional Interest Accrual Amount, the Class A-3 Notional Interest Accrual
Amount and the Class B Notional Interest Accrual Amount [Class B Fixed
Rate Interest Accrual Amount]; (B) any unreimbursed Class A-1 Swap
Interest Carryover Shortfall Amount, Class A-2 Swap Interest Carryover
Shortfall
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Amount, Class A-3 Swap Interest Carryover Shortfall Amount and any
[Class B Swap Interest Carryover Shortfall Amount] [Class B Interest
Carryover Shortfall Amount]; and (C) the reduction of the Adjusted Class
A-1 Certificate Balance, the Adjusted Class A-2 Certificate Balance, the
Adjusted Class A-3 Certificate Balance and the Adjusted Class B
Certificate Balance, separately identifying any Maturity Advances;
(iv) the Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance, the Adjusted Class A-3 Certificate Balance
and Adjusted Class B Certificate Balance, in each case as of such Monthly
Allocation Date and after giving effect to the allocation and application
or payment of the Certificate Distribution Amount;
(v) the aggregate amount, if any, of the reimbursement of Loss
Amounts included in the Certificate Distribution Amount and the amount
thereof allocated to the Adjusted Class A-1 Certificate Balance, the
Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance and the Adjusted Class B Certificate Balance;
(vi) the amount of the Certificate Distribution Amount allocable
to reimbursement of Certificate Principal Loss Amounts and the amount
thereof allocated to the Adjusted Class A-1 Certificate Balance, the
Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance and the Adjusted Class B Certificate Balance;
(vii) the amount, if any, of the remaining unreimbursed
Certificate Principal Loss Amounts, after giving effect to the allocation
and application or payment of the Certificate Distribution Amount;
(viii) the Investor Percentage of the Servicing Fee and any
amounts remaining unpaid in respect thereof from any prior Monthly
Allocation Date;
(ix) the amount of any Required Amount included in the
Certificate Distribution Amount and the balance on deposit in the Reserve
Fund 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 as of the date of such
report;
(x) the amount of Transferor Amounts, if any, included in the
Certificate Distribution Amount;
(xi) the Aggregate Net Investment Value as of the end of such
Collection Period;
(xii) 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;
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(xiii) the amount of Advances and Maturity Advances made, and the
amount of unreimbursed Advances and Maturity Advances outstanding after
giving effect to the allocation or distribution of the Certificate
Distribution Amount; and
(xiv) Whether the "Residual Value Test" is satisfied, separately
stating (A) whether with respect to the related Collection Period the
number of Leased Vehicles returned to the Servicer relating to Contracts
that became Matured Contracts and that were sold 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 (B)
whether the average Net Matured Leased Vehicle Proceeds during the three
immediately preceding calendar months is less than 75% of the average
Residual Values of Leased Vehicles disposed of or liquidated during such
period.
(b) The Servicer shall prepare certain reports during the Revolving
Period that reflect or include certain statistical information with respect to
Subsequent Lease Contracts and Subsequent Leased Vehicles allocated as SUBI
Assets during the Revolving Period. Such reports will be delivered by the
Servicer to the 1998-C Securitization Trustee and the Luxembourg Stock Exchange
within 20 days of the last day of the Collection Period during which Subsequent
Contracts and Subsequent Leased Vehicles are added to the 1998-C SUBI Sub-Trust
such that the aggregate Discounted Principal Balance and Subsequent Contracts
and Subsequent Leased Vehicles added since the Closing Date exceeds 10% of the
Aggregate Net Investment Value as of the Cut-Off Date or, for each subsequent
such report, exceeds 10% of the Aggregate Net Investment Value as of the date of
the prior report. Each such report will be delivered by the Servicer to the
1998-C Securitization Trustee and each Paying Agent and made available to each
person who makes a written request therefor.
(c) Any person may obtain a copy [of any statement required by this
Section], of any Servicer's Certificate required pursuant to Section 5.01(b) of
the 1998-C SUBI Servicing Supplement, any annual report of Independent
Accountants required pursuant to Section 5.02 of the 1998-C SUBI Servicing
Supplement, and of any annual Officer's Certificate required pursuant to Section
5.03 of the 1998-C SUBI Servicing Supplement, upon written request to the 1998-C
Securitization Trustee at the Corporate Trust Office.
(d) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the 1998-C
Securitization Trustee shall mail to each Person who at any time during such
calendar year shall have been a Holder of a Class B Certificate, a statement or
statements, based on the Servicer's Certificate prepared by the Servicer, which
in the aggregate contain the sum of the amounts set forth in clauses (iii),
(vii) and (viii) in Section 3.03(a) for such calendar year or, in the event such
Person shall have been a Holder of a Class B Certificate during a portion of
such calendar year, for the applicable portion of such year, for the purposes of
such Certificateholder's preparation of income tax returns. In addition, the
Servicer shall furnish to the 1998-C 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.
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ARTICLE IV
THE CERTIFICATES
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 1998-C 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 of $1 in excess thereof
and the Class B Certificates shall be issuable in minimum denominations of
$500,000 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 1998-C Securitization Trust by manual or facsimile
signature of an officer or other authorized signatory of the 1998-C
Securitization Trustee. 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 1998-C Securitization Trustee shall not be
rendered invalid, notwithstanding that such individuals or any of them have
ceased to be so 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 1998-C 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 1998-C
Securitization Trust Agreement. The Transferor Certificate shall represent the
interest in the 1998-C Securitization Trust not represented by the Investor
Certificates.
(c) No Certificate shall be entitled to any benefit under this 1998-C
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 1998-C Securitization
Trust Agreement, as the case may be, executed by the 1998-C Securitization
Trustee or an authentication agent appointed for such purpose by the 1998-C
Securitization Trustee, by manual or facsimile signature. Such certificate of
authentication upon any Certificate shall be the sole conclusive evidence that
such Certificate has been duly authenticated and delivered under this 1998-C
Securitization Trust Agreement. The 1998-C Securitization Trustee is hereby
authorized to appoint an authentication agent to execute any or all such
certificates of authentication on behalf of the 1998-C Securitization Trustee.
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4.02 AUTHENTICATION AND DELIVERY OF CERTIFICATES.
(a) In exchange for, and simultaneously with the sale, assignment and
transfer to the 1998-C Securitization Trustee of the 1998-C SUBI (exclusive of
all monies and payments due or payable under any Residual Value Insurance
Policies and the right to receive such amounts), the 1998-C SUBI Certificate and
the other assets of the 1998-C Securitization Trust, the 1998-C 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 authenticated by the 1998-C Securitization Trustee or any
authentication agent appointed thereby, and evidencing the entire ownership of
the 1998-C Securitization Trust.
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 Registrar shall provide for the registration of Certificates and
transfers and exchanges of Certificates as provided in this 1998-C
Securitization Trust Agreement; provided, however, that Bankers Trust Luxembourg
S.A. shall provide for transfers and exchanges of the Definitive Certificates,
if any. The 1998-C Securitization Trustee is hereby initially appointed
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as provided in this 1998-C Securitization Trust
Agreement. In the event that, subsequent to the Closing Date, the 1998-C
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 1998-C
Securitization Trust Agreement applicable to it, and otherwise acceptable to the
1998-C Securitization Trustee, to act as successor Certificate Registrar under
this 1998-C Securitization Trust Agreement.
The Transferor Certificate shall be owned by the Transferor and may not
be transferred, as provided by Section 5.06.
(b) No transfer of the Class B Certificates shall be made unless such
resale or transfer is made (i) pursuant to an effective Registration Statement
under the Securities Act, (ii) in a transaction (other than a transaction in
clause (iv) below) exempt from the registration requirements of the Securities
Act and applicable state and foreign securities laws, (iii) to the Transferor or
(iv) to a Person who the transferor of such Class B Certificate reasonably
believes is a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act and that is aware that the resale or other transfer is
being made in reliance on Rule 144A or to an institutional "accredited investor"
as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor"). In the event that a transfer is to be
made as described in clause (ii) of the preceding sentence, the prospective
transferee shall deliver or cause to be delivered an Opinion of Counsel in form
and substance satisfactory to the 1998-C Securitization Trustee and the
Transferor to the effect that such transfer may be made without registration
under the Securities Act or any
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applicable state or foreign securities laws. In the event that a transfer is
to be made to an institutional accredited investor as described in clause
(iv), the 1998-C Securitization Trustee shall require that the transferee
execute a representation letter acceptable to and in form and substance
satisfactory to the 1998-C Securitization Trustee (provided that the form
attached as Exhibit E shall be deemed acceptable if it is completed in a
manner acceptable to the 1998-C Securitization Trustee) certifying to the
1998-C Securitization Trustee the facts surrounding such transfer, which
representation letter shall not be an expense of the 1998-C Securitization
Trustee, the Transferor or the Servicer. In the case of a transfer under
either clause (ii) or clause (iv), the Holder of a Class B Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify
the 1998-C 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 and foreign securities
laws. Neither the Transferor, the Servicer nor the 1998-C Securitization
Trustee is under any obligation to register the Class B Certificates under
the Securities Act or any applicable state or foreign securities laws.
Prospective purchasers of the Class B Certificates are hereby notified that
the seller of any Class B Certificates may be relying on the exemption from
the registration requirements of Section 5 of the Act provided by Rule 144A
under the Act.
The Class B Certificates or a beneficial interest therein may not be
transferred unless the 1998-C Securitization Trustee has received a certificate
to the effect that 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.
Subject to the last sentence of this paragraph, no Class B Certificate
or beneficial interest therein may be transferred to a transferee who is an
employee benefit plan, trust or account, subject to ERISA, or subject to Section
4975 of the Code, or a governmental plan defined in Section 3(32) of ERISA
subject to any federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code and is not an entity,
including an insurance company separate account or an insurance company general
account if the assets in any such accounts constitute "Plan Assets" for the
purposes of regulation Section 2510.3101 of ERISA, whose underlying assets
include Benefit Plan assets by reason of a Benefit Plan's investment in the
entity. If any Paying Agent or a Trust Officer of the 1998-C Securitization
Trustee has actual knowledge of any such transfer, such transfer shall be deemed
null and void. Unless the 1998-C Securitization Trustee shall have received
either (a) a certificate from the transferee making the representations with
respect to such ERISA matters set forth in Exhibit D hereto or (b) an opinion of
counsel concerning such ERISA matters as set forth in Exhibit D hereto, the
1998-C Securitization Trustee shall not permit a transfer of Class B
Certificates to such transferee.
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The Transferor shall, whenever the 1998-C Securitization Trust is not
subject to Section 13 or 15(d) of the Exchange Act, make available, upon
request, to any holder of such Class B Certificates in connection with any sale
thereof and any prospective purchaser of Class B Certificates from such holder
the information specified in Rule 144A(d)(4) under the Securities Act.
In addition, no resale or other transfer of the Class B Certificates or
any interest therein shall be permitted unless immediately after giving effect
to such resale or other transfer, there would be fewer than 100 Class B
Certificateholders.
The Class B Certificates, this 1998-C 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.
(c) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office of the 1998-C Securitization Trustee in its capacity
as Certificate Registrar, or at the office of the agent of the 1998-C
Securitization Trustee as Certificate Registrar, who shall initially be U.S.
Bank National Association located at One Illinois Center, 111 E. Wacker Drive,
Suite 3000, Chicago, Illinois 60601 and, with respect to the Definitive
Certificates, Bankers Trust Luxembourg S.A. for so long as any Class A
Certificates are listed on the Luxembourg and Stock Exchange, or the appropriate
office of any successor Certificate Registrar, the 1998-C Securitization Trust
shall execute, and the 1998-C Securitization Trustee shall 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.
(d) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class of authorized denominations
of a like aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the 1998-C Securitization Trust shall execute, and the
1998-C Securitization Trustee shall 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 1998-C Securitization Trustee and the Certificate Registrar duly executed by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be imposed on any Holder for any registration of
transfer or exchange of Certificates, but the 1998-C 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.
All Certificates surrendered for registration of transfer and exchange
shall be cancelled and subsequently destroyed by the 1998-C Securitization
Trustee.
No Class B Certificate shall be listed for trading on any recognized
securities exchange.
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(e) Each purchaser of a Class B Certificate that does not deliver a
transfer certificate in the form of Exhibit E hereto will be deemed to have
represented to and agreed with the parties hereto (or, in the case of
purchases by agents or fiduciaries acting for beneficial owners of an account
for which such agents or fiduciaries exercise complete investment discretion,
such agents or fiduciaries will be deemed to have confirmed to the parties
hereto on behalf of such beneficial owners) as follows (terms used below that
are defined in Rule 144A under the Securities Act are used as defined
therein):
(i) The purchaser understands that the Class B Certificate has
not been registered under the Securities Act, or the securities laws of
any state or foreign jurisdiction.
(ii) The purchaser is acquiring the Class B Certificate for its
own account (or for the account of a "qualified institutional buyer")
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 or foreign 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, the 1998-C Securitization Trustee or
any of their respective affiliates.
(iii) The purchaser agrees that the Class B Certificate must be
held indefinitely by it unless (i) subsequently registered under the
Securities Act or (ii) an exemption from the registration requirements of
the Securities Act is available.
(iv) The purchaser agrees that it will not transfer or exchange
any Class B Certificate unless such transfer or exchange is made in
accordance with the provisions of this Section 4.03.
(v) The purchaser is a qualified institutional buyer as defined
in Rule 144A of the Securities Act and is aware that the sale to it is
being made in reliance on Rule 144A, it is acquiring the Class B
Certificate for its own account or for the account of a qualified
institutional buyer and it understands that such Class B Certificate may
be resold, pledged or transferred only (i) to a person who the purchaser
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 and foreign
securities laws.
(vi) Neither the purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of any Class B
Certificate, any interest in any Class B Certificate or any other similar
security of the Transferor or the 1998-C Securitization Trust to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Class B Certificate, any interest in any Class B
Certificate or any other similar security of the Transferor or the 1998-C
Securitization Trust 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
Class B Certificates under the Securities Act or which would render the
disposition of any Class B
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Certificate a violation of Section 5 of the Securities Act or any state
or foreign securities law, require registration or qualification pursuant
thereto, or require registration of the 1998-C 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
Class B Certificates.
(vii) The purchaser understands that there is no market, nor is
there any assurance that a market will develop, for the Class B
Certificates and that the Transferor and the 1998-C Securitization Trust
have no obligation to make or facilitate any such market (or to otherwise
repurchase the Class B Certificate from the purchaser) under any
circumstances.
(viii) 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 Class
B Certificate, is aware that its taxable income with respect to the Class
B Certificate in any accounting period may not correspond to the cash
flow (if any) from the Class B Certificate for such period, and is not
purchasing the Class B Certificate in reliance on any representations of
the Transferor or its counsel with respect to tax matters.
(ix) The purchaser has reviewed the Private Placement Memorandum
dated _______________, 1998 (the "Private Placement Memorandum"),
including the prospectus attached thereto, 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.
(x) The purchaser understands that the Class B Certificates
will bear legends substantially as set forth herein.
(xi) The purchaser agrees to be bound by all the terms and
conditions of the Class B Certificates provided in this 1998-C
Securitization Trust Agreement.
4.04 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar (or Bankers Trust Luxembourg S.A. with respect to the Definitive
Certificates), or the Certificate Registrar (or Bankers Trust Luxembourg S.A.)
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Certificate Registrar (or
Bankers Trust Luxembourg S.A. with respect to the Definitive Certificates) and
the 1998-C Securitization Trustee such security or indemnity as may be required
by them to save each of them and the 1998-C Securitization Trust harmless, then,
in the absence of notice that such Certificate has been acquired by a bona fide
purchaser, the 1998-C Securitization Trustee on behalf of the 1998-C
Securitization Trust shall execute and the 1998-C 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
Percentage Interest. In connection with the issuance of any new Certificate
under
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this Section, the 1998-C 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 1998-C 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.
4.05 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the 1998-C 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 1998-C Securitization Trustee, the Certificate Registrar nor any
of their respective agents shall be affected by any notice to the contrary.
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 1998-C Securitization Trustee, and such application states that
the Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this 1998-C 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 1998-C
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 Certificateholder, by
receiving and holding a Certificate, agrees with the Servicer and the 1998-C
Securitization Trustee that neither the Servicer nor the 1998-C 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.
4.07 MAINTENANCE OF OFFICE OR AGENCY.
The 1998-C 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 U.S. Bank Trust National Association, 100
Wall Street, 20th Floor, New York, New York 10005 and, with respect to the
Definitive Certificates shall be Bankers Trust Luxembourg S.A., 14 Boulevard
F.D. Roosevelt, L-2450, Luxembourg, for so long as any Class A Certificates are
listed on the Luxembourg Stock Exchange; provided that a copy of any such
Certificate surrendered shall be sent to the 1998-C
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Securitization Trustee at the Corporate Trust Office. The 1998-C
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 1998-C
Securitization Trustee in respect of the Certificates and this 1998-C
Securitization Trust Agreement shall not be sent to such office or agency,
but shall be sent as set forth in Section 10.02.
4.08 TEMPORARY CERTIFICATES.
Pending the preparation of definitive Class A-1 Certificates, Class A-2
Certificates or Class A-3 Certificates, the 1998-C Securitization Trust may
execute, and the 1998-C Securitization Trustee may 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 or
Class A-3 Certificates, the temporary Class A-1 Certificates, Class A-2
Certificates or 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 1998-C Securitization Trust
shall execute and the 1998-C Securitization Trustee shall 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.
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 1998-C 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;
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(ii) the Transferor, the Servicer, the Certificate Registrar and
the 1998-C 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; to the extent
that the provisions of this Section conflict with any other provisions of
the Agreement, the provisions of this Section shall control;
(iii) 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
(iv) whenever this 1998-C 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,
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 1998-C Securitization Trustee.
4.10 NOTICES.
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 1998-C 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 1998-C 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. Whenever notice or other
communication to the holders of Definitive Certificates is required under this
1998-C Securitization Trust Agreement, the 1998-C Securitization Trustee and the
Servicer shall give all such notices and communications specified herein to the
Holders of such Definitive Certificates, for so long as any Definitive
Certificates are listed on the Luxembourg Stock Exchange, 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 LUXEMBOURGER WORT. If Definitive Certificates are issued with
respect to any Class of Certificates, such notices will also be mailed to the
addresses of holders thereof at the addresses therefor as they appear in the
Certificate Register
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maintained by the 1998-C Securitization Trustee prior to such mailing. Such
notices will be deemed to have been given on the date of such publication or
mailing.
4.11 DEFINITIVE CERTIFICATES.
The Class B Certificates shall be issued in definitive form on the
Closing Date. The Class A Certificates shall be issued in book-entry form on
the Closing Date pursuant to Section 4.09 hereof. Definitive Certificates
may be issued representing the Class A Certificates thereafter if: (i)(A)
the Transferor advises the 1998-C 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 1998-C Securitization Trustee and the Clearing Agency and (B)
the 1998-C Securitization Trustee or the Transferor is unable to locate a
qualified successor, (ii) the Transferor at its option, advises the 1998-C
Securitization Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency, or (iii) after the occurrence of a Swap
Termination, 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 1998-C 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. Following the
occurrence of any such event, the 1998-C Securitization Trustee shall notify
all Certificate Owners of the occurrence thereof and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the 1998-C Securitization Trustee of the Class A-1 Certificates,
the Class A-2 Certificates and the Class A-3 Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the 1998-C 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 1998-C 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 1998-C Securitization Trustee shall recognize the Holders
of the Definitive Certificates as Class A-1 Certificateholders, Class A-2
Certificateholders, Class A-3 Certificateholders and Class B
Certificateholders, as applicable. The 1998-C Securitization Trustee shall
not be liable if the 1998-C Securitization Trustee or the Transferor is
unable to locate a qualified successor Clearing Agency.
Holders of Definitive Certificates in Luxembourg may contact Bankers
Trust Luxembourg S.A. to arrange for receipt of their Definitive
Certificates. Holders of Definitive Certificates in Luxembourg will be able
to effect transfers by delivery of the Definitive Certificates to Bankers
Trust Luxembourg S.A. with instructions for the transfer of all or part
thereof to the proposed transferee thereof. The 1998-C Securitization
Trustee is hereby instructed to maintain a paying agent and transfer agent in
Luxembourg for so long as any Class A Certificates are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require.
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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 1998-C 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 1998-C 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 1998-C 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 1998-C Contracts and
1998-C 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 1998-C Securitization
Trust, then the Transferor, the 1998-C 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 1998-C
Securitization Trust to the Transferor.
4.13 ERISA MATTERS.
The Transferor shall cause the Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates to be registered under Section
12(g) of the Exchange Act within 120 days after December 31, 1998, and, with
respect to each such Class of Class A Certificates, maintain such
registration until the Class Certificate Balance of such Class of Class A
Certificates (after giving effect to any reimbursements of Certificate
Principal Loss Amounts allocated thereto) is reduced to zero.
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ARTICLE V
THE TRANSFEROR
5.01 REPRESENTATIONS OF TRANSFEROR.
The Transferor hereby makes the following representations on which the
1998-C Securitization Trustee relies in accepting the 1998-C SUBI and 1998-C
SUBI Certificate in trust and authenticating the Certificates. The
representations speak as of the execution and delivery of this 1998-C
Securitization Trust Agreement, but shall survive the sale, transfer and
assignment of the 1998-C SUBI and 1998-C SUBI Certificate to the 1998-C
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 1998-C SUBI and 1998-C 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 1998-C 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 1998-C Securitization Trustee as part of the 1998-C Securitization Trust
and has duly authorized such sale and assignment to the 1998-C Securitization
Trustee by all necessary action; and the execution, delivery and performance
of this 1998-C Securitization Trust Agreement have been duly authorized by
the Transferor by all necessary corporate action.
(d) VALID SALE: BINDING OBLIGATIONS. This 1998-C Securitization
Trust Agreement evidences a valid sale, transfer and assignment of the 1998-C
SUBI Certificate and the assets of the 1998-C SUBI evidenced thereby (which
do not include any proceeds of the Residual Value Insurance Policies), and
constitutes a legal, valid and binding obligation of the Transferor
enforceable in accordance with its terms, in each case 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.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this 1998-C Securitization Trust Agreement and the
fulfillment of the terms of this 1998-C 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
Articles of Incorporation or Bylaws 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
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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 those contemplated by this 1998-C Securitization Trust
Agreement and any documents related hereto); 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 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 1998-C 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 1998-C 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 1998-C Securitization Trust
Agreement or the Certificates or (iv) relating to the Transferor and which
might adversely affect the federal or Delaware income tax attributes of the
Certificates.
(g) TITLE TO 1998-C SUBI CERTIFICATE. Prior to the transfer
pursuant to this 1998-C Securitization Trust Agreement, the Transferor has
good title to, and is the sole legal and beneficial owner of, the 1998-C SUBI
Certificate, free and clear of all Liens, except as provided for in the
Back-Up Security Agreement.
(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 1998-C 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 1998-C Securitization Trust Agreement.
5.02 LIABILITY OF TRANSFEROR: INDEMNITIES.
The Transferor shall be liable in accordance with this 1998-C
Securitization Trust Agreement only to the extent of the obligations in this
1998-C Securitization Trust Agreement specifically undertaken by the
Transferor in such capacity under this 1998-C Securitization Trust Agreement
and shall have no other obligations or liabilities hereunder.
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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 (iii) which may
succeed to all or substantially all of the business of the Transferor, shall
be the successor to the Transferor under this 1998-C 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 1998-C 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 prior notice
of any merger, consolidation or succession pursuant to this Section to each
Rating Agency.
(b) Subject to subparagraph (c) 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 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.
(c) Notwithstanding subparagraph (b) above, the purpose of the
Transferor shall be limited to the following purposes and activities
incidental to and necessary or convenient to accomplish 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;
(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 Agreements;
(F) to perform its obligations under the Agreements; and
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(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 or
advisable to accomplish the foregoing.
(d) 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 the 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 consenting 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 affirmative vote of the members of the Board of
Directors of the Transferor (including each Independent Director), 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 entity; PROVIDED that such restrictions shall not
(a) limit the acquisition of the 1998-C SUBI Certificate or the 1998-C
SUBI Insurance Certificate from TMCC, the 1998-C Securitization Trustee
or any other Person, or the acquisition of any other SUBI Certificate
from TMCC or any other Person, or (b) limit 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)(2) hereof, on which
there shall be no such restriction; 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
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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.
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 1998-C Securitization Trust Agreement.
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 1998-C
Securitization Trust Agreement, without preference, priority or distinction
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.
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
(a) the Transferor Certificate or any part of its right to receive any Excess
Amounts pursuant to Section 3.01(i) or (b) the 1998-C SUBI Insurance
Certificate, except as expressly set forth in the 1998-C SUBI Supplement.
5.07 TAX MATTERS PARTNER.
In the event that the 1998-C 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
1998-C 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 1998-C
Securitization Trust's federal, state or local tax
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returns. In the event of such recharacterization, the Transferor shall
provide written notice of such recharacterization to the 1998-C
Securitization Trustee. The Transferor shall not be liable to the 1998-C
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.
5.08 MATURITY ADVANCES.
If, with respect to any Class of Certificates, on the related Targeted
Maturity Date or any subsequent relevant Certificate Payment Date the
aggregate of amounts available in the 1998-C SUBI Certificateholders'
Account, the 1998-C SUBI Collection Account or from other sources to be paid
in respect of the Adjusted Class A-1 Certificate Balance, the Adjusted Class
A-2 Certificate Balance, the Adjusted Class A-3 Certificate Balance or the
Adjusted Class B Certificate Balance pursuant to Section 3.01 of this 1998-C
Securitization Trust Agreement are insufficient to reduce such Adjusted Class
A-1 Certificate Balance, Adjusted Class A-2 Certificate Balance, Adjusted
Class A-3 Certificate Balance or Adjusted Class B Certificate Balance to
zero, as applicable, and to reimburse all unreimbursed Certificate Principal
Loss Amounts previously allocated thereto, the Transferor may, at its sole
option, make a Maturity Advance with respect to such shortfall to the
Servicer or the 1998-C Securitization Trustee for deposit into the 1998-C
SUBI Collection Account.
ARTICLE VI
THE 1998-C SECURITIZATION TRUSTEE
6.01 DUTIES OF THE 1998-C SECURITIZATION TRUSTEE.
(a) The 1998-C Securitization Trustee, both prior to and after the
occurrence of an Event of Servicing Termination under the 1998-C SUBI
Servicing Supplement, undertakes to perform such duties and only such duties
as are specifically set forth in this 1998-C Securitization Trust Agreement.
(b) The 1998-C Securitization Trustee, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the 1998-C Securitization Trustee that
shall be specifically required to be furnished pursuant to any provision of
this 1998-C Securitization Trust Agreement, shall examine them to determine
whether they conform on their face to the requirements of this 1998-C
Securitization Trust Agreement.
(c) No provision of this 1998-C Securitization Trust Agreement
shall be construed to relieve the 1998-C 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 1998-C Securitization
Trustee shall be determined solely by the express provisions of this
1998-C Securitization Trust Agreement, the 1998-C Securitization Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this 1998-C Securitization
Trust
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Agreement, no implied covenants or obligations shall be read into
this 1998-C Securitization Trust Agreement against the 1998-C
Securitization Trustee, the permissive right of the 1998-C Securitization
Trustee to do things enumerated in this 1998-C Securitization Trust
Agreement shall not be construed as a duty and, in the absence of bad
faith on the part of the 1998-C Securitization Trustee, the 1998-C
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 1998-C Securitization
Trustee and conforming on their face to the requirements of this 1998-C
Securitization Trust Agreement;
(ii) the 1998-C 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 1998-C Securitization Trustee
was negligent in performing its duties in accordance with the terms of
this 1998-C Securitization Trust Agreement; and
(iii) the 1998-C 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 1998-C Securitization Trustee,
or exercising any trust or power conferred upon the 1998-C Securitization
Trustee, under this 1998-C Securitization Trust Agreement or the Titling
Trust Agreement (as supplemented by the 1998-C SUBI Supplement).
(d) The 1998-C 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 1998-C 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.
(e) All information obtained by the 1998-C Securitization Trustee
regarding the Obligors and the Contracts contained in the 1998-C SUBI,
whether upon the exercise of its rights under this 1998-C Securitization
Trust Agreement or otherwise, shall be maintained by the 1998-C
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.
(f) Pursuant to Section 3.03(a) of the 1998-C SUBI Servicing
Supplement, in the event that the 1998-C Securitization Trustee discovers
that a representation or warranty with respect to a 1998-C Contract was
incorrect as of the time specified with respect to such representation and
warranty and such incorrectness materially and adversely affects such 1998-C
Contract, the 1998-C Securitization Trustee shall give prompt written notice
to the Servicer and the Titling Trustee of such incorrectness.
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6.02 CERTAIN MATTERS AFFECTING THE 1998-C SECURITIZATION TRUSTEE.
(a) Except as otherwise provided in Section 6.01:
(i) the 1998-C 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 1998-C 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 1998-C Securitization Trust Agreement in good faith and in
accordance with such Opinion of Counsel;
(iii) the 1998-C Securitization Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
1998-C Securitization Trust Agreement or the Titling Trust Agreement (as
supplemented by the 1998-C SUBI Supplement), or to institute, conduct or
defend any litigation under this 1998-C Securitization Trust Agreement or
the Titling Trust Agreement (as supplemented by the 1998-C SUBI
Supplement), or in relation to this 1998-C Securitization Trust Agreement
or the Titling Trust Agreement (as supplemented by the 1998-C SUBI
Supplement), at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this 1998-C
Securitization Trust Agreement or the Titling Trust Agreement (as
supplemented by the 1998-C SUBI Supplement), unless such
Certificateholders shall have offered to the 1998-C Securitization
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby;
(iv) the 1998-C Securitization Trustee shall not be personally
liable for any action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this 1998-C Securitization Trust
Agreement;
(v) the 1998-C Securitization Trustee shall not be bound to
recalculate, reverify, or make any investigation into the facts of
matters stated in any resolution, certificate, statement, 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 1998-C 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 1998-C Securitization
Trustee, not reasonably assured to the 1998-C Securitization Trustee by
the security afforded to it by the terms of this 1998-C Securitization
Trust Agreement, the 1998-C 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
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Transferor or, if paid by the 1998-C 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 1998-C Securitization Trustee may execute any of the
trusts or powers under this 1998-C Securitization Trust Agreement or
perform any duties under this 1998-C 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 1998-C Securitization Trust Agreement except
upon satisfying the conditions set forth in Section 9.03(c).
6.03 1998-C SECURITIZATION TRUSTEE NOT LIABLE FOR CERTIFICATES OR CONTRACTS.
The 1998-C Securitization Trustee makes no representations as to the
validity or sufficiency of this 1998-C Securitization Trust Agreement or of
the Certificates (other than the execution by the 1998-C Securitization
Trustee on behalf of the 1998-C Securitization Trust of, and the certificate
of authentication on, the Certificates), or of the 1998-C SUBI or 1998-C SUBI
Certificate. The 1998-C Securitization Trustee shall have no obligation to
perform any of the duties of the Transferor unless explicitly set forth in
this 1998-C Securitization Trust Agreement. The 1998-C Securitization
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of the 1998-C SUBI or
1998-C SUBI Certificate or any 1998-C Contract, any ownership interest in any
1998-C Leased Vehicle, or the maintenance of any such ownership interest, or
for or with respect to the efficacy of the 1998-C Securitization Trust or its
ability to generate the payments to be distributed to Certificateholders
under this 1998-C Securitization Trust Agreement, including without
limitation the validity of the assignment of the 1998-C SUBI or 1998-C SUBI
Certificate to the 1998-C Securitization Trust or of any intervening
assignment; the existence, condition, location and ownership of any 1998-C
Contract or 1998-C Leased Vehicle; the existence and enforceability of any
physical damage or credit life or credit disability insurance; the existence
and contents of any 1998-C Contract or any computer or other record thereof;
the completeness of any 1998-C Contract; the performance or enforcement of
any 1998-C Contract; the compliance by the Transferor with any covenant or
the breach by the Transferor of any warranty or representation made under
this 1998-C Securitization Trust Agreement or in any related document and the
accuracy of any such warranty or representation prior to the 1998-C
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 1998-C Securitization
Trustee taken at the instruction of the Servicer PROVIDED, HOWEVER, that the
foregoing shall not relieve the 1998-C Securitization Trustee of its
obligation to perform its duties under this 1998-C Securitization Trust
Agreement. Except with respect to a claim based on the failure of the 1998-C
Securitization Trustee to perform its duties under this 1998-C Securitization
Trust Agreement or based on the 1998-C Securitization Trustee's willful
misconduct, bad faith or negligence, no recourse shall be had for any claim
based on any provision of this 1998-C Securitization Trust Agreement, the
Certificates, the 1998-C SUBI or
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1998-C SUBI Certificate or assignment thereof against the institution serving
as the 1998-C Securitization Trustee in its individual capacity. The 1998-C
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
1998-C Securitization Trust or any indemnitor who shall furnish indemnity as
provided in this 1998-C Securitization Trust Agreement. The 1998-C
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 1998-C SUBI or 1998-C SUBI Certificate.
6.04 1998-C SECURITIZATION TRUSTEE MAY OWN CERTIFICATES.
The 1998-C 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 the 1998-C Securitization Trustee.
6.05 1998-C SECURITIZATION TRUSTEE'S FEES AND EXPENSES.
The 1998-C 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 1998-C Securitization
Trust Agreement and in the exercise and performance of any of the powers and
duties of the 1998-C Securitization Trustee under this 1998-C Securitization
Trust Agreement, and payment or reimbursement upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
1998-C Securitization Trustee in its capacity as 1998-C Securitization
Trustee in accordance with any of the provisions of this 1998-C
Securitization Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ in each case to the extent their services are provided in
connection with the 1998-C Securitization Trustee's administration of this
1998-C Securitization Trust Agreement) 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 1998-C
Securitization Trust Agreement. Such compensation and reimbursement shall be
paid as set forth in Sections 3.01(c) and (g) hereof.
6.06 ELIGIBILITY REQUIREMENTS FOR 1998-C SECURITIZATION TRUSTEE.
The 1998-C Securitization Trustee under this 1998-C Securitization
Trust Agreement shall at all times be a national banking association or State
banking institution; and organized and doing business under the laws of any
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 1998-C 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
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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 1998-C Securitization Trustee shall cease to be eligible in
accordance with the provisions of this Section, the 1998-C Securitization
Trustee shall resign immediately in the manner and with the effect specified
in Section 6.07.
6.07 RESIGNATION OR REMOVAL OF 1998-C SECURITIZATION TRUSTEE.
(a) RESIGNATION. The 1998-C Securitization Trustee may at any time
resign and be discharged from the trusts created by this 1998-C
Securitization Trust Agreement by giving written notice thereof to the
Transferor. Upon receiving such notice of resignation, the Transferor shall
promptly appoint a successor 1998-C Securitization Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning 1998-C Securitization 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) REMOVAL. If at any time the 1998-C 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 1998-C Securitization Trustee shall be legally unable to
act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
1998-C Securitization Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the 1998-C Securitization
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Transferor may remove the 1998-C
Securitization Trustee. If it shall remove the 1998-C Securitization Trustee
under the authority of the immediately preceding sentence, the Transferor
shall promptly appoint a successor 1998-C Securitization Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the 1998-C Securitization Trustee so removed and one copy to the successor
1998-C Securitization Trustee, and arrange for the payment of all fees owed
to the outgoing 1998-C Securitization Trustee.
(c) EFFECTIVE DATE OF RESIGNATION OR REMOVAL. Any resignation or
removal of the 1998-C Securitization Trustee and appointment of a successor
1998-C Securitization Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor 1998-C Securitization Trustee as provided in Section 6.08. The
Servicer shall give each Rating Agency notice of any such resignation or
removal of the 1998-C Securitization Trustee and appointment and acceptance
of a successor Trustee.
6.08 SUCCESSOR 1998-C SECURITIZATION TRUSTEE.
Any successor 1998-C Securitization Trustee appointed as provided in
Section 6.07 shall execute, acknowledge and deliver to the Transferor and to
its predecessor 1998-C Securitization Trustee an instrument accepting such
appointment under this 1998-C 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
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fully vested with all the rights, powers, duties and obligations of its
predecessor under this 1998-C 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 1998-C 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
1998-C 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.
6.09 MERGER OR CONSOLIDATION OF 1998-C SECURITIZATION TRUSTEE.
Any corporation (i) into which the 1998-C Securitization Trustee may
be merged or consolidated, (ii) which may result from any merger, conversion
or consolidation to which the 1998-C Securitization Trustee shall be a party,
or (iii) which may succeed to the corporate trust business of the 1998-C
Securitization Trustee, shall be the successor of the 1998-C 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 1998-C Securitization Trustee in
any of the foregoing cases is not the surviving entity, then the surviving
entity shall assume and agree to perform every obligation of the 1998-C
Securitization Trustee, either generally or particularly as provided herein.
Notice of any such event shall be given by the 1998-C Securitization Trustee
to each Rating Agency.
6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this 1998-C
Securitization Trust Agreement, at any time, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the 1998-C
Securitization Trust may at the time be located, the Transferor and the
1998-C Securitization Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons to act
jointly with the 1998-C Securitization Trustee, or separate trustee or
separate trustees, of all or any part of the 1998-C Securitization Trust, and
to vest in such Person, in such capacity and for the benefit of the
Certificateholders, such title to the 1998-C 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
1998-C 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 1998-C Securitization Trustee alone
shall have the power to make such appointment. No co-trustee or separate
trustee under this 1998-C 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 shall be
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required 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.
(b) 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 1998-C Securitization Trustee shall be conferred upon
and exercised or performed by the 1998-C 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 1998-C 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 1998-C 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 1998-C 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 1998-C
Securitization Trustee;
(ii) no trustee under this 1998-C Securitization Trust Agreement
shall be personally liable by reason of any act or omission of any other
trustee under this 1998-C Securitization Trust Agreement; and
(iii) the Transferor and the 1998-C Securitization Trustee acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee.
(c) Any notice, request or other writing given to the 1998-C
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 1998-C 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 1998-C
Securitization Trustee or separately, as may be provided therein, subject to
all the provisions of this 1998-C Securitization Trust Agreement,
specifically including every provision of this 1998-C Securitization Trust
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the 1998-C Securitization Trustee. Each such
instrument shall be filed with the 1998-C Securitization Trustee and a copy
thereof given to the Transferor and the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the
1998-C 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 1998-C 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
1998-C Securitization Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in this 1998-C Securitization Trust Agreement, the appointment of
any separate trustee or co-trustee shall not
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relieve the 1998-C Securitization Trustee of its obligations and duties under
this 1998-C Securitization Trust Agreement.
6.11 REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The 1998-C Securitization Trustee makes the following representations
and warranties on which the Transferor and Certificateholders may rely:
ORGANIZATION AND GOOD STANDING. The 1998-C Securitization Trustee is
a national banking association organized, existing and in good standing under
the laws of the United States.
POWER AND AUTHORITY. The 1998-C Securitization Trustee has full
power, authority and right to execute, deliver and perform this 1998-C
Securitization Trust Agreement and has taken all necessary action to
authorize the execution, delivery and performance by it of this 1998-C
Securitization Trust Agreement.
DUE EXECUTION. This 1998-C Securitization Trust Agreement has been
duly executed and delivered by the 1998-C Securitization Trustee.
ENFORCEABILITY. This 1998-C Securitization Trust Agreement
constitutes the legal, valid and binding obligation of the 1998-C
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.
6.12 TAX RETURNS.
The 1998-C Securitization Trustee shall, at the written 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 1998-C Securitization Trust or the assets of the
1998-C Securitization Trust and shall deliver any such returns to the 1998-C
Securitization Trustee for signature at least five days prior to the date
such returns are required by law to be filed. The 1998-C Securitization
Trust shall not elect to be treated as an association under Treasury
Regulations Section 301.7701-3(a) for federal income tax purposes.
6.13 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES.
All rights of action and claims under this 1998-C Securitization Trust
Agreement or the Certificates may be prosecuted and enforced by the 1998-C
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 1998-C 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 1998-C
Securitization Trustee, its
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agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been obtained.
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 1998-C SUBI
Servicing Supplement with respect to the 1998-C SUBI Portfolio, the 1998-C
Securitization Trustee, in its discretion may, subject to the provisions of
Sections 6.01 and 6.02 hereof and Sections 6.01(b) and 6.01(c) of the 1998-C
SUBI Servicing Supplement, proceed to protect and enforce its rights and the
rights of the Certificateholders under this 1998-C Securitization Trust
Agreement, the Titling Trust Agreement and the 1998-C 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 1998-C Securitization Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the 1998-C
Securitization Trustee or the Certificateholders.
6.15 RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
Holders of Investor Certificates evidencing not less than 25% of the
Voting Interests of the Certificates, voting together as a single class,
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the 1998-C Securitization Trustee
under this 1998-C Securitization Trust Agreement (including to direct the
1998-C Securitization Trustee to take or withhold any action with respect to
the TMCC Demand Notes), or exercising any trust or power conferred on the
1998-C Securitization Trustee by this 1998-C 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 1998-C
SUBI Supplement by the 1998-C Securitization Trustee in its capacity as a
transferee of the 1998-C SUBI Certificate, the greater Percentage Interest
shall prevail; (b) subject to Sections 6.01 and 6.02, the 1998-C
Securitization Trustee shall have the right to decline to follow any such
direction if the 1998-C Securitization Trustee being advised by counsel
determines that the action so directed may not lawfully be taken, or if the
1998-C 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 1998-C Securitization Trust Agreement
shall impair the right of the 1998-C Securitization Trustee to take any
action deemed proper by the 1998-C Securitization Trustee and which is not
inconsistent with such direction by the Certificateholders.
6.16 NO PETITION.
The 1998-C 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 1998-C
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,
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reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law. The
foregoing shall not limit the 1998-C 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 1998-C Securitization Trust Agreement or the
resignation or removal of the 1998-C Securitization Trustee under this 1998-C
Securitization Trust Agreement.
6.17 NEGATIVE PLEDGE.
Except as expressly set forth herein with respect to the disposition
of the assets of the 1998-C Securitization Trust in connection with the
termination of the 1998-C Securitization Trust pursuant to Section 7.01, the
1998-C Securitization Trustee shall not sell, assign, pledge, convey or
otherwise transfer to any person the 1998-C SUBI Certificate or any interest
therein.
ARTICLE VII
TERMINATION
7.01 TERMINATION OF THE 1998-C SECURITIZATION TRUST.
(a) The 1998-C Securitization Trust and the respective obligations
and responsibilities of the Transferor and the 1998-C Securitization Trustee
shall terminate upon the earliest of (i) the maturity, sale or other
liquidation, as the case may be, of the last outstanding 1998-C Contract and
1998-C Leased Vehicle evidenced by the 1998-C SUBI and the distribution of
all proceeds thereof (other than proceeds of Residual Value Insurance
Policies), together with all amounts on deposit in all 1998-C SUBI Accounts
and the Reserve Fund in the manner provided in Section 3.01, (ii) the
purchase by the Transferor of the corpus of the 1998-C Securitization Trust
as described in Section 7.02 (except that the 1998-C Securitization Trust
shall continue solely for the limited purposes set forth in (b) and (c)
below), (iii) the day following the Monthly Allocation Date on which the
Class A-1 Certificate Balance, the Class A-2 Certificate Balance, the Class
A-3 Certificate Balance and the Class B Certificate Balance have been reduced
to zero and all Loss Amounts and Certificate Principal Loss Amounts have been
reimbursed, (iv) on the occurrence of a Swap Termination and the subsequent
liquidation of the assets of the 1998-C Securitization Trust and the
distribution of the net proceeds thereof to Certificateholders, the 1998-C
Securitization Trustee, the Titling Trustee and the Transferor pursuant to
Section 3.01(o) of this 1998-C Securitization Trust Agreement, or (v) the
expiration, disposition or termination of the 1998-C SUBI; PROVIDED, HOWEVER,
that in no event shall the trust created by this 1998-C Securitization Trust
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, late ambassador of the
United States of America to the Court of St. James', living on the date of
the Agreement. The Transferor shall promptly notify the 1998-C
Securitization Trustee and each Rating Agency of any prospective termination
of the 1998-C Securitization Trust.
(b) Notice of any termination, specifying the Monthly Allocation Date
upon which the Certificateholders may surrender their Certificates to the 1998-C
Securitization Trustee or, in the case of any Definitive Class A Certificates,
to the 1998-C Securitization Trustee or the Paying Agent in Luxembourg, for
payment of the final distribution and retirement of the Certificates, shall
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be given promptly by the 1998-C Securitization Trustee (i) for so long as any
Class A Certificates are listed on the Luxembourg Stock Exchange, 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 LUXEMBOURGER WORT) and (ii)
if Definitive Certificates are issued by letter to Certificateholders mailed
not later than the 15th day and not earlier than the 30th day prior to the
date on which such final distribution is expected to occur specifying (A) the
Certificate Payment 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 1998-C Securitization Trustee
therein specified, or, in the case of any Definitive Class A Certificates, to
the 1998-C Securitization Trustee or the Paying Agent in Luxembourg, (B) the
amount of any such final payment and (C) if applicable, that the related
Record Date for such Certificate Payment Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
locations therein specified. Such notices will be mailed to the addresses of
the holders thereof as they appear in the Certificate Register maintained by
the Trustee on the Record Date preceding such mailing. Such notices will be
deemed to have been given on the date of such publication or mailing. The
1998-C Securitization Trustee shall give such notice to the Certificate
Registrar (if other than the 1998-C Securitization Trustee) at the time such
notice is given to Certificateholders.
(c) In the event such notice is given, in the case of an optional
purchase of the 1998-C Securitization Trust corpus pursuant to Section 7.02,
the Transferor shall deposit into the 1998-C SUBI Collection Account, the
amount specified in Section 7.02. Upon presentation and surrender of the
Certificates, the 1998-C Securitization Trustee shall cause to be paid to
Certificateholders so surrendering amounts payable on such Certificate
Payment Date pursuant to Section 3.01. No further interest will accrue with
respect to any Investor Certificate from and after the final Certificate
Payment Date with respect thereto.
(d) 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 1998-C
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 any Certificates shall not have been surrendered for
retirement, the 1998-C 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 1998-C Securitization Trust Agreement. Any funds remaining in the
1998-C Securitization Trust after exhaustion of such remedies shall be
distributed by the 1998-C Securitization Trustee at the request of the
Transferor to the Transferor, and such remaining Certificateholders shall
look solely to the Transferor for such funds.
7.02 OPTIONAL PURCHASE OF 1998-C SUBI.
On each Monthly Allocation Date on or after the Class A-3 Targeted
Maturity Date, if either before or after giving effect to any allocations,
applications or payments in respect of principal required to be made on such
Monthly Allocation Date, the Investor Balance shall be less
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than or equal to $74,998,813.25 (10% of the Aggregate Net Investment Value as
of the Cutoff Date) or amounts sufficient to effectively reduce the Investor
Balance to such amount have been deposited in the 1998-C SUBI Collection
Account on such date, the Transferor shall have the option to purchase the
Investor Certificateholders' interest in the corpus of the 1998-C
Securitization Trust. To exercise such option, the Transferor shall notify
the 1998-C Securitization Trustee and the Servicer, in writing, no later than
the fifteenth day of the month preceding the month in which such purchase is
to be effected, and shall deposit in the 1998-C SUBI Certificateholders'
Account an amount equal to the greater of (i) the Aggregate Net Investment
Value as of the last day of the preceding Collection Period, and (ii) the sum
of (A) the Adjusted Class A-1 Certificate Balance, the Adjusted Class A-2
Certificate Balance, the Adjusted Class A-3 Certificate Balance and the
Adjusted Class B Certificate Balance (B) any accrued and unpaid interest with
respect to the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates and Class B Certificates, including any accrued and unpaid Class
A-1 Swap Interest Carryover Shortfall Amount, Class A-2 Swap Interest
Carryover Shortfall Amount, Class A-3 Swap Interest Carryover Shortfall
Amount and Class B Swap Interest Carryover Shortfall Amount, (C) 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 interest accrued
thereon), (D) any unreimbursed Maturity Advances, other Advances or
compensation payable to the Servicer through such date and (E) any
compensation or reimbursements due to the Titling Trustee and the 1998-C
Securitization Trustee hereunder. On such Monthly Allocation Date, upon
receipt of such amount, the 1998-C Securitization Trustee shall distribute
such amounts pursuant to the priorities set forth in Section 3.01, and any
balance shall be distributed to the Transferor. Thereupon the Transferor
shall succeed to all of the Investor Certificateholders' interests in and to
the 1998-C Securitization Trust corpus.
ARTICLE VIII
ACCUMULATION EVENTS AND SWAP TERMINATIONS
8.01 ACCUMULATION EVENTS.
If an Accumulation Event or Swap Termination shall occur during the
Revolving Period, then (but in the case of any event described in
subparagraph (i), (ii), (iii) or (iv) of the definition of "Accumulation
Event" after any applicable grace period set forth in such clause), the
Revolving Period shall terminate and Principal Collections and reimbursed
Loss Amounts and Certificate Principal Loss Amounts will no longer be
reinvested in Subsequent Contracts and Subsequent Leased Vehicles.
8.02 SWAP TERMINATIONS, EVENTS OF DEFAULT AND TERMINATION EVENTS.
(a) Following the occurrence of a Swap Termination, the Transferor
shall promptly give notice to the 1998-C Securitization Trustee of such Swap
Termination. Within 15 days of the receipt by the 1998-C Securitization
Trustee of the notice, the 1998-C Securitization Trustee shall publish a
notice in the Authorized Newspapers that a Swap Termination has occurred and
that the 1998-C Securitization Trustee intends to sell, dispose of or
otherwise liquidate the 1998-C SUBI, the 1998-C SUBI Certificate and the
other property of the 1998-C Securitization Trust in a
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commercially reasonable manner. Following such publication, the 1998-C
Securitization Trustee shall, unless otherwise prohibited by applicable law
from any such action, sell, dispose of, or otherwise liquidate the 1998-C
SUBI, the 1998-C SUBI Certificate and the other property of the 1998-C
Securitization Trust, in a commercially reasonable manner and on commercially
reasonable terms, which may, but are not required to, include the
solicitation of competitive bids, and shall proceed to consummate the sale,
liquidation or disposition thereof as provided above with the highest bidder.
The Transferor and the Servicer shall be permitted to bid for the 1998-C
Securitization Trust property. The 1998-C 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 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) If a Trust Officer of the 1998-C Securitization Trust obtains
actual knowledge of an Event of Default or Termination Event (as such terms
are defined in the Swap Agreement), the 1998-C Securitization Trustee shall
promptly publish and deliver notice to the Certificateholders as provided in
Section 4.10 of this 1998-C Securitization Trust Agreement. In the case of
any Tax Event or Tax Event Upon Merger (as defined in the Swap Agreement),
such notice shall specify that unless the 1998-C Securitization Trustee
receives within 30 days of the date of publication of such notice the
direction of Holders of at least 51% of the Voting Interests of the Class A
Certificateholders (acting as a single Class) to elect to terminate the Swap
Agreement and liquidate the assets of the 1998-C Securitization Trust, the
1998-C Securitization Trustee shall not designate an Early Termination Date
(as defined in the Swap Agreement) and, accordingly, such event will not
constitute a Termination Event. In the case of notice of any other such
event as to which the 1998-C Securitization Trust has the option to
designate an Early Termination Date under the Swap Agreement, such notice
shall specify that unless otherwise directed by Holders of at least 51% of the
Voting Interests of the Class A Certificateholders (acting as a single Class)
within the time period specified in such notice (which time period shall be
not more than 30 days from the date such notice is published or delivered by
the 1998-C Securitization Trustee), the 1998-C Securitization Trustee, on
behalf of the 1998-C Securitization Trust, will elect to designate an Early
Termination Date under the Swap Agreement and thereafter to terminate the Swap
Agreement and liquidate the assets of the 1998-C Securitization Trust. Upon
the occurrence of (i) any Event of Default under the Swap Agreement arising
from any action taken, or failure to act, by the Swap Counterparty of which a
Trust Officer or the 1998-C Securitization Trustee has actual knowledge, or (ii)
a Termination Event under the Swap Agreement of which a Trust Officer or the
1998-C Securitization Trustee has actual knowledge (except as described in the
following sentence) with respect to which the Swap Counterparty is an Affected
Party (as defined in the Swap Agreement), the 1998-C Securitization Trustee may
and will, at the direction of 51% of the Voting Interest of the
Certificateholders, by notice to the Swap Counterparty, designate an Early
Termination Date with respect to the Swap Agreement. If a Termination Event
under the Swap Agreement occurs (i) as a result of the insolvency or bankruptcy
of the Transferor or (ii) because the Trust or the Transferor becomes subject
to registration as an "Investment Company" under the Investment Company Act of
1940, the 1998C Securitization Trustee shall terminate the Swap Agreement.
If the 1998-C Securitization Trust or the Swap Counterparty elects to
designate an Early Termination Date and thereafter to terminate the Swap
Agreement and liquidate the assets of the
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1998-C Securitization Trust, the 1998-C Securitization Trustee will specify
in a further notice to the Class A Certificateholders the date elected, and
shall also deliver such notice to the Luxembourg Stock Exchange. As soon as
the 1998-C Securitization Trustee is reasonably able to do so, it will so
publish and deliver a further notice to each such party specifying the date
on which the net proceeds of such liquidation are to be allocated and applied
or paid pursuant to Section 3.01(o). In the event that a Swap Termination
Event occurs, whether because the 1998-C Securitization Trust elects to
designate or receives appropriate direction from the relevant
Certificateholders to designate an Early Termination Date, or because the
Swap Counterparty elects to designate an Early Termination Date, the 1998-C
Securitization Trustee shall sell or otherwise dispose of the SUBI, the
1998-C SUBI Certificate and such other property of the Trust in accordance
with Section 8.02(c).
(c) The proceeds from the sale, disposition or liquidation of the
1998-C SUBI Certificate and the 1998-C SUBI Assets evidenced thereby pursuant
to Section 8.02(a) or (b) above, shall be payable pursuant to the priorities
set forth in Section 3.01(o) above; PROVIDED, that the Servicer on behalf of
the 1998-C 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 Certificate
Payment Date on which such proceeds are distributed to the Investor
Certificateholders, the 1998-C Securitization Trust shall terminate.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 AMENDMENT.
(a) This 1998-C 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, (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, and
(iv) to add or amend any provision therein in connection with permitting
transfers of the Class B Certificates; PROVIDED, HOWEVER, that any such
action shall not, in the good faith judgment of the parties hereto or
thereto, adversely affect in any material respect the interests of the
Certificateholders and the Titling Trustee and the 1998-C Securitization
Trustee shall have received an Opinion of Counsel to the effect that such
action shall not materially and adversely affect the interests of the
Certificateholders PROVIDED, HOWEVER, further, that any amendment eliminating
the Reserve Fund or reducing the Specified Reserve Fund Balance shall also
require the Transferor to deliver to the 1998-C Securitization Trustee an
Opinion of Counsel to the effect that after such amendment, for federal
income tax purposes, the 1998-C Securitization 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 1998-C Securitization
Trust.
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(b) This 1998-C Securitization Trust Agreement and the other
Transaction Documents may also be amended from time to time by the respective
parties hereto or thereto for the purpose of adding any provisions to or
changing in any manner, or eliminating any of the provisions of this
Agreement or the other Transaction Documents or of modifying in any manner
the right of each Class of Certificateholders, 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 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 1998-C SUBI Collection
Account, (iv) changing the definition of "Permitted Investments") or (v) to
obtain or comply with the Requested Exemption, if either (A) the 1998-C
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 1998-C Securitization Trustee has received the consent of the Holders of
Investor Certificates representing not less than 51% of the Voting Interests
of the Certificates, voting together as a single class (which consent of any
Holder of an Investor Certificate given pursuant to this Section or pursuant
to any other provision of this 1998-C 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 1998-C SUBI or any 1998-C 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. It shall not be necessary for the consent of Certificate Owners
pursuant to this 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.
(c) The 1998-C 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 1998-C 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 1998-C Securitization
Trustee may prescribe.
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(e) The 1998-C Securitization Trustee may enter into an amendment
to the Swap Agreement without the consent of any Certificateholder for the
purpose of (i) curing any ambiguity or mistake, (ii) correcting any defective
provisions or to correct or supplement any provision therein which may be
inconsistent with any other provision therein or with any provision of this
1998-C Securitization Trust Agreement or (iii) adding any other provisions
with respect to matters or questions arising under the Swap Agreement;
provided, in the case of any amendment pursuant to clause (iv) above, that
such amendment will not adversely affect in any material respect the
interests of any Certificateholder; and provided, further, that any such
amendment will be deemed not to adversely affect in any material respect the
interests of any Certificateholder if the 1998-C Securitization Trustee
receives written confirmation from each Rating Agency that its then
outstanding ratings of the Class A Certificates will not be reduced or
withdrawn as a result of such amendment.
(f) Prior to the execution of any amendment to this 1998-C
Securitization Trust Agreement or the Swap Agreement, the 1998-C
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 1998-C Securitization Trust Agreement. The 1998-C
Securitization Trustee may, but shall not be obligated to, enter into any
such amendment which affects the 1998-C Securitization Trustee's own rights,
duties or immunities under this 1998-C Securitization Trust Agreement or the
Swap Agreement or otherwise.
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 1998-C Securitization Trustee under this 1998-C
Securitization Trust Agreement in the 1998-C SUBI, the 1998-C SUBI
Certificate and in the proceeds thereof. The Transferor shall deliver (or
cause to be delivered) to the 1998-C Securitization Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) If the Transferor shall 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 it shall give the 1998-C
Securitization Trustee written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements as contemplated by Sections 9-402(7) and 9-406 of the
UCC as in effect in California on the date hereof or any successor provision
thereof.
(c) The Transferor shall give the 1998-C 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
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or continuation statement or of any new financing statement and shall
promptly make any such filing.
(d) The Transferor shall deliver to the 1998-C Securitization
Trustee promptly after the execution and delivery of each amendment to this
1998-C 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 1998-C Securitization Trustee in
the 1998-C SUBI, 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.
9.03 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this 1998-C Securitization Trust Agreement or the 1998-C
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
1998-C Securitization Trust, nor otherwise affect the rights, obligations and
liabilities of the parties to this 1998-C 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 1998-C Securitization Trust, or the obligations of the
parties to this 1998-C Securitization Trust Agreement, nor shall anything set
forth in this 1998-C 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 1998-C
Securitization Trust Agreement.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this 1998-C Securitization Trust
Agreement to institute any suit, action, or proceeding in equity or at law
upon or under or with respect to this 1998-C Securitization Trust Agreement
or any other Transaction Document, unless such Holder previously shall have
given to the 1998-C 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 Voting Interests of the Certificates, considered as a single Class,
shall have made written request upon the 1998-C Securitization Trustee to
institute such action, suit or proceeding in its own name as Trustee under
this 1998-C Securitization Trust Agreement and shall have offered to the
1998-C Securitization Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or
thereby, and the 1998-C 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; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and
the 1998-C Securitization Trustee, that no one or more Holders of
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Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this 1998-C 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 1998-C Securitization Trust
Agreement or any other Transaction Document, except in the manner provided in
this 1998-C 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, each and every Certificateholder and the
1998-C Securitization Trustee shall be entitled to such relief as can be
given either at law or in equity.
9.04 GOVERNING LAW.
THIS 1998-C 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.
9.05 NOTICES.
With respect to the Class A Certificates, all demands, notices and
communications under this 1998-C Securitization Trust Agreement shall, for so
long as any Class A Certificates are listed on the Luxembourg Stock Exchange,
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 LUXEMBOURGER WORT. In
addition, with respect to the Class B Certificates and, if Class A Definitive
Certificates are issued, the Class A Certificates, such notices will be
mailed to the addresses of holders thereof at the addresses therefor as they
appear in the Corporate Register maintained by the 1998-C Securitization
Trustee prior to such mailing. Such notices will be deemed to have been given
on the date of such publication or the date of mailing or (prior to the
issuance of Definitive Certificates) on the date delivered to the Clearing
Agency pursuant to Section 4.10 above.
All demands, notices and communications under this 1998-C
Securitization Trust Agreement to the parties hereto 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 1998-C
Securitization Trust Agreement, or at such other address as shall be
designated by the Transferor in a written notice to the 1998-C Securitization
Trustee; (ii) in the case of the 1998-C 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 1998-C Securitization Trust Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
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9.06 SEVERABILITY OF PROVISIONS: COUNTERPARTS.
If any one or more of the covenants, agreements, provisions or terms
of this 1998-C 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 1998-C Securitization Trust Agreement and shall
in no way affect the validity or enforceability of the other provisions of
this 1998-C Securitization Trust Agreement or of the Certificates or the
rights of the Holders thereof.
This 1998-C 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.
9.07 ASSIGNMENT.
Notwithstanding anything to the contrary contained in this 1998-C
Securitization Trust Agreement, except as provided in Sections 5.03 and 5.06,
this 1998-C 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 Voting Interests
of all Classes of Certificates. The Transferor shall provide a copy of any
such assignment to each Rating Agency.
9.08 CERTIFICATES NONASSESSABLE AND FULLY PAID.
Except as provided in Section 5.02 with regard to the Transferor,
Certificateholders shall not be personally liable for obligations of the
1998-C Securitization Trust. The interests represented by the Certificates
shall be nonassessable for any losses or expenses of the 1998-C
Securitization Trust or for any reason whatsoever, and, upon the execution
and authentication thereof by the 1998-C Securitization Trustee pursuant to
Sections 4.02, 4.03 or 4.04, the Certificates are and shall be deemed fully
paid.
9.09 INVENTORY ADVANCES.
As set forth more fully in the 1998-C SUBI Servicing Supplement, the
Servicer is authorized to make an Inventory Advance if it expects to recover
the full amount thereof in connection with the liquidation of the related
1998-C Leased Vehicles. The 1998-A Securitization Trustee shall not accept
monies from the Servicer that the Servicer has identified or designated as
Inventory Advances in the related Statement to Certificateholders unless it
shall also have received the written representation of the Servicer that the
Servicer expects to recover the full amount thereof in connection with the
liquidation of the related 1998-C Leased Vehicles based on its estimation of
expected Liquidation Proceeds. In estimating the expected Liquidation
Proceeds, the Servicer shall take into account (a) the specific 1998-C Leased
Vehicles that are to be the subject of such Inventory Advance and (b) its own
recent actual experience with the liquidation of vehicles of comparable makes
and models, in each case on a basis consistent with the review and estimates
the Servicer prepares in establishing and revising its own servicing
guidelines.
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ARTICLE X
AGENT FOR SERVICE
10.01 AGENT FOR SERVICE OF TRANSFEROR.
The agent for service of process for the Transferor shall be its
Corporate Treasury Manager, at 19001 South Western Avenue, Torrance, California
90501, Attention: Corporate Treasury Manager (fax: 310-787-6194).
10.02 AGENT OF TRUSTEE.
The 1998-C Securitization Trustee shall maintain an office or offices
or agency or agencies where notices and demands to or upon the 1998-C
Securitization Trustee in respect of the Certificates and this 1998-C
Securitization Trust Agreement may be served. The initial such office shall
be the Corporate Trust Office. The 1998-C Securitization Trustee shall give
prompt written notice to the Transferor, the Servicer and 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 1998-C
Securitization Trust Agreement to be duly executed by their respective
officers as of _______________________1998.
TOYOTA LEASING, INC.
as Transferor
By:
----------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as 1998-C Securitization Trustee and as
Securities Intermediary
By:
----------------------------------------
Name:
Title:
<PAGE>
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 1998-C
ADJUSTABLE RATE AUTO LEASE ASSET BACKED CERTIFICATE, CLASS A-1
Evidencing a percentage interest in the distributions allocable to the
Class A-1 Certificates, as defined below.
This Certificate does not represent an obligation of, or an interest in,
Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling
Trustee, the 1998-C Securitization Trustee or any of their respective
affiliates.
Initial Class A-1 Certificate Balance: CUSIP #__________
$189,000,000
Number A-1-1 Denomination: $[_______________]
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a _____________
_____________________ DOLLARS ($___________________) nonassessable,
fully-paid, fractional undivided interest in the Toyota Auto Lease Trust
1998-C (the "1998-C Securitization Trust") formed by Toyota Leasing, Inc., a
California corporation, as Transferor (the "Transferor"). The 1998-C
Securitization Trust was created pursuant to a 1998-C Securitization Trust
Agreement dated as of December 1, 1998 (the "Agreement"), between the
Transferor and U.S. Bank National Association, a national banking
association, as trustee (the "1998-C Securitization 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 1998-C Adjustable
Rate Auto Lease Asset Backed Certificates, Class A-1" (the "Class A-1
Certificates"). Also issued under the Agreement are Certificates designated
as "Toyota Auto Lease Trust 1998-C Adjustable Rate Auto Lease Asset Backed
Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates
designated as "Toyota
A-1-1
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Auto Lease Trust 1998-C Adjustable Rate Auto 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 1998-C Adjustable Rate
Auto Lease Asset Backed Certificates, Class B" (the "Class B Certificates"
and, together with the Class A Certificates, the "Investor Certificates") and
a Certificate evidencing the Transferor Interest (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 1998-C Securitization Trust includes, among other
things, the 1998-C SUBI Certificate evidencing beneficial interests in the
assets of the 1998-C SUBI other than the proceeds of the Residual Value
Insurance Policies. The 1998-C SUBI 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 "1998-C
SUBI Portfolio") entered into by various automobile and light duty truck
dealers pursuant to contractual arrangements with the Titling Trust. Toyota
Motor Credit Corporation acts as servicer (in that capacity, the "Servicer")
of the 1998-C SUBI Portfolio. During the Revolving Period, Principal
Collections and amounts applied to reimburse Loss Amounts and Certificate
Principal Loss Amounts allocable to the assets of the 1998-C SUBI represented
by the 1998-C SUBI Certificate generally will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles from among other unallocated
Contracts and Leased Vehicles owned by the Titling Trust. At the time of
reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will
be allocated to the 1998-C SUBI. Following the Revolving Period, Principal
Collections allocable to the assets of the 1998-C SUBI will be deposited in
the Certificateholders' Account and invested in Permitted Investments (which
are expected to be TMCC Demand Notes) maturing prior to the relevant Targeted
Maturity Date.
Payments in respect of the 1998-C SUBI Certificate will be allocated
between the Investor Certificates and the Transferor Certificate and paid to
the registered Holder of this Certificate as provided in the Agreement.
Except as otherwise provided in the Agreement, interest payments in
respect of this Certificate shall be made quarterly on the 25th day of March,
June, September and December (or if such day is not a Business Day, the next
succeeding Business Day, each such day a "Certificate Payment Date"),
commencing on March 25, 1999, and through the Class A-1 Targeted Maturity
Date and thereafter, if applicable, monthly on each succeeding Certificate
Payment Date until the Adjusted Class A-1 Certificate Balance has been
reduced to zero. Except to the extent provided otherwise 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
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A-3 Certificates have been paid in full. Except as otherwise provided in the
Agreement, the principal of the Class A-1 Certificates shall be distributable
on the A-1 Targeted Maturity Date which shall be December 25, 2000 (or if
such day is not a Business Day, on the next succeeding Business Day) and
thereafter, if applicable, monthly on each succeeding Certificate Payment
Date until the Adjusted Class A-1 Certificate Balance has been reduced to
zero. In any event, any remaining unpaid principal of any Class A-1
Certificate shall be due and payable on December 25, 2002 (or if such day is
not a Business Day, on the next succeeding Business Day).
On each Certificate Payment Date, the 1998-C Securitization Trustee
shall pay or cause to be paid to the Person in whose name this Class A-1
Certificate is registered at the close of business on the calendar day
immediately preceding such Certificate Payment Date or, if Definitive
Certificates have been issued, the last Business Day of the immediately
preceding calendar month (the "Record Date"), amounts distributable as
interest on the Class A-1 Certificates pursuant to the terms of the
Agreement, all to the extent and as more specifically set forth in the
Agreement. Payments of principal may be made earlier under certain
circumstances (in connection with the exercise of the Transferor of its right
to purchase the SUBI, described below, or the liquidation of the 1998-C SUBI
following a Swap Termination) or later (depending on payment, delinquency
and loss experience). Distributions on this Class A-1 Certificate will be
made by the 1998-C 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 1998-C 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 1998-C Securitization
Trustee or at the offices of Bankers Trust Luxembourg S.A. (initially at 14
Boulevard F.D. Roosevelt, L-450 Luxembourg).
It is the intention of the Transferor and the Investor
Certificateholders 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 1998-C
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 an Investor Certificate also agrees that it will not be entitled to
any of the tax benefits related to the 1998-C Contracts and 1998-C Leased
Vehicles, including any of the depreciation deductions resulting therefrom.
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
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<PAGE>
purposes, but rather represent an equity interest in the assets of the 1998-C
Securitization Trust, then the Holder is deemed to agree (and each
Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein is deemed to agree): (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 1998-C 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
1998-C Securitization Trustee or any of their respective Affiliates. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the 1998-C SUBI Assets evidenced by the 1998-C 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. 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 of the Titling Trust Assets other than those from
time to time included in the 1998-C SUBI Sub-Trust (except for those
evidenced by the 1998-C SUBI Insurance Certificate) and those proceeds or
assets derived from or earned by such 1998-C SUBI Assets (except for those
evidenced by the 1998-C SUBI Insurance Certificate and the proceeds
therefrom). A copy of the Agreement may be examined during normal business
hours at the Corporate Trust Office of the 1998-C Securitization Trustee, at
the offices of Bankers Trust Luxembourg S.A. (initially at 14 Boulevard F.D.
Roosevelt, L-450 Luxembourg) and at such other places, if any, designated by
the 1998-C 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 1998-C Securitization Trustee without
the consent of any Certificateholders. 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 Voting Interest of
all Investor Certificates, voting together as a single class. To be entitled
to vote in respect of an interest in the Class A-1 Certificates, a person
shall be a holder of record of such Class A-1 Certificates as shown on the
books of the Certificate Registrar on the last day of the preceding month, or
a person appointed by such holder by an instrument in writing. 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 therein
set forth, Certificates are exchangeable for new Certificates of the same
Class, in authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same or for register of transfer at
the Corporate Trust Office of the 1998-C Securitization Trustee
A-1-4
<PAGE>
in its capacity as Certificate Registrar, or at the office of the agent of
the 1998-C Securitization Trustee in its capacity as Certificate Registrar,
who shall initially be U.S. Bank National Association, 100 Wall Street, 20th
Floor, New York, New York 10005, in the Borough of Manhattan, the City of New
York, and, with respect to the Definitive Certificates only, a transfer agent
appointed in Luxembourg, or at the appropriate office of any successor
Certificate Registrar, accompanied by a written instrument of transfer in
form satisfactory to the 1998-C 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 A-1 Certificates
of authorized denominations and of a like aggregate fractional undivided
interest will be issued to the designated transferee. No service charge will
be made for any such registration of transfer or exchange, but the 1998-C
Securitization Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Class A-1 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-1 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-1 Certificate
Balance).
Prior to due presentation of this Certificate for registration of
transfer, the 1998-C Securitization Trustee, the Certificate Registrar and
any of their respective agents may treat the Person in whose name this Class
A-1 Certificate is registered as the owner hereof for the purpose of
receiving distributions and for all other purposes, and neither the 1998-C
Securitization Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
1998-C Securitization Trust created thereby shall terminate upon the payment
to Investor Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the 1998-C Securitization Trust. The Transferor may at its option purchase
the corpus of the 1998-C Securitization Trust at a price specified in the
Agreement, and such purchase of the 1998-C SUBI and 1998-C SUBI Certificate
and other property of the 1998-C Securitization Trust will effect early
retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is
exercisable only on the Monthly Allocation Date on or after the Class A-3
Targeted Maturity Date, if either before or after giving effect to any
payments of principal required to be made on such Monthly Allocation Date,
the Investor Balance shall be less than or equal to [$______________] (ten
percent of the Aggregate Net Investment Value as of the Cutoff Date).
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 (and each Certificate Owner is deemed to agree)
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 (or Certificate Owner) will not institute against, or join
any other Person in instituting against the Transferor, Toyota Motor Credit
Corporation, the 1998-C Securitization Trustee, the 1998-C
A-1-5
<PAGE>
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 (or any Certificate Owner'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
noncompetition covenant shall survive the termination of the Agreement.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the 1998-C 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.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust and not in its individual capacity has caused
this Class A-1 Certificate to be duly executed.
Dated: [_______________], 1998
TOYOTA AUTO LEASE TRUST 1998-C
By: U.S. BANK NATIONAL ASSOCIATION,
as 1998-C Securitization Trustee
By:________________________________
Authorized Officer
Certificate of Authentication
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
1998-C Securitization Trustee
By:__________________________________
Authorized Officer
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 1998-C
ADJUSTABLE RATE AUTO LEASE ASSET BACKED CERTIFICATE, CLASS A-2
Evidencing a percentage interest in the distributions allocable to the
Class A-2 Certificates, as defined below.
This Certificate does not represent an obligation of, or an interest
in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling
Trustee, the 1998-C Securitization Trustee or any of their respective
affiliates.
Initial Class A-2 Certificate Balance:
$424,500,000 CUSIP ___________
Number A-2-1 Denomination: $[________________]
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a ______________
__________________ DOLLARS ($______________________) nonassessable,
fully-paid, fractional undivided interest in the Toyota Auto Lease Trust
1998-C (the "1998-C Securitization Trust") formed by Toyota Leasing, Inc., a
California corporation, as Transferor (the "Transferor"). The 1998-C
Securitization Trust was created pursuant to a 1998-C Securitization Trust
Agreement dated as of December 1, 1998 (the "Agreement"), between the
Transferor and U.S. Bank National Association, a national banking
association, as trustee (the "1998-C Securitization 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 1998-C Adjustable
Rate Auto 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 1998-C Adjustable Rate Auto Lease Asset Backed
Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates
designated as "Toyota
A-2-1
<PAGE>
Auto Lease Trust 1998-C Adjustable Rate Auto 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 1998-C Adjustable Rate
Auto Lease Asset Backed Certificates, Class B" (the "Class B Certificates"
and, together with the Class A Certificates, the "Investor Certificates") and
a Certificate evidencing the Transferor Interest (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 1998-C Securitization Trust includes, among other
things, the 1998-C SUBI Certificate evidencing beneficial interests in the
assets of the 1998-C SUBI other than the proceeds of the Residual Value
Insurance Policies. The 1998-C SUBI 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 "1998-C
SUBI Portfolio") entered into by various automobile and light duty truck
dealers pursuant to contractual arrangements with the Titling Trust. Toyota
Motor Credit Corporation acts as servicer (in that capacity, the "Servicer")
of the 1998-C SUBI Portfolio. During the Revolving Period, Principal
Collections and amounts applied to reimburse Loss Amounts and Certificate
Principal Loss Amounts allocable to the assets of the 1998-C SUBI represented
by the 1998-C SUBI Certificate generally will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles from among other unallocated
Contracts and Leased Vehicles owned by the Titling Trust. At the time of
reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will
be allocated to the 1998-C SUBI. Following the Revolving Period, Principal
Collections allocable to the assets of the 1998-C SUBI will be deposited in
the Certificateholders' Account and invested in Permitted Investments (which
are expected to be TMCC Demand Notes) maturing prior to the relevant Targeted
Maturity Date.
Payments in respect of the 1998-C SUBI Certificate will be allocated
between the Investor Certificates and the Transferor Certificate and paid to
the registered Holder of this Certificate as provided in the Agreement.
Except as otherwise provided in the Agreement, interest payments in
respect of this Certificate shall be made quarterly on the 25th day of March,
June, September and December (or if such day is not a Business Day, the next
succeeding Business Day, each such day a "Certificate Payment Date"),
commencing on March 25, 1999, and through the Class A-2 Targeted Maturity
Date and thereafter, if applicable, monthly on each succeeding Certificate
Payment Date until the Adjusted Class A-2 Certificate Balance has been
reduced to zero. Except to the extent provided otherwise 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
A-2-2
<PAGE>
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. Except
as otherwise provided in the Agreement, the principal of the Class A-2
Certificates shall be distributable on the Class A-2 Targeted Maturity Date
which shall be December 25, 2001 (or if such day is not a Business Day, on
the next succeeding Business Day) and thereafter, if applicable, monthly on
each succeeding Certificate Payment Date until the Adjusted Class A-2
Certificate Balance has been reduced to zero. In any event, any remaining
unpaid principal of any Class A-2 Certificate shall be due and payable on
February 25, 2003 (or if such day is not a Business Day, on the next
succeeding Business Day).
On each Certificate Payment Date, the 1998-C Securitization Trustee
shall pay or cause to be paid to the Person in whose name this Class A-2
Certificate is registered at the close of business on the calendar day
immediately preceding such Certificate Payment Date or, if Definitive
Certificates have been issued, the last Business Day of the immediately
preceding calendar month (the "Record Date"), amounts distributable as
interest on the Class A-2 Certificates pursuant to the terms of the
Agreement, all to the extent and as more specifically set forth in the
Agreement. Payments of principal may be made earlier under certain
circumstances (in connection with the exercise of the Transferor of its right
to purchase the 1998-C SUBI, described below, or the liquidation of the SUBI
following a Swap Termination) or later (depending on payment, delinquency
and loss experience). Distributions on this Class A-2 Certificate will be
made by the 1998-C 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 1998-C 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 1998-C Securitization
Trustee or at the offices of Bankers Trust Luxembourg S.A. (initially at 14
Boulevard F.D. Roosevelt, L-450 Luxembourg).
It is the intention of the Transferor and the Investor
Certificateholders 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 1998-C
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 of the Transferor and to report the transactions contemplated by
the Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of an Investor Certificate also agrees that it will
not be entitled to any of the tax benefits related to the 1998-C Contracts
and 1998-C Leased Vehicles, including any of the depreciation deductions
resulting therefrom.
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
A-2-3
<PAGE>
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 1998-C Securitization Trust, then the Holder is deemed to agree
(and each Certificate Owner hereof with respect hereto by virtue of acquiring
a beneficial interest herein is deemed to agree): (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 1998-C 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
1998-C Securitization Trustee or any of their respective Affiliates. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the 1998-C SUBI Assets evidenced by the 1998-C 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. 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 of the Titling Trust Assets other than those from
time to time included in the 1998-C SUBI Sub-Trust (except for those
evidenced by the 1998-C SUBI Insurance Certificate) and those proceeds or
assets derived from or earned by such 1998-C SUBI Assets (except for those
evidenced by the 1998-C SUBI Insurance Certificate and the proceeds
therefrom). A copy of the Agreement may be examined during normal business
hours at the Corporate Trust Office of the 1998-C Securitization Trustee, at
the offices of Bankers Trust Luxembourg S.A. (initially at 14 Boulevard F.D.
Roosevelt, L-450 Luxembourg) and at such other places, if any, designated by
the 1998-C 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 1998-C Securitization Trustee without
the consent of any Certificateholders. 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 Voting Interest of
all Investor Certificates, voting together as a single class. To be entitled
to vote in respect of an interest in the Class A-2 Certificates, a person
shall be a holder of record of such Class A-2 Certificates as shown on the
books of the Certificate Registrar on the last day of the preceding month, or
a person appointed by such holder by an instrument in writing. 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 therein
set forth, Certificates are exchangeable for new Certificates of the same
Class, in authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the
A-2-4
<PAGE>
same or for register of transfer at the Corporate Trust Office of the 1998-C
Securitization Trustee in its capacity as Certificate Registrar, or at the
office of the agent of the 1998-C Securitization Trustee in its capacity as
Certificate Registrar, U.S. Bank National Association, 100 Wall Street, 20th
Floor, New York, New York 10005, in the Borough of Manhattan, the City of New
York, and, with respect to the Definitive Certificates only, a transfer agent
appointed in Luxembourg, or at the appropriate office of any successor
Certificate Registrar, accompanied by a written instrument of transfer in
form satisfactory to the 1998-C 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 A-2 Certificates
of authorized denominations and of a like aggregate fractional undivided
interest will be issued to the designated transferee. No service charge will
be made for any such registration of transfer or exchange, but the 1998-C
Securitization Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
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).
Prior to due presentation of this Certificate for registration of
transfer, the 1998-C 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 1998-C
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
1998-C 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 1998-C Securitization Trust. The Transferor may at its option purchase
the corpus of the 1998-C Securitization Trust at a price specified in the
Agreement, and such purchase of the 1998-C SUBI and 1998-C SUBI Certificate
and other property of the 1998-C Securitization Trust will effect early
retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is
exercisable only on the Monthly Allocation Date on or after the Class A-3
Targeted Maturity Date, if either before or after giving effect to any
payments of principal required to be made on such Monthly Allocation Date,
the Investor Balance shall be less than or equal to $[ ] (ten
percent of the Aggregate Net Investment Value as of the Cutoff Date).
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 (and each Certificate Owner is deemed to agree)
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
A-2-5
<PAGE>
Transferor, Toyota Motor Credit Corporation, the 1998-C Securitization
Trustee, the 1988-B 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 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 1998-C 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.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust and not in its individual capacity has caused
this Class A-2 Certificate to be duly executed.
Dated: [ ], 1998
TOYOTA AUTO LEASE TRUST 1998-C
By: U.S. BANK NATIONAL ASSOCIATION, as 1998-C
Securitization Trustee
By: _________________________________________
Authorized Officer
Certificate of Authentication
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
1998-C Securitization Trustee
By:___________________________________________
Authorized Officer
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 1998-C
ADJUSTABLE RATE AUTO LEASE ASSET BACKED CERTIFICATE, CLASS A-3
Evidencing a percentage interest in the distributions allocable to the
Class A-3 Certificates, as defined below.
This Certificate does not represent an obligation of, or an interest
in, Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling
Trustee, the 1998-C Securitization Trustee or any of their respective
affiliates.
Initial Class A-3 Certificate Balance: CUSIP #____________
$72,800,000
Number A-3-1 Denomination: $[________________]
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a ____________
_____________________ DOLLARS ($______________) nonassessable, fully-paid,
fractional undivided interest in the Toyota Auto Lease Trust 1998-C (the
"1998-C Securitization Trust") formed by Toyota Leasing, Inc., a California
corporation, as Transferor (the "Transferor"). The 1998-C Securitization
Trust was created pursuant to a 1998-C Securitization Trust Agreement dated
as of December 1, 1998 (the "Agreement"), between the Transferor and U.S.
Bank National Association, a national banking association, as trustee (the
"1998-C Securitization 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 1998-C Adjustable
Rate Auto Lease Asset Backed Certificates, Class A-3" (the "Class A-3
Certificates"). Also issued under the Agreement are
A-3-1
<PAGE>
Certificates designated as "Toyota Auto Lease Trust 1998-C Adjustable Rate
Auto Lease Asset Backed Certificates, Class A-1" (the "Class A-1
Certificates"), Certificates designated as "Toyota Auto Lease Trust 1998-C
Adjustable Rate Auto Lease Asset Backed Certificates, Class A-2" (the "Class
A-2 Certificates" and, together with the Class A-1 Certificates and the Class
A-3 Certificates, the "Class A Certificates"), Certificates designated as
"Toyota Auto Lease Trust 1998-C Adjustable Rate Auto Lease Asset Backed
Certificates, Class B" (the "Class B Certificates" and, together with the
Class A Certificates, the "Investor Certificates") and a Certificate
evidencing the Transferor Interest (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 1998-C Securitization Trust includes, among other
things, the 1998-C SUBI Certificate evidencing beneficial interests in the
assets of the 1998-C SUBI other than the proceeds of the Residual Value
Insurance Policies. The 1998-C SUBI 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 "1998-C
SUBI Portfolio") entered into by various automobile and light duty truck
dealers pursuant to contractual arrangements with the Titling Trust. Toyota
Motor Credit Corporation acts as servicer (in that capacity, the "Servicer")
of the 1998-C SUBI Portfolio. During the Revolving Period, Principal
Collections and amounts applied to reimburse Loss Amounts and Certificate
Principal Loss Amounts allocable to the assets of the 1998-C SUBI represented
by the 1998-C SUBI Certificate generally will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles from among other unallocated
Contracts and Leased Vehicles owned by the Titling Trust. At the time of
reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will
be allocated to the 1998-C SUBI. Following the Revolving Period, Principal
Collections allocable to the assets of the 1998-C SUBI will be deposited in
the Certificateholders' Account and invested in Permitted Investments (which
are expected to be TMCC Demand Notes) maturing prior to the relevant Targeted
Maturity Date.
Payments in respect of the 1998-C SUBI Certificate will be allocated
between the Investor Certificates and the Transferor Certificate and paid to
the registered Holder of this Certificate as provided in the Agreement.
Except as otherwise provided in the Agreement, interest payments in
respect of this Certificate shall be made quarterly on the 25th day of March,
June, September and December (or if such day is not a Business Day, the next
succeeding Business Day, each such day a "Certificate Payment Date"),
commencing on March 25, 1999, and through the Class A-3 Targeted Maturity
Date and thereafter, if applicable, monthly on each succeeding Certificate
Payment Date until the Adjusted Class A-3 Certificate Balance has been
reduced to zero. Except to the extent provided otherwise in the Agreement, no
principal payments shall be made in respect of the Class A-2
A-3-2
<PAGE>
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. Except as otherwise provided in the
Agreement, the principal of the Class A-3 Certificates shall be distributable
on the Class A-3 Targeted Maturity Date which shall be March 25, 2002 (or if
such day is not a Business Day, on the next succeeding Business Day) and
thereafter, if applicable, monthly on each succeeding Certificate Payment
Date until the Adjusted Class A-3 Certificate Balance has been reduced to
zero. In any event, any remaining unpaid principal of any Class A-3
Certificate shall be due and payable on February 25, 2004 (or if such day is
not a Business Day, on the next succeeding Business Day).
On each Certificate Payment Date, the 1998-C Securitization Trustee
shall pay or cause to be paid to the Person in whose name this Class A-3
Certificate is registered at the close of business on the calendar day
immediately preceding such Certificate Payment Date or, if Definitive
Certificates have been issued, the last Business Day of the immediately
preceding calendar month (the "Record Date"), amounts distributable as
interest on the Class A-3 Certificates pursuant to the terms of the
Agreement, all to the extent and as more specifically set forth in the
Agreement. Payments of principal hereof may be made earlier under certain
circumstances (in connection with the exercise of the Transferor of its right
to purchase the 1998-C SUBI, described below, or the liquidation of the SUBI
following a Swap Termination) or later (depending on payment, delinquency
and loss experience). Distributions on this Class A-3 Certificate will be
made by the 1998-C 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 1998-C 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 1998-C Securitization
Trustee or at the offices of Bankers Trust Luxembourg S.A. (initially at 14
Boulevard F.D. Roosevelt, L-450 Luxembourg).
It is the intention of the Transferor and the Investor
Certificateholders 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 1998-C
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 of the Transferor and to report the transactions contemplated by
the Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of an Investor Certificate also agrees that it will
not be entitled to any of the tax benefits related to the 1998-C Contracts
and 1998-C Leased Vehicles, including any of the depreciation deductions
resulting therefrom.
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 1998-C
Securitization Trust, then the Holder is deemed to agree (and each
Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein is deemed to agree): (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 1998-C 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
1998-C Securitization Trustee or any of their respective Affiliates. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the 1998-C SUBI Assets evidenced by the 1998-C 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. 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 of the Titling Trust Assets other than those from
time to time included in the 1998-C SUBI Sub-Trust (except for those
evidenced by the 1998-C SUBI Insurance Certificate) and those proceeds or
assets derived from or earned by such 1998-C SUBI Assets (except for those
evidenced by the 1998-C SUBI Insurance Certificate and the proceeds
therefrom). A copy of the Agreement may be examined during normal business
hours at the Corporate Trust Office of the 1998-C Securitization Trustee, at
the offices of Bankers Trust Luxembourg S.A. (initially at 14 Boulevard F.D.
Roosevelt, L-450 Luxembourg) and at such other places, if any, designated by
the 1998-C 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 1998-C Securitization Trustee without
the consent of any Certificateholders. 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 Voting Interest of
all Investor Certificates, voting together as a single class. To be entitled
to vote in respect of an interest in the Class A-3 Certificates, a person
shall be a holder of record of such Class A-3 Certificates as shown on the
books of the Certificate Registrar on the last day of the preceding month, or
a person appointed by such holder by an instrument in writing. 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.
A-3-4
<PAGE>
As provided in the Agreement and subject to certain limitations therein
set forth, Certificates are exchangeable for new Certificates of the same
Class, in authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same or for register of transfer in
the Certificate Register upon surrender of this Certificate for registration
of transfer at the Corporate Trust Office of the 1998-C Securitization
Trustee in its capacity as Certificate Registrar, or at the office of the
agent of the 1998-C Securitization Trustee in its capacity as Certificate
Registrar, who shall initially be U.S. Bank National Association, 100 Wall
Street, 20th Floor, New York, New York 10005, in the Borough of Manhattan,
the City of New York, and with respect to the Definitive Certificates only, a
transfer agent appointed in Luxembourg, or at the appropriate office of any
successor Certificate Registrar, accompanied by a written instrument of
transfer in form satisfactory to the 1998-C 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 A-3
Certificates of authorized denominations and of a like aggregate fractional
undivided interest will be issued to the designated transferee. No service
charge will be made for any such registration of transfer or exchange, but
the 1998-C Securitization Trustee may require payment of a sum sufficient to
cover any tax or governmental charges payable in connection therewith.
The Class A-3 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-3 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-3 Certificate
Balance).
Prior to due presentation of this Certificate for registration of
transfer, the 1998-C Securitization Trustee, the Certificate Registrar and
any of their respective agents may treat the Person in whose name this Class
A-3 Certificate is registered as the owner hereof for the purpose of
receiving distributions and for all other purposes, and neither the 1998-C
Securitization Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
1998-C Securitization Trust created thereby shall terminate upon the payment
to Investor Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the 1998-C Securitization Trust. The Transferor may at its option purchase
the corpus of the 1998-C Securitization Trust at a price specified in the
Agreement, and such purchase of the 1998-C SUBI and 1998-C SUBI Certificate
and other property of the 1998-C Securitization Trust will effect early
retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is
exercisable only on the Monthly Allocation Date on or after the Class A-3
Targeted Maturity Date, if either before or after giving effect to any
payments of principal required to be made on such Monthly Allocation Date,
the Investor Balance shall be less than or equal to [$_________________] (ten
percent of the Aggregate Net Investment Value as of the Cutoff Date).
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 (and each
A-3-5
<PAGE>
Certificate Owner is deemed to agree) 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
1998-C Securitization Trustee, the 1998-C 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 any Certificate Owner'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 noncompetition covenant shall
survive the termination of the Agreement.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the 1998-C 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 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust and not in its individual capacity has caused
this Class A-3 Certificate to be duly executed.
Dated: [_______________], 1998
TOYOTA AUTO LEASE TRUST 1998-C
By: U.S. BANK NATIONAL ASSOCIATION, as
1998-C Securitization Trustee
By:____________________________________
Authorized Officer
Certificate of Authentication
This is one of the Class A-3 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
1998-C Securitization Trustee
By:_____________________________________
Authorized Officer
A-3-7
<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-3-8
<PAGE>
EXHIBIT B
THIS CLASS B CERTIFICATE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION
IN RELIANCE ON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE OR
FOREIGN SECURITIES LAWS. THE CLASS B CERTIFICATES ARE ELIGIBLE FOR PURCHASE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT. NO RESALE OR OTHER TRANSFER
OF THIS CERTIFICATE SHALL 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 (OTHER THAN A TRANSACTION IN CLAUSE
(iv) BELOW) EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS, (iii) TO TOYOTA LEASING
INC. (THE "TRANSFEROR") OR (iv) TO A PERSON WHO THE TRANSFEROR OF THIS CLASS
B CERTIFICATE 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 OR TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" UNDER RULE 501(a)(1),(2),(3) OR (7) UNDER
THE SECURITIES ACT. IN THE EVENT THAT THE TRANSFER OF A CLASS B CERTIFICATE
IS TO BE MADE AS DESCRIBED IN CLAUSE (ii) OF THE PRECEDING SENTENCE, THE
PROSPECTIVE INVESTOR IS REQUIRED TO DELIVER AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE 1998-C SECURITIZATION TRUSTEE AND THE
TRANSFEROR TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS.
THE PROSPECTIVE TRANSFEREE IN A TRANSFER OF A CLASS B CERTIFICATE TO BE MADE
AS DESCRIBED IN CLAUSE (iv) ABOVE MUST DELIVER TO THE 1998-C SECURITIZATION
TRUSTEE A REPRESENTATION LETTER REQUIRED BY SECTION 4.03 OF THE AGREEMENT
REFERRED TO HEREIN. PROSPECTIVE PURCHASERS OF THE CLASS B CERTIFICATES ARE
HEREBY NOTIFIED THAT THE SELLER OF ANY CLASS B CERTIFICATES MAY BE RELYING ON
THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF THE ACT
PROVIDED BY RULE 144A UNDER THE ACT.
THIS CLASS B CERTIFICATE OR A BENEFICIAL INTEREST HEREIN MAY NOT BE
TRANSFERRED UNLESS THE 1998-C SECURITIZATION TRUSTEE HAS RECEIVED (I) EITHER
(A) A CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), OR A GOVERNMENTAL PLAN DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO
ANY FEDERAL STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
FOREGOING PROVISIONS OF
B-1
<PAGE>
ERISA OR THE CODE ("SIMILAR LAW") (EACH, A "BENEFIT PLAN") AND IS NOT AN
ENTITY INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR AN INSURANCE
COMPANY GENERAL ACCOUNT IF THE ASSETS IN ANY SUCH ACCOUNTS CONSTITUTE "PLAN
ASSETS" FOR PURPOSES OF REGULATION SECTION 2510.3-101 OF ERISA, WHOSE
UNDERLYING ASSETS INCLUDE BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S
INVESTMENT IN THE ENTITY (SUCH BENEFIT PLAN OR ENTITY, A "BENEFIT PLAN
INVESTOR") OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE 1998-C
SECURITIZATION TRUSTEE, THE TRANSFEROR AND THE SERVICER TO THE EFFECT THAT
THE PURCHASE OR HOLDING OF SUCH CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN
THE ASSETS OF THE 1998-C SECURITIZATION TRUST BEING DEEMED TO BE "PLAN
ASSETS" SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR
PROHIBITED TRANSACTIONS PROVISIONS OF SECTION 4975 OF THE CODE OR SIMILAR
LAW, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE OR
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE TRANSFEROR OR THE SERVICER
TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER
ERISA, SECTION 4975 OF THE CODE OF SIMILAR LAW) IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT AND (II) A CERTIFICATE TO THE EFFECT THAT 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.
IN ADDITION, NO RESALE OR OTHER TRANSFER OF THIS CLASS B CERTIFICATE OR
ANY INTEREST THEREIN SHALL BE PERMITTED UNLESS IMMEDIATELY AFTER GIVING
EFFECT TO SUCH RESALE OR OTHER TRANSFER, THERE WOULD BE FEWER THAN 100 CLASS
B CERTIFICATEHOLDERS.
THIS CLASS B CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
BELOW.
B-2
<PAGE>
TOYOTA AUTO LEASE TRUST 1998-C
ADJUSTABLE RATE AUTO LEASE ASSET BACKED CERTIFICATE, CLASS B
Evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below.
This Certificate does not represent an obligation of, or an interest in,
Toyota Leasing, Inc., Toyota Motor Credit Corporation, the Titling Trustee
or the 1998-C Securitization Trustee or any of their respective affiliates.
Initial Class B Certificate Balance: CUSIP #_______________
$48,700,000
Number B-1 Denomination: $_____________
THIS CERTIFIES THAT [_________] is the registered owner of _____________
($____________) nonassessable, fully-paid, fractional undivided interest in
the Toyota Auto Lease Trust 1998-C (the "1998-C Securitization Trust") formed
by Toyota Leasing, Inc., a California corporation, as Transferor (the
"Transferor"). The 1998-C Securitization Trust was created pursuant to a
1998-C Securitization Trust Agreement dated as of December 1, 1998 (the
"Agreement"), between the Transferor and U.S. Bank National Association, a
national banking association, as trustee (the "1998-C Securitization
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 1998-C Adjustable
Rate Auto Lease Asset Backed Certificates, Class B" (the "Class B
Certificates"). Also issued under the Agreement are Certificates designated
as "Toyota Auto Lease Trust 1998-C Adjustable Rate Auto Lease Asset Backed
Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates
designated as "Toyota Auto Lease Trust 1998-C Adjustable Rate Auto Lease
Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates"),
Certificates designated as "Toyota Auto Lease Trust 1998-C Adjustable Rate
Auto 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 evidencing the
Transferor Interest (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.
B-1
<PAGE>
The property of the 1998-C Securitization Trust includes, among
other things, the 1998-C SUBI Certificate evidencing beneficial interests in
the assets of the 1998-C SUBI other than the proceeds of the Residual Value
Insurance Policies. The 1998-C SUBI 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 "1998-C
SUBI Portfolio") entered into by various automobile and light duty truck
dealers pursuant to contractual arrangements with the Titling Trust. Toyota
Motor Credit Corporation acts as servicer (in that capacity, the "Servicer")
of the 1998-C SUBI Portfolio. During the Revolving Period, Principal
Collections and amounts applied to reimburse Loss Amounts and Certificate
Principal Loss Amounts allocable to the assets of the 1998-C SUBI represented
by the 1998-C SUBI Certificate generally will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles from among other unallocated
Contracts and Leased Vehicles owned by the Titling Trust. At the time of
reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will
be allocated to the 1998-C SUBI. Following the Revolving Period, Principal
Collections allocable to the assets of the 1998-C SUBI will be deposited in
the Certificateholders' Account and invested in Permitted Investments (which
are expected to be TMCC Demand Notes) maturing prior to the relevant Targeted
Maturity Date.
Payments in respect of the 1998-C SUBI Certificate will be allocated
between the Investor Certificates and the Transferor Certificate and paid to
the registered Holder of this Certificate as provided in the Agreement.
Except as otherwise provided in the Agreement, interest payments in
respect of this Certificate shall be made quarterly on the 25th day of March,
June, September and December (or if such day is not a Business Day, the next
succeeding Business Day, each such day a "Certificate Payment Date"),
commencing on March 25, 1999, and through the Class B Targeted Maturity Date
and thereafter, if applicable, monthly on each succeeding Certificate Payment
Date until the Adjusted Class B Certificate Balance has been reduced to zero.
Except to the extent provided otherwise 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. Except as otherwise provided in the Agreement, the
principal of the Class B Certificates shall be distributable on the Class B
Targeted Maturity Date which shall be December 25, 2003 (or if such day is
not a Business Day, on the next succeeding Business Day) and thereafter, if
applicable, monthly on each succeeding Certificate Payment Date until the
Adjusted Class B Certificate Balance has been reduced to zero. In any event,
any remaining unpaid principal of any Class B Certificate shall be due and
payable on May 25, 2006 (or if such day is not a Business Day, on the next
succeeding Business Day).
Distributions on this Class B Certificate will be made by the 1998-C
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
1998-C Securitization Trustee not later
B-2
<PAGE>
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 1998-C 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 1998-C Securitization
Trustee.
It is the intention of the Transferor and the Investor
Certificateholders 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 1998-C
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 of the Transferor and to report the transactions contemplated by
the Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of an Investor Certificate also agrees that it will
not be entitled to any of the tax benefits related to the 1998-C Contracts
and 1998-C Leased Vehicles, including any of the depreciation deductions
resulting therefrom.
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 1998-C Securitization
Trust, then the Holder is deemed to agree (and each Certificate Owner by
virtue of acquiring a beneficial interest herein is deemed to agree) (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 1998-C
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
1998-C Securitization Trustee or any of their respective Affiliates. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the 1998-C SUBI Assets evidenced by the 1998-C 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. 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 of the Titling Trust Assets other than those from
time to time included in the 1998-C SUBI Sub-Trust (except for those
evidenced by the 1998-C SUBI Insurance Certificate) and those proceeds or
assets derived from or earned by such 1998-C SUBI Assets (except for those
evidenced by the 1998-C SUBI Insurance
B-3
<PAGE>
Certificate and the proceeds therefrom). A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
1998-C Securitization Trustee at the offices of Bankers Trust Company
Luxembourg S.A. in Luxembourg (initially at 14 Boulevard F.D. Roosevelt,
L-450 Luxembourg) and at such other places, if any, designated by the 1998-C
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 1998-C Securitization Trustee without
the consent of any Certificateholders. 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 Voting Interest of
all Investor Certificates, voting together as a single class. To be entitled
to vote in respect of an interest in the Class B Certificates, a person shall
be a holder of record of such Class B Certificates as shown on the books of
the Certificate Registrar on the last day of the preceding month, or a person
appointed by an instrument in writing. 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 therein set
forth, Certificates are exchangeable for new Certificates of the same Class,
in authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same or for register of transfer at
the Corporate Trust Office of the 1998-C Securitization Trustee in its
capacity as Certificate Registrar, or at the office of the agent of the
1998-C Securitization Trustee in its capacity as Certificate Registrar, who
shall initially be U.S. Bank National Association, 100 Wall Street, 20th
Floor, New York, New York 10005, or at the appropriate office of any
successor Certificate Registrar, accompanied by a written instrument of
transfer in form satisfactory to the 1998-C 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
Certificates 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 $500,000 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 1998-C 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 1998-C Securitization Trustee, the Certificate Registrar and
any of their respective agents may treat the
B-4
<PAGE>
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 1998-C 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
1998-C 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 1998-C Securitization Trust. The Transferor may at its option purchase
the corpus of the 1998-C Securitization Trust at a price specified in the
Agreement, and such purchase of the 1998-C SUBI and 1998-C SUBI Certificate
and other property of the 1998-C Securitization Trust will effect early
retirement of the Certificates; PROVIDED, HOWEVER, such right of purchase is
exercisable only on the Monthly Allocation Date on or after the Class A-3
Targeted Maturity Date, if either before or after giving effect to any
payments of principal required to be made on such Monthly Allocation Date,
the Investor Balance shall be less than or equal to [$_________________] (ten
percent of the Aggregate Net Investment Value as of the Cutoff Date).
By accepting this Certificate, the Holder hereof covenants and agrees
(and each Certificate Owner is deemed to agree) 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 (or
Certificate Owner) will not institute against, or join any other Person in
instituting against the Transferor, Toyota Motor Credit Corporation, the
1998-C Securitization Trustee, the 1998-C 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 (or any Certificate Owner'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.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the 1998-C 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-5
<PAGE>
IN WITNESS WHEREOF, the 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust and not in its individual capacity has caused
this Class B Certificate to be duly executed.
Dated: ______________, 1998
TOYOTA AUTO LEASE TRUST 1998-C
By: U.S. BANK NATIONAL ASSOCIATION, AS 1998-C
SECURITIZATION TRUSTEE
By:_________________________________________
Authorized Officer
B-6
<PAGE>
Certificate of Authentication
This is one of the Class B Certificates referred to in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
1998-C Securitization Trustee
By:______________________________________________
B-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.
B-8
<PAGE>
EXHIBIT C
TRANSFEROR CERTIFICATE
THIS CERTIFICATE IS NOT TRANSFERABLE.
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 1998-C
AUTO LEASE ASSET BACKED TRANSFEROR CERTIFICATE
Evidencing the entire interest in the distributions allocable to
the Transferor Certificate, as defined below.
This Certificate does not represent an obligation of, or an
interest in, Toyota Leasing, Inc., Toyota Motor Credit Corporation,
the Titling Trustee, the 1998-C Securitization Trustee, 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 1998-C (the "1998-C
Securitization Trust") formed by the Transferor. The 1998-C Securitization
Trust was created pursuant to a 1998-C Securitization Trust Agreement dated
as of December 1, 1998 (the "Agreement"), between the Transferor and U.S.
Bank National Association, a national banking corporation, as trustee (the
"1998-C Securitization 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 1998-C
Auto Lease Asset Backed Transferor Certificate" (the "Transferor
Certificate"). Also issued under the Agreement are Certificates designated
as "Toyota Auto Lease Trust 1998-C Adjustable Rate Auto Lease Asset Backed
Certificates, Class A-1" (the "Class A-1 Certificates"), Certificates
designated as "Toyota Auto Lease Trust 1998-C Adjustable Rate Auto Lease
Asset Backed Certificates, Class A-2" (the "Class A-2 Certificates"),
Certificates designated as "Toyota Auto Lease Trust 1998-C Adjustable Rate
Auto 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 1998-C Adjustable Rate Auto 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
C-1
<PAGE>
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 1998-C Securitization Trust includes, among other
things, the 1998-C SUBI Certificate evidencing beneficial interests in the
assets of the 1998-C SUBI other than the proceeds of the Residual Value
Insurance Policies. The 1998-C SUBI 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 "1998-C
SUBI Portfolio") entered into by various automobile and light duty truck
dealers pursuant to contractual arrangements with the Titling Trust. Toyota
Motor Credit Corporation acts as servicer (in that capacity, the "Servicer")
of the 1998-C SUBI Portfolio. During the Revolving Period, Principal
Collections and amounts applied to reimburse Loss Amounts and Certificate
Principal Loss Amounts allocable to the assets of the 1998-C SUBI represented
by the 1998-C SUBI Certificate generally will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles from among other unallocated
Contracts and Leased Vehicles owned by the Titling Trust. At the time of
reinvestment, such Subsequent Contracts and Subsequent Leased Vehicles will
be allocated to the 1998-C SUBI. Following the Revolving Period, Principal
Collections allocable to the assets of the 1998-C SUBI will be deposited in
the Certificateholders' Account and invested in Permitted Investments (which
are expected to be TMCC Demand Notes) maturing prior to the Targeted Maturity
Date.
Payments in respect of the 1998-C SUBI Certificate 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 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 1998-C Securitization Trustee and the Holder of this
Certificate by acceptance of this Certificate 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 secured indebtedness of the Transferor and to report
the transactions contemplated by the Agreement on all applicable tax returns
in a manner consistent with such treatment.
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 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 1998-C Securitization Trust, then the
Holder hereof, agrees (i) to treat such Certificate, together with the
Investor Certificates, 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 1998-C Securitization Trust to the Transferor.
C-2
<PAGE>
The Certificates do not represent an obligation of, or an interest in,
the Transferor, the Servicer, the Titling Trust, the Titling Trustee, the
1998-C Securitization Trustee or any of their respective affiliates. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the 1998-C SUBI and 1998-C 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. 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 of the Titling Trust Assets other than those from time to
time included in the 1998-C SUBI Sub-Trust (except for those evidenced by the
1998-C SUBI Insurance Certificate) and those proceeds or assets derived from
or earned by such 1998-C SUBI Assets (except for those evidenced by the
1998-C SUBI Insurance Certificate and the proceeds therefrom). A copy of the
Agreement may be examined during normal business hours at the Corporate Trust
Office of the 1998-C Securitization Trustee, and at such other places, if
any, designated by the 1998-C 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 1998-C Securitization Trustee without
the consent of any Certificateholders. In certain limited circumstances, the
Agreement may only be amended with the consent of the Investor
Certificatesholders evidencing not less than 51% of the aggregate Voting
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.
The obligations and responsibilities created by the Agreement and the
1998-C 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 1998-C Securitization Trust. The Transferor may at its option purchase
the corpus of the 1998-C Securitization Trust at a price specified in the
Agreement, and such purchase of the 1998-C SUBI and 1998-C SUBI Certificate
and other property of the 1998-C Securitization Trust will effect early
retirement of the Certificates; provided, however, such right of purchase is
exercisable only on the Monthly Allocation Date on or after the Class A-3
Targeted Maturity Date, if either before or after giving effect to any
payment required to be made on such Monthly Allocation Date, the Certificate
Balance shall be less than or equal to [$_________________] (ten percent of
the Aggregate Net Investment Value as of the Cutoff Date).
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the 1998-C 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-3
<PAGE>
IN WITNESS WHEREOF, the 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust and not in its individual capacity has caused
this Transferor Certificate to be duly executed.
Dated: [_______________], 1998
TOYOTA AUTO LEASE TRUST 1998-C
By: U.S. BANK NATIONAL ASSOCIATION,
as 1998-C Securitization Trustee
__________________________________________
Authorized Officer
Certificate of Authentication
This is the Transferor Certificate referred to in the
within-mentioned Agreement.
By: U.S. BANK NATIONAL ASSOCIATION,
as 1998-C Securitization Trustee
__________________________________________
Authorized Officer
C-4
<PAGE>
Certificate of Authentication
This is the Transferor Certificate referred to in the within-mentioned
Agreement.
U.S. Bank National Association, as
1998-C Securitization Trustee
By:
--------------------------------------------
<PAGE>
EXHIBIT D
FORM OF RULE 144A TRANSFEREE CERTIFICATE
Toyota Motor Credit Corporation
Toyota Leasing, Inc.,
c/o Toyota Motor Credit Corporation
19001 S. Western Avenue
Torrance, California 90509
[ ]
Re: Toyota Auto Lease Trust 1998-C; ____% Auto
LEASE ASSET BACKED CERTIFICATES CLASS B
Ladies and Gentlemen:
___________ (the "Purchaser") is today purchasing in a private resale
from ___________, (the "Seller") $_____ aggregate principal amount of Auto Lease
Asset-Backed Certificates, Class B (the "Certificates"), issued pursuant to a
securitization trust agreement, dated as of [ ] (the
"Agreement") between Toyota Leasing, Inc. ("TLI") and [ ]
(the "[ ]"), as trustee (the "Trustee"). The Certificates are securities
issued by and evidencing interests in the assets of Toyota Auto Lease Trust
1998-C (the "Trust").
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 law of any state or foreign jurisdiction.
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 or foreign securities laws
(subject to the understanding that disposition of the Purchaser's property
will at all times be and remain
D-1
<PAGE>
within its control). The Purchaser is not an affiliate of TLI, the Trustee 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.
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 one 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 by the Purchaser only (i) to a person who the
Purchaser 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 and foreign
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 TLI or the Trust 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 Trust or TLI 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.
D-2
<PAGE>
7. The Purchaser understands that there is no market, nor is
there any assurance that a market will develop, for the Certificates and that
TLI and the Trust have no obligation to make or facilitate any such market
(or to otherwise repurchase the Certificates from the Purchaser) under any
circumstances.
8. 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 TLI or its counsel with
respect to tax matters.
9. The Purchaser has reviewed the Private Placement Memorandum
with respect to the Certificates dated [ ], 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 obtain additional information necessary to verify the
accuracy and completeness of any information furnished to the Purchaser or to
which the Purchaser had access.
10. The Purchaser understands that the Certificates will bear
legends substantially as set forth in the form of Certificate included as
Exhibit B to the Agreement.
11. The Purchaser hereby further agrees to be bound by all the
terms and conditions of the Certificates as provided in the Agreement.
12. The Purchaser selects one of the following:
__________ (a) the Purchaser is not an employee benefit plan, trust or
account subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or subject to Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), or a governmental plan defined in Section
3(32) of ERISA subject to any federal state or local law which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code ("Similar Law")
(each, a "Benefit Plan") and is not an entity, including an insurance company
separate account or an insurance company general account if the assets in any
such accounts constitute "Plan Assets" for
D-3
<PAGE>
purposes of regulation Section 2510.3-101 of ERISA, whose underlying assets
include Benefit Plan assets by reason of a Benefit Plan's investment in the
entity; or
(b) the Purchaser is delivering herewith an Opinion of Counsel
addressed to the Trustee, the Seller and the Servicer to the effect that the
purchase or holding of such Certificate will not constitute or result in the
assets of the trust being deemed to be "Plan Assets" subject to the fiduciary
responsibility provisions of ERISA or prohibited transactions provisions of
Section 4975 of the Code or Similar Law, will not constitute or result in a
prohibited transaction within the meaning of Section 406 or Section 407 of ERISA
or Section 4975 of the Code or Similar Law, and will not subject the Trustee,
the Seller or the Servicer to any obligation or liability (including obligations
or liabilities under ERISA, Section 4975 of the Code or Similar Law) in addition
to those undertaken in the Agreement.
13. 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.
14. If the Purchaser sells any of the Certificates, the Purchaser
will obtain from any subsequent purchaser of the Certificates 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.
D-4
<PAGE>
The representations and warranties contained herein shall be binding
upon the heirs, executors, administrators and other successors of the
undersigned. If there is more than one signatory hereto, the obligations,
representations, warranties and agreements of the undersigned are made
jointly and severally.
Executed at ___________, this ___ day of _______
199__
--------------------------------
Purchaser's Name (Print)
By
------------------------------
Signature
Its
-----------------------------
--------------------------------
Address of Purchaser
--------------------------------
Purchaser's Taxpayer
Identification Number
D-5
<PAGE>
APPENDIX 1 TO EXHIBIT D
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
(Buyers other than Registered Investment Companies)
Toyota Motor Credit Corporation
Toyota Leasing, Inc.,
c/o Toyota Motor Credit Corporation
19001 S. Western Avenue
Torrance, California 90509
[ ]
Re: Toyota Auto Lease Trust 1998-C; % Auto
LEASE ASSET BACKED CERTIFICATES, CLASS B
Name of Buyer: ______________________________ ("Buyer")
Ladies and Gentlemen:
I hereby certify that, as indicated below, I am the President, Chief
Executive/Financial Officer, Senior Vice President or other executive officer of
the Buyer.
In connection with purchases by Buyer from time to time, I hereby
certify to you and, if you act as broker for one or more customers, to such
customers, that Buyer 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 Buyer owned and/or invested on a discretionary basis
$______(1) in securities (except for the excluded securities referred to
below) as of the end of Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A) and (ii) Buyer satisfies the
criteria in the category marked below.
- ------------------------
(1) 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-6
<PAGE>
_______ CORPORATION. ETC. Buyer 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. Buyer (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.
_______ SAVINGS AND LOAN. Buyer (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.
_______ BROKER-DEALER. Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as
amended (the "1934 Act").
_______ INSURANCE COMPANY. Buyer 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. Buyer 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. Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income
Security Act of 1974.
D-7
<PAGE>
_______ INVESTMENT ADVISOR. Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
The term "SECURITIES" as used herein does not include (i) securities
of issuers that are affiliated with Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Purchaser, if Buyer 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.
For purposes of determining the aggregate of securities owned and/or
invested on a discretionary basis by Buyer, Buyer used the cost of such
securities to Buyer and did not include any of the securities referred to in
the preceding paragraph.
Further, in determining such aggregate amount, Buyer may have included
securities owned by subsidiaries of Buyer, but only if such subsidiaries are
consolidated with Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under Buyer's direction. However, such securities
were not included if Buyer is a majority owned, consolidated subsidiary of
another enterprise and Buyer is not itself a reporting company under the 1934
Act.
Buyer acknowledges that it is familiar with Rule 144A and understands
that you and your customers (if you act as a broker for one or more
customers) are and will continue to rely on the statements made herein
because one or more sales by you for your own account or your customer's
account to Buyer may be in reliance on Rule 144A.
Will Buyer be purchasing Rule 144A securities only for Buyer's own
account?
--- ---
Yes No
If the answer to this question is "no", Buyer agrees that, in
connection with any purchase of securities sold to Buyer for the account of a
third party (including any separate account) in reliance on Rule 144A, Buyer
will only repurchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
Buyer agrees that Buyer will not purchase securities for a third party unless
Buyer has obtained a current
D-8
<PAGE>
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently
meets the definition of "qualified institutional buyer" set forth in Rule
144A.
Buyer agrees to notify you of any changes in the information and
conclusions herein. Until such notice is given, Buyer's purchase of
securities from you, or through you from your customers, will constitute a
reaffirmation of the foregoing certifications and acknowledgements as of the
date of such purchase.
Very truly yours,
Date:
-----------------------
---------------------------------
Name of Buyer (Print)
By:
------------------------------
Name:
Title:
D-9
<PAGE>
ANNEX 2 TO EXHIBIT D
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
(Buyers that are Registered Investment Companies)
Toyota Motor Credit Corporation [ ]
Toyota Leasing, Inc.
c/o Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
Re: Toyota Auto Lease Trust 1998-C;
Auto Lease Asset-Backed Certificates, Class B
Name of Buyer: _________________________("Buyer")
Name of Investment Adviser: _________________________("Adviser")
I hereby certify that, as indicated below, I am the President, Chief
Executive/Financial Officer or Senior Vice President of Buyer or, if Buyer is
a "qualified institutional buyer" as defined in Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended, because Buyer is part of a Family of
Investment Companies (as defined below), of Adviser.
In connection with purchases by Buyer, from time to time, I hereby
certify to you and, if you act as broker for one or more customers, to such
customers, that Buyer is a "qualified institutional buyer" as defined in Rule
144A because (i) Buyer is an investment company registered under the Investment
Company Act of 1940, as amended and (ii) as marked below, Buyer alone, or
Buyer'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 Buyer's most recent fiscal year. (2)
- -------------------------
(2) 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-10
<PAGE>
_______ Buyer owned $_________ in securities (other than the
excluded securities referred to below) as of the end of
Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
_______ Buyer 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 Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
For purposes of determining the amount of securities owned by Buyer or
Buyer's Family of Investment Companies, I used the cost of such securities and
did not include any of the securities referred to below in the second succeeding
paragraph.
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).
The term "SECURITIES" as used herein does not include (i) securities of
issuers that are affiliated with Buyer or are part of Buyer'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.
On behalf of Buyer, I acknowledge that Buyer 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 Buyer by you for your
account or your customer's account will be made in reliance on Rule 144A. In
addition, on behalf of Buyer, I agree that, in connection with any purchase of
securities sold by or through you in reliance on Rule 144A, Buyer will only
purchase for Buyer's own account.
D-11
<PAGE>
Finally, on behalf of Buyer or Adviser (as appropriate), I agree to
notify you of any changes in the information and conclusions herein. Until
such notice is given, Buyer's purchase from time to time of securities from
you, or, through you from your customers, will constitute a reaffirmation of
foregoing certificates and acknowledgement by me as of the date of such
purchase.
Date:
------------------
Very truly yours,
-----------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
On behalf of
-----------------------------------------
Name of Buyer:
or
-----------------------------------------
Name of Adviser:
D-12
<PAGE>
EXHIBIT E
FORM OF NON-RULE 144A REPRESENTATION LETTER
Toyota Motor Credit Corporation
Toyota Leasing, Inc.
c/o Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90509
[ ]
[ ]
Re: Toyota Auto Lease Trust 1998-C
[ ]% 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 by institutions which are "Accredited Investors" under Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities
Act"). 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 [ ] as trustee (the "Trustee") of the Toyota Auto
Lease Trust 1998-C (the "Trust"), Toyota Leasing, Inc. (the "Transferor") and
[ ] to determine its suitability as a purchaser
of Certificates and to determine that the private transfer exemption from
registration relied upon by the Transferor under the Securities Act is
available to it.
E-1
<PAGE>
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 laws 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 Act and other applicable state securities laws is available,
that neither the Transferor nor the 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 [ ] (the "Agreement"), between
the Transferor and the 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 "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) 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 risk of its investment in the Certificates and is able to bear the
economic risks of such investment. The Purchaser has been given such
information concerning the Certificates, Toyota Motor Credit Corporation and
the Transferor as it has requested.
4. The Purchaser is acquiring the Certificates as principal for
its own account 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 Trust under the Investment Company
E-2
<PAGE>
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 [ ], including the
Prospectus attached thereto as Exhibit A (the "Private Placement Memorandum")
and has-had the opportunity to ask questions and receive answers concerning
the terms and conditions of the transactions 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.
7. Either (a) Purchaser is not an employee benefit plan, trust or
account subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or subject to Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), or a governmental plan defined
in section 3(32) of ERISA subject to any federal, state or local law which
is, to a material extent, similar to the foregoing provisions of ERISA or the
Code ("Similar Law") (each, a "Benefit Plan") and is not an entity, including
an insurance company separate account or an insurance company general account
if the assets in any such accounts constitute "plan assets" for purposes of
regulation section 2510.3-101 of ERISA, whose underlying assets include
Benefit Plan assets by reason of a Benefit Plan's investment in the entity;
or (b) Purchaser is delivering herewith an opinion of counsel addressed to
the Trustee, the Transferor and the Servicer to the effect that the purchase
or holding of such Certificate will not constitute or result in the assets of
the trust being deemed to be "plan assets" subject to the fiduciary
responsibility provisions of ERISA or prohibited transactions provisions of
Section 4975 of the Code or Similar Law, will not constitute or result in a
prohibited transaction within the meaning of Section 406 or Section 407 of
ERISA or Section 4975 of the Code or Similar Law, and will not subject the
Trustee, the Transferor or the Servicer to any obligation or liability
(including obligations or liabilities under ERISA, Section 4975 of the Code
or Similar Law) in addition to those undertaken in the Agreement.
8. The Purchaser understands that the Certificates will bear a
legend substantially as set forth in the form of Certificate included as an
Exhibit to the Agreement.
E-3
<PAGE>
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 represents, on behalf of itself that if the
Purchaser is a partnership, grantor trust or S corporation for federal income
tax purposes (a "Flow-Through Entity"), any Class B Certificates owned by or
on behalf of 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.
12. 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 I through 11
and in this paragraph 12.
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 continued herein shall be binding
upon the successors of the undersigned.
Executed at _________, this ____ day of ________, 199__.
E-4
<PAGE>
---------------------------------------
Purchaser's Name (Print)
By:
------------------------------------
Name:
Title:
---------------------------------------
Address of Purchaser
---------------------------------------
Purchaser's Taxpayer
Identification Number
E-5
<PAGE>
Exhibit 5.1
November 17, 1998
Toyota Motor Credit Corporation
Toyota Leasing, Inc.
Toyota Auto Lease Trust 1998-C
Toyota Lease Trust
19001 South Western Avenue
Torrance, California 90509
Re: Toyota Motor Credit Corporation
Toyota Leasing, Inc.
Toyota Auto Lease Trust 1998-C
Toyota Lease Trust
Registration Statement on Form S-3 and Form S-1
Registration No. 333-65067
Ladies and Gentlemen:
We have acted as special counsel to Toyota Motor Credit Corporation
("TMCC"), a California corporation, Toyota Leasing, Inc. ("TLI"), a California
corporation, Toyota Lease Trust ("TLT"), a Delaware business trust, and Toyota
Auto Lease Trust 1998-C (the "Trust"), in connection with (i) the authorization
and proposed issuance after the date hereof of $735,000,000 aggregate principal
amount of asset-backed certificates (the "Certificates") to be offered pursuant
to a registration statement on Form S-3 and Form S-1 (such registration
statement as amended, the "Registration Statement") relating to the
Certificates, and issued under and pursuant to the conditions of a a
securitization trust agreement ("Securitization Trust Agreement") among TLI, as
transferor (the "Transferor") , TMCC as servicer (the "Servicer") and U.S. Bank
National Association as trustee (the "Trustee"), (ii) the issuance by the
Titling Trust of a special unit of beneficial interest (the "SUBI ") evidencing
beneficial interests in certain specified assets of the Titling Trust pursuant
to the 1998-C SUBI Supplement to the Amended and Restated Trust and Servicing
Agreement dated as of December 1, 1998, among TMCC, U.S. Bank National
Association as Titling Trustee (the "Titling Trustee") and U.S. Bank National
Association as Trust Agent (the "SUBI Supplement") and (iii) the issuance by
TMCC of the TMCC Demand Notes (the "TMCC Demand Notes") pursuant to the
Indenture (the "Indenture") dated as of December 1, 1998, between TMCC and U.S.
Bank National Association, as indenture trustee. The Registration Statement has
been filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "1933 Act"), and the rules and regulations promulgated
thereunder. As set forth in the Registration Statement, the Certificates, SUBI
and TMCC Demand Notes will be issued under and pursuant to the conditions of the
Securitization Trust Agreement, SUBI Supplement and the Indenture, as the case
may be.
We have examined originals or copies, certified or otherwise identified to
our satisfaction of the organizational documents of TMCC, TLI, TLT and the
Trust, the form of Securitization Trust Agreement included as an exhibit to the
Registration Statement, the form of Certificates
<PAGE>
included in such form of Securitization Trust Agreement, the prospectus (the
"Prospectus"), the form of SUBI Supplement included as an exhibit to the
Registration Statement, the form of Indenture included as an exhibit to the
Registration Statement (collectively "the Basic Agreements") and such other
records, documents and statutes as we have deemed necessary for the purpose
of this opinion.
Based upon the foregoing, we are of the opinion that:
1. Each Basic Agreement to which TMCC or TLI is a party constitutes a
legally valid and binding obligation of TMCC and/or TLI, as applicable,
enforceable against TMCC and/or TLI in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and by general principles of equity,
including without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding at equity
or at law.
2. When the Certificates have been duly authorized by all necessary
action on the part of the Transferor (subject to the terms thereof being
otherwise in compliance with applicable law at such time), duly executed and
authenticated by the Trustee in accordance with the terms of the Securitization
Trust Agreement and issued and delivered against payment therefor as
contemplated in the Registration Statement, the Certificates will be validly
issued, fully paid and nonassessable and the holders thereof will be entitled to
the benefits of the Securitization Trust Agreement, enforceable against the
Transferor, in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws), and general principles of equity, including without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunction relief,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
3. When the creation of SUBI Assets and issuance of the certificates
evidencing the SUBI have been duly authorized by all necessary corporate action
on the part of TMCC and, when the certificates evidencing the SUBI have been
executed and authenticated by the Titling Trustee as specified in the SUBI
Supplement and delivered against payment of the consideration therefor as
contemplated in the Registration Statement, the SUBI will be validly issued,
fully paid and non-assessable and will constitute legally valid and binding
obligations of the Titling Trustee, enforceable in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws), and general
principles of equity, including without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunction relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
<PAGE>
4. The TMCC Demand Notes (in the form of specimens examined by us) are in
forms permitted by the Indenture, have been duly authorized by all necessary
corporate action on the part of TMCC for issuance and, when completed, executed
and authenticated as specified in the Indenture and delivered against payment of
the consideration therefor as contemplated in the Registration Statement, will
constitute legally valid and binding obligations of TMCC, enforceable against
TMCC in accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally (including, without limitation, fraudulent
conveyance laws), and general principles of equity, including without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunction relief,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and the TMCC Demand Notes will be entitled to the benefits of
the Indenture.
The opinions expressed above are limited to the federal laws of the United
States of America and the laws of the States of California and Delaware
(excluding choice of law principles therein). We express no opinion herein as
to the laws of any other jurisdiction and no opinion regarding the statutes,
administrative decisions, rules, regulations or requirements of any county,
municipality, subdivision or local authority of any jurisdiction.
We consent to the filing of this letter as an exhibit to the Registration
Statement and to the reference to this firm under the heading "Legal Matters" in
the Prospectus, without admitting that we are "experts" within the meaning of
the 1933 Act or the rules or regulations of the Securities and Exchange
Commission thereunder, with respect to any part of the Registration Statement,
including this exhibit.
Respectfully submitted,
/s/ O'MELVENY & MYERS LLP
<PAGE>
Exhibit 8.1
November 17, 1998
Toyota Motor Credit Corporation
Toyota Leasing, Inc.
Toyota Auto Lease Trust 1998-C
Toyota Lease Trust
19001 South Western Avenue
Torrance, California 90509
Re: Toyota Motor Credit Corporation
Toyota Leasing, Inc.
Toyota Auto Lease Trust 1998-C
Toyota Lease Trust
Registration Statement on Form S-3 and Form S-1
Registration No. 333-65067
Ladies and Gentlemen:
We have acted as special tax counsel to Toyota Motor Credit Corporation
("TMCC"), a California corporation, Toyota Leasing, Inc. ("TLI"), a California
corporation, Toyota Lease Trust ("TLT"), a Delaware business trust, and Toyota
Auto Lease Trust 1998-C ("Trust"), in connection with the authorization and
proposed issuance from after the date hereof of $735,000,000 aggregate
principal amount of asset-backed certificates (the "Certificates") to be offered
pursuant to a registration statement on Form S-3 and Form S-1 (such registration
statement as amended, the "Registration Statement") relating to the
Certificates. The Registration Statement has been filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "1933
Act"), and the rules and regulations promulgated thereunder. As set forth in
the Registration Statement, the Certificates will be issued under and pursuant
to the conditions of a securitization trust agreement ("Securitization Trust
Agreement") among TLI as transferor (the "Transferors"), TLI, TMCC, as servicer
(in such capacity, the "Servicer"), and U.S. Bank National Association as
trustee (the "Trustee").
In connection with rendering this opinion letter, we have examined the
Prospectus contained in the Registration Statement (the "Prospectus"), and such
other documents, records and instruments as we have deemed necessary. As to
matters of fact, we have examined and relied upon representations or
certifications of officers of the Transferor or public officials. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural person and the
conformity to the originals of all documents.
<PAGE>
Page 2
In arriving at the opinion expressed below, we have assumed that (i) the
Securitization Trust Agreement will be duly and validly authorized by all
necessary corporate action on the part of the Transferor, the Servicer, the
Trustee and any other party thereto, (ii) the Securitization Trust Agreement
will be duly executed and delivered by the Transferor, the Servicer, the
Trustee, and any other party thereto substantially in the form filed as an
exhibit to the Registration Statement, that the Certificates will be duly
executed and delivered substantially in the forms set forth in the form of
Securitization Trust Agreement incorporated by reference as an exhibit to the
Registration Statement, and (iii) the Certificates will be sold in the manner
described in the Registration Statement.
In rendering this opinion letter, we express no opinion as to the laws of
any jurisdiction other than the United States Internal Revenue Code of 1986, as
amended, (the "Code") nor do we express any opinion, either implicitly or
otherwise, on any issue not expressly addressed below. In rendering this
opinion letter, we have not passed upon and do not pass upon the application of
"doing business" or the securities laws of any jurisdiction.
As special tax counsel to TMCC, TLI, TLT and the Trust, we have advised
TMCC, TLI, TLT and the Trust with respect to certain federal income tax aspects
of the proposed issuance of the Certificates after the date hereof as described
in the Registration Statement. Such advice has formed the basis for the
description of selected federal income tax consequences for holders of the
Certificates that appears under the heading "Material Federal Income Tax
Consequences" in the Prospectus. Such description does not purport to discuss
all possible federal income tax ramifications of the proposed issuance of the
Certificates, but with respect to those federal income tax consequences which
are discussed, in our opinion, the description is accurate.
This opinion set forth above is based on relevant provisions of the Code,
Treasury Regulations thereunder, and interpretations of the foregoing as
expressed in court decisions, administrative determinations, and legislative
history as of the date hereof. These provisions and interpretations are subject
to change, which may or may not be retroactive in effect, that might result in
modifications of our opinion.
We consent to the filing of this letter as an exhibit to the Registration
Statement and to the reference to this firm under the heading "Material Federal
Income Tax Consequences" in the Prospectus, without admitting that we are
"experts" within the meaning of the 1933 Act or the rules or regulations of the
Securities and Exchange Commission thereunder, with respect to any part of the
Registration Statement, including this exhibit.
Respectfully submitted,
/s/ O'MELVENY & MYERS LLP
<PAGE>
- --------------------------------------------------------------------------------
TOYOTA LEASE TRUST
(a Delaware Business Trust)
---------------
AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT
Among
TOYOTA MOTOR CREDIT CORPORATION,
TMTT, INC.
and
(For certain limited purposes only)
FIRST BANK NATIONAL ASSOCIATION
---------------
Dated as of October 1, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CREATION OF TITLING TRUST; GRANTOR'S INTEREST
SECTION 2.01 Creation of Titling Trust. . . . . . . . . . . . . . . . . . . . 1
SECTION 2.02 Business Trust . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.03 Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.04 Purposes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.05 Document Execution and Performance.. . . . . . . . . . . . . . . 3
SECTION 2.06 Additional Beneficiaries.. . . . . . . . . . . . . . . . . . . . 4
SECTION 2.07 Tax Reporting and Characterization.. . . . . . . . . . . . . . . 4
ARTICLE III
BENEFICIAL INTERESTS IN THE TITLING TRUST
SECTION 3.01 Sub-Trusts: Creation of UTI and SUBIs. . . . . . . . . . . . . . 4
SECTION 3.02 Beneficiary Liabilities. . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03 Insurance Policies.. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.04 Allocation of Liabilities and Indemnification. . . . . . . . . . 8
ARTICLE IV
THE SERVICER
SECTION 4.01 Duties of the Servicer . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02 Liability of Servicer; Indemnities.. . . . . . . . . . . . . . .10
SECTION 4.03 Merger, Consolidation, or Assumption of the Obligations
of, the Servicer . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.04 Limitation on Liability of Servicer and Others.. . . . . . . . .11
SECTION 4.05 Servicer Not to Resign; Delegation of Duties.. . . . . . . . . .12
SECTION 4.06 Servicing Compensation . . . . . . . . . . . . . . . . . . . . .13
SECTION 4.07 Powers of Attorney.. . . . . . . . . . . . . . . . . . . . . . .13
SECTION 4.08 Protection of Title to Titling Trust . . . . . . . . . . . . . .14
ARTICLE V
PAYMENTS
SECTION 5.01 Payments from Titling Trust Assets Only. . . . . . . . . . . . .14
SECTION 5.02 Manner of Payment. . . . . . . . . . . . . . . . . . . . . . . .14
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ARTICLE VI
THE TITLING TRUSTEE
SECTION 6.01 Duties and Powers of Titling Trustee.. . . . . . . . . . . . . .15
SECTION 6.02 Duty of Care.. . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 6.03 Certain Matters Affecting the Titling Trustee. . . . . . . . . .17
SECTION 6.04 Titling Trustee Not Liable for Certificates or Losses. . . . . .19
SECTION 6.05 Indemnity of Titling Trustee and Trust Agents. . . . . . . . . .20
SECTION 6.06 Titling Trustee's Right Not to Act.. . . . . . . . . . . . . . .21
SECTION 6.07 Qualification of Titling Trustee.. . . . . . . . . . . . . . . .21
SECTION 6.08 Resignation or Removal of Titling Trustee. . . . . . . . . . . .21
SECTION 6.09 Successor Titling Trustee. . . . . . . . . . . . . . . . . . . .22
SECTION 6.10 Merger or Consolidation of Titling Trustee.. . . . . . . . . . .22
SECTION 6.11 Appointment of Co-Titling Trustee, Separate Titling
Trustee, or Nominee.. . . . . . . . . . . . . . . . . . . . . .23
SECTION 6.12 Representations, Warranties and Covenants of Titling
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
SECTION 6.13 Titling Trustee's Fees and Expenses. . . . . . . . . . . . . . .26
SECTION 6.14 No Petition. . . . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 6.15 Stock of TMTT, Inc.. . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE VII
ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS
SECTION 7.01 Accounts.. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 7.02 Relationship to Securitized Financings.. . . . . . . . . . . . .30
SECTION 7.03 SUBI Lease Funding Accounts. . . . . . . . . . . . . . . . . . .30
SECTION 7.04 Rebalancing After Third Party Claim. . . . . . . . . . . . . . .31
ARTICLE VIII
TERMINATION
SECTION 8.01 Termination of the Titling Trust . . . . . . . . . . . . . . . .31
SECTION 8.02 Termination at the Option of Beneficiary . . . . . . . . . . . .32
SECTION 8.03 Titling Trustee Actions Upon Termination . . . . . . . . . . . .32
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.01 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 9.02 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 9.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 9.04 Severability of Provisions.. . . . . . . . . . . . . . . . . . .33
SECTION 9.05 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 9.06 Successors and Assigns . . . . . . . . . . . . . . . . . . . . .33
SECTION 9.07 Table of Contents and Headings . . . . . . . . . . . . . . . . .33
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A -- Form of UTI Supplement, including Form of UTI
Certificate A-1
EXHIBIT B -- Form of SUBI Supplement, including Form of SUBI
Certificate B-1
</TABLE>
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AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT, dated as of October 1,
1996 among TOYOTA MOTOR CREDIT CORPORATION, a California corporation (as
grantor, initial beneficiary and servicer) and TMTT, INC., a Delaware
corporation, as Titling Trustee, and, for the limited purposes set forth herein,
FIRST BANK NATIONAL ASSOCIATION, a national banking association, as Trust Agent,
amending and restating in its entirety the Trust and Servicing Agreement dated
as of October 1, 1996 among the same parties, and herein referred to as the
"Titling Trust Agreement" or this "Agreement".
IN CONSIDERATION of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. For all purposes of this Titling Trust
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, capitalized terms used and not otherwise defined herein
shall have the meanings ascribed thereto in the Annex of Definitions attached
hereto for all purposes of this Titling Trust Agreement. In the event of any
conflict between a definition set forth herein and that set forth in the Annex
of Definitions, that set forth herein shall prevail. All terms used in this
Titling Trust Agreement include, as appropriate, all genders and the plural as
well as the singular. All references such as "herein", "hereof" and the like
shall refer to this Titling Trust Agreement as a whole and not to any particular
article or section within this Titling Trust Agreement. All references such as
"includes" and variations thereon shall mean "includes without limitation" and
references to "or" shall mean "and/or". Any reference to the "Titling Trustee,
acting on behalf of the Titling Trust", or words of similar import, shall be
deemed to mean the Titling Trustee, acting on behalf of Toyota Lease Trust and
all beneficiaries thereof.
ARTICLE II
CREATION OF TITLING TRUST; GRANTOR'S INTEREST
Section 2.01 CREATION OF TITLING TRUST. There is hereby formed in
accordance with the provisions of the Delaware Act, a Delaware business trust to
be known as the Toyota Lease Trust. The Titling Trustee is hereby authorized
and vested with the power and authority to make and execute contracts,
instruments, certificates, agreements and other writings on behalf of the
Titling Trust as set forth herein and to sue and be sued on behalf of the
Titling Trust.
The Titling Trustee does hereby accept and agree to hold in trust, for the
benefit of the UTI Beneficiary and such other Persons as may become
Beneficiaries hereunder from time to time, all Titling Trust Assets conveyed or
to be conveyed pursuant to Section 3.01, and all monies and proceeds that may be
received thereunder, subject to the terms of this Agreement.
SECTION 2.02 BUSINESS TRUST. It is the intention of the parties hereto
that the Titling Trust be a business trust under the Delaware Act and that this
Agreement shall constitute the
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governing instrument of the Titling Trust. Effective as of the date hereof, the
Titling Trustee shall have all rights, powers and duties set forth herein and in
the Delaware Act with respect to accomplishing the purposes of the Titling
Trust. At the direction of the Grantor, the Titling Trustee shall file or cause
to be filed a certificate of trust for the Titling Trust pursuant to the
Delaware Act and such amendments thereto as shall be necessary or appropriate to
satisfy the purposes of this agreement and as shall be consistent with the
provisions hereof.
SECTION 2.03 OFFICES. The principal place of business of the Titling
Trust for purposes of Delaware law shall be in care of the Delaware Trustee as
identified in the Co-Trustee Agreement. The Titling Trust may establish
additional offices located at such place or places inside or outside of the
State of Delaware as the Titling Trustee may designate from time to time in
written notice to each Beneficiary and the Servicer. Initially, the Titling
Trust shall establish one such additional office at offices of Toyota Motor
Credit Corporation set forth in Section 9.03.
SECTION 2.04 PURPOSES.
(a) The purposes of the Titling Trust are to: (i) take assignments and
conveyances of, hold in trust and release its ownership interest in the Titling
Trust Assets as nominee holder of legal title and for the benefit of, and at the
direction of, the Beneficiaries; (ii) engage in any of the other activities
described or authorized in this Agreement, any UTI Supplement or SUBI
Supplement, or in any amendment to this Agreement or any UTI Supplement or SUBI
Supplement; and (iii) engage in any and all activities that are necessary or
appropriate to accomplish the foregoing or that are incidental thereto or
connected therewith. The Titling Trust shall not engage in any activity other
than in connection with the foregoing or other than as required or authorized by
applicable law or (subject to the terms of this Agreement) the documents
relating to a Securitized Financing.
In consideration of the receipt of beneficial interests in the Titling
Trust described in Article III, the Grantor shall from time to time assign,
transfer, contribute or convey, or cause to be assigned, transferred,
contributed or conveyed, the Titling Trust Assets to the Titling Trust. The
Titling Trust, and the Titling Trustee on behalf of the Titling Trust, shall
hold in trust all legal rights and interests in the Titling Trust Assets for the
benefit of the Beneficiaries.
The UTI Beneficiary may from time to time designate the Titling Trust or
the Titling Trustee, on behalf of the Titling Trust, as the nominee holder of
legal title to Contracts that are Eligible Contracts, the related Leased
Vehicles and other Titling Trust Assets. In connection therewith, such Leased
Vehicles will be titled in the name of the Titling Trust or the Titling Trustee,
on behalf of the Titling Trust, and the Titling Trustee will accept such
designation and, subject to the other terms of this Agreement, will permit the
related Certificates of Title to be titled in the name of the Titling Trust or
the Titling Trustee, on behalf of the Titling Trust. Legal title to all Titling
Trust Assets shall be vested in the Titling Trust or the Titling Trustee, on
behalf of the Titling Trust, as a separate legal entity except to the extent
otherwise specifically provided herein or in any other document relating to a
Securitized Financing or where applicable state law requires any Titling Trust
Asset to be vested otherwise, in which case the Titling
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Trustee will, at the direction of the UTI Beneficiary or the Servicer, cause
legal title to be held as required thereby.
(b) The Titling Trustee hereby accepts and agrees to hold in trust all
Titling Trust Assets conveyed to it hereunder, for the use and benefit of, and
as nominee holder of legal title for, the Beneficiaries and any successors and
assigns as may be designated pursuant to the terms hereof or as may otherwise
succeed to the rights of a Beneficiary hereunder. The Servicer may appoint one
or more nominees to hold title to some or all of the Titling Trust Assets in the
name of such nominee title holder for the sole and exclusive benefit of the
Titling Trust and, upon the appointment of such nominee title holder(s), the
Titling Trustee will transfer title to all or such portion of the Titling Trust
Assets as directed by the Servicer.
SECTION 2.05 DOCUMENT EXECUTION AND PERFORMANCE. Each Beneficiary hereby
authorizes and directs the Titling Trustee, and the Titling Trustee hereby
agrees to: (i) at the request of a Beneficiary or the Servicer, execute and
deliver all agreements, instruments or documents necessary or advisable to
accept, or cause the Titling Trust to accept, the designation as nominee holder
of legal title to Contracts, Leased Vehicles and other Titling Trust Assets as
described herein and cause the related Certificates of Title to be titled in the
name of the Titling Trust or the Titling Trustee, on behalf of the Titling
Trust; (ii) take action that is required to be taken by the Titling Trustee as
specified in the documents relating to a Securitized Financing or at the
direction of the relevant Beneficiary in accordance with applicable law;
(iii) exercise its rights and perform its duties as Titling Trustee as specified
in the documents relating to a Securitized Financing; (iv) at the direction of a
Beneficiary (a) release, discharge, sell, assign, transfer, pledge, convey or
otherwise dispose of any right, title or interest in and to any portion of the
Titling Trust Assets comprising the related Sub-Trust (or to cause the Titling
Trust to take any such action), (b) amend or revoke the terms hereof with
respect to all or any portion of the related Titling Trust Assets or affecting
any other provision hereof; and (v) appoint the Servicer as the attorney in fact
for the Titling Trust as contemplated by this Titling Trust Agreement and the
related SUBI Servicing Supplement and direct the Servicer to perform such
administrative duties on behalf of the Titling Trust as are set forth herein.
SECTION 2.06 ADDITIONAL BENEFICIARIES. Notwithstanding any other
provision of this Agreement, the UTI Beneficiary and the Servicer may in writing
designate additional Beneficiaries who shall have the right to designate the
Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as nominee
holder of legal title to Contracts, Leased Vehicles and other Titling Trust
Assets and cause the related Certificates of Title to be titled in the name of
the Titling Trust or the Titling Trustee, on behalf of the Titling Trust. No
Person shall become a Beneficiary until it has delivered to the parties hereto
an agreement in form and substance satisfactory to the Titling Trustee and the
Servicer pursuant to which it agrees to become a party to this Agreement.
SECTION 2.07 TAX REPORTING AND CHARACTERIZATION. Consistent with the
treatment of the Titling Trust for tax purposes as a mere nominee holder of
legal title of the Titling Trust Assets with respect to each Sub-Trust, unless
otherwise required by appropriate taxing authorities, the Titling Trust will not
file or cause to be filed any annual or other tax returns with respect to the
Titling Trust. Consistent with the treatment of the UTI Sub-Trust as a mere
agent
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of the UTI Beneficiary for tax purposes, unless otherwise required by
appropriate taxing authorities, the UTI Beneficiary will not file or cause to be
filed any annual or other tax returns with respect to the UTI Sub-Trust. In the
event that the Titling Trust or the UTI Sub-Trust or the Titling Trustee on
behalf of the Titling Trust or the UTI Sub-Trust is required to file any tax
returns, the Servicer will prepare or cause to be prepared the returns for the
Titling Trust, the Titling Trustee or the UTI Sub-Trust and will deliver such
returns to the Titling Trustee for signature, unless applicable law requires one
or more Beneficiaries to sign such returns, in which case the Servicer will
deliver such returns to such Beneficiary or Beneficiaries. The Titling Trust
shall not elect to be treated as an association under Section 301.7701-3(a) of
the regulations of the United States Department of the Treasury for federal
income tax purposes.
ARTICLE III
BENEFICIAL INTERESTS IN THE TITLING TRUST
SECTION 3.01 SUB-TRUSTS: CREATION OF UTI AND SUBIS.
(a) Subject to the other provisions of this Section, to the extent
designated by the UTI Beneficiary from time to time, the Titling Trustee shall
establish one or more Sub-Trusts under this Agreement and allocate the Titling
Trust Assets identified by the UTI Beneficiary to each such Sub-Trust, and the
Titling Trustee shall hold such Titling Trust Assets as Titling Trustee
hereunder for the benefit, and subject to the direction, of the Beneficiaries of
such Sub-Trust. Each Sub-Trust shall be created by the execution and delivery
of a UTI Supplement or SUBI Supplement (as appropriate) and shall have the name
and beneficiaries designated by the UTI Beneficiary and shall be a separate
series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act.
The Servicer shall maintain separate and distinct records for each Sub-Trust,
and the Titling Trust Assets allocated to such Sub-Trust shall be held and
accounted for separately from all other Titling Trust Assets. Subject to the
right of the Titling Trustee to allocate certain Liabilities, charges and
reserves as provided herein and in any UTI Supplement or SUBI Supplement, and in
accordance with Section 3804(a) of the Delaware Act or to the extent otherwise
permitted by applicable law, all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a Sub-Trust shall
be enforceable against the Titling Trust Assets allocated to such Sub-Trust
only, and not against the Titling Trust Assets allocated to any other Sub-Trust.
Every note, bond, contract or other undertaking issued by or on behalf of a
Sub-Trust (including any UTI Certificate or SUBI Certificate) shall include a
recitation limiting the obligation represented thereby to the related Sub-Trust
and the Titling Trust Assets allocated thereto. The Certificate of Trust for
the Titling Trust shall include notice of the limitation of liabilities of each
Sub-Trust of the Titling Trust, in accordance with Section 3804(a) of the
Delaware Act.
(b) In accordance with Section 3806(b) of the Delaware Act, all Titling
Trust Assets that have not been allocated to a SUBI Sub-Trust shall constitute,
and be defined as, the "UTI Assets" and shall be, and be deemed to be,
identified to and assets of the UTI Sub-Trust separate from the assets of any
SUBI Sub-Trust within the Titling Trust. The UTI Sub-Trust shall be a separate
series of the Titling Trust pursuant to Section 3806(b)(2) of the Delaware Act.
In accordance with Section 3.01(a), the Servicer shall maintain separate and
distinct records for the
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UTI Sub-Trust and the UTI Assets shall be held and accounted for separately from
all other Titling Trust Assets. Pursuant to the related UTI Supplement, the
Titling Trustee shall distribute to or upon the order of the UTI Beneficiary, a
UTI representing an undivided interest in the UTI Sub-Trust and the UTI Assets
which may be subdivided and will be represented by one or more UTI Certificates
issued pursuant to one or more related UTI Supplements. Except as otherwise
provided for herein or in a UTI Supplement, all income and other amounts with
respect to the UTI shall be distributed or retained by the Titling Trustee as
directed from time to time by the UTI Beneficiary.
(c) The Titling Trustee shall from time to time, as directed in writing by
the UTI Beneficiary, and subject to Section 3.01(d), identify or cause to be
identified on the books and records of the Titling Trust one or more separate
SUBI Sub-Trusts to be accounted for separately from each other and from the UTI
Sub-Trust within the Titling Trust, and will identify and allocate, or cause to
be identified and allocated, to such SUBI Sub-Trust on such books and records
certain Titling Trust Assets that are not then allocated to another SUBI
Sub-Trust. Upon such allocation, such related SUBI Assets shall no longer be
assets of, or allocated to, the UTI (unless and until specifically reallocated
to the UTI from that SUBI in accordance with the related SUBI Supplement). Each
SUBI shall constitute a separate series of the Titling Trust pursuant to Section
3806(b)(2) of the Delaware Act and shall represent the beneficial interest in
such SUBI and the SUBI Assets allocated thereto from time to time. Each SUBI
shall be represented by one or more separate SUBI Certificates issued pursuant
to the related SUBI Supplement. Pursuant to the related SUBI Supplement, the
Titling Trustee shall issue each SUBI Certificate to or upon the order of the
UTI Beneficiary.
(d) Notwithstanding anything to the contrary contained in this Section,
the Titling Trustee shall create a new SUBI Sub-Trust and SUBI and issue to or
upon the order of the UTI Beneficiary one or more SUBI Certificates evidencing
such SUBI by executing and delivering a SUBI Supplement only (i) upon receipt of
a certification of the UTI Beneficiary, dated as of the date of the issuance of
the related SUBI Certificate, to the effect that, as of the date of such
certificate, and after giving effect to the creation of the SUBI Sub-Trust, the
transfer to the UTI Beneficiary of any SUBI Certificates in connection therewith
and the application by the UTI Beneficiary of any net proceeds from any
Securitized Financing involving such SUBI and such SUBI Certificates, no Event
of Servicing Termination or other Early Amortization Event (or event that, with
the passage of time or the giving of notice, or both, could constitute an Event
of Servicing Termination or other Early Amortization Event), in each case as
defined in the relevant Transaction Documents, shall exist under any Securitized
Financing or other agreement or obligation secured by a UTI Pledge, and (ii) if,
as of the date of the issuance of the SUBI Certificates, the Titling Trustee
shall not have received from any pledgee of a UTI Pledge a notice asserting any
such default under any Securitized Financing or other agreement or obligation so
secured.
(e) The UTI Beneficiary shall not further transfer, assign, or pledge any
beneficial interest in the Titling Trust except as contemplated herein. The UTI
Beneficiary shall at all times maintain any minimum net worth specified in the
related UTI Supplement or any related SUBI Supplement.
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(f) Each SUBI Beneficiary shall maintain with respect to the SUBI relating
thereto any minimum interest in that SUBI and the related SUBI Sub-Trust as may
be required by the applicable SUBI Supplement. Each SUBI Beneficiary shall at
all times maintain any minimum net worth specified in the related SUBI
Supplement.
(g) Except to the extent specified in this Agreement or in any applicable
SUBI Supplement, interests in a SUBI or SUBI Certificate shall be
nontransferable, provided that all or any part thereof may be (i) transferred
and assigned to a special purpose subsidiary of TMCC or another vehicle created
for the purpose of a Securitized Financing involving a SUBI, or (ii) assigned,
either absolutely or collaterally, or pledged by the UTI Beneficiary or the
related SUBI Beneficiary to or in favor of a trustee for one or more
securitization trusts solely for the purpose of securing or otherwise
facilitating one or more Securitized Financings, and provided further that each
such assignee or pledgee must (x) give a non-petition covenant substantially
similar to that set forth in Section 6.14, and (y) execute an agreement between
or among itself and each UTI Beneficiary and any SUBI Beneficiary, to release
all claims to the Titling Trust Assets allocated to the UTI Sub-Trust or any
other SUBI Sub-Trust and, in the event that such release is not given effect, to
fully subordinate all claims it may be deemed to have against the Titling Trust
Assets allocated thereto. In the event of a sale or an absolute assignment, or
upon foreclosure in the event of a collateral assignment or pledge as
contemplated in clause (ii), such purchaser, assignee or pledgee shall be a SUBI
Beneficiary in the manner and to the extent set forth in the related SUBI
Certificates so acquired and in the applicable SUBI Supplement. If so specified
in the related SUBI Supplement, the foregoing provisions restricting the
transfer of SUBI Certificates may be waived upon delivery to the Titling
Trustee and the UTI Beneficiary of an Opinion of Counsel in form and scope
reasonably satisfactory thereto to the effect that a contemplated transfer of
SUBI Certificates will not have any material adverse effect upon the Titling
Trust, any Sub-Trust or the interests of any Beneficiary.
Section 3.02 BENEFICIARY LIABILITIES.
(a) The Beneficiary or Beneficiaries of each Sub-Trust shall, as to such
Sub-Trust but not as to any other Sub-Trust, each be jointly and severally
liable to third parties (including the Beneficiary or Beneficiaries of all other
Sub-Trusts) and indemnify, defend and hold harmless the Titling Trustee,
including its officers, directors, employees and agents, for all Liabilities
incurred in connection with the SUBI Assets of such Sub-Trust, including all
state and local taxes assessed on the Titling Trustee or the Titling Trust or
any such other Beneficiary resulting from the allocation of Titling Trust Assets
to such Sub-Trust.
(b) The UTI Beneficiary shall (to the extent necessary after giving effect
to Section 3.02(a)) indemnify, defend and hold harmless the Titling Trustee,
including its officers, directors, employees and agents, for all Liabilities of
the Titling Trust or the UTI Sub-Trust to third parties to the same extent that
the UTI Beneficiary would be liable if the Titling Trust or the UTI Sub-Trust
were a partnership formed under either of the Delaware Partnership Acts and the
UTI Beneficiary were a general partner thereof.
(c) As set forth in this Section, the Titling Trustee and its successors,
assigns, agents, officers, directors and employees shall be indemnified,
defended and held harmless with respect
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to any Liabilities arising out of or in connection with the Titling Trustee's
acceptance or performance of the trusts and duties contained in this Titling
Trust Agreement and in any SUBI Supplement or related SUBI Servicing Supplement.
Notwithstanding the foregoing, in no event shall the Titling Trustee or its
officers, directors or employees, be indemnified, defended or held harmless for
any Liabilities incurred solely (i) by reason of the Titling Trustee's willful
malfeasance, bad faith or negligence or (ii) by reason of the Titling Trustee's
breach of its representations set forth in Section 6.12. The Titling Trustee
shall promptly notify the Beneficiaries of any claim for which it may seek
indemnity. Failure by the Titling Trustee to so notify the Beneficiaries of a
claim for which it seeks indemnification shall not relieve the Beneficiaries of
their obligations under this Section except to the extent of Liabilities that
the Beneficiaries could have avoided if notice had been so provided.
(d) All third party creditors of the Titling Trust shall be deemed to be
third party beneficiaries for purposes of this Section. The indemnities
contained in this Section shall survive the resignation or termination of the
Titling Trustee, or the termination of this Agreement. Any amounts that are
paid to the Titling Trustee pursuant to this Section shall no longer be deemed
to be Titling Trust Assets immediately after such amounts have been paid to the
Titling Trustee. To the extent provided in this Section, the Beneficiaries
hereby waive the limited liability protection otherwise afforded under the
Delaware Act (including Section 3803 thereof) or any other law.
SECTION 3.03 INSURANCE POLICIES.
(a) The Grantor will cause to be maintained, and shall not, without the
prior written consent of the Servicer, which consent may not be unreasonably
withheld, or, in the case of a rated Securitized Financing, unless otherwise
specified in the related SUBI Supplement, the consent of each Rating Agency,
cause the termination of, the Contingent and Excess Liability Insurance Policies
unless (i) one or more replacement insurance policies or binder(s) is obtained
providing coverage against third party claims that may be raised against the
Titling Trustee, on behalf of the Titling Trust, with respect to any Leased
Vehicle included in the 1997-A SUBI Sub-Trust in an amount at least equal to $10
million per claim, not subject to any annual or aggregate cap (which policy or
policies may be a blanket insurance policy or policies covering the Servicer and
one or more of its Affiliates), or (ii) such further conditions as are specified
in any SUBI Servicing Supplement are satisfied.
(b) The UTI Beneficiary shall cause each of the Contingent and Excess
Liability Insurance Policies referred to in Section 3.03(a) to name the Titling
Trustee or Titling Trust as additional insureds or loss payees.
SECTION 3.04 ALLOCATION OF LIABILITIES AND INDEMNIFICATION.
Notwithstanding any other provision of this Agreement, any Supplement or any
amendment hereto, (i) to the extent that a Liability, including any
indemnification obligation, shall be incurred or suffered with respect to, or is
attributable to, one or more Affected Trust Assets allocated to one or more
Sub-Trusts, the Beneficiaries of each such Sub-Trust shall bear in full such
Liability or indemnification obligation in proportion to the ratio of the
aggregate value of the Affected Trust Assets in the UTI Portfolio or the related
SUBI Portfolio, as the case may be, to the aggregate value of the Affected Trust
Assets, but (ii) to the extent that any such Liability or indemnification
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obligation is suffered with respect to all Titling Trust Assets generally, the
Beneficiaries shall bear such Liability or indemnification obligation in
proportion to the ratio of the aggregate value of the Contracts and Leased
Vehicles in the UTI Portfolio or the related SUBI Portfolio, as the case may be,
to the aggregate value of all Contracts and Leased Vehicles that are Titling
Trust Assets.
ARTICLE IV
THE SERVICER
SECTION 4.01 DUTIES OF THE SERVICER. The Servicer is hereby appointed and
authorized to act as attorney-in-fact for the Titling Trust, and in such
capacity shall manage, service, administer and make collections on the Titling
Trust Assets with reasonable care, using that degree of skill and attention that
it exercises with respect to comparable assets that it services for itself. The
Titling Trustee shall, with the consent of the Servicer, enter into any and all
agreements specified by the Beneficiary of the UTI or a SUBI in order to add,
delete or amend any or all of the obligations of the Servicer hereunder in
respect of all or any portion of the Titling Trust Assets in the UTI Sub-Trust
or the related SUBI Sub-Trust. The Servicer shall follow its customary
standards, policies and procedures and, unless otherwise indicated herein or in
the related SUBI Servicing Supplement, shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administrating and collecting that it may deem necessary or desirable
in the interest of the Titling Trust. The foregoing shall not be construed to
prevent the Servicer from implementing new programs, whether on an intermediate
pilot or permanent basis, or on a regional or nationwide basis, or from
modifying its standards, policies and procedures, as long as, in each case, the
Servicer does or would implement such programs, or modify its standards,
policies and procedures, in respect of comparable assets for itself in the
ordinary course of business.
Without limiting the generality of the foregoing, the Servicer is hereby
authorized and empowered by the Beneficiaries and the Titling Trust to (x)
modify or extend the term of any Contract on the same terms and conditions it
applies or would apply to comparable assets owned by it, or (y) execute and
deliver, on behalf of the Titling Trust, any and all instruments, certificates
or other documents necessary or advisable to record and maintain title to the
Leased Vehicles in the name of the Titling Trust or the Titling Trustee, on
behalf of the Titling Trust, and to release interests of the Titling Trust, the
Titling Trustee, on behalf of the Titling Trust, and each Beneficiary in any
Leased Vehicle in connection with the sale or other disposition of a Leased
Vehicle (whether directly to the Obligor under the Contract relating to the
Leased Vehicle or to a third party) by the related Beneficiary as contemplated
by this Agreement and the other documents relating to a Securitized Financing.
The Servicer also shall be responsible for creating, maintaining and amending
the Schedule of Contracts and Leased Vehicles. The Servicer shall deliver to
the Titling Trustee, upon written request therefor by the Titling Trustee or any
Beneficiary, and upon any Trust Asset Transfer, a revised Schedule of Contracts
and Leased Vehicles current as of a date not more than ten days prior to the
date of such delivery.
The Servicer is hereby authorized to communicate with Obligors in the
course of its servicing of the Contracts and Leased Vehicles in its own name.
The Servicer is hereby
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authorized to commence, in its own name or in the name of the Titling Trust, a
legal proceeding or participate in a legal proceeding (including a bankruptcy
proceeding) relating to or involving the protection or enforcement of the
interest of the Titling Trust or the related Beneficiary in any Contract, Leased
Vehicle or other Trust Asset. If the Servicer commences or participates in such
legal proceeding in its own name, the Titling Trust shall thereupon be deemed to
have automatically assigned legal title to each related Leased Vehicle and the
Titling Trust's interest in the related Contract to the Servicer for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Titling Trust to execute and
deliver in the Servicer's name any notices, demands, Claims, responses,
affidavits or other documents or instruments in connection with any such
proceeding. The Titling Trustee shall furnish the Servicer with any powers of
attorney and other documents and take any other steps which the Servicer may
deem necessary or appropriate to enable it to carry out its duties under this
Agreement and the other documents relating to a Securitized Financing.
SECTION 4.02 LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer shall be liable in accordance with this Agreement and the
other documents relating to a Securitized Financing only to the extent of the
obligations specifically undertaken by the Servicer and shall have no other
obligations or liabilities hereunder or thereunder. The Servicer shall
indemnify, defend and hold harmless:
(i) (A) the Titling Trust, the Titling Trustee and the Trust Agent
from and against any and all Liabilities arising out of or resulting from its
use, ownership or operation of any Leased Vehicle; and (B) the Titling Trust,
the Titling Trustee and the Trust Agent from and against any taxes that may at
any time be asserted against any of them with respect to the transactions
contemplated by this Agreement (other than taxes with respect to fees payable
hereunder, such fees being payable by the related Beneficiary, or as herein
provided, by the Servicer), including any state sales, gross receipts, general
corporation (including franchise and minimum income taxes), tangible personal
property, privilege or license, taxes and costs and expenses in defending
against the same, in each case to the extent not paid by the related Obligors
and to the extent related Titling Trust Assets are not available therefor
hereunder or are insufficient therefor;
(ii) the Titling Trust, the Titling Trustee, the Trust Agent and
the Beneficiaries from and against any and all Liabilities to the extent that
such Liabilities arose out of, or are imposed upon, any of them through the
Servicer by reason of its disregard of its obligations and duties hereunder or
thereunder; and
(iii) the Titling Trustee and the Trust Agent from and against all
Liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties contained in this Agreement, except to the
extent that such Liabilities: (A) are due to the willful misfeasance, bad faith
or negligence (except for errors in judgment) of the Titling Trustee or Trust
Agent, (B) arise from the material breach by the Titling Trustee or the Trust
Agent of any of its representations or warranties set forth in this Agreement,
or (C) shall arise out of or be incurred in connection with the performance by
the Titling Trustee of the duties of a successor Servicer hereunder, or of any
such duties on behalf of the Titling Trustee by the Trust Agent.
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(b) Indemnification under this Section shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer has made any
indemnity payments pursuant to this Section and the recipient thereafter
collects any such amounts from others, the recipient shall promptly repay such
amounts collected to the Servicer, without interest, to the extent of such
payments made by the Servicer. Indemnification under this Section shall survive
any transaction described in Section 4.03 with respect to any and all Titling
Trust Assets as of the date of such transaction and any acts, occurrences or
transactions related thereto whether arising before or after the date of such
transaction.
SECTION 4.03. MERGER, CONSOLIDATION, OR ASSUMPTION OF THE OBLIGATIONS OF,
THE SERVICER. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger, conversion or consolidation to
which the Servicer shall be a party or (iii) succeeding to the business of the
Servicer and which is otherwise servicing leases or retail installment sales
contracts, which corporation executes an agreement of assumption to perform
every obligation of the Servicer hereunder, shall be the successor to the
Servicer without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement. The Servicer shall provide notice
of any merger, consolidation or succession pursuant to this Section 4.03 to the
Titling Trustee, the UTI Beneficiary and each Rating Agency.
SECTION 4.04 LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
(a) Neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Titling Trust, the Titling Trustee,
the Trust Agent, or any Beneficiary, except as otherwise provided in this
Agreement and the other documents relating to a Securitized Financing, for any
action taken or for refraining from the taking of any action pursuant hereto or
thereto, or for errors in judgment. Notwithstanding the foregoing, this
provision shall not protect the Servicer or any such Person against any
Liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence (except errors in judgment) in the performance of duties or
by reason of reckless disregard of obligations hereunder or thereunder. The
Servicer and its directors, officers, employees or agents 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 hereunder or
thereunder.
(b) Except as provided in this Agreement and the other documents relating
to a Securitized Financing, the Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
duties to service the Titling Trust Assets in accordance herewith or therewith
and that in its opinion may involve it in any expense or Liability.
Notwithstanding the foregoing, the Servicer may undertake any reasonable action
that it may deem necessary or desirable in respect of this Agreement and the
other documents relating to a Securitized Financing and the rights and duties of
the parties hereto or thereto and the interests of any Beneficiary hereunder or
thereunder. In such event, the reasonable legal expenses and costs for such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Titling Trust Assets relating to the applicable Sub-Trust and
the Servicer shall be entitled to be reimbursed therefor solely from funds
available therefor.
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SECTION 4.05 SERVICER NOT TO RESIGN; DELEGATION OF DUTIES.
(a) Subject to Section 4.03, the Servicer shall not resign from the
obligations and duties imposed on it by this Agreement as Servicer except upon a
determination that the performance of its duties under this Agreement is no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an opinion of counsel to such
effect delivered to the Titling Trustee. No such resignation shall become
effective until a successor servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 4.03. The Titling Trustee
will, in no event, be obligated to serve as successor servicer except upon its
express prior written consent.
(b) The Servicer may not assign any of its rights, powers, duties or
obligations under this Agreement. Notwithstanding the foregoing, the Servicer
may make such an assignment in connection with a consolidation, merger,
conversion or succession effected in compliance with Section 4.03 or in
connection with the transfer to a successor servicer as contemplated by clause
(a) above.
(c) Except as provided in paragraphs (a) and (b) of this Section or in any
other document relating to a Securitized Financing, the duties and obligations
of the Servicer under this Agreement shall continue until this Agreement has
been terminated as provided in Section 8.01 and shall survive the exercise by
the Titling Trustee of any right or remedy under, or the enforcement by the
Titling Trustee of any provision contained in, this Agreement or any other
documents relating to a Securitized Financing.
(d) Notwithstanding the foregoing, the Servicer may enter into
subservicing agreements with one or more subservicers (which may be Affiliates
of the Servicer) for the servicing and administration (in whole or in part) of
the Contracts and the Leased Vehicles, with the consent of the Beneficiaries
(which consent shall not be unreasonably withheld) if such subservicer is not an
Affiliate of the Servicer. References in this Agreement or any other document
relating to a Securitized Financing to actions taken or to be taken by the
Servicer in servicing the Contracts and Leased Vehicles include actions taken or
to be taken by any such subservicer on behalf of the Servicer. Each such
subservicing agreement will be upon terms and conditions not inconsistent with
this Agreement and the other documents relating to a Securitized Financing and
as the Servicer and any such subservicer may agree and shall contain a
non-petition covenant substantially identical to that set forth in Section 6.14.
The Servicer shall provide the Titling Trustee with a copy of each such
subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the provisions of
this Agreement or the other documents relating to a Securitized Financing that
relate to agreements or arrangements between the Servicer and any subservicer or
reference to actions that are taken through a subservicer or otherwise, the
Servicer shall remain obligated and liable to the Titling Trust and the Titling
Trustee pursuant to Section 4.02 without diminution of such obligation or
liability by virtue of such delegation or by virtue of indemnification from any
subservicer, to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Contracts and Leased
Vehicles.
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SECTION 4.06 SERVICING COMPENSATION. The Servicer shall receive such fees
and reimbursement for expenses with respect to the Titling Trust Assets relating
to a Sub-Trust as may be agreed to from time to time between the Servicer and
the related Beneficiary.
SECTION 4.07 POWERS OF ATTORNEY. The Servicer is hereby designated by
each Beneficiary, the Titling Trust, and the Titling Trustee as its true and
lawful attorney-in-fact, with full power and authority to perform any and all
acts related to managing, servicing, administering, collecting or repossessing
any part of the Titling Trust Assets and any and all acts otherwise required or
permitted to be performed by the Servicer pursuant to Section 4.01 or otherwise
under this Agreement and the other documents relating to a Securitized Financing
whether acting in its own name or in the name of the Titling Trust, the Titling
Trustee or any Beneficiary. The Servicer is hereby authorized and empowered to
execute and deliver, on behalf and in the name of each Beneficiary, the Titling
Trust or the Titling Trustee, any and all instruments, certificates or other
documents relating thereto. The Servicer also has the right, power and
authority to designate in writing other persons and entities as true and lawful
attorneys-in-fact for and on its or their behalf to do anything that the
Servicer has the power to do under this Agreement and the other documents
relating to a Securitized Financing. Without limiting the generality of the
foregoing, the Servicer or any such person or entity designated by the Servicer
is hereby authorized and empowered by the Titling Trustee and the Titling Trust
to execute and deliver, on behalf of the Titling Trust and the Titling Trustee,
any and all applications for or duplicates of Certificates of Title in the name
of the Titling Trust or the Titling Trustee, on behalf of the Titling Trust, any
and all applications for registrations of vehicles and/or license plates, any
and all applications for transfers of Certificates of Title or registrations for
vehicles and/or license plates, and any and all other instruments, certificates
or other documents which the Servicer deems necessary or advisable to record,
hold or release title to and/or registration of motor vehicles in the name of
the Titling Trust or the Titling Trustee, as appropriate.
SECTION 4.08 PROTECTION OF TITLE TO TITLING TRUST.
(a) The Servicer shall maintain its computer systems so that its master
computer records (including any back-up archives) that refer to any Leased
Vehicles indicate clearly that legal title to such Leased Vehicle is held by the
Titling Trust or the Titling Trustee, on behalf of the Titling Trust, as
appropriate, as nominee holder of legal title for the related Beneficiary.
Indication of the legal title of the Titling Trust or the Titling Trustee, on
behalf of the Titling Trust, to a Leased Vehicle shall be deleted from or
modified on such computer systems when, and only when, legal title to such
Leased Vehicle is no longer owned by the Titling Trust or the Titling Trustee,
on behalf of the Titling Trust, for the benefit of the related Beneficiary.
(b) If at any time the Servicer or a Beneficiary proposes to sell, grant a
security interest in or otherwise transfer any interest in any Leased Vehicles
to any prospective purchaser, lender or other transferee, all computer tapes,
records or print-outs (including any restored from back-up archives) delivered
by the Titling Trustee to such prospective purchaser, lender or other transferee
that refers in any manner whatsoever to any Leased Vehicle shall indicate
clearly that legal title to such Leased Vehicle is held in the name of the
Titling Trust or the Titling Trustee, on behalf of the Titling Trust, for the
benefit of the related Beneficiary.
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ARTICLE V
PAYMENTS
SECTION 5.01 PAYMENTS FROM TITLING TRUST ASSETS ONLY. All payments, if
any, to be made by the Titling Trustee or the Servicer under this Agreement or
any other documents relating to a Securitized Financing, other than
(i) indemnities of the Servicer pursuant to Section 4.02, (ii) payment of the
Titling Trustee's fees and expenses by the Servicer pursuant to Section 6.13 or
(iii) amounts owing by the Titling Trustee arising from its willful misfeasance,
bad faith or negligence, shall be made only from any then available collections
and proceeds in respect of the Titling Trust Assets or the SUBI Assets of the
related Sub-Trust, as appropriate, and only to the extent that the Titling
Trustee or the Servicer shall have received such collections and proceeds in
respect thereof to make such payments in accordance with the terms hereof. This
Section is not intended to override the waivers of limited liability by the
Beneficiaries made in Section 3.02.
SECTION 5.02 MANNER OF PAYMENT. All amounts payable to Beneficiaries
pursuant to this Agreement or any other document relating to a Securitized
Financing shall be paid or caused to be paid by the Titling Trustee or the
Servicer, as the case may be, to or for the account of the related Beneficiary
in immediately available funds by wire transfer or other method of same-day
transfer.
ARTICLE VI
THE TITLING TRUSTEE
SECTION 6.01 DUTIES AND POWERS OF TITLING TRUSTEE.
(a) The Titling Trustee and the Trust Agent undertake to perform such
duties and engage in such activities, and only such duties and activities, as
are specified in this Agreement, any SUBI Supplement or UTI Supplement, any
other amendment to this Agreement, SUBI Supplement or UTI Supplement, or as may
be directed by the Beneficiary in a manner not contrary to the terms hereof or
thereof from time to time, including in connection with (i) Securitized
Financings, (ii) sales of Contracts and other Titling Trust Assets to the extent
permitted by the terms of any existing Securitized Financings (so long as the
Certificate of Title of any Leased Vehicle so sold is amended to reflect the
transfer of ownership thereof from the Titling Trust or the Titling Trustee, on
behalf of the Titling Trust, as applicable, unless applicable law permits the
transfer of ownership of a motor vehicle without an amendment to the vehicle's
certificate of title) or (iii) activities ancillary thereto.
(b) Neither the Titling Trustee nor the Trust Agent shall engage in any
activities other than activities required or permitted by the provisions of this
Agreement. Except as provided in or permitted by this Titling Trust Agreement,
any UTI Supplement, any SUBI Supplement or any related SUBI Servicing
Supplement, neither the Titling Trustee nor the Trust Agent shall (i) issue
beneficial interests in the Titling Trust Assets or securities of the Titling
Trust other than the UTI and UTI Certificates and one or more SUBIs and SUBI
Certificates; (ii) borrow money on behalf of the Titling Trust; (iii) make loans
on behalf of the Titling Trust; (iv) invest in or
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underwrite securities; (v) offer securities in exchange for Titling Trust Assets
(other than UTI Certificates and SUBI Certificates); (vi) repurchase or
otherwise reacquire any UTI Certificate or SUBI Certificate except as permitted
by or in connection with any Securitized Financing; or (vii) grant any security
interest in or lien upon any Titling Trust Assets.
(c) At the direction of the UTI Beneficiary or the Servicer and at the
expense of the Servicer, the Titling Trustee shall: (i) apply for and maintain
(or cause to be applied for and maintained) all licenses, permits and
authorizations necessary and appropriate for the Titling Trust or the Titling
Trustee in carrying out the terms of this Agreement (including receiving
assignments of Contracts and causing Certificates of Title to reflect the
Titling Trust, or the Titling Trustee on behalf of the Titling Trust, as the
owner of the Leased Vehicles) in each jurisdiction that the UTI Beneficiary or
the Servicer reasonably deems appropriate; (ii) file (or cause to be filed) all
notices, reports and other required filings in each jurisdiction that the UTI
Beneficiary or the Servicer reasonably deems appropriate; (iii) file (or cause
to be filed) in each jurisdiction that the UTI Beneficiary or the Servicer
reasonably deems appropriate applications for Certificates of Title as are
necessary and appropriate so as to cause the Titling Trust or the Titling
Trustee, on behalf of the Titling Trust, to be recorded as the holder of legal
title of record of the Leased Vehicles and to execute and deliver to each Dealer
a power of attorney in order to allow such Dealers to so record the Titling
Trust or the Titling Trustee, on behalf of the Titling Trust, as the holder of
legal title to such Leased Vehicles; (iv) to the extent that the UTI Beneficiary
or the Servicer deems it necessary or useful to have a lien recorded on
Certificates of Title, file (or cause to be filed) in each jurisdiction that the
UTI Beneficiary or the Servicer reasonably deems appropriate, such applications
as are necessary to record upon each of the Certificates of Title an
Administrative Lien in favor of an Administrative Lienholder; (v) be, or cause
the Titling Trust to be, the assignee of the original Dealer/Obligee with
respect to the Contracts; and (vi) pay or cause to be paid all applicable taxes
and fees properly due and owing in connection with its activities.
(d) The Titling Trustee, or the Trust Agent on its behalf, shall establish
accounts and receive, maintain, invest and disburse funds in accordance with
Articles V and VII hereof and the SUBI Supplements.
(e) Neither any Beneficiary nor the Servicer shall direct the Titling
Trustee or the Trust Agent to take any action that (i) is inconsistent with the
purposes of the Titling Trust as set forth in Section 2.04 or (ii) would result
in the treatment of the Titling Trust or any SUBI Sub-Trust as an entity that is
taxable as an "association" for federal income tax purposes.
SECTION 6.02 DUTY OF CARE.
(a) In carrying out their duties hereunder, the Titling Trustee and the
Trust Agent each shall exercise the rights and powers vested in it only as set
forth in this Agreement. No provision of this Agreement shall be construed to
relieve the Titling Trustee or the Trust Agent from liability for their own
negligent actions, negligent failure to act, bad faith or willful misfeasance or
similar act or omission; provided, however, that:
(i) neither the Titling Trustee nor the Trust Agent shall be personally
liable for any action taken, suffered or omitted by it or any error of judgment,
in each case made in good faith
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by any officer of, or any other employee of the Corporate Trust Office of, the
Titling Trustee or any Trust Agent, including the president, any vice-president,
assistant vice-president, trust officer, corporate secretary or assistant
corporate secretary or any other officer of the Titling Trustee or such Trust
Agent customarily performing functions similar to those performed by such
officers or to whom any corporate trust matter is referred because of such
Person's knowledge of or familiarity with the particular subject, unless it
shall be proved that the Titling Trustee or Trust Agent was negligent or acted
with willful misfeasance in performing its duties in accordance with the terms
of this Agreement; and
(ii) neither the Titling Trustee nor the Trust Agent shall be personally
liable with respect to any action taken, suffered or omitted to be taken in good
faith in accordance with the express direction of the UTI Beneficiary (to the
extent relating to the Undivided Trust Interest) or the holder or pledgee of a
SUBI Certificate that is not the Titling Trustee or a trust agent of the Titling
Trustee in connection with a Securitized Financing (to the extent relating to
the SUBI evidenced thereby) relating to the exercise of any trust, power or
authority conferred upon the Titling Trustee under this Agreement.
(b) Notwithstanding subsection (a) above, the Titling 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 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, and none of the provisions
contained in this Agreement shall in any event require the Titling Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of a Servicer hereunder or under any related SUBI Servicing
Supplement except during such time, if any, as the Titling Trustee shall be
successor to, and be vested with the rights, duties, powers and privileges of,
any Servicer in accordance with the terms of this Agreement or any related SUBI
Servicing Supplement.
(c) Except for actions expressly authorized by this Agreement, a SUBI
Supplement, a UTI Supplement, or an amendment thereto, the Titling Trustee shall
take no action as to which the Titling Trustee has been notified by a
Beneficiary, or has actual knowledge, that such action would impair the
beneficial interests in the Titling Trust, would impair the value of any Titling
Trust Asset or would adversely affect the then outstanding credit rating issued
by a Rating Agency with respect to any class of securities issued in a
Securitized Financing.
(d) All information obtained by the Titling Trustee regarding the
administration of the Titling Trust, whether upon the exercise of its rights
under this Agreement or otherwise, shall be maintained by the Titling Trustee in
confidence and shall not be disclosed to any other Person other than to the
Trust Agent or an appropriate Beneficiary unless such disclosure is required by
any applicable law or regulation or pursuant to subpoena, or such information is
already otherwise publicly available.
SECTION 6.03 CERTAIN MATTERS AFFECTING THE TITLING TRUSTEE. Except as
otherwise provided in this Agreement:
(a) The Titling Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, officer's certificate, certificate
of auditors or any other certificate,
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statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by an authorized signatory of the
relevant party. In particular, but without limitation, whenever in this
Agreement it is provided that the Titling Trustee shall receive or may rely on
the instructions or directions of a Beneficiary in connection with a Securitized
Financing, any written instruction or direction purporting to bear the signature
of any officer or authorized signatory of the Beneficiary, or the holder or
pledgee of a UTI Certificate or a SUBI Certificate in connection with a
Securitized Financing reasonably believed by it to be genuine may be deemed by
the Titling Trustee to have been signed or presented by the proper party.
(b) The Titling Trustee may consult with counsel, and any written 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 Agreement in good faith
and in accordance with such opinion of counsel.
(c) The Titling Trustee shall be under no obligation to exercise any of
the discretionary rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or in relation
to this Agreement, at the request, order or direction of a Beneficiary in
connection with a Securitized Financing or any Beneficiary of the Titling Trust
pursuant to the provisions of this Agreement, unless such requesting Person(s)
shall have offered to the Titling Trustee reasonable security or indemnity
against the Liabilities that may be incurred therein or thereby.
(d) The Titling Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by a Beneficiary;
provided, however, that if the payment within a reasonable time to the Titling
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 Titling Trustee, not
reasonably assured to the Titling Trustee by the security afforded to it by the
terms of this Agreement or any SUBI Supplement, the Titling Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a condition
to so proceeding; the reasonable expense of every such examination shall be paid
by the Person(s) requesting such examination or, if paid by the Titling Trustee,
shall be reimbursed as a Titling Trust expense upon demand.
(e) The Titling Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by or
through agents or attorneys or one or more custodians and shall not be liable
for the negligence or willful misconduct of such agents or attorneys appointed
with due care. By way of illustration and not in limitation of the foregoing,
the Titling Trustee may from time to time enter into one or more Trust Agency
Agreements with such Trust Agents, including any Affiliate of the Titling
Trustee, as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to the UTI Beneficiary. Notwithstanding the
foregoing, the Titling Trustee shall replace any Trust Agent if (i) in the good
faith judgment of the UTI Beneficiary, the compensation or level of service of
such Trust Agent shall no longer be reasonably competitive with those of any
alternative agent reasonably proposed by the UTI Beneficiary, or (ii) if the
Trust Agent has materially breached its
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obligations under the Trust Agency Agreement, the UTI Beneficiary or a
Beneficiary in connection with a Securitized Financing has given written notice
to the Titling Trustee and the Trust Agent of such breach, and the Trust Agent
has not cured such breach in all material respects within 30 Business Days
thereafter. Such Trust Agency Agreement shall specify the duties, powers,
liabilities, obligations and compensation of such Trust Agent(s) to carry out on
behalf of the Titling Trustee any or all of its obligations as Titling Trustee
of the Titling Trust arising under this Agreement or otherwise and shall contain
a non-petition covenant substantially identical to that set forth in Section
6.14, provided, however, that nothing contained in any Trust Agency Agreement
shall excuse, limit or otherwise affect any power, duty, obligation, liability
or compensation otherwise applicable to the Titling Trustee hereunder. The
Titling Trustee hereby engages First Bank National Association as its initial
Trust Agent, and First Bank National Association by its signature hereto accepts
such engagement, with all provisions of this Section 6.03(e) relating to Trust
Agents constituting a Trust Agency Agreement between First Bank National
Association and the Titling Trustee, subject to any amendment or supplement
thereto between such parties not inconsistent herewith. First Bank National
Association shall carry out as Trust Agent each and every obligation of the
Titling Trustee hereunder and under any SUBI Supplement and is hereby delegated
by the Titling Trustee all power and authority delegable by the Titling Trustee
hereunder in order better to be able to carry out its duties as Trust Agent.
SECTION 6.04 TITLING TRUSTEE NOT LIABLE FOR CERTIFICATES OR LOSSES. The
Titling Trustee shall have no obligation to perform any of the duties of the
Grantor or the Servicer unless explicitly set forth herein or in any SUBI
Supplement or related SUBI Servicing Supplement. The Titling Trustee shall at
no time have any responsibility or liability for or with respect to the (a)
legality, validity and enforceability of any security interest in any Trust
Asset; (b) the perfection or priority of such a security interest or the
maintenance of any such perfection and priority; (c) the efficacy of the Titling
Trust or its ability to generate the payments to be distributed to any
Beneficiary or its permitted assignee(s) under this Agreement, including the
existence, condition, location and ownership of any Trust Asset; (d) the
existence and enforceability of any Insurance Policy; (e) the existence and
contents of any Contract or any computer or other record thereof; (f) the
validity of the assignment of any Trust Asset to the Titling Trustee or of any
intervening assignment; (g) the completeness of any Contract; (h) the
performance or enforcement of any Contract; (i) the compliance by the Grantor or
any Servicer with any covenant or the breach by the Grantor or any Servicer of
any warranty or representation in any document and the accuracy of any such
warranty or representation prior to the Titling Trustee's receipt of notice or
other discovery of any noncompliance therewith or any breach thereof; (j) any
investment of monies by any Servicer or any loss resulting therefrom (it being
understood that the Titling Trustee shall remain responsible for any Titling
Trust Assets that it may hold); (k) the acts or omissions of any Dealer or any
other Person, the Grantor, any Servicer or any obligor under, or in connection
with the origination of, any Contract; (1) any action of any Servicer taken in
the name of the Titling Trustee; or (m) any action by the Titling Trustee taken
at the instruction of any Servicer; provided, however, that the foregoing shall
not relieve the Titling Trustee of its obligation to perform its duties under
this Agreement. Except with respect to a claim based on the Titling Trustee's
or any Trust Agent's willful misconduct, bad faith or negligence, (i) no
recourse shall be had against the institution serving as Titling Trustee in its
individual capacity for any claim based on any provision of this Agreement, a
SUBI Supplement or UTI Supplement or any amendment thereof, a SUBI Certificate
or any Trust Asset or
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assignment thereof and (ii)the Titling Trustee shall not have any personal
obligation, liability or duty whatsoever to the UTI Beneficiary or any other
Person with respect to any such claim, and any such claim shall be asserted
solely against the Titling Trust Assets (subject to Section 3.04) or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Titling Trustee shall not be accountable for the use or application by a
Beneficiary of any SUBI Certificate or of the proceeds of such SUBI Certificate,
or for the use or application of any funds properly paid to any Servicer
hereunder or pursuant to any SUBI Servicing Supplement.
SECTION 6.05 INDEMNITY OF TITLING TRUSTEE AND TRUST AGENTS. The Titling
Trustee and any Trust Agent shall be indemnified and held harmless out of and to
the extent of the Titling Trust Assets with respect to any Claim arising out of
or incurred in connection with (a) any of the Titling Trust Assets (including
any Claim relating to any Contract, Leased Vehicle, consumer fraud, consumer
leasing act violation, misrepresentation, deceptive and unfair trade practice,
and any other claim arising in connection with any Contract, personal injury or
property damage claim arising with respect to any Leased Vehicle or any claim
with respect to any tax arising with respect to any Titling Trust Asset) or (b)
the Titling Trustee's or Trust Agent's acceptance or performance of the trusts
and duties contained in this Agreement or any Trust Agency Agreement, with any
allocation of such indemnification among the Titling Trust Assets to be made as
provided for in Section 3.04; provided, however, that neither the Titling
Trustee nor any Trust Agent shall be indemnified or held harmless out of the
Titling Trust Assets as to any Claim (i) for which the Servicer shall be
expressly and solely liable hereunder or pursuant to any SUBI Servicing
Supplement (unless the Servicer shall not have paid such claim upon the final
determination of its liability therefor), (ii) incurred by reason of the Titling
Trustee's or such Trust Agent's willful misconduct, bad faith or negligence or
(iii) incurred by reason of the Titling Trustee's breach of its representations,
warranties or covenants herein or in any Transaction Document. The
Beneficiaries will indemnify, defend and hold harmless the Titling Trustee and
any Trust Agent for any such Claims that the Titling Trust Assets are
insufficient to satisfy, with any allocation of such indemnification among the
Beneficiaries to be made as provided for in Section 3.04. Such indemnification
shall be irrespective of any other indemnification provided to the Beneficiaries
under any other documents relating to a Securitized Financing.
SECTION 6.06 TITLING TRUSTEE'S RIGHT NOT TO ACT. Notwithstanding anything
to the contrary contained herein, the Titling Trustee shall have the right to
decline to act in any particular manner otherwise provided for herein if the
Titling Trustee, being advised in writing by counsel, determines that such
action may not lawfully be taken, or if the Titling Trustee in good faith shall
determine that such action would be illegal or subject it to personal liability
or, in the case of a direction from one or more Beneficiaries, be prejudicial to
the rights of other Beneficiaries; and provided further, that nothing in this
Agreement shall impair the right of the Titling Trustee to take any action
deemed proper by the Titling Trustee that is not inconsistent with such
otherwise required acts.
SECTION 6.07 QUALIFICATION OF TITLING TRUSTEE.
(a) Except as otherwise provided in this Agreement, the Titling Trustee
under this Agreement shall at all times (i) be a corporation organized under the
laws of one of the fifty states of the United States, the District of Columbia
or the Commonwealth of Puerto Rico (which
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corporation shall not be the Grantor or any Affiliate thereof), (ii) be
authorized to exercise trust powers in the State of Delaware as and to the
extent contemplated herein or have appointed a Delaware Trustee that is so
authorized, (iii) have a principal place of business in the State of Delaware or
have appointed a Delaware Trustee that has such a principal place of business,
(iv) be qualified, or promptly will be qualified, to do business as a foreign
corporation in each of the Trust States and (v) be otherwise acceptable to each
Rating Agency rating any class of securities at the request of the Grantor
issued in connection with any Securitized Financing and to any pledgee of a UTI
Pledge (such acceptance by any such pledgee not to be unreasonably withheld,
delayed or conditioned).
SECTION 6.08 RESIGNATION OR REMOVAL OF TITLING TRUSTEE.
(a) The Titling Trustee may not at any time resign without the express
written consent of the Beneficiaries.
(b) If at any time the Titling Trustee shall cease to be qualified in
accordance with Section 6.07, or if any representation or warranty made by the
Titling Trustee pursuant to Section 6.12 or the Trust Agent pursuant to Section
6.15 shall prove to have been untrue in any material respect when made and shall
not have been cured within 45 days after any Beneficiary gives the Titling
Trustee written notice of such inaccuracy, but the Titling Trustee shall fail to
resign after written request therefor by any Beneficiary or pledgee of any UTI
Certificate or SUBI Certificate in connection with a Securitized Financing, or
if at any time the Titling Trustee shall be legally unable to act, or shall be
adjudged bankrupt or insolvent, or a receiver of the Titling Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Titling Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the UTI Beneficiary shall
remove the Titling Trustee. If the Titling Trustee is removed under the
authority of the immediately preceding sentence, the UTI Beneficiary shall
promptly appoint a successor Titling Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Titling
Trustee so removed and one copy to the successor Titling Trustee, together with
payment of all fees owed to the outgoing Titling Trustee.
(c) Any resignation or removal of the Titling Trustee and appointment of a
successor Titling Trustee pursuant to any of the provisions of this section
shall not become effective until acceptance of appointment by the successor
Titling Trustee.
SECTION 6.09 SUCCESSOR TITLING TRUSTEE. Any successor Titling Trustee
appointed as provided in Section 6.08 shall execute, acknowledge and deliver to
the UTI Beneficiary, the Servicer and to its predecessor Titling Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Titling Trustee shall become effective
and such successor Titling Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
the Titling Trustee under this Agreement, with like effect as if originally
named as Titling Trustee. The predecessor Titling Trustee shall deliver to the
successor Titling Trustee all documents and statements held by it under this
Agreement, and the UTI Beneficiary and the predecessor Titling 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
Titling Trustee all such
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rights, powers, duties and obligations. No successor Titling Trustee shall
accept appointment as provided in this Section unless at the time of such
acceptance such successor Titling Trustee shall be eligible under the provisions
of Section 6.07. Upon acceptance of appointment by a successor Titling Trustee
as provided in this Section, the UTI Beneficiary shall mail notice of the
successor of such Titling Trustee under this Agreement to each pledgee or other
Beneficiary of a UTI Certificate or a SUBI Certificate. If the UTI Beneficiary
fails to mail such notice within ten days after acceptance of appointment by the
successor Titling Trustee, the successor Titling Trustee shall cause such notice
to be mailed at the expense of the UTI Beneficiary.
SECTION 6.10 MERGER OR CONSOLIDATION OF TITLING TRUSTEE. The Titling
Trustee shall not merge or consolidate with, or sell all or any substantial part
of its assets to any other Person, without the express written consent of the
UTI Beneficiary. Any such corporation (i) into which the Titling Trustee may be
merged or consolidated, (ii) which may result from any merger, conversion, or
consolidation to which the Titling Trustee shall be a party, or (iii) which may
succeed to the corporate business of the Titling Trustee, which corporation
executes an agreement of assumption to perform every obligation of the Titling
Trustee under this Agreement, shall be the successor of the Titling Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 6.07,
without the execution or filing of any other instrument or any further act on
the part of any of the parties hereto other than the written consent of the UTI
Beneficiary. The Titling Trustee shall give reasonable written notice to each
SUBI Beneficiary and each Rating Agency of any such merger or consolidation.
SECTION 6.11 APPOINTMENT OF CO-TITLING TRUSTEE, SEPARATE TITLING TRUSTEE,
OR NOMINEE.
(a) Notwithstanding any other provisions of this Agreement, if at any time
the Titling Trustee determines that it is in the best interests of the Titling
Trust to take any action for the purpose of meeting any legal requirements of
any jurisdiction in which any Titling Trust Asset may at the time be located or
within which such Titling Trust Asset is to be acquired or for any other purpose
as so determined by the Titling Trustee, the Beneficiary of the Sub-Trust to
which such Trust Asset is allocated and the Titling Trustee, acting jointly,
shall have the power to execute and deliver all instruments to appoint one or
more Persons approved by the Titling Trustee and such Beneficiary to act as
co-trustee, jointly with the Titling Trustee, or as a separate trustee or
nominee holder of legal title, of all or any part of such Titling Trust Assets,
and to vest in such Person, in such capacity and for the benefit of such
Beneficiary and its permitted assignee(s), such title to such Titling Trust
Assets, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as such Beneficiary
and the Titling Trustee may consider necessary or desirable. No co-trustee,
separate trustee, or nominee holder of legal title under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 6.07, except that no co-trustee, separate trustee or nominee holder of
legal title under this Agreement may be the UTI Beneficiary or any Affiliate
thereof.
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(b) Each separate trustee, co-trustee and nominee holder of legal title
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 Titling Trustee shall be conferred upon and exercised or
performed by the Titling Trustee and such separate trustee, co-trustee or
nominee holder of legal title jointly (it being understood that such
separate trustee, co-trustee or nominee holder of legal title is not
authorized to act separately without the Titling 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 (whether as Titling Trustee
under this Agreement or as successor to any Servicer under this Agreement
or any SUBI Servicing Supplement), the Titling 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
Titling Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee, co-trustee or
nominee holder of legal title, but solely at the direction of the Titling
Trustee;
(ii) no trustee or nominee holder of legal title under this
Agreement shall be personally liable by reason of any act or omission of
any other trustee or nominee holder of legal title under this Agreement;
and
(iii) the Beneficiaries and the Titling Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee,
co-trustee or nominee holder of legal title.
(c) Any notice, request or other writing given to the Titling Trustee
shall be deemed to have been given to each of the then separate trustees,
co-trustees and nominee holders of legal title, as effectively as if given to
each of them. Every instrument appointing any separate trustee, co-trustee or
other nominee holder of legal title shall refer to this Agreement and the
conditions of this Section. Each separate trustee, co-trustee and nominee
holder of legal title, 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 Titling Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Titling Trustee. Each such
instrument shall be filed with the Titling Trustee and a copy thereof given to
the Servicer and each Beneficiary.
Any separate trustee, co-trustee or nominee holder of legal title may at
any time appoint the Titling 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 Agreement on its behalf and in its name. If any
separate trustee, co-trustee or nominee holder of legal title shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts relating to this Agreement and the Titling Trust
Assets shall vest in and be exercised by the Titling Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
Notwithstanding anything to the contrary in this Agreement, the appointment of
any
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separate trustee, co-trustee or nominee holder of legal title shall not relieve
the Titling Trustee of its obligations and duties under this Agreement.
(d) The parties hereto shall appoint a Delaware Trustee to serve as the
trustee of the Titling Trust in the State of Delaware pursuant to the
Co-Trustee Agreement for the sole purpose of satisfying the requirements of the
Delaware Act. The duties of such Delaware Trustee will be those expressly set
forth in the Co-Trustee Agreement.
SECTION 6.12 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TITLING TRUSTEE.
The Titling Trustee hereby represents, warrants and covenants for the benefit of
the Grantor, each Beneficiary and each pledgee of a UTI Certificate or SUBI
Certificate:
(a) ORGANIZATION AND GOOD STANDING. The Titling Trustee is a corporation,
duly organized, validly existing and in good standing under the law of the State
of Delaware and is, or promptly will be, qualified to do business as a foreign
corporation and is, or promptly will be, in good standing in each state that is
a Trust State as of the date of this Agreement. The Titling Trustee shall
promptly take or cause to be taken all such actions and execute and file or
cause to be executed and filed all such instruments and documents, the cost of
which shall be a Titling Trust Expense, as may reasonably be required in order
for the Titling Trustee to qualify to do business and be in good standing in
each other State identified in writing from time to time by the Grantor or the
UTI Beneficiary.
(b) POWER AND AUTHORITY. The Titling Trustee has full power, authority
and right to execute and deliver this Agreement, and has, or promptly will have,
full power and authority to perform its obligations hereunder in each state that
is a Trust State as of the date of this Agreement, and has taken all necessary
action to authorize the execution and delivery of this Agreement, and has taken,
or promptly will take, all necessary action to authorize performance by it of
this Agreement in each state that is a Trust State as of the date of this
Agreement.
(c) DUE EXECUTION. This Agreement has been duly executed and delivered by
the Titling Trustee, and is a legal, valid and binding instrument enforceable
against the Titling Trustee in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(d) NO CONFLICT. To the Titling Trustee's actual knowledge, neither the
execution and delivery of this Agreement nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof,
will conflict with or result in a breach of, or constitute a default (with
notice or passage of time or both) under any provision of any law, governmental
rule, regulation, judgment, decree or order binding on the Titling Trustee (but
excluding any matters of consumer protection or credit laws as to which the
Titling Trustee has no actual knowledge and has conducted no independent
investigation) or the articles of incorporation or bylaws of the Titling Trustee
or any provision of any mortgage, indenture, contract agreement or other
instrument to which the Titling Trustee is a party or by which it is bound.
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(e) SINGLE PURPOSE. The Titling Trustee has not engaged, is not currently
engaged, and will not engage during the term of this Agreement in any other
activity other than serving as Titling Trustee and in such ancillary activities
as are necessary and proper in order to act as Titling Trustee in accordance
with this Agreement, any SUBI Supplement or UTI Supplement, and any amendment
thereto or any of the other documents relating to a Securitized Financing.
SECTION 6.13 TITLING TRUSTEE'S FEES AND EXPENSES. The Titling Trustee
shall be paid out of Titling Trust Assets in the UTI Portfolio reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) and reimbursement for all
services rendered by it in the execution of the Titling Trust and in the
exercise and performance of any of the powers and duties under this Agreement
and the other documents relating to a Securitized Financing to which it is a
party, and as an expense of the Titling Trust, reimbursement of all reasonable
costs and expenses (including reasonable attorneys' fees and expenses) of
incorporation, qualification, periodic maintenance of its corporate franchises
and qualification, annual board of directors' meetings and all necessary
corporate filings, taxes (to the extent set forth in Section 4.02(a)(i)(B)) and
fees.
SECTION 6.14 NO PETITION. Each of the Titling Trustee and First Bank
National Association, as Trust Agent, covenants and agrees that prior to the
date which is one year and one day after the date upon which all obligations
under each Securitized Financing has been paid in full, it will not institute
against, or join any other Person in instituting against, TMCC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law. This Section
shall survive the termination of this Agreement or the resignation or removal of
the Titling Trustee under this Agreement.
SECTION 6.15 STOCK OF TMTT, INC. First Bank National Association hereby
represents, warrants and covenants, for the benefit of the Grantor, each
Beneficiary and each pledgee of a UTI Certificate or SUBI Certificate, as
follows:
(a) OWNERSHIP OF STOCK. All of the issued and outstanding Titling Trustee
Stock is owned by First Bank National Association, free and clear of any lien,
encumbrance or any other restriction, agreement or commitment of any kind (other
than as provided for in this Agreement) that would in any way restrict First
Bank National Association's ability freely to transfer, convey and assign the
Titling Trustee Stock. All such Titling Trustee Stock currently outstanding is
(and any Titling Trustee Stock that may be issued in the future will be) validly
issued, fully paid and nonassessable and has not been (and will not be) issued
in violation of any preemptive, first refusal or other subscription rights of
any Person. There are no outstanding options, warrants, conversion' rights,
subscription rights, preemptive rights, exchange rights or other rights,
agreements or commitments of any kind obligating First Bank National Association
to sell any Titling Trustee Stock or to issue any additional capital stock in
the Titling Trustee to any Person. First Bank National Association will not
issue any additional Titling Trustee Stock without the express written consent
of the UTI Beneficiary.
(b) TRANSFER OF TITLING TRUSTEE STOCK. For so long as First Bank National
Association is acting as a Trust Agent pursuant to this Agreement or any Trust
Agency Agreement, but
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subject to any applicable legal or regulatory requirements, it will retain
ownership of all of the Titling Trustee Stock. If at any time (and for any
reason, including First Bank National Association's resignation or termination
as Trust Agent or the termination of the Titling Trust) First Bank National
Association either is no longer acting as a Trust Agent, is no longer able,
because of legal or regulatory changes, to own the Titling Trustee Stock, or the
Titling Trustee would have to be removed pursuant to Section 6.08 because of its
being owned by First Bank National Association, First Bank National Association
will (i) notify the UTI Beneficiary of such event and (ii) sell to the UTI
Beneficiary's designee (who shall not be the UTI Beneficiary or any Affiliate
thereof), at the UTI Beneficiary's option, without recourse except with respect
to the representations, warranties and covenants of the Titling Trustee and the
Trust Agent contained herein, all of the Titling Trustee Stock for the sum of
Ten Dollars ($10). The UTI Beneficiary's designee shall have sixty (60) days
from the date of receipt of such notice in which to exercise such option and to
consummate such acquisition, during which time First Bank National Association
shall refrain from offering for sale or selling any Titling Trustee Stock to any
Person other than the UTI Beneficiary's designee. If the UTI Beneficiary's
designee shall not consummate such acquisition within such period, First Bank
National Association shall be free to offer for sale or sell to any Person any
or all of the Titling Trustee Stock or to dissolve the Titling Trustee;
provided, however, that a successor Titling Trustee shall have been appointed in
accordance herewith. If the UTI Beneficiary's designee shall timely exercise
its option to acquire the Titling Trustee Stock, First Bank National Association
shall promptly tender all such Titling Trustee Stock to such buyer at a time and
place determined by the buyer, duly endorsed in blank or with duly endorsed
stock powers attached, against payment of the purchase price. The UTI
Beneficiary shall pay any transfer or similar taxes arising from a transfer of
the Titling Trustee Stock as contemplated herein. If no designee of the UTI
Beneficiary shall be willing to purchase the Titling Trustee Stock as described
above, then the Titling Trustee and each Beneficiary shall have the right to
petition a court of competent jurisdiction to appoint a successor trustee
meeting the requirements for a successor trustee set forth herein.
ARTICLES VII
ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS
SECTION 7.01 ACCOUNTS.
(a) Unless otherwise specified in the UTI Supplement, the Titling Trustee
will establish and maintain with respect to the Undivided Trust Interest a
Lease Funding Account satisfying the definition of an Eligible Account. The
Lease Funding Account shall be established and maintained in the name of the
Titling Trustee on behalf of the UTI Sub-Trust. None of the Grantor, any
Beneficiary or, subject to Section 7.02(c), the holder or pledgee of any UTI
Certificate or SUBI Certificate shall have any right to draw on the Lease
Funding Account without the express written consent of the Titling Trustee;
provided, however, that the Titling Trustee, with the express written consent of
the related UTI Beneficiary, shall so consent to the extent provided for in the
documentation relating to any Securitized Financing of such UTI Certificate or
SUBI Certificate. The Lease Funding Account shall only contain funds relating to
UTI Assets.
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(b) For so long as the Monthly Remittance Conditions are satisfied, the
Servicer shall not be required to remit to the Lease Funding Account collections
in respect of any Titling Trust Assets allocable to the Lease Funding Account on
a daily basis but shall be entitled to retain such collections, without
segregation from its other funds, until the Business Day preceding the date
identified as a "Distribution Date" in the related UTI Supplement, at which time
the Servicer shall so remit all such collections in immediately available funds;
provided that (i) investments on which the Trust Agent is the obligor (including
repurchase agreements as to which it, in its commercial capacity, is liable as
principal), may mature on the Distribution Date, and (ii) investments made of
collections on deposit in a SUBI Collection Account in respect of the related
Contracts and Leased Vehicles may mature on such dates as specified by the
Titling Trustee at the Servicer's direction so as to maintain the availability
of sufficient cash to make the payments described in any SUBI Supplement or
related SUBI Servicing Supplement.
Notwithstanding the foregoing, commencing with the first day of the first
period identified as a "Collection Period" in the related UTI Supplement or SUBI
Supplement, as the case may be, that begins at least two Business Days after the
day on which any Monthly Remittance Conditions cease to be satisfied and for so
long as the Monthly Remittance Conditions are not satisfied, all collections in
respect of the UTI Assets or the related SUBI Assets, as applicable, then held
by the Servicer shall be immediately so deposited and all such future
collections shall be so remitted by the Servicer to the appropriate account in
accordance with this Agreement or the related SUBI Servicing Supplement, as
applicable, on a daily basis within two Business Days after receipt thereof.
Each SUBI Servicing Supplement shall also provide (i) the terms on which any
other funds received by any Servicer, including funds transferred from any of
the SUBI Collection Accounts to the extent of (1) the net investment value (as
recorded on the books of the Titling Trust) of any Contracts and Leased Vehicles
allocated to a SUBI in a Trust Asset Transfer, (2) reimbursement of any Servicer
Advances provided for in any Securitized Financing with respect to such SUBI or
(3) funding for such SUBI's share of any allocable Titling Trust Expenses will
be deposited by the Servicer into the Lease Funding Account (or transferred
directly to the Servicer, Grantor or UTI Beneficiary directly, as appropriate)
and (ii)whether and under what circumstances any other funds received by the
Servicer with respect to a SUBI Asset, including income with respect to any
investment made in any SUBI Account, shall be deposited by the Servicer into an
appropriate SUBI Account.
(c) Except as otherwise provided in Section 7.03, a UTI Supplement or a
SUBI Supplement, all Titling Trust Expenses shall be paid out of the Lease
Funding Account or from monies held by the Servicer and allocable thereto or
distributable in respect thereof, including: (i) any reimbursement due to the
Servicer for payments from its own operating accounts in order to fund (A)
amounts due to Dealers in payment for the assignment to the Titling Trustee of
Contracts and Leased Vehicles occurring prior to the Titling Trustee's notice to
the Servicer to cease acquiring Contracts and Leased Vehicles on behalf of the
Titling Trustee given pursuant to Section 7.02(c)(ii) and (B) any other Advances
made by the Servicer with the consent of the Titling Trustee (to be given at the
direction of the UTI Beneficiary or in accordance with the terms of any
Securitized Financing), with respect to any Contract or Leased Vehicle,
(ii) Servicer fees (and expenses, if any, not covered by the Servicer fee under
any SUBI Servicing Supplement), (iii) Titling Trustee fees and expenses and
(iv) other Titling Trust Expenses, if any;
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provided, however, that, to the extent that any Liability of the Titling Trustee
or any Beneficiary is incurred in respect of Affected Trust Assets allocated to
one or more Sub-Trusts, then such Liability shall be borne in accordance with
Section 3.04, and the Titling Trustee, at the direction of the Servicer, shall
transfer periodically from the related SUBI Collection Accounts to the Lease
Funding Account each Sub-Trust's appropriate share of such aggregate Liabilities
of the Titling Trust.
Prior to the funding of the Lease Funding Account from collections on
outstanding Contracts or otherwise, the UTI Beneficiary will advance monies to
fund the origination of Contracts as described in the UTI Supplement. The UTI
Supplement or any SUBI Supplement may provide that all or any portion of the
collections on the related UTI Assets or SUBI Assets will be deposited in the
Lease Funding Account or the related SUBI Lease Funding Account for a period of
time specified therein. Prior to the creation of a SUBI, the expenses of the
Titling Trust will be advanced by the UTI Beneficiary or funded from collections
on the Contracts in the UTI Portfolio, as more fully described in the UTI
Supplement. Thereafter, during any period during which there are no monies on
deposit in the Lease Funding Account, expenses of the Titling Trust will be
advanced by the UTI Beneficiary as and to the extent provided in the UTI
Supplement and each SUBI Supplement.
(d) All or a portion of the funds deposited into the Lease Funding Account
shall be separately invested by the Titling Trustee from time to time at the
direction of the UTI Beneficiary or its designee in any of the Permitted
Investments; provided, however, that should the terms of any Securitized
Financing impose any more stringent limits on the types or tenors of permitted
investments in the Lease Funding Account than are provided for in the definition
of Permitted Investments, such limits shall apply thereto for the period
specified in the related Transaction Documents. The Servicer is hereby made the
designee of the UTI Beneficiary for such purpose. All income, gain or loss from
investment of monies in the Lease Funding Account shall, unless otherwise
specified in the Transaction Documents with respect to any Securitized
Financing, be for the account of the UTI Beneficiary; provided that each such
investment shall be made in the name of the Titling Trustee, its nominee or its
Financial Intermediary. If at any time the relevant Beneficiary or its designee
shall not have given the Titling Trustee a timely investment directive with
respect to any account, the Titling Trustee shall invest and reinvest any monies
in such account(s) in a mutual fund offered by the Trust Agent or an Affiliate
thereof meeting the requirements of clause (i) of the definition of Permitted
Investments.
SECTION 7.02 RELATIONSHIP TO SECURITIZED FINANCINGS.
(a) All funds in each SUBI Collection Account (other than any de minimis
amount necessary to maintain the account), however derived, to the extent not
required to fund that SUBI's share of Trust Liabilities or to fund any Trust
Asset Transfer into that SUBI Sub-Trust as provided for in the related SUBI
Supplement, shall be reinvested or paid out in accordance with the terms and
provisions hereof or of such SUBI Supplement.
(b) A UTI Pledge shall be recognized by the Titling Trustee for purposes
of this Agreement only if the UTI Beneficiary shall have given the Titling
Trustee written notice of such UTI Pledge and the name and address of the
related pledgee. During any period in which the
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Titling Trustee has neither received notice from any pledgee of a UTI Pledge nor
otherwise obtained actual knowledge to the effect that (i) there is any sum due
with respect to any Securitized Financing secured by a UTI Pledge not otherwise
timely paid by a UTI Beneficiary (after any applicable grace period), or
(ii) there is any outstanding and uncured other default by a UTI Beneficiary
with respect to any such Securitized Financing (after any applicable grace
period), the Titling Trustee, promptly upon receipt of a written demand therefor
accompanied by a determination by such UTI Beneficiary (or any Servicer on its
behalf) as to the amount of Excess Funds, shall pay out to such UTI Beneficiary
upon its request the Excess Funds so requested.
(c) During any period as to which the Titling Trustee either has received
notice from any pledgee of a UTI Pledge or otherwise has obtained actual
knowledge that either of the defaults described in Sections 7.02(b)(i) and
(ii) has occurred and is continuing, the Titling Trustee shall (i) not create
any new SUBI, (ii) direct each Servicer not to accept any further assignments on
behalf of the Titling Trustee of Contracts or Leased Vehicles (other than as
provided for in Sections 7.03 and 7.04), and (iii) distribute to such pledgee of
a UTI Pledge, on demand, all Excess Funds that would otherwise be distributable
to the UTI Beneficiary.
SECTION 7.03 SUBI LEASE FUNDING ACCOUNTS.
In the event that for any reason (a) (i) a different Servicer shall be
engaged by the Titling Trustee to manage one or more SUBI Portfolios, on the one
hand, and the UTI Portfolio, on the other hand, or (ii) circumstances with
respect to any Securitized Financing secured by a UTI Pledge are such that (A)
the Titling Trustee has given to any Servicer the notice provided for in Section
7.02(c)(ii) or (B) if there is any outstanding UTI Pledge, the Titling Trustee
is notified that a Trust Asset Transfer into one or more SUBI Sub-Trusts would
cause a borrowing base deficiency (as defined in the documents related to such
Securitized Financing) to occur in any Securitized Financing secured by a UTI
Pledge, and (b) at such time the Titling Trustee, acting pursuant to any SUBI
Supplement or SUBI Servicing Supplement, would otherwise be causing its Servicer
to effect Trust Asset Transfers from the UTI Sub-Trust into one or more SUBI
Sub-Trusts: (1) the Titling Trustee shall establish and maintain in its name
for each SUBI a separate SUBI Lease Funding Account, (2) to the extent that the
Titling Trustee would, but for the conditions set forth in the foregoing clauses
(a) and (b), cause the transfer from any SUBI Collection Account to the Lease
Funding Account in connection with any Trust Asset Transfer, the Titling Trustee
shall instead cause the transfer of such funds from that SUBI Collection Account
to the SUBI Lease Funding Account established with respect to that SUBI, (3) the
Titling Trustee shall direct the Servicer then servicing the respective SUBI
Portfolio to acquire on behalf of the Titling Trust, for the account of that
SUBI Sub-Trust rather than for the UTI Sub-Trust, Contracts and Leased Vehicles
from Dealers, and (4) the Titling Trustee shall apply any such funds in any such
SUBI Lease Funding Account directly to reimburse the Servicer then servicing
that SUBI Portfolio for any payments made by it to Dealers in respect of such
Contracts and Leased Vehicles. In the event that Contracts and Leased Vehicles
are being acquired by any Servicer(s) on behalf of the Titling Trustee (on
behalf of the Titling Trust) both with respect to the UTI Sub-Trust and any SUBI
Sub-Trust simultaneously, the Titling Trustee shall first allocate all such
Contracts and Leased Vehicles to the SUBI Sub-Trusts until funds
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available for such purpose in any SUBI Lease Funding Account shall be exhausted
and then shall allocate all remaining Contracts and Leased Vehicles to the UTI
Sub-Trust.
SECTION 7.04 REBALANCING AFTER THIRD PARTY CLAIM. To the extent that a
third party claim against Titling Trust Assets is satisfied out of Titling Trust
Assets in proportions other than as provided in Section 3.04, then,
notwithstanding anything to the contrary contained herein, the Titling Trustee
shall promptly identify and reallocate (or cause the Servicer to identify and
reallocate) the remaining Titling Trust Assets among the UTI Sub-Trust and each
of the SUBI Sub-Trusts so that each shall bear the expense of the third party
claim as nearly as possible as if the burden of such claim had been allocated as
provided in Section 3.04.
ARTICLE VIII
TERMINATION
SECTION 8.01 TERMINATION OF THE TITLING TRUST.
(a) This Agreement and the Titling Trust shall terminate upon the last to
occur of (i) the payment to the Beneficiaries and each permitted purchaser,
assignee and pledgee thereof of interests in the Titling Trust of all amounts
and obligations required to be paid to them, and the expiration or termination
of all Securitized Financings by their respective terms, and (ii) the maturity
or liquidation and the disposition of all Titling Trust Assets and the
disposition to the Beneficiaries or their permitted purchasers, assignees or
pledgees of all net proceeds thereof. Notwithstanding the foregoing, in no
event shall the trust created by this Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date of this Agreement.
(b) Upon the termination of the Titling Trust, (i) after satisfaction of
all creditors, if any, of the Titling Trust, the Titling Trustee shall
distribute the Titling Trust Assets to the Beneficiaries in accordance with this
Agreement and the outstanding UTI Supplements and SUBI Supplements; (ii) the
Beneficiaries to whom such Titling Trust Assets are distributed shall retitle or
cause to be retitled any Leased Vehicles so distributed to those Beneficiaries
and shall pay or cause to be paid all applicable titling and registration fees
and taxes; and (iii) the Titling Trustee shall file or cause to be filed a
certificate of cancellation with the Delaware Secretary of State pursuant to
Section 3810(c) of the Delaware Act.
SECTION 8.02 TERMINATION AT THE OPTION OF BENEFICIARY. Notwithstanding
the provisions of Section 8.01, the Titling Trust shall be deemed terminated,
solely with respect to the Titling Trust Assets allocated to the related
Sub-Trust, and not as to any of the Titling Trust Assets allocated to any other
Sub-Trust, upon the written direction to the Titling Trustee by any Beneficiary
with respect to such Sub-Trust to revoke and terminate such portion of the
Titling Trust. Upon such termination of the Titling Trust with respect to such
a Sub-Trust, the Titling Trustee shall distribute to the Beneficiary for such
Sub-Trust all Titling Trust Assets allocated to such Sub-Trust and shall cause
the Certificates of Title to the Leased Vehicles allocated to such Sub-Trust to
be issued in the name of, or at the direction of, such Beneficiaries. The
Beneficiary
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to whom such Titling Trust Assets are distributed shall then pay or cause to be
paid all applicable titling and registration fees and taxes.
SECTION 8.03 TITLING TRUSTEE ACTIONS UPON TERMINATION. Upon termination
of this Agreement, the Titling Trust and/or one or more Sub-Trusts pursuant to
Section 8.01 or 8.02, the Titling Trustee shall take such action as may be
requested by any Beneficiary to transfer the related Titling Trust Assets to
such Beneficiary or such other Person as such Beneficiary may designate,
including the execution of the assignment forms on the Certificates of Title and
any other instruments of transfer and assignment with respect to the Leased
Vehicles.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.01 AMENDMENT. Prior to the first Securitized Financing, this
Agreement may be amended by written agreement between the UTI Beneficiary and
the Titling Trustee to correct or supplement any provision in this Agreement, to
cure any ambiguity, and to add, change or eliminate any other provision of this
Agreement with respect to matters or questions arising under this Agreement.
After the first Securitized Financing, any such amendment shall also require
such additional approvals, if any, as are required under documents relating to
each Securitized Financing.
SECTION 9.02 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
Delaware, without reference to its conflicts of laws provisions, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
SECTION 9.03 NOTICES. All demands, notices and communications under this
Agreement shall be in writing and shall be delivered or mailed by registered or
certified first class United States mail, postage prepaid, return receipt
requested; hand delivery; prepaid courier service; or telecopier, and addressed
in each case as follows: (a) if to the Grantor or UTI Beneficiary, at Toyota
Motor Credit Corporation, 19001 S. Western Avenue, Torrance, California 90509,
Attention: Corporate Treasury Manager (Telecopier No. (310) 787-6194), (b) if
to the Titling Trustee, at TMTT, Inc., care of First Bank National Association,
111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attention: Toyota
Lease Trust (at Telecopier No. (312) 228-9401), and (c) if to the Trust Agent,
First Bank National Association, 111 East Wacker Drive, Suite 3000, Chicago,
Illinois 60601, Attention: Corporate Trust Office (at Telecopier No. (312)
228-9401) or at such other address as shall be designated by the Grantor or
Beneficiary, the Titling Trustee or the Trust Agent in written notice to the
other parties hereto. Delivery shall occur only upon actual receipt or rejected
tender of such communication by an officer of the recipient entitled to received
such notices located at the address of such recipient for notices hereunder. A
copy of all notices to the Titling Trustee shall be delivered to First Bank
National Association for so long as it is a Trust Agent.
SECTION 9.04 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the
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remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of any Certificates or the rights of the holders thereof.
SECTION 9.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original, but all of which counterparts shall together constitute but one and
the same instrument.
SECTION 9.06 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained in this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their permitted successors and assigns and the
Beneficiaries and their respective permitted successors and assigns. Any
request, notice, direction, consent, waiver or other instrument or action by a
Beneficiary shall bind the successors and assigns of such Beneficiary.
SECTION 9.07 TABLE OF CONTENTS AND HEADINGS. The Table of Contents and
Article and Section headings are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
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IN WITNESS WHEREOF, TMCC, the Titling Trustee and, solely for the limited
purposes set forth herein, First Bank National Association, as Trust Agent, have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
TOYOTA MOTOR CREDIT CORPORATION, as Grantor,
Initial Beneficiary and Servicer
By:
------------------------------------------
Name:
Title:
TMTT, Inc., as Titling Trustee
By:
------------------------------------------
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION,
as Trust Agent
By:
------------------------------------------
Name:
Title:
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EXHIBIT A
FORM OF UTI SUPPLEMENT
A-1
<PAGE>
EXHIBIT B
FORM OF SUBI SUPPLEMENT
B-1
<PAGE>
EXECUTION COPY
- -------------------------------------------------------------------------------
TOYOTA MOTOR CREDIT CORPORATION
TMTT, INC.,
as Trustee of Toyota Lease Trust
and,
for Certain Limited Purposes only,
FIRST BANK NATIONAL ASSOCIATION,
as Trust Agent
UTI SUPPLEMENT
TO
AMENDED AND RESTATED
TRUST AND SERVICING AGREEMENT
Dated as of October 1, 1996
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
PAGE
ARTICLE X.
DEFINITIONS
<S> <C>
SECTION 10.01 Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE XI.
CREATION AND TERMINATION OF TRUST INTERESTS
SECTION 11.01 Initial Creation of UTI, Subdivision Thereof. . . . . . . . . . . . .2
SECTION 11.02 Issuance and Form of UTI Certificates.. . . . . . . . . . . . . . . .4
SECTION 11.03 Filings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 11.04 Termination of UTI. . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE XII.
ACCOUNTS AND CASH FLOWS
SECTION 12.01 Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 12.02 Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 12.03 Distribution of Funds, Default in UTI Pledge. . . . . . . . . . . . .8
SECTION 12.04 Lease Funding Accounts. . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 12.05 Rebalancing After Third Party Claims. . . . . . . . . . . . . . . . .9
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.01 Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 13.02 Effect of UTI Supplement on Trust Agreement.. . . . . . . . . . . . 10
SECTION 13.03 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 13.04 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
EXHIBITS
EXHIBIT A Form of Direction to Create UTI Unit. . . . . . . . . . . . . . . . . .A-1
EXHIBIT B Form of Direction to Reallocate UTI Unit Assets . . . . . . . . . . . .B-1
EXHIBIT C Form of [Residual] UTI [Unit] Certificate . . . . . . . . . . . . . . .C-1
EXHIBIT D Forms of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . .D-1
EXHIBIT E Form of Dealer Agreement. . . . . . . . . . . . . . . . . . . . . . . .E-1
</TABLE>
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UTI SUPPLEMENT TO AMENDED AND RESTATED
TRUST AND SERVICING AGREEMENT
UTI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT, dated
and effective as of October 1, 1996, among TOYOTA MOTOR CREDIT CORPORATION, a
California corporation (in its capacities as grantor, initial beneficiary and
servicer), TMTT, INC., a Delaware corporation, as Titling Trustee, and for
certain limited purposes only, FIRST BANK NATIONAL ASSOCIATION, a national
banking association, as Trust Agent.
RECITALS
A. TMCC, the Titling Trustee and the Trust Agent have entered into that
certain Trust and Servicing Agreement, as the same was amended and restated
pursuant to that certain Amended and Restated Trust and Servicing Agreement,
each dated as of October 1, 1996 (collectively, the "Titling Trust Agreement"),
pursuant to which the Grantor and the Titling Trustee formed Toyota Lease Trust,
a Delaware business trust, for the purpose of taking assignments and conveyances
of, holding in trust and dealing in, various Titling Trust Assets in accordance
with the Titling Trust Agreement.
B. The Titling Trust Agreement contemplates that all Titling Trust
Assets, other than those from time to time identified on the Titling Trust's
books and records by the Titling Trustee on behalf of the Titling Trust and at
the direction of the UTI Beneficiary, as SUBI Assets allocated to separate SUBI
Sub-Trusts, shall constitute UTI Assets, and that the Titling Trustee shall
create an undivided trust interest therein and issue to the UTI Beneficiary a
UTI Certificate evidencing such UTI, and the UTI Beneficiary and its permitted
assignees generally will be entitled to the proceeds of, including the net cash
flow arising from, but only from, the UTI Assets.
C. The parties hereto desire to supplement the terms of the Titling Trust
Agreement to cause the Titling Trustee, at the direction of the UTI Beneficiary,
to identify the UTI Portfolio and to allocate the related Titling Trust Assets
to the UTI Sub-Trust and to create and issue to the UTI Beneficiary one or more
UTI Certificates that collectively evidence the entire beneficial interest in
the UTI, and to set forth the terms and conditions thereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and in the Titling Trust Agreement, the parties hereto agree to
the following supplemental obligations and provisions with regard to the UTI
Portfolio:
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ARTICLE X.
DEFINITIONS
SECTION 10.01 Definitions.
For all purposes of this UTI Supplement, except as otherwise expressly
provided or unless the context otherwise requires, capitalized terms used and
not otherwise defined herein shall have the meanings ascribed thereto in the
Annex of Definitions attached to the Titling Trust Agreement for all purposes of
this UTI Supplement. In the event of any conflict between a definition set
forth herein and that set forth in the Annex of Definitions, that set forth
herein shall prevail. All terms used in this UTI Supplement include, as
appropriate, all genders and the plural as well as the singular. All references
such as "herein", "hereof" and the like shall refer to this UTI Supplement as a
whole and not to any particular article or section within this UTI Supplement.
All references such as "includes" and variations thereon shall mean "includes
without limitation" and references to "or" shall mean "and/or". Any reference
herein to the "Titling Trustee, acting on behalf of the Titling Trust", or words
of similar import, shall be deemed to mean the Titling Trustee, acting on behalf
of Toyota Lease Trust and all beneficiaries thereof.
ARTICLE XI.
CREATION AND TERMINATION OF TRUST INTERESTS
SECTION 11.01 Initial Creation of UTI, Subdivision Thereof.
(a) Pursuant to Section 3.01(b) of the Titling Trust Agreement, all
Titling Trust Assets (including without limitation Contracts and Leased
Vehicles), other than any Titling Trust Assets denominated as SUBI Assets from
time to time in accordance with Section 3.01(c) of the Titling Trust Agreement,
shall constitute UTI Assets. All Contracts and Leased Vehicles that are
included as UTI Assets shall be, for so long as they remain UTI Assets, "UTI
Contracts" and "UTI Leased Vehicles", respectively, and collectively shall
comprise the "UTI Portfolio". The UTI Assets also shall include: the Lease
Funding Account, including all cash and Permitted Investments therein and all
income from the investment of funds therein; all Insurance Policies and rights
thereunder to the extent applicable to the UTI Portfolio, including the right to
proceeds therefrom with respect to the UTI Portfolio or obligors with respect
thereto, as the case may be; the right to receive the proceeds of all Dealer or
other repurchase obligations, if any, relating to the UTI Portfolio; and all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other property.
(b) Also pursuant to Section 3.01(b) of the Titling Trust Agreement,
the beneficial interest in the UTI Assets shall constitute the UTI. The UTI
shall represent an undivided beneficial interest solely in the UTI Assets.
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(c) Upon the written direction of the UTI Beneficiary to the Titling
Trustee (in substantially the form attached as Exhibit A) in connection with a
UTI Pledge or otherwise, the Titling Trustee shall from time to time identify
and allocate or cause to be identified and allocated on the books and records of
the Titling Trust one or more separate sub-portfolios of UTI Assets, to be so
identified and allocated by date of origination, lease number and original
principal balance, but otherwise not accounted for independently within the UTI
Portfolio, which shall be represented by one or more UTI Unit Certificates (as
defined in Section 11.02(a)), with the residual UTI Assets and the residual UTI
Portfolio being represented by the Residual UTI Certificate.
All UTI Assets not allocated or identified as UTI Unit Assets shall remain
as Residual UTI Assets until allocated as UTI Unit Assets or SUBI Assets. Upon
such allocation as UTI Unit Assets or SUBI Assets, such Residual UTI Assets
shall no longer be assets of, or allocated to, the Residual UTI Portfolio,
unless and until specifically reallocated to the Residual UTI Portfolio from
that UTI Unit Portfolio or SUBI Portfolio pursuant to a written direction from
the holder of the related UTI Unit Certificate or SUBI Certificate, as
applicable, to the Titling Trustee. Each such direction to reallocate UTI Unit
Assets or SUBI Assets to the Residual UTI Portfolio, and each similar direction
to allocate UTI Unit Assets or UTI Residual Assets to a SUBI Portfolio, shall be
in substantially the form attached as Exhibit B. The undivided beneficial
interest in each such UTI Unit Portfolio shall constitute a separate subdivision
of the Undivided Trust Interest (each, a "UTI Unit"); the undivided interest in
the Residual UTI Portfolio shall constitute a separate subdivision of the UTI
(the "Residual UTI Unit"); and the Residual UTI Unit and any UTI Units
outstanding from time to time collectively shall comprise the UTI.
The Titling Trustee shall distribute to or upon the order of the UTI
Beneficiary one or more UTI Units, each UTI Unit representing a specific
undivided interest in (but only in) such identified UTI Unit Portfolio and the
UTI Unit Assets allocated thereto from time to time.
Before any UTI Unit Certificate is issued, Section 2.07 of the Titling
Trust Agreement must be amended, if and to the extent, that the issuance of the
UTI Unit Certificate and its possible transfer could result in the UTI
Beneficiary and the holders of the UTI Unit Certificates being two different
entities.
(d) The UTI Beneficiary shall at all times maintain a minimum net
worth of at least $5,000,000 (excluding the value of any UTI Certificate(s) or
SUBI Certificates held thereby).
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SECTION 11.02 Issuance and Form of UTI Certificates.
(a) The UTI initially shall be represented by a single trust
certificate (together with any replacements thereof, the "Residual UTI
Certificate"). Upon the written direction described above in Section 11.01(c),
the UTI thereafter shall be represented by the Residual UTI Certificate and any
additional trust certificate representing each UTI Unit to be formed (together
with any replacements thereof, a "UTI Unit Certificate") and such previous UTI
Unit Certificates as may have been issued and not retired. All such trust
certificates shall constitute "UTI Certificates" within the meaning of Section
3.01(b) of the Titling Trust Agreement. The Residual UTI Certificate, and each
other UTI Certificate shall be in substantially the form of Exhibit C attached
hereto, with such appropriate insertions, omissions, substitutions and other
variations as are required by this UTI Supplement, and may have such letters,
numbers or other marks of identification and such legends and endorsements
placed thereon as may, consistently herewith and with the Titling Trust
Agreement, be directed by the UTI Beneficiary. Each UTI Certificate shall be
printed, lithographed, typewritten, mimeographed, photocopied or otherwise
produced or may be produced in any other manner as may, consistently herewith
and with the Titling Trust Agreement, be determined by the UTI Beneficiary.
(b) Each UTI Certificate shall contain (i) an express written waiver
of any claim by any holder thereof to any assets of the Titling Trustee and to
all of the Titling Trust Assets or proceeds thereof other than the UTI Unit
Assets or Residual UTI Assets, as the case may be, represented by such UTI
Certificate, and those proceeds or assets derived from or earned by such UTI
Assets, and (ii) an express subordination in favor of the holder of each SUBI
Certificate (or pledgee thereof) by any holder or pledgee of a UTI Certificate
to any claim to any SUBI Asset that, notwithstanding such holder's or pledgee's
disclaimer, may be determined to exist.
(c) Neither any interest in the UTI nor any UTI Certificate may be
transferred or assigned by the UTI Beneficiary other than as contemplated
herein, and any such purported transfer or assignment shall be deemed null, void
and of no effect. However, any UTI Certificates and the Residual UTI
Certificate may be pledged, and a security interest therein granted, and may be
transferred or assigned absolutely to or by the pledgee thereof, solely in
connection with exercise of remedies with respect to a default under or with
respect to any Securitized Financing secured thereby or any UTI Pledge secured
thereby; provided that each pledgee or transferee must (i) give a non-petition
covenant substantially similar to that set forth in Section 6.14 of the Titling
Trust Agreement, and (ii) execute an agreement between or among itself, each
other assignee or pledgee from time to time of the UTI or any UTI Certificate,
and each assignee or pledgee from time to time of any SUBI or SUBI Certificate,
to release all claims to the SUBI Assets and, in the event that such release is
not given effect, to fully subordinate all claims it may be deemed to have
against the SUBI Assets.
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SECTION 11.03 Filings.
The Grantor, the UTI Beneficiary (if different from the Grantor) and the
Titling Trustee, as directed by and at the expense of the Grantor or the UTI
Beneficiary, will undertake all other and future actions and activities as
may be deemed reasonably necessary by the Grantor or the UTI Beneficiary to
perfect (or evidence) and confirm the foregoing allocations of Titling Trust
Assets to the UTI Portfolio, including without limitation filing or causing
to be filed UCC financing statements and executing and delivering all related
filings, documents or writings as may be deemed reasonably necessary by the
Grantor or the UTI Beneficiary hereunder or for such purposes under any other
documents relating to any Securitized Financing involving the UTI or a UTI
Pledge; provided, however, that in no event will the Grantor, the UTI
Beneficiary or the Titling Trustee be required to take any action to perfect
(i) any allocation of UTI Assets to a UTI Unit Portfolio or (ii) any security
interest that may be deemed to be held by any party in any UTI Leased
Vehicle. The Grantor and the UTI Beneficiary each hereby revocably makes and
appoints each of the Titling Trustee and the Servicer from time to time of
the UTI Portfolio, and any of the respective officers, employees or agents,
as the true and lawful attorney-in-fact of the Grantor and the UTI
Beneficiary, which appointment is coupled with an interest and is revocable
(but, in the case of the Servicer, is made only for so long as such Servicer
is acting in such capacity) with power to sign on behalf of the Grantor or
the UTI Beneficiary any financing statements, continuation statements,
security agreements, assignments, affidavits, letters of authority, notices
or similar documents necessary or appropriate
SECTION 11.04 Termination of UTI.
In connection with the termination of the Titling Trust Agreement and the
Titling Trust, upon the direction of the UTI Beneficiary and the consent of any
pledgee of a UTI Pledge, the UTI shall be terminated and the UTI Certificates
shall be returned to the Titling Trustee and canceled thereby.
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ARTICLE XII.
ACCOUNTS AND CASH FLOWS
SECTION 12.01 Accounts.
(a) On the date of the creation of the first SUBI, the Titling
Trustee will establish, and for so long as may be required by the provisions of
any SUBI Supplement, the Titling Trustee will maintain with respect to the UTI
the UTI Collection Account and Lease Funding Account (collectively, the "UTI
Accounts") described in Section 7.01(a) of the Titling Trust Agreement. All
amounts that are held in the UTI Collection Account shall be invested in
Permitted Investments in accordance with Section 12.02 of this UTI Supplement
until distributed or otherwise applied in accordance with the Titling Trust
Agreement or this UTI Supplement.
(b) The UTI Accounts shall relate solely to the UTI and the UTI
Portfolio and any funds held therein shall not be commingled with any other
monies, except as otherwise provided for or contemplated in the Titling Trust
Agreement as supplemented by this UTI Supplement. SUBI Accounts established
pursuant to any SUBI Supplement shall relate solely to the respective SUBI's and
SUBI Portfolios. The Titling Trustee, as directed by the Servicer, will account
for and record separately all proceeds that are received by the Titling Trustee
relating to each of the Titling Trustee Accounts from the Titling Trust Assets.
(c) For so long as TMCC shall be the Servicer, the Servicer and the
Titling Trustee may make any remittances pursuant to this Article net of amounts
to be distributed to such remitting party from the Lease Funding Account or the
UTI Collection Account. In particular, unless otherwise specified in any SUBI
Supplement, advances by the UTI Beneficiary or the Servicer with respect to the
funding of Contracts or the payment of Titling Trust Expenses, and the
reimbursement of such advances from collections on the Contracts, the proceeds
of any Securitized Financing or otherwise, will not require deposit of funds
into the Lease Funding Account or UTI Collection Account, and may in each case
be made by using funds that have been commingled with other funds. Nonetheless,
each such party shall account for all of the above described remittances and
distributions as if the amounts were deposited and/or transferred separately
rather than on a net basis.
6
<PAGE>
SECTION 12.02 Cash Flows.
(a) Subject to Section 7.01(b) of the Titling Trust Agreement and
Sections 12.04 and 12.05 hereof, and except as otherwise provided herein, in any
SUBI Supplement or in any related SUBI Servicing Supplement, the Servicer or
Titling Trustee shall deposit as described in Section 7.01(b) of the Titling
Trust Agreement all collections and proceeds received by the Servicer with
respect to any Contract or Leased Vehicle, whether from regular periodic
payments by obligors under a Contract sent to a Servicer lock box or from any
other payments from such obligors or any other Persons received in any other way
by the Servicer. All such collections and proceeds shall be identified by the
Servicer as related either to (i) Contracts and Leased Vehicles in a particular
SUBI Portfolio or (ii) Contracts and Leased Vehicles remaining as part of the
UTI Portfolio and shall be deposited by the Servicer into the appropriate SUBI
Collection Account to the extent they relate to any SUBI Portfolio and into the
UTI Collection Account (or simply paid to the UTI Beneficiary by the Servicer if
the UTI Beneficiary and the Servicer are not the same person) to the extent they
relate to the UTI Portfolio.
(b) Except as provided in Sections 12.01, 12.04 and 12.05 of this UTI
Supplement, or as provided in any SUBI Supplement or related SUBI Servicing
Supplement, the Titling Trustee shall, at the direction of the Servicer, make,
or cause to be made, the following payments and transfers on each Distribution
Date from the UTI Collection Account or the appropriate SUBI Accounts (as and
to the extent specified in the related SUBI Supplement, SUBI Servicing
Supplement or Securitization Trust Agreement) in the following order and
priority: (i) to or on behalf of the Servicer, all Servicer Expenses incurred
during the related Collection Period, together with any unreimbursed Servicer
Expenses incurred in one or more prior Collection Periods; (ii) to or on behalf
of the Servicer, all Servicing Fees incurred during the related Collection
Period, together with any unpaid Servicing Fees incurred in one or more prior
Collection Periods; (iii) to or on behalf of the Person to whom due, all Titling
Trust Expenses incurred during the related Collection Period, together with any
unpaid Titling Trust Expenses incurred in one or more prior Collection Periods;
and (iv) to or upon the direction of the UTI Beneficiary, any remaining funds
therein.
(c) Except as provided in Sections 12.04 and 12.05 of this UTI
Supplement, or as provided in any SUBI Supplement or related SUBI Servicing
Supplement, the Titling Trustee shall, at the direction of the Servicer, make,
or cause to be made (or permit the allocation by the Servicer with respect to
monies held by the Servicer), on each Funding Advance Reimbursement Date,
payment from the Lease Funding Account (or from monies held by the Servicer and
allocable or distributable therefor) to or on behalf of the Servicer, the
related Funding Advance Reimbursement Amount, together with any unreimbursed
Funding Advance Reimbursement Amounts incurred in one or more prior Collection
Periods.
7
<PAGE>
(d) Unless this UTI Supplement is amended to reflect a different
arrangement specified in any one or more SUBI Supplements, the allocation of
Liabilities of the Titling Trust, including with respect to any Affected Trust
Assets, shall be as specified in Section 3.04 of the Titling Trust Agreement.
SECTION 12.03 Distribution of Funds, Default in UTI Pledge.
(a) On any date during any period in which the Titling Trustee has
neither received notice from the Servicer or any pledgee of a UTI Pledge nor
otherwise obtained actual knowledge to the effect that (i) there is any sum due
with respect to the related Securitized Financing or other UTI Pledge not
otherwise timely paid by the UTI Beneficiary (after any applicable grace
period), (ii) there is any other outstanding and uncured default by the UTI
Beneficiary with respect thereto (after any applicable grace period), or (iii)
any reimbursements of Funding Advances due to the Servicer have not been made,
the Titling Trustee, promptly upon receipt of a written demand therefor from the
related UTI Beneficiary accompanied by a written determination by the Servicer
as to the extent of Excess Funds in the Lease Funding Account, shall pay out to
such UTI Beneficiary upon its request any or all Excess Funds so requested.
(b) Notwithstanding subsection (a) above, or any direction of the
Grantor, the UTI Beneficiary or the Servicer to the contrary, during any period
as to which the Titling Trustee either has received notice from the Servicer or
any pledgee of a UTI Pledge or otherwise has obtained actual knowledge that a
default in connection therewith has occurred and is continuing, and the Titling
Trustee has not received notice of correction or cure thereof and other
assurances and indemnifications reasonably satisfactory to it with respect to
such correction or cure, the Titling Trustee shall (i) not create any new SUBI,
(ii) direct each Servicer not to accept any further assignments on behalf of the
Titling Trustee of Contracts or Leased Vehicles except as provided for in
Sections 3.04, 7.02, 7.03 and 7.04 of the Titling Trust Agreement and Section
12.04 of this UTI Supplement, and (iii) distribute to the relevant pledgee of
the UTI Pledge to which such default relates, on demand, all Excess Funds that
would otherwise be distributable to the UTI Beneficiary up to the amount
necessary to cure any such default. The Grantor, UTI Beneficiary and Servicer
each hereby agrees to and ratifies each such action on the part of the Titling
Trustee, and covenants not to give the Titling Trustee contrary instructions or
directions.
(c) If for any reason circumstances with respect to any Securitized
Financing or other UTI Pledge are such that the Titling Trustee has given to any
Servicer the notice provided for in subsection (b)(ii) above, the Titling
Trustee shall take the actions set forth in Section 12.04 of this UTI
Supplement.
SECTION 12.04 Lease Funding Accounts.
In the event that for any reason (a) (i) a different Servicer shall be
engaged by the Titling Trustee to manage one or more SUBI Portfolios, on the
one hand, and the UTI Portfolio, on the
8
<PAGE>
other hand, or (ii) the Titling Trustee has actual knowledge that
circumstances with respect to any Securitized Financing secured by a UTI
Pledge are such that a Trust Asset Transfer into one or more SUBI Portfolios
would cause a borrowing base deficiency (as defined in the documents related
to such Securitized Financing or UTI Pledge) or similar default to occur with
respect to such Securitized Financing or UTI Pledge, and (b) at such time the
Titling Trustee, acting pursuant to any SUBI Supplement, would otherwise be
causing the related Servicer to effect Trust Asset Transfers from the UTI
Portfolio into one or more SUBI Portfolios upon the written direction of the
UTI Beneficiary, the Titling Trustee shall (1) establish (to the extent such
account has not already been established with respect to such SUBI Portfolio)
and maintain in its name for each SUBI a separate SUBI Lease Funding Account,
each of which shall be a Titling Trustee Account and a SUBI Account; (2) to
the extent that the Titling Trustee would, but for the conditions set forth
in clauses (a)(i) and (a)(ii) of this Section 12.04, cause the transfer of
funds from any SUBI Collection Account to the Lease Funding Account (or
directly to the Servicer) in connection with any Trust Asset Transfer,
instead cause the transfer of such funds from that SUBI Collection Account to
the related SUBI Lease Funding Account; (3) direct the Servicer then
servicing the respective SUBI Portfolio to acquire on behalf of the Titling
Trust, for the account of that SUBI Portfolio rather than for the UTI
Portfolio, Contracts and Leased Vehicles from Dealers, and (4) apply any such
funds in any such SUBI Lease Funding Account directly to reimburse the
Servicer then servicing that SUBI Portfolio for any payments made by it to
Dealers in respect of such Contracts and Leased Vehicles. In th event that
Contracts and Leased Vehicles are being acquired by any Servicer(s) at such
direction of the Titling Trustee on behalf of the Titling Trust with respect
to both the UTI Portfolio and any SUBI Portfolio simultaneously, the Titling
Trustee and the Servicer shall first allocate all such Contracts and Leased
Vehicles to the relevant SUBI Portfolios until funds available for such
purpose in any SUBI Lease Funding Account shall be exhausted and then shall
allocate all remaining Contracts and Leased Vehicles to the UTI Portfolio.
SECTION 12.05 Rebalancing After Third-Party Claim.
To the extent that a third-party Claim against Titling Trust Assets is
satisfied out of Titling Trust Assets in proportions other than as provided in
Section 3.04 of the Titling Trust Agreement, then, notwithstanding anything to
the contrary contained herein, the Titling Trustee shall promptly identify and
reallocate (or cause the Servicer to identify and reallocate) the remaining
Titling Trust Assets among the UTI Sub-Trust and each of the SUBI Sub-Trusts
such that each shall bear the expense of such Claim as nearly as possible as if
the burden thereof had been allocated as provided in Section 3.04 of the Titling
Trust Agreement.
9
<PAGE>
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.01 GOVERNING LAW.
This UTI Supplement shall be created under and governed by and construed
under the internal laws of the State of Delaware, without regard to any
otherwise applicable principles of conflicts of laws, and the obligations,
rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
SECTION 13.02 EFFECT OF UTI SUPPLEMENT ON TRUST AGREEMENT.
(a) Except as otherwise specifically provided herein: (i) the
parties shall continue to be bound by all provisions of the Titling Trust
Agreement; and (ii) the provisions set forth herein shall operate either as
additions to or modifications of the extant obligations of the parties under
the Titling Trust Agreement, as the context may require. In the event of any
conflict between the provisions of this UTI Supplement and the Titling Trust
Agreement with respect to the UTI and any UTI Assets, the provisions of this
UTI Supplement shall prevail.
(b) For purposes of determining the parties' obligations under
this UTI Supplement with respect to the UTI, general references in the
Titling Trust Agreement to a UTI Supplement shall be deemed to refer more
specifically to this UTI Supplement.
SECTION 13.03 COUNTERPARTS.
This UTI Supplement may be executed in any number of counterparts, each
of which so executed and delivered shall be deemed to be an original, but all
of which counterparts shall together constitute but one and the same
instrument.
SECTION 13.04 AMENDMENT.
Prior to the first Securitized Financing, this UTI Supplement may be
amended by written agreement between the UTI Beneficiary and the Titling
Trustee to correct or supplement any provision in this UTI Supplement, to
cure any ambiguity, and to add, change or eliminate any other provision of
this UTI Supplement with respect to matters or questions arising under this
UTI Supplement. After the first Securitized Financing, any such amendment
shall also require such additional approvals, if any, as are required under
documents relating to each Securitized Financing.
10
<PAGE>
IN WITNESS WHEREOF, the Grantor, the Titling Trustee and (solely for the
limited purposes set forth in Sections 6.03(e), 6.11(d), 6.14, 6.15, 9.01 and
9.03 of the Titling Trust Agreement), the Trust Agent, have caused this UTI
Supplement to be duly executed by the respective officers as of the day and
year first above written.
TOYOTA MOTOR CREDIT CORPORATION,
as Grantor, UTI Beneficiary and Servicer
By:
-----------------------------------------
Name: George Borst
Title: Senior Vice President and General
Manager
TMTT, Inc.,
as Titling Trustee
By:
-----------------------------------------
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION,
as Trust Agent
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF DIRECTION TO CREATE UTI UNIT
TMTT, INC., Titling Trustee
c/o First Bank National Association
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attention: Corporate Trust Office
Re: Toyota Lease Trust
Creation of UTI Unit No. ____
Dear sirs:
Pursuant to Section 11.01(c) of the UTI Supplement (the "UTI
Supplement") dated as of October 1, 1996, to the Trust and Servicing
Agreement, as the same was amended and restated pursuant to the Amended and
Restated Trust and Servicing Agreement (the "Titling Trust Agreement"), dated
as of October 1, 1996, each among Toyota Motor Credit Corporation ("TMCC") as
grantor, initial beneficiary and servicer, TMTT, INC., as Titling Trustee
(the "Titling Trustee"), and for certain limited purposes only, First Bank
National Association, a national banking association as trust agent, you are
hereby directed to create a UTI Unit No. ___ (the "UTI Unit") comprised of
the assets identified in the attached schedule.
You are hereby directed to register the UTI Unit Certificate in the name
of [Pledgee/Transferee] as of [date], and to deliver the same on [date] to
[Pledgee/Transferee or Agent] at [Address], against confirmation of receipt
of [amount of proceeds of Pledge or Securitized Financing] received in the
account described in the attached account details.
The [name, date and parties to controlling document] setting forth the
terms and conditions of the [Pledge/Securitized Financing] is attached
hereto. Your attention is directed to Sections ___, ___ and ___, which
specify events of default the occurrence of which may require the Titling
Trustee to make future distributions of amounts payable to the UTI
Beneficiary to the persons or on the basis specified in Section 12.03 of the
UTI Supplement.
A-1
<PAGE>
TMCC, as UTI Beneficiary, hereby represents and warrants to the Titling
Trustee that all of the conditions precedent to the creation of a UTI Unit
are satisfied as of the date of this instruction, including, but not limited
to, those contained in Sections 3.01 and 7.02 of the Titling Trust Agreement
and Section 11.02 of the UTI Supplement.
Dated: TOYOTA MOTOR CREDIT CORPORATION,
--------------------
as UTI Beneficiary
By:
------------------------------------
Name:
Title:
A-2
<PAGE>
EXHIBIT B
FORM OF DIRECTION TO REALLOCATE UTI UNIT ASSETS
TMTT, INC., Titling Trustee
c/o First Bank National Association
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attention: Corporate Trust Office
Re: Toyota Lease Trust
Reallocation with respect to UTI Unit No. ____
Dear sirs:
Pursuant to Section 11.01(c) of the UTI Supplement (the "UTI
Supplement") dated as of October 1, 1996, to the Trust and Servicing
Agreement, as the same was amended and restated pursuant to the Amended and
Restated Trust and Servicing Agreement (collectively, the "Titling Trust
Agreement"), dated as of October 1, 1996, each among Toyota Motor Credit
Corporation ("TMCC") as grantor, initial beneficiary and servicer, TMTT,
INC., as Titling Trustee (the "Titling Trustee"), and for certain limited
purposes only, First Bank National Association, a national banking
association as trust agent, you are hereby directed to allocate to a UTI Unit
Portfolio relating to UTI Unit No. ___ the Contracts and Leased Vehicles
specified on the attached schedule, and additionally, for the term of the
[Secured Financing UTI Pledge] documented in the attached
[name, date and parties to controlling document], to regard and treat the
related proceeds and other rights associated with such leases and leased
vehicles in relation to such UTI Unit No. ___ as specified in the UTI
Supplement.
TMCC, as UTI Beneficiary, hereby represents and warrants to the Titling
Trustee that all of the conditions precedent to the allocation of UTI Assets
to a UTI Unit are satisfied as of the date of this direction, including, but
not limited to, those contained in Sections 3.01 and 7.02 of the Titling
Trust Agreement and Section 11.02 of the UTI Supplement.
Dated: TOYOTA MOTOR CREDIT CORPORATION
-------------------
By: ____________________________________
Name:
Title:
B-1
<PAGE>
EXHIBIT C
FORM OF [RESIDUAL] UTI [UNIT] CERTIFICATE
TOYOTA LEASE TRUST
UNDIVIDED TRUST INTEREST CERTIFICATE
evidencing a fractional undivided interest in the UTI Sub-Trust (as
defined below).
(This Certificate does not represent any obligation of, or an interest
in, Toyota Motor Credit Corporation, Toyota Motor Sales, U.S.A., Inc., TMTT,
Inc., Toyota Leasing, Inc. ("TLI") or any of their respective affiliates.)
Number
------
THIS CERTIFIES THAT _____________________________________ is the
registered owner of a nonassessable, fully-paid, fractional undivided
interest in the UTI [UTI Unit] (the ["UTI"]["UTI Unit"]) comprised of
interests in those Titling Trust Assets not allocated to any other Sub-Trust
of the Titling Trust [or the Residual UTI Sub-Trust], such assets comprising
the UTI Sub-Trust (the "UTI Sub-Trust") of the Toyota Lease Trust, a Delaware
business trust (the "Trust") formed by Toyota Motor Credit Corporation, as
Grantor and UTI Beneficiary (in such capacities, the "Grantor" and the "UTI
Beneficiary" respectively), and TMTT, Inc., a Delaware corporation, as
trustee (the "Trustee") pursuant to a Trust and Servicing Agreement, as the
same was amended and restated pursuant to the Amended and Restated Trust and
Servicing Agreement (as amended and restated, the "Titling Trust Agreement"),
each dated and effective as of October 1, 1996, among the Grantor, the
Titling Trustee, and, for certain limited purposes set forth therein, First
Bank National Association, a national banking association, as Trust Agent
(the "Trust Agent"). A summary of certain of the provisions of the Titling
Trust Agreement is set forth below. Capitalized terms used and not otherwise
defined herein have the meanings ascribed thereto in the Titling Trust
Agreement and UTI Supplement (defined below).
This Certificate is one of the duly authorized UTI Certificates issued
under the Titling Trust Agreement, as supplemented by the UTI Supplement (the
"UTI Supplement") dated and effective as of October 1, 1996, among the UTI
Beneficiary, the Titling Trustee and, for certain limited purposes only set
forth therein, the Trust Agent (the "UTI Certificates"). This UTI
Certificate is subject to the terms, provisions and conditions of the Titling
Trust Agreement and the UTI Supplement, to which agreements each UTI
Beneficiary by virtue of the acceptance hereof or of any interest herein
hereby assents and by which such UTI Beneficiary is bound.
C-1
<PAGE>
Also issued or to be issued under the Titling Trust Agreement are
various other series of certificates evidencing undivided interests in other
Sub-Trusts of the Titling Trust. [To date, no other UTI Certificate has been
issued, but] SUBI Certificates representing 100% of the undivided interests in
each SUBI Sub-Trust formed or to be formed have or will be issued at the time
each related SUBI Sub-Trust is formed.
The property of the Titling Trust includes, or will include, among other
things: (i) any capital contributed by the Grantor; (ii) the Contracts and
all proceeds thereof; (iii) the Leased Vehicles and all proceeds thereof,
including each Certificate of Title and the Residual Value of each Leased
Vehicle, whether realized through the exercise by Obligors of purchase
options under the Contracts, the proceeds of sale of the Leased Vehicles to
Dealers or third parties or through payments received from any other Person
(directly or indirectly) under any related Insurance Policy (to the extent
not applied to making repairs to the related Leased Vehicle or otherwise paid
to the Obligor, a third Person or Governmental Authority by the Servicer as
required by law or pursuant to its normal servicing practices) or as a
subsidy or other funding of any modification of the related Residual Value;
(iv) all of the Titling Trust's rights with respect to any Contract or Leased
Vehicle, including the right to enforce and to proceeds arising from all
Dealer repurchase obligations arising under Dealer Agreements; (v) all of
TMCC's rights with respect to any Contract or Leased Vehicle, including the
right to enforce and to proceeds arising from all Dealer repurchase
obligations arising under Dealer Agreements; (vi) any Insurance Policy and
rights thereunder or proceeds therefrom relating to any of the Contracts,
Leased Vehicles or payments of the related Obligors with respect thereto (to
the extent not applied to making repairs to the related Leased Vehicle or
otherwise paid to the Obligor, a third Person or Governmental Authority by
the Servicer as required by law or pursuant to its normal servicing
practices); (vii) any portion of any security deposit actually and properly
applied by the Servicer against amounts due under the related Contract, to
the extent not applied to making repairs to the related Leased Vehicle or
paid to the Obligor, a third Person or Governmental Authority in accordance
with the Servicer's normal servicing practices; and (viii) all proceeds of
any of the foregoing (such assets, together with any other assets of the
Titling Trust, the "Titling Trust Assets"). The Titling Trust Agreement
provides that, from time to time, the Titling Trust Assets will be identified
and allocated on the records of the Titling Trust into one or more separate
Sub-Trusts comprised of identified Titling Trust Assets (such Sub-Trusts the
"UTI Sub-Trust" or a "SUBI Sub-Trust", as the case may be, and the related
assets, "UTI Assets" or "SUBI Assets", as the case may be).
Pursuant to the UTI Supplement, the UTI Assets were identified and
allocated on the records of the Titling Trust as the UTI Sub-Trust, and the
beneficial interest in the UTI Sub-Trust was designated as the UTI. The
rights of the UTI Beneficiary to certain of the proceeds of the UTI Assets
are further set forth in the Titling Trust Agreement and the UTI Supplement.
This UTI Certificate is limited in right of payment to certain
collections and recoveries respecting the Contracts (and the related
Obligors) and the Leased Vehicles allocated to the UTI
C-2
<PAGE>
[Unit] Sub-Trust, all to the extent and as more specifically set in the
Titling Trust Agreement and the UTI Supplement. Copies of the Titling Trust
Agreement and the UTI Supplement may be examined during normal business hours
at the principal office of the Titling Trustee, and at such other places, if
any, designated by the Titling Trustee, or by the UTI Beneficiary upon
request.
By accepting this UTI Certificate or any interest herein, the UTI
Beneficiary waives any claim to any proceeds or assets of the Titling Trustee
and to all of the Titling Trust Assets other than those from time to time
included within the UTI [Unit] Sub-Trust and those proceeds or assets derived
from or earned by the UTI Assets. In addition, by accepting this UTI
Certificate or any interest herein, the UTI Beneficiary hereby expressly
subordinates any claim or interest in or to any Titling Trust Assets not
included in the UTI [Unit] Sub-Trust that may be determined to exist in favor
of such UTI Beneficiary notwithstanding the foregoing disclaimer to the
rights and interests of each SUBI Beneficiary.
The Titling Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the parties thereto by written agreement between the UTI
Beneficiary and the Titling Trustee to correct or supplement any provision in
the Titling Trust Agreement, to cure any ambiguity, and to add, change or
eliminate any other provision of the Titling Trust Agreement with respect to
matters or questions arising under the Titling Trust Agreement. After the
first Securitized Financing, any such amendment shall also require such
additional approvals, if any, as are required under documents relating to
each Securitized Financing.
As provided in the Titling Trust Agreement and the UTI Supplement, this
UTI Certificate and the underlying interests represented hereby may not be
transferred or assigned, and any purported transfer or assignment shall be
null, void, and of no effect, except in accordance with the provisions of the
Titling Trust Agreement and the UTI Supplement.
Prior to due presentation of this UTI Certificate for registration of a
permitted transfer, the Titling Trustee, the certificate registrar and any of
their respective agents may treat the person or entity in whose name this UTI
Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and, except as provided for in the
Titling Trust Agreement, neither the Titling Trustee, the certificate
registrar nor any such agent shall be affected by any notice to the contrary.
Unless this UTI Certificate shall have been executed by an authorized
officer of the Titling Trustee, by manual signature, this UTI Certificate
shall not entitle the holder hereof to any benefit under the Titling Trust
Agreement or the UTI Supplement or be valid for any purpose.
C-3
<PAGE>
IN WITNESS WHEREOF, the Titling Trustee on behalf of the Titling Trust
and not in its individual capacity has caused this UTI Certificate to be duly
executed.
Dated: TOYOTA LEASE TRUST
By: TMTT, INC., as Titling Trustee
By:
Authorized Officer
ATTEST:
- ---------------------------
C-4
<PAGE>
EXHIBIT D
FORMS OF CONTRACT
[Omitted - On file with the Servicer]
D-1
<PAGE>
EXHIBIT E
FORM OF DEALER AGREEMENT
D-1
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOYOTA MOTOR CREDIT CORPORATION
TMTT, INC.,
as Titling Trustee of Toyota Lease Trust
and,
for Certain Limited Purposes only,
U.S. BANK NATIONAL ASSOCIATION,
as Trust Agent
and,
U.S. BANK NATIONAL ASSOCIATION,
as 1998-C Securitization Trustee
1998-C SUBI SUPPLEMENT
TO
AMENDED AND RESTATED
TRUST AND SERVICING AGREEMENT
Dated as of [___________], 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE XIV [RESERVED]. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE XV DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
15.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE XVI CREATION AND TERMINATION OF TRUST INTERESTS . . . . . . . . . . . 3
16.1 Initial Creation of 1998-C SUBI Sub-Trust and 1998-B SUBI. . . . . . 3
16.2 Rights in Respect of 1998-C SUBI . . . . . . . . . . . . . . . . . . 5
16.3 Issuance and Form of SUBI Certificates . . . . . . . . . . . . . . . 5
16.4 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
16.5 Termination of 1998-C SUBI . . . . . . . . . . . . . . . . . . . . . 7
16.6 Representations and Warranties of Titling Trustee. . . . . . . . . . 7
16.7 Resignation or Removal of Titling Trustee. . . . . . . . . . . . . . 7
ARTICLE XVII ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS. . . . . . . . . . . 7
17.1 1998-C SUBI Collection Account . . . . . . . . . . . . . . . . . . . 7
17.2 1998-C SUBI Lease Funding Account. . . . . . . . . . . . . . . . . . 9
17.3 Investment Gains and Losses. . . . . . . . . . . . . . . . . . . . .10
17.4 Rebalancing After Third-Party Claim. . . . . . . . . . . . . . . . .10
ARTICLE XVIII MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . .11
18.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
18.2 Effect of 1998-C SUBI Supplement on Titling Trust Agreement. . . . .11
18.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
18.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
18.5 Severability of Provisions . . . . . . . . . . . . . . . . . . . . .12
18.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
i
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EXHIBITS
<S> <C>
ANNEX OF SUPPLEMENTAL DEFINITIONS. . . . . . . . . . . . . . . . . . . . Annex I
EXHIBIT A Form of 1998-C SUBI Certificate. . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of 1998-C SUBI Insurance Certificate. . . . . . . . . . . . B-1
SCHEDULE I Schedule of 1998-C Contracts and 1998-C
Leased Vehicles as of the Cutoff Date. . . . . . . . . . . . . . S-1
</TABLE>
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1998-C SUBI SUPPLEMENT TO
AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT
1998-C SUBI SUPPLEMENT TO AMENDED AND RESTATED TRUST AND SERVICING
AGREEMENT, dated and effective as of [___________], 1998, among TOYOTA MOTOR
CREDIT CORPORATION, a California corporation (in its capacities as Grantor, UTI
Beneficiary and Servicer, respectively), TMTT, INC., as Titling Trustee, for the
limited purposes of acknowledging the provisions of Sections 17.01, 17.02 and
17.03 and having rights under Section 18.03, U.S. BANK NATIONAL ASSOCIATION
(formerly known as First Bank National Association), a national banking
association, as Trust Agent, and for the limited purposes of the provisions of
Sections 17.01, 17.02, 17.03, and the rights under 18.03,
[_________________________], in its capacity as 1998-C Securitization Trustee.
RECITALS
A. The Grantor, the Titling Trustee and the Trust Agent have entered into
the Titling Trust Agreement, pursuant to which the Grantor and the Titling
Trustee formed the Titling Trust, for the purpose of taking assignments and
conveyances of, holding in trust and dealing in, various Titling Trust Assets in
accordance with the Titling Trust Agreement.
B. The Titling Trust Agreement contemplates that certain of the
Titling Trust Assets, other than those previously identified on the Titling
Trust's books and records as Other SUBI Assets and allocated to a separate
SUBI Sub-Trust, may be allocated to a SUBI Sub-Trust and thenceforth
constitute SUBI Assets within such SUBI Sub-Trust, and that in connection
with any such allocation the Titling Trustee shall create a SUBI and issue
to, or to the order of, the UTI Beneficiary one or more SUBI Certificates
evidencing such SUBI, and the related SUBI Beneficiaries and their permitted
assignees generally will be entitled to the net cash flow arising from, but
only from, such SUBI Assets.
C. The parties hereto desire to supplement the terms of the Titling Trust
Agreement to cause the Titling Trustee to identify a SUBI Portfolio to be
designated the 1998-C SUBI Portfolio and allocate the related Titling Trust
Assets to the related 1998-C SUBI Sub-Trust, to create the related 1998-C SUBI
and to create and issue to or to the order of the UTI Beneficiary (i) a 1998-C
SUBI Certificate, evidencing beneficial interests in the assets of the 1998-C
SUBI other than the proceeds of the Residual Value Insurance Policies and (ii) a
1998-C SUBI Insurance Certificate, evidencing beneficial interests in the assets
of the 1998-C SUBI that are proceeds of the Residual Value Insurance Policies
insofar as such policies relate to the 1998-C Leased Vehicles and the 1998-C
Contracts, and to set forth the terms and conditions thereof. It is the
intention of the parties hereto that the 1998-C SUBI Certificate and the 1998-C
SUBI Insurance Certificate collectively represent 100% of the beneficial
interests in the 1998-C SUBI.
D. The parties hereto desire to supplement the terms of the Titling Trust
Agreement relating to the establishment of the 1998-C SUBI Collection Account.
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E. The parties hereto desire that, concurrently herewith,
[_________________________], as securities intermediary (as defined in Section
8-102 of the UCC in effect on the date hereof in the State of New York (the "New
York UCC")) (in such capacity, the "SUBI Securities Intermediary"), establish a
securities account (as defined in Section 8-501 of the New York UCC) in the name
of and for the benefit of TMCC (the "TMCC SUBI Securities Account") pursuant to
that certain TMCC SUBI Account Control Agreement dated as of [___________],
1998, between TMCC and the SUBI Securities Intermediary, ("Account Control
Agreement") into which the 1998-C SUBI Certificate and the 1998-C SUBI Insurance
Certificate will initially be transferred and held until such time as TMCC
directs the SUBI Securities Intermediary to debit the TMCC SUBI Securities
Account to reflect the transfer of the 1998-C SUBI Certificate and/or the 1998-C
SUBI Insurance Certificate, pursuant to a financing transaction.
F. Concurrently herewith, the Titling Trustee, on behalf of the Titling
Trust, and the Servicer also will enter into the 1998-C Servicing Supplement
pursuant to which, among other things, the terms of the Titling Trust Agreement
will be supplemented insofar as they apply solely to the servicing of the SUBI
Sub-Trust created hereby to provide for further specific servicing obligations
that will benefit solely the SUBI Beneficiaries with respect to the 1998-C SUBI
created hereby.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and in the Titling Trust Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each party hereto, the parties hereto agree to the following supplemental
obligations and provisions with regard to the 1998-C SUBI Sub-Trust:
ARTICLE XIV
[RESERVED]
ARTICLE XV
DEFINITIONS
15.01 DEFINITIONS. For all purposes of this 1998-C SUBI Supplement,
except as otherwise expressly provided or unless the context otherwise requires,
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed thereto in the Annex of Definitions attached to the Titling Trust
Agreement or in the Annex of Supplemental Definitions attached hereto for all
purposes of this 1998-C SUBI Supplement. In the event of any conflict between a
definition set forth both in the Annex of Definitions and in the Annex of
Supplemental Definitions, the definition set forth in the Annex of Supplemental
Definitions shall prevail. In the event of any conflict between a definition
set forth both herein and in the Annex of Definitions or Annex of Supplemental
Definitions, the definitions set forth herein shall prevail. All terms used in
this 1998-C SUBI Supplement include, as appropriate, all genders and the plural
as well as the singular. All references such as "herein", "hereof" and the like
shall refer to this 1998-C SUBI Supplement as a whole and not to any particular
article or section within this 1998-C SUBI Supplement. All references such as
"includes" and variations thereon shall mean "includes without limitation" and
references to "or" shall mean "and/or". Any reference herein
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to the "Titling Trustee, acting on behalf of the Titling Trust", or words of
similar import, shall be deemed to mean the Titling Trustee, acting on behalf
of Toyota Lease Trust and all beneficiaries thereof.
ARTICLE XVI
CREATION AND TERMINATION OF TRUST INTERESTS
16.01 Initial Creation of 1998-C SUBI Sub-Trust and 1998-C SUBI.
(a) Pursuant to Section 3.01(c) of the Titling Trust Agreement,
Titling Trust Assets not already denominated as SUBI Assets with respect to a
different SUBI Sub-Trust may be identified and allocated as SUBI Assets of a
separate SUBI Sub-Trust at the direction of the UTI Beneficiary. The UTI
Beneficiary hereby directs the Titling Trustee to identify and allocate or cause
to be identified and allocated on the books and records of the Titling Trust a
separate portfolio of SUBI Assets (the "1998-C SUBI Assets") consisting of
(i) the Contracts and related Leased Vehicles listed on Schedule I hereto and
other related Titling Trust Assets to be accounted for and held in trust
independently from all other Titling Trust Assets within the Titling Trust,
including all Titling Trust Assets already identified and allocated to any other
SUBI Sub-Trust and from those remaining as assets of the UTI Sub-Trust and
(ii) the Subsequent Contracts, Subsequent Leased Vehicles and related Titling
Trust Assets to be allocated to the 1998-C SUBI Sub-Trust pursuant to Section
3.02(a) of the 1998-C Servicing Supplement.
The assets of the 1998-C SUBI Sub-Trust established hereby shall consist
of: (i) those Contracts identified by contract number on Schedule I hereto that
are Eligible Contracts as of the Cutoff Date, including the related rights of
the Titling Trust as lessor under such Contracts, having an Aggregate Net
Investment Value as of the Cutoff Date of $[_____________] and those Contracts
allocated to the 1998-C SUBI Sub-Trust pursuant to Section 3.02(a) of the 1998-C
Servicing Supplement; (ii) the related Leased Vehicles and all proceeds thereof,
including each Certificate of Title and the Booked Residual Value of each Leased
Vehicle, whether realized through the exercise by Obligors of purchase options
under the Contracts, the proceeds of sale of the Leased Vehicles to Dealers or
third parties or through payments received from any other Person (directly or
indirectly) including as proceeds of any related Insurance Policy (to the extent
not applied to making repairs to the related Leased Vehicle or otherwise paid to
the Obligor, a third Person or Governmental Authority by the Servicer as
required by law or pursuant to its normal servicing practices and, with respect
to the Residual Value Insurance Policies, net of any loss adjustment expenses
that may be offset against such proceeds pursuant to the terms of such Residual
Value Insurance Policies relating thereto) or as a subsidy or other funding of
any modification of the related Residual Value; (iii) all of the Titling Trust's
right, title, interest and obligations (except such obligations that are
specifically retained by the Titling Trust pursuant to the terms of the Titling
Trust Agreement) with respect to such Contracts or Leased Vehicles, including
the right to enforce all Dealer repurchase obligations arising under Dealer
Agreements and to proceeds arising therefrom; (iv) any other rights under or
other proceeds of any Insurance Policy relating to such Contracts, Leased
Vehicles or payments of the related Obligors with respect thereto (to the extent
not applied to making repairs to the related Leased Vehicle or otherwise paid to
the Obligor, a third Person or Governmental Authority by the Servicer as
required by law or pursuant to its normal servicing practices and, with respect
to the Residual
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Value Insurance Policies net of any loss adjustment expenses that may be
offset against such proceeds pursuant to the terms of such Residual Value
Insurance Policies); (v) any portion of any Security Deposit actually and
properly applied by the Servicer against amounts due under the related
Contract, to the extent not applied to making repairs to the related Leased
Vehicle or paid to the Obligor, a third Person or Governmental Authority in
accordance with the Servicer's normal servicing practices; (vi) the 1998-C
SUBI Collection Account, including all cash and Permitted Investments therein
and all income from the investment of funds therein and (vii) all proceeds of
any of the foregoing arising on or after the Cutoff Date.
Based upon their identification and allocation by the Servicer pursuant to
the 1998-C Servicing Supplement, the Titling Trustee hereby identifies and
allocates as 1998-C SUBI Assets the portfolio of Contracts and Leased Vehicles
more particularly described on Schedule I hereto, and the related Titling Trust
Assets described above, each such 1998-C SUBI Asset to be identified on the
books and accounts of the Titling Trust as belonging to the 1998-C SUBI
Portfolio.
(b) Pursuant to Section 3.01(c) of the Titling Trust Agreement, the
Titling Trustee hereby creates the 1998-C SUBI Sub-Trust and the 1998-C SUBI.
The 1998-C SUBI shall represent a specific undivided beneficial interest solely
in the 1998-C SUBI Sub-Trust and the 1998-C SUBI Assets.
(c) As required by Section 3.01(d) of the Titling Trust Agreement,
the UTI Beneficiary hereby certifies to the Titling Trustee that as of the
date of execution and delivery hereof: that (i) either there is no pledgee
of the UTI or each such pledgee of a UTI Pledge has received prior notice of
the creation of the 1998-C SUBI Sub-Trust and of the terms and provisions of
this 1998-C SUBI Supplement and of the related Securitized Financing and (ii)
as of the date hereof, and after giving effect to the creation of the 1998-C
SUBI Sub-Trust pursuant to Section 16.01(b), the issuance of the 1998-C SUBI
Certificate and 1998-C SUBI Insurance Certificate pursuant to Section
16.03(a), the transfer to, or to the order of, the UTI Beneficiary of the
1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate pursuant to
Section 16.03(b) and the Account Control Agreement specified in recital E
herein, and the application by the UTI Beneficiary of any net proceeds from
any Securitized Financing involving the 1998-C SUBI, the 1998-C SUBI
Certificate and/or the 1998-C SUBI Insurance Certificate, there is and will
be no default with respect to any Securitized Financing or other agreement or
obligation secured by a UTI Pledge.
(d) The parties hereto intend that, at any time during which the
1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate are held or
beneficially owned by a single Person, or by two or more Persons that are
treated as a single Person for federal income tax purposes, the 1998-C SUBI
Sub-Trust shall not constitute a separate entity for federal income tax
purposes or for state income or franchise tax purposes. However, at any time
that the 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate
are held or beneficially owned by two or more Persons that are not treated as
a single Person for federal income tax purposes, the parties hereto intend
that the 1998-C SUBI Sub-Trust be characterized as a separate entity for
federal and state income tax purposes that shall qualify as a partnership for
such purposes. The 1998-C SUBI Sub-Trust shall not elect to be treated as an
association under Section 301.7701-
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3(a) of the regulations of the United States Department of the Treasury for
federal income tax purposes.
(e) Each Beneficiary of the 1998-C SUBI Certificate and/or the
1998-C SUBI Insurance Certificate shall at all times maintain a minimum net
worth (excluding the value of the 1998-C SUBI Certificate and the 1998-C
Insurance Certificate held thereby and the value of any assets of the 1998-C
Securitization Trust established pursuant to the 1998-C Securitization Trust
Agreement) equal to at least $100,000; provided that such minimum net worth
requirement shall not apply to the 1998-C Securitization Trust or the 1998-C
Securitization Trustee.
16.02 RIGHTS IN RESPECT OF 1998-C SUBI.
Each holder of the 1998-C SUBI Certificate (including the 1998-C
Securitization Trustee, on behalf of the Holders of the securities issued by the
1998-C Securitization Trust, after the transfer of the 1998-C SUBI Certificate
by the UTI Beneficiary to the Transferor and the subsequent transfer of the
1998-C SUBI Certificate by the Transferor to the 1998-C Securitization Trustee,
on behalf of the 1998-C Securitization Trust) and the 1998-C SUBI Insurance
Certificate is a third-party beneficiary of the Titling Trust Agreement and this
1998-C SUBI Supplement, insofar as they apply to the 1998-C SUBI and the holder
of the 1998-C SUBI Certificate or the 1998-C SUBI Insurance Certificate.
Therefore, to that extent, references in the Titling Trust Agreement to the
ability of any "holder of a SUBI Certificate", "assignee of a SUBI Certificate"
or the like to take any action shall also be deemed to refer to the 1998-C
Securitization Trustee as holder of the 1998-C SUBI Certificate acting at its
own instigation or upon the instruction of Investor Certificateholders pursuant
to the terms of Section 6.15 of the 1998-C Securitization Trust Agreement.
16.03 ISSUANCE AND FORM OF SUBI CERTIFICATES.
(a) The 1998-C SUBI shall be represented by two SUBI Certificates to
be issued hereunder: (i) the 1998-C SUBI Certificate, evidencing beneficial
interests in the assets of the 1998-C SUBI other than proceeds of the Residual
Value Insurance Policies; and (ii) the 1998-C SUBI Insurance Certificate,
evidencing beneficial interests in the assets of the 1998-C SUBI that are
proceeds of the Residual Value Insurance Policies insofar as such Insurance
Policies relate to the 1998-C Leased Vehicles and the 1998-C Contracts. The
1998-C SUBI Certificate and 1998-C SUBI Insurance Certificate collectively
represent 100% of the beneficial interests in the 1998-C SUBI and the assets of
the 1998-C SUBI Sub-Trust. The Titling Trustee is hereby instructed to issue
the 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate
substantially in the forms of Exhibits A and B attached hereto, with such
letters, numbers or other marks of identification and such legends and
endorsements placed thereon as may, consistently herewith and with the Titling
Trust Agreement, be directed by the UTI Beneficiary.
The 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate may
be printed, lithographed, typewritten, mimeographed, photocopied or otherwise
produced in any other manner as may, consistently herewith and with the Titling
Trust Agreement, be determined by the UTI Beneficiary. The Titling Trustee is
hereby directed to issue and register the 1998-C
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SUBI Certificate and the 1998-C SUBI Insurance Certificate in the name of the
SUBI Securities Intermediary in such capacity, on behalf of and for the
benefit of TMCC, and to deliver such SUBI Certificates on the Closing Date to
the SUBI Securities Intermediary upon the order of TMCC.
(b) The 1998-C SUBI Certificate and 1998-C SUBI Insurance
Certificate initially shall be held in the TMCC SUBI Securities Account.
(c) TMCC shall direct the SUBI Securities Intermediary in writing
to effect the transfer of the 1998-C SUBI Certificate and the 1998-C SUBI
Insurance Certificate to the TLI SUBI Securities Account. Thereafter, TLI
shall direct the SUBI Securities Intermediary in writing to effect the
transfer of the 1998-C SUBI Certificate to the 1998-C SUBI Securities
Account. TLI shall not transfer the 1998-C SUBI Insurance Certificate in
connection with this transfer of the 1998-C SUBI Certificate.
(d) Pursuant to Section 3.01(g) of the Titling Trust Agreement,
the 1998-C SUBI Certificate may not be transferred or assigned except as
provided in connection with the termination of the 1998-C Securitization
Trust pursuant to Section 7.02 or 8.02 of the 1998-C Securitization Trust
Agreement, in each case subject to the assignee or pledgee (x) giving a
non-petition covenant substantially similar to that set forth in Section 6.14
of the Titling Trust Agreement, and (y) executing an agreement between or
among itself and each UTI Beneficiary and each SUBI Beneficiary of each SUBI
relating to another Sub-Trust, to release all claims to the Titling Trust
Assets allocated to the UTI Sub-Trust or to such other SUBI Sub-Trust and, in
the event that such release is not given effect, to fully subordinate all
claims it may be deemed to have against the Titling Trust Assets allocated
thereto (which agreement may be included in the 1998-C SUBI Certificate
itself). Notwithstanding the foregoing, the 1998-C SUBI Certificate may, at
any time, be transferred or assigned to TLI, TMCC, or any of their respective
affiliates.
The 1998-C SUBI Insurance Certificate shall not be transferred or
assigned except to a transferee or assignee who is (i) the holder of the
1998-C SUBI Certificate on the date of such transfer or (ii) TMCC, TLI or any
of their respective affiliates.
16.04 FILINGS.
The Grantor, the UTI Beneficiary (if different from the Grantor) and the
Titling Trustee, as directed by the Grantor or the UTI Beneficiary, will
undertake all other and future actions and activities as may be deemed
reasonably necessary by the Grantor or the UTI Beneficiary to perfect (or
evidence) and confirm the allocation of the 1998-C SUBI Assets to the 1998-C
SUBI Portfolio as provided herein, including filing or causing to be filed
UCC financing statements and executing and delivering all related filings,
documents or writings as may be deemed reasonably necessary by the Servicer
hereunder or under any other agreements or instruments relating to such
Securitized Financing. The Grantor hereby irrevocably makes and appoints
each of the Titling Trustee and the Servicer (in the case of the Servicer,
only for so long as such Servicer is acting in such capacity), and any of
their respective officers, employees or agents, as the true and lawful
attorney-in-fact of the Grantor (which appointment is coupled with an
interest and is irrevocable) with power to sign on behalf of the Grantor any
financing statements,
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continuation statements, security agreements, mortgages, assignments,
affidavits, letters of authority, notices or similar documents necessary or
appropriate to be executed or filed pursuant to this Section 16.04.
16.05 TERMINATION OF 1998-C SUBI.
In connection with any purchase by the Transferor of the Investor
Certificateholders' interest in the corpus of the 1998-C Securitization Trust
pursuant to Section 7.02 of the 1998-C Securitization Trust Agreement, and
the succession thereof to all of the interest in the 1998-C SUBI and 1998-C
SUBI Certificate, should all of the interest in the 1998-C SUBI thereafter be
transferred to the UTI Beneficiary, whether by sale or otherwise, then, upon
the direction of the UTI Beneficiary, the 1998-C SUBI shall be terminated,
the 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate shall
be returned to the Titling Trustee and canceled thereby, and the Titling
Trustee, at the direction of the Servicer, shall reallocate all 1998-C
Contracts, 1998-C Leased Vehicles and related 1998-C SUBI Assets to the UTI
Sub-Trust.
16.06 REPRESENTATIONS AND WARRANTIES OF TITLING TRUSTEE.
The Titling Trustee hereby makes the same representations and warranties
set forth in Section 6.12 of the Titling Trust Agreement as of the date hereof,
on which the Grantor and UTI Beneficiary have relied in executing this 1998-C
SUBI Supplement and on which each of their permitted assignees and pledgees, and
each pledgee or holder of the 1998-C SUBI Certificate and the 1998-C SUBI
Insurance Certificate (and each Beneficiary of the 1998-C SUBI Certificate and
the 1998-C SUBI Insurance Certificate ) may rely.
16.07 RESIGNATION OR REMOVAL OF TITLING TRUSTEE.
No resignation or removal of the Titling Trustee pursuant to any
provision of the Titling Trust Agreement shall be effective unless and until
each Rating Agency has confirmed, in writing, that such resignation or
removal would not cause it to reduce, modify or withdraw its then current
rating of any class of securities issued by the 1998-C Securitization Trust.
ARTICLE XVII
ACCOUNTS; CASH FLOWS; PERMITTED INVESTMENTS
17.01 1998-C SUBI COLLECTION ACCOUNT.
(a) The 1998-C Securitization Trustee shall establish in its name,
and maintain with respect to the 1998-C SUBI, the 1998-C SUBI Collection
Account for the benefit of (a) the Beneficiaries of the 1998-C SUBI
Certificate, (b) the Beneficiaries of the 1998-C SUBI Insurance Certificate
to the extent proceeds of the Residual Value Insurance Policies are deposited
therein, and (c) to the extent provided below, the Titling Trustee, which
account shall constitute a SUBI Collection Account. The 1998-C SUBI
Collection Account initially shall be established with
[_________________________], as 1998-C Securitization Trustee, and at all
times shall be an Eligible Account. In the event that the institution
maintaining the 1998-C SUBI Collection Account no longer meets the
requirements stated in the definition of Eligible
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Account, then the Servicer shall, with the 1998-C Securitization Trustee's
assistance as necessary, cause the 1998-C SUBI Collection Account to be moved
to a bank or trust company that satisfies those requirements. In connection
with the termination of the 1998-C Securitization Trust pursuant to Article
VII of the 1998-C Securitization Trust Agreement, the 1998-C Securitization
Trustee may transfer the 1998-C SUBI Collection Account to the Trust Agent.
The 1998-C SUBI Collection Account shall relate solely to the 1998-C SUBI and
the 1998-C SUBI Sub-Trust, and funds therein shall not be commingled with any
other monies, except as otherwise provided for or contemplated in Article VII
of the Titling Trust Agreement as supplemented by this 1998-C SUBI Supplement
or the 1998-C Servicing Supplement. All amounts held in the 1998-C SUBI
Collection Account shall be invested in Permitted Investments until
distributed or otherwise applied in accordance with Article V of the Titling
Trust Agreement or Sections 17.01(b), 17.01(c), 17.01(d), 17.02, 17.03 or
17.04 of this 1998-C SUBI Supplement. The Titling Trustee shall be a
beneficiary of the SUBI Collection Account only to the extent that amounts
described in Sections 7.01(c) and 7.03 of the Titling Trust Agreement are not
paid or reimbursed to the Titling Trustee, pursuant to such sections from a
Lease Funding Account; any such amounts shall be withdrawn from the 1998-C
SUBI Collection Account only for such purposes and only to the extent set
forth in Section 3.01 of the 1998-C Securitization Trust Agreement, or as set
forth in this Section 17.01(a) if the 1998-C SUBI Collection Account has been
transferred to the Trust Agent.
(b) The Servicer shall deposit into the 1998-C SUBI Collection
Account all amounts collected or received in respect of the 1998-C Contracts
and 1998-C Leased Vehicles (in each case exclusive of the proceeds of any
Residual Value Insurance Policies and amounts reinvested or to be reinvested
in Subsequent Contracts) and any Maturity Advance received from the
Transferor on or before the Deposit Date relating to each Collection Period
except as otherwise specified herein or in the 1998-C Servicing Supplement
(in connection with any failure to satisfy the Monthly Remittance
Conditions). Amounts so deposited will be applied by the 1998-C
Securitization Trustee or by the Servicer as specified in the 1998-C
Securitization Trust Agreement and the 1998-C Servicing Supplement.
It is the intent of the parties hereto that the proceeds of the Residual
Value Insurance Policies applicable to the 1998-C Leased Vehicles and the
1998-C Contracts will be payable by the Servicer (or the insurer under the
Residual Value Insurance Policies) directly to the holder of the 1998-C SUBI
Insurance Certificate and will not under any circumstances be subject to the
lien of the 1998-C Securitization Trust Agreement. If, notwithstanding the
foregoing, any such amounts are in fact deposited in any SUBI Account or
other account established by the Titling Trustee or the 1998-C Securitization
Trustee, then such amounts will be distributed to the holder of the 1998-C
SUBI Insurance Certificate by the Titling Trustee or the 1998-C
Securitization Trustee, as the case may be, on the next succeeding Monthly
Allocation Date at the written direction of the Servicer.
(c) Principal Collections and Interest Collections (which amounts
are exclusive of proceeds of the Residual Value Insurance Policies) that are
to be reinvested in Subsequent Contracts and Subsequent Leased Vehicles to be
included in the 1998-C SUBI Sub-Trust during the Revolving Period that are
not deposited into the 1998-C SUBI Collection
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Account on a Monthly Allocation Date, will be so reinvested by the Servicer
on a Transfer Date during the calendar month in which such Monthly Allocation
Date occurs as specified in Section 3.02(a) of the 1998-C Servicing
Supplement.
(d) From and after the date, if any, on which the Monthly
Remittance Conditions cease to be satisfied, the Servicer will deposit all
Principal Collections and Interest Collections (which amounts are exclusive
of proceeds of the Residual Value Insurance Policies) into the 1998-C SUBI
Collection Account within two Business Days of its receipt thereof as set
forth in Section 4.02 of the 1998-C Servicing Supplement, and such amounts
will thereafter be applied as described in Section 3.02 of the 1998-C
Servicing Supplement and Section 17.02 hereof, insofar as they are to be
reinvested in Subsequent Contracts and Subsequent Leased Vehicles, or
pursuant to Section 3.01 of the 1998-C Securitization Trust Agreement, as
appropriate.
17.02 1998-C SUBI LEASE FUNDING ACCOUNT.
Notwithstanding the provisions of Section 7.03 of the Titling Trust
Agreement, the Titling Trustee shall be required to establish and maintain
with respect to the 1998-C SUBI the 1998-C SUBI Lease Funding Account in the
name of the Titling Trustee, which account shall constitute a SUBI Lease
Funding Account; only in the event that the Monthly Remittance Conditions are
no longer satisfied. Such account shall be for the benefit of the
Beneficiaries of the 1998-C SUBI Certificate and 1998-C SUBI Insurance
Certificate (in the event that amounts relating to the Residual Value
Insurance Policies represented by the 1998-C SUBI Insurance Certificate are
in fact deposited in the 1998-C Lease Funding Account rather than paid
directly to the Holder of the 1998-C SUBI Insurance Certificate, as provided
in Section 17.01(b) hereof). Any such 1998-C SUBI Lease Funding Account
initially shall be established with U.S. Bank, as Trust Agent, and at all
times shall be an Eligible Account. In the event that the Trust Agent no
longer meets the requirements stated in the definition of Eligible Account,
then the Servicer shall, with the Titling Trustee's assistance as necessary,
cause the 1998-C SUBI Lease Funding Account to be moved to a bank or trust
company that satisfies those requirements. The 1998-C SUBI Lease Funding
Account shall relate solely to the 1998-C SUBI and the 1998-C SUBI Portfolio,
and funds therein shall not be commingled with any other monies, except as
otherwise provided for or contemplated in the Titling Trust Agreement as
supplemented by this 1998-C SUBI Supplement or the 1998-C Servicing
Supplement. All amounts held in the 1998-C SUBI Lease Funding Account shall
be invested in Permitted Investments until distributed or otherwise applied
in accordance with the Titling Trust Agreement, this 1998-C SUBI Supplement
or the 1998-C Servicing Supplement. All transfers of funds into and out of
the 1998-C SUBI Lease Funding Account shall be made in accordance with
Section 7.03 of the Titling Trust Agreement and Sections 3.02 and 4.02 of the
1998-C Servicing Supplement in connection with purchases of Subsequent
Contracts and Subsequent Leased Vehicles. Prior to the date, if any, on
which the Monthly Remittance Conditions cease to be satisfied, the Servicer
will instead be allowed to commingle the amounts to be reinvested in
additional Subsequent Contracts and Subsequent Leased Vehicles with its own
funds and to reinvest such amounts (by transfer of such amounts to the Lease
Funding Account or directly to the UTI Beneficiary, as appropriate) without
deposit into the 1998-C SUBI Collection Account or 1998-C SUBI Lease Funding
Account.
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17.03 INVESTMENT GAINS AND LOSSES.
Except as otherwise provided herein, all or a portion of the funds
deposited into the 1998-C SUBI Accounts and the Lease Funding Account shall
be separately invested by the Titling Trustee or the 1998-C Securitization
Trustee, as applicable, from time to time at the written direction of the
Servicer, in any Permitted Investments. All income, gain or loss from
investment of monies in the 1998-C SUBI Lease Funding Account shall be for
the account of the Servicer and credited or debited, as the case may be, from
such account; provided, that, each such investment shall be made in the name
of the Titling Trustee on behalf of the Titling Trust, its nominee or its
Financial Intermediary. All income, gain or loss from investment of monies
in the Lease Funding Account shall be for the account of the UTI Beneficiary
and credited or debited, as the case may be, from such account; provided,
that, each such investment shall be made in the name of the Titling Trustee
on behalf of the Titling Trust, its nominee or its Financial Intermediary.
If at any time the Servicer shall not have given the Titling Trustee a timely
written investment directive with respect to the Lease Funding Account or the
1998-C Lease Funding Account, the Titling Trustee shall invest and reinvest
any monies in such account(s) in a mutual fund offered by the 1998-C
Securitization Trustee or an affiliate of the 1998-C Securitization Trustee,
each of which meet the requirements of clause (i) of the definition of
Permitted Investments, or of the Trust Agent or another affiliate of the
Titling Trustee, each of which meet the requirements of clause (i) of the
definition of Permitted Investments. All income gain or loss from investment
of monies in the 1998-C SUBI Certificateholders' Account shall be for the
account of the Certificateholders and credited or debited, as the case may
be, from such account(s) provided that each such investment shall be made in
the name of the 1998-C Securitization Trustee on behalf of the 1998-C
Securitization Trust, its nominee or its Financial Intermediary. All income
gain or loss from investment of monies in the 1998-C SUBI Collection Account
shall be for the account of the Servicer and credited and debited, as the
case may be, from such account; provided, that, each such investment shall be
made in the name of the 1998-C Securitization Trustee on behalf of the 1998-C
Securitization Trust, its nominee or Financial Intermediary. If at any time
the Servicer shall not have given the 1998-C Securitization Trustee a timely
written investment directive with respect to the 1998-C SUBI
Certificateholders Account or the 1998-C SUBI Collection Account, the 1998-C
Securitization Trustee shall invest and reinvest any monies in such
account(s) in a mutual fund offered by the 1998-C Securitization Trustee or
an affiliate of the 1998-C Securitization Trustee, each of which meet the
requirements of clause (i) of the definition of Permitted Investments. The
1998-C Securitization Trustee shall not be liable for the selection of
investments or for investment losses incurred thereon in accordance with the
instructions of the Servicer or as otherwise specified in this Section 17.03.
The 1998-C Securitization Trustee shall have no liabilities in respect of
losses incurred as a result of the liquidation of any investment prior to its
stated maturity or the failure of the Servicer to provide timely written
investment direction.
17.04 REBALANCING AFTER THIRD-PARTY CLAIM.
To the extent that a third-party Claim against Titling Trust Assets is
satisfied out of Titling Trust Assets in proportions other than as provided
in Section 3.04 of the Titling Trust Agreement, then, notwithstanding
anything to the contrary contained herein, the Titling Trustee,
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at the direction of the Servicer, shall promptly identify and reallocate (or
cause the Servicer to identify and reallocate) the remaining Titling Trust
Assets among the UTI Sub-Trust and each of the SUBI Sub-Trusts, including the
1998-C SUBI Sub-Trust, such that each shall bear the expense of such Claim as
nearly as possible as if the burden thereof had been allocated as provided in
Section 3.04 of the Titling Trust Agreement.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
18.01 GOVERNING LAW.
This 1998-C SUBI Supplement shall be created under and governed by and
construed under the internal laws of the State of Delaware, without regard to
any otherwise applicable principles of conflicts of laws, and the
obligations, rights and remedies of the parties hereunder shall be determined
in accordance with such laws, except for the rights, privileges, duties,
liabilities and immunities of the 1998-C Securitization Trustee which shall
be governed by and construed in accordance with the internal laws of the
state of New York without regard to any otherwise applicable principles of
conflicts of laws.
18.02 EFFECT OF 1998-C SUBI SUPPLEMENT ON TITLING TRUST AGREEMENT.
(a) Except as otherwise specifically provided herein: (i)
the parties shall continue to be bound by all provisions of the Titling Trust
Agreement; and (ii) the provisions set forth herein shall operate either as
additions to or modifications of the extant obligations of the parties under
the Titling Trust Agreement, as the context may require. In the event of any
conflict between the provisions of this 1998-C SUBI Supplement and the
Titling Trust Agreement with respect to the 1998-C SUBI, the provisions of
this 1998-C SUBI Supplement shall prevail.
(b) For purposes of determining the parties' obligations
under this 1998-C SUBI Supplement with respect to the 1998-C SUBI, general
references in the Titling Trust Agreement to: (i) a SUBI Account shall be
deemed to refer more specifically to a 1998-C SUBI Account; (ii) a SUBI Asset
shall be deemed to refer more specifically to a 1998-C SUBI Asset; (ii) an
appropriate or applicable SUBI Collection Account shall be deemed to refer
more specifically to the 1998-C SUBI Collection Account; (iv) an appropriate
or applicable SUBI Lease Funding Account shall be deemed to refer more
specifically to a 1998-C SUBI Lease Funding Account; (v) a SUBI Sub-Trust or
SUBI Portfolio shall be deemed to refer more specifically to the 1998-C SUBI
Sub-Trust or 1998-C SUBI Portfolio, as the case may be; (vi) a SUBI
Supplement shall be deemed to refer more specifically to this 1998-C SUBI
Supplement; and (vii) a SUBI Servicing Supplement shall be deemed to refer
more specifically to the 1998-C Servicing Supplement.
18.03 AMENDMENT.
(a) The 1998-C SUBI Supplement and the Titling Trust
Agreement may be amended from time to time, to the extent such amendment
applies to or affects only the 1998-C
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SUBI or the Beneficiaries of the 1998-C SUBI Certificate and 1998-C SUBI
Insurance Certificate, by a writing signed by the Titling Trustee, the UTI
Beneficiary, each 1998-C SUBI Beneficiary and, to the extent that any such
amendment affects any obligation or interest of the Trust Agent, the Trust
Agent, in each case only with the prior written consent of the 1998-C
Securitization Trustee and upon prior written notice to each Rating Agency
that includes the substance of the proposed amendment. Any amendment of the
Titling Trust Agreement that applies to or affects the UTI or any Other SUBI
or any Beneficiary of the UTI or any Other SUBI in addition to this 1998-C
SUBI shall also be subject to the foregoing provisions of this Section 18.03.
Notwithstanding the foregoing, this Section 18.03 does not modify or
supersede any provision in the Titling Trust Agreement. Without limiting the
foregoing, any amendment of the Titling Trust Agreement or any other SUBI
Supplement that neither applies to nor affects the 1998-C SUBI, the 1998-C
SUBI Portfolio or the Beneficiaries of the 1998-C SUBI Certificate and 1998-C
SUBI Insurance Certificate shall not require the consent of the Beneficiaries
of the 1998-C SUBI Certificate, the 1998-C SUBI Insurance Certificate or of
the 1998-C Securitization Trustee.
18.04 NOTICES.
The notice provisions of the Titling Trust Agreement shall apply equally
to this Supplement; provided, that, any notice to the 1998-C Securitization
Trust or the 1998-C Securitization Trustee shall be addressed as follows:
[_________________________]
[_________________________]
[_________________________]
Attention: [______________________]
A copy of each notice or other writing required to be delivered to the
Titling Trustee pursuant to the Titling Trust Agreement or this 1998-C SUBI
Supplement shall be addressed and delivered as follows:.
U.S. Bank National Association
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attention: Toyota Auto Lease Trust 1998-C
A copy of each notice or other writing required to be delivered to the
Titling Trustee pursuant to the Titling Trust Agreement shall also be
delivered to the 1998-C Securitization Trustee insofar as it relates to the
1998-C Securitization Trust.
18.05 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this 1998-C SUBI Supplement shall be for any reason whatsoever held invalid,
then such covenants,
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agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this 1998-C SUBI Supplement and
shall in no way affect the validity or enforceability of the other provisions
of this 1998-C SUBI Supplement or of the 1998-C SUBI Certificate or the
1998-C SUBI Insurance Certificate or the rights of the holders thereof. To
the extent permitted by law, the parties hereto waive any provision of law
that renders any provision of this 1998-C SUBI Supplement invalid or
unenforceable in any respect.
18.06 COUNTERPARTS.
This 1998-C SUBI Supplement may be executed in any number of
counterparts, each of which so executed and delivered shall be deemed to be
an original, but all of which counterparts shall together constitute but one
and the same instrument.
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IN WITNESS WHEREOF, TMCC, the Titling Trustee and, solely for the
limited purposes set forth herein, U.S. Bank National Association, as Trust
Agent, have caused this 1998-C SUBI Supplement to be duly executed by their
respective officers as of the day and year first above written.
TOYOTA MOTOR CREDIT CORPORATION,
as Grantor, Servicer and UTI Beneficiary
By: ______________________________
Name: George E. Borst
Title: Senior Vice President and
General Manager
TMTT, INC.,
as Titling Trustee
By: ______________________________
Name: Steven E. Charles
Title: Vice President and Assistant
Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Trust Agent
By: ______________________________
Name: Steven E. Charles
Title: Vice President
[_________________________],
as 1998-C Securitization Trustee and SUBI
Securities Intermediary
By: ______________________________
Name:
Title:
<PAGE>
ANNEX OF DEFINITIONS
Unless otherwise specified in the agreement to which this Annex of
Definitions is attached or which refers to this Annex of Definitions, the
following terms have the indicated meanings. Terms defined herein but not
directly or indirectly used or referenced in such agreement shall not be deemed
to have any meaning or significance with respect to such agreement.
"ADMINISTRATIVE EXPENSE" means any reasonable administrative cost or
expense associated with any relevant Securitization Trust and the Titling Trust,
as the context indicates, including reasonable fees and expenses of attorneys
and accountants.
"ADMINISTRATIVE LIEN" means any first lien specified upon any Certificate
of Title as deemed necessary and useful by the Servicer or the UTI Beneficiary
to provide for delivery of title documentation to the Titling Trustee or its
designee.
"ADMINISTRATIVE LIENHOLDER" means the Person or Persons identified as such
from time to time to the Titling Trustee by the Servicer and in whose name one
or more Administrative Liens are specified on Certificates of Title.
"ADVANCE" if a Transaction Document specifies that Advances are to be made,
unless otherwise provided in such Transaction Document, means an advance to be
made by the Servicer on the date specified in such Transaction Document in
respect of the related SUBI Collection Period and with respect to each
outstanding Contract that is included in the related SUBI Portfolio as to which
the scheduled Monthly Payment is delinquent or as to which payments have been
deferred by the Servicer which deferrals have resulted in any diminution of the
amount of Collections received in connection therewith relative to the
originally scheduled Monthly Payments, each such advance to be in an amount
equal to the aggregate amount of the Monthly Payments due thereon during such
SUBI Collection Period but not received during such SUBI Collection Period.
"AFFECTED TRUST ASSETS" means a discrete Titling Trust Asset or group of
Titling Trust Assets impacted by any Liability (including contract, tort or tax
claims relating to one or more specific Contracts or Leased Vehicles) as
described in Section 3.04 of the Titling Trust Agreement.
"AFFILIATE" means, as to any Person, any other Person that (i) directly or
indirectly controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan) or (ii) is an officer or director of
such Person. A Person shall be deemed to be "controlled by" any other Person if
such other Person possesses, directly or indirectly, power (x) to vote 5% or
more of the securities (on a fully diluted basis) having ordinary voting power
for the election of directors or managing partners; or (y) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.
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"AUTHORIZED NEWSPAPER" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"BENEFICIARY" means the UTI Beneficiary or any holder of a UTI Certificate
or SUBI Certificate, including any trust formed with respect to a Securitized
Financing but excluding the Titling Trustee, any Trust Agent, or any trustee or
trust agent with respect to a Securitized Financing or UTI Pledge.
"BOOKED RESIDUAL VALUE" means the amount established at the origination of
the lease (based on documentation provided to the Dealers by TMCC) representing
the estimated wholesale market value at the Maturity Date of the related
Contract, each as set forth on the face of such Contract at the time of
origination including, and with respect to a Contract for which the Maturity
Date has been extended by the Servicer in connection with any extension or
deferral, means the value as set forth above reduced by payments in respect of
principal received during the extension period.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on
which banking institutions in New York, New York, Chicago, Illinois or Los
Angeles, California are authorized or obligated by law, executive order or
governmental 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-1, Class A-2 and Class A-3 Certificates in any foreign
jurisdiction by a paying agent located therein, "Business Day" shall also
exclude any day on which banking institutions in such foreign jurisdiction are
authorized or obligated by law, regulation, governmental order or decree to be
closed, whether or not payments are made in any other city on such Certificates
on such date, but such date shall not be used for making any other determination
with respect to the assets of the Trust or the Certificates of any Class.
"CERTIFICATE OF TITLE" means a certificate of title or other evidence of
ownership of a Leased Vehicle issued by the Registrar of Titles in the
respective jurisdiction in which such Leased Vehicle is registered, which
Certificate of Title shall reflect as the owner of such Leased Vehicle "Toyota
Lease Trust", "TMTT, Inc., as Trustee of Toyota Lease Trust" or such other
similar designation as may be acceptable to any relevant Registrar of Titles.
"CERTIFICATE OF TRUST" means the Certificate of Trust for the Titling Trust
required to be filed with the office of the Secretary of State of the State of
Delaware pursuant to Section 3810 of the Delaware Act.
"CHARGED-OFF CONTRACT" means 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.
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"CLAIMS" means any losses, liabilities and expenses (including reasonable
attorney's and other professional fees and expenses) incurred in connection with
reasonable collection efforts or the defense of any suit or action.
"CLASS" means all Certificates whose form is identical except for variation
in denomination, principal amount or owner.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"CLOSING DATE" means, with respect to any Securitized Financing, the date
specified as such in the related Transaction Documents.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTION PERIOD" means, with respect to any Distribution Date, the
calendar month preceding such Distribution Date.
"COLLECTIONS" means, with respect to any Collection Period, all net
collections received in respect of the Contracts and Leased Vehicles during such
Collection Period, including Monthly Payments and 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 (iii) Additional Loss Amounts in respect of
such Collection Period.
"COMMISSION" means the Securities and Exchange Commission, and any
successor thereto.
"CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES" means, collectively,
the contingent liability insurance policies maintained or to be maintained by
TMCC providing coverage for bodily injury and property damage suffered by third
persons caused by the operation of any vehicle that is a Leased Vehicle, and
each of the excess liability insurance policies maintained or to be maintained
by TMCC with third party insurers providing excess insurance coverage as to such
liabilities.
"CONTRACT" means any of the fixed rate retail closed-end lease contracts
(and all proceeds thereof) originated in connection with the lease of the Leased
Vehicles that are or were originated by Dealers pursuant to and in conformity
with Dealer Agreements between such Dealers and the Titling Trust, the rights to
which have been assigned to the Titling Trust, or the Titling Trustee on behalf
of the Titling Trust, in accordance with such Dealer Agreements.
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"CONTRACT DOCUMENTS" means, with respect to each Contract, (i) the fully
executed Contract, (ii) the related Certificate of Title (or the application
therefor if the Certificate of Title has not been received), (iii) any written
agreements modifying such Contract (including any written extension thereof),
(iv) all related credit applications, factory invoices, Dealer worksheets,
written records of certification of information provided in the credit
application and odometer statements required by applicable law, (v) documents
related to the provision of insurance and (vi) all other documents relating to
such Contract and retained by the Servicer.
"CONTRACT RECORD" means all data maintained by the Servicer (including,
without limitation, computerized records), together with all operating software
and appropriate documentation, relating directly to or maintained in connection
with the servicing of the Contracts.
"CORPORATE TRUST OFFICE" means the office of the Titling Trustee or Trust
Agent, as indicated by the context. As of October 1, 1996, the Corporate Trust
Office is located at 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601,
Attention: Toyota Lease Trust. After October 1, 1996, Corporate Trust Office
will mean the corporate trust office designated in writing to the Servicer and
to the Beneficiaries by the Titling Trustee, Trust Agent or any successor
thereto, as the case may be.
"CO-TRUSTEE AGREEMENT" means that Co-Trustee Agreement dated as of October
1, 1996, among TMCC, the Titling Trustee, the Trust Agent and Delaware Trust
Capital Management Inc., as Delaware Trustee.
"CREDIT AND COLLECTION POLICY" means those credit and collection policies
and practices of the Servicer, as applied by the Servicer, with respect to the
origination and servicing of Contracts and related Leased Vehicles as they may
be amended, supplemented, or modified by the Servicer from time to time.
"CURRENT CONTRACT" means a Contract that is not a Charged-off Contract, a
Matured Contract, a Liquidated Contract or an Additional Loss Contract.
"DEALER" means a motor vehicle dealer, located in a State permitted by the
Origination Criteria, that has entered into a Dealer Agreement.
"DEALER AGREEMENT" means that certain Retail Motor Vehicle Lease Agreement
substantially in the form to be attached as an exhibit to the UTI Supplement or
in such other form as may be approved from time to time entered into between the
Titling Trust and a Dealer setting forth the respective rights and obligations
of the Titling Trust and the Dealer, acting as an independent contractor, with
respect to the Dealer's entering into Contracts.
"DELAWARE ACT" means the Delaware Business Trust Act 12 Del. Code, Sections
3801 ET SEQ.
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"DELAWARE TRUSTEE" means any trustee or co-trustee appointed as such by the
Titling Trustee pursuant to a co-trustee agreement for purposes of satisfying
the Delaware Act. Initially, the Titling Trustee will so appoint Delaware Trust
Capital Management, Inc.
"DELAWARE PARTNERSHIP ACTS" means the Delaware Revised Uniform Limited
Partnership Act and the Delaware Uniform Partnership Act, in each case as
amended.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
second Business Day prior to such Distribution Date.
"DISCOUNTED CONTRACT" means any Contract that has a Lease Rate below the
Discount Rate specified in the Transaction Documents with respect to any
Securitized Financing.
"DISCOUNT RATE" means the discount rate specified in the Transaction
Documents with respect to any Securitized Financing.
"DISTRIBUTION DATE" means, with respect to the UTI and a Collection Period,
the twenty-fifth day of the following month, or if that day is not a Business
Day, the next Business Day, beginning with October 25, 1997.
"DTC" means The Depository Trust Company and its successors.
"DUE DATE" with respect to any Contract, means the monthly date specified
in such Contract on which the scheduled Monthly Payment is due.
"ELIGIBLE ACCOUNT" means (i) an account maintained with a federal or state
chartered depository or trust institution, the short-term unsecured debt
obligations of which have the Required Rating, (ii) a segregated trust account
maintained with a federal or state chartered depository or trust institution in
its corporate trust department or (iii) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of its rating of any related Rated
Certificates, as evidenced by a letter from each Rating Agency.
"ELIGIBLE CONTRACT" with respect to eligibility for origination in the name
of the Titling Trust, means a UTI Eligible Contract, and with respect to
eligibility for inclusion in any SUBI Sub-Trust means a UTI Eligible Contract
that also satisfies the definition of Eligible Contract applicable to such SUBI
Sub-Trust as set forth in the related SUBI Servicing Supplement.
"ELIGIBLE SERVICER" means TMCC or an entity that is servicing a portfolio
of automobile and/or light truck retail installment lease contracts, that is
legally qualified and has the capacity to service the Contracts and that has
demonstrated the ability to service a portfolio of similar lease contracts
professionally and competently in accordance with high standards of skill and
care.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to refer also to any
successor sections.
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of ERISA)
which, together with the identified person, would be deemed to be a member of
the same "controlled group" within the meaning of Section 414(b), (c), (m) and
(o) of the Code or Section 4001 of ERISA.
"EXCESS FUNDS" means, as of any date, the amount of funds in the Lease
Funding Account or otherwise held by the Servicer or the Titling Trustee in
respect of the UTI in excess of those (i) required to maintain the account to
meet all existing Liabilities of the Titling Trust to be paid out of such
account (after accounting for all transfers to be made from any SUBI Account on
or before such date) and (ii) required to be retained in such account as
reserves for reasonably anticipated Liabilities of the Titling Trust (after
taking into account all transfers to be made to such Lease Funding Account out
of any SUBI Account in respect of that SUBI's proportionate share of such
anticipated Liabilities).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXTENSION FEE" means, with respect to any Contract that has had its
Maturity Date extended as contemplated in the Titling Trust Agreement or any
SUBI Servicing Supplement, any payment required to be made by the Obligor in
connection with such extension.
"FDIC" means the Federal Deposit Insurance Corporation and its successors.
"FINANCIAL INTERMEDIARY" means a financial intermediary, as such term is
defined in Section 8-313(4) of the UCC.
"FIRST BANK" means First Bank National Association, a national banking
association.
"FNMA" means the Federal National Mortgage Association and its successors.
"FUNDING ADVANCE" means the amount of each advance of the face amount or
any portion of a Contract (including with respect to any taxes, fees or charges
payable to the related Dealer or any third party at the time of the funding
thereof) made by the UTI Beneficiary or any agent thereof in connection with the
funding of such Contract that has not previously been reimbursed thereto.
"FUNDING ADVANCE REIMBURSEMENT AMOUNT" means, with respect to any
Distribution Date, the aggregate amount of Funding Advances made during the
related Collection period and not previously reimbursed to the UTI Beneficiary
from Collections on the related Contracts or otherwise.
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"FUNDING ADVANCE REIMBURSEMENT DATE" means a Distribution Date on which a
Funding Advance Reimbursement Amount is to be made.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government.
"GRANTOR" means TMCC in its capacity as Grantor.
"INDEPENDENT" with respect to any specified Person means another Person who
(a) is in fact independent of the specified Person and any of its Affiliates;
(b) does not have any direct financial interest or any material indirect
financial interest in the specified Person or any of its Affiliates; and (c) is
not connected with the specified Person or any of its Affiliates as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions. Whenever it is provided in the Titling Trust Agreement or
any other agreement adopting this definition that any Independent Person's
opinion or certificate shall be furnished, such Independent Person shall be
deemed to be Independent to the satisfaction of the recipient thereof if such
opinion or certificate shall state that the signer has read this definition and
that the signer is in fact Independent within the meaning hereof.
"INDEPENDENT ACCOUNTANT" means an Accountant, who may also be the
Accountant who audits the books of TMCC or any of its Affiliates, who is
Independent with respect to TMCC and its Affiliates as contemplated by Rule 101
of the Code of Professional Conduct of the American Institute of Certified
Public Accountants.
"INDEPENDENT DIRECTOR" means a director of the Transferor who shall at no
time be (i) a director, officer, employee or former employee of the Transferor
or any Affiliate thereof, (ii) a natural person related to any director,
officer, employee or former employee of the Transferor or any Affiliate thereof,
(iii) a holder (directly or indirectly) of any voting securities of the
Transferor or any Affiliate thereof, or (iv) a natural person related to a
holder (directly or indirectly) of any voting securities of the Transferor or
any Affiliate thereof.
"INSOLVENCY EVENT" means, with respect to any Person:
(i) Such Person shall file a petition commencing a voluntary case under
any chapter of the Federal bankruptcy laws; or such Person 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 such Person 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 any
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due; or
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(ii) any order for relief against such Person 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 such Person 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 such Person or of any substantial part of its
property, or for the winding up or liquidation of its affairs, shall have been
entered.
"INSURANCE COSTS" means, with respect to any Insurance Policy, the premiums
therefor, any deductibles and any coinsurance payments.
"INSURANCE POLICIES" means any residual value insurance policy and any
policy of comprehensive, collision, public liability, physical damage, personal
liability, credit accident or health, credit life or unemployment insurance
maintained by the Grantor, any Obligor under any Contract or any Affiliate of
any such Person to the extent that any such policy covers or applies to any
Contract, Leased Vehicle or the ability of any Obligor under any Contract to
make required payments with respect to a Contract or the related Leased Vehicle;
provided that, with respect to any SUBI, "Insurance Policies" means only such of
the foregoing policies as relate to the related SUBI Portfolio and, in the case
of such insurance policies that relate to Contracts or related assets in more
than one SUBI Portfolio, such policies only insofar as they, or the proceeds
thereof, relate to Contracts or related assets included in the related SUBI
Portfolio.
"INSURANCE PROCEEDS" with respect to any Collection Period, means
recoveries pursuant to each Insurance Policy obtained and maintained by the
Obligor pursuant to a Contract, or by the Titling Trust or the Servicer with
respect to such Contract or the related Leased Vehicle.
"INTEREST COLLECTIONS" means, with respect to any Collection Period, an
amount equal to the amount by which Collections exceed Principal Collections
with respect to such Collection Period.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
"LEASE FUNDING ACCOUNT" means the Lease Funding Account established and
maintained in accordance with Section 7.01(a) of the Titling Trust Agreement.
"LEASED VEHICLE" means the new or used (including any dealer demonstrator
vehicle or manufacturers' program vehicle) automobile, minivan, sports utility
vehicle or light duty truck, together with all accessories, additions and parts
constituting a part thereof and all accessions thereto, which is the subject of
a Contract.
"LEASE RATE" means the imputed interest rate set forth in each Contract on
the basis of which the lessor identifies the portions of each Monthly Payment
that constitute principal or interest, respectively.
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"LIABILITIES" means all losses, liabilities, claims, damages, expenses
(including related reasonable legal and other professional fees and expenses),
taxes, actions and suits of any kind.
"LIEN" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to property, as the context may require, by operation of law.
"LIQUIDATED CONTRACT" means 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.
"LIQUIDATION EXPENSES" means reasonable out-of-pocket expenses (including
related attorneys' fees and expenses) incurred by the Servicer in connection
with the attempted realization of the full amounts due or to become due under
any Contract, including expenses incurred in connection with the repossession of
the related Leased Vehicle, the sale of such Leased Vehicle, whether upon its
repossession or return (if such Contract is a Matured Contract), any collection
effort (whether or not resulting in a lawsuit against the Obligor under such
Contract) or any claim under an Insurance Policy.
"LIQUIDATION PROCEEDS" means gross amounts received by the Servicer or the
Titling Trustee, on behalf of the Titling Trust (before reimbursement for
Liquidation Expenses), in connection with the realization of the full amounts
due or to become due under any Contract, whether from the sale or other
disposition of the related Leased Vehicle (without regard to whether such
proceeds exceed the Booked Residual Value), the proceeds of any collection
effort (whether or not resulting in a lawsuit against the Obligor under such
Contract), the proceeds of recourse payments by Dealers, receipt of Insurance
Proceeds, or collection of amounts due hereunder in respect of such Contract
(including the application of Security Deposits) or otherwise.
"MATURED CONTRACT" means any Contract that has reached its Maturity Date.
"MATURED VEHICLE", as of any date, means any Leased Vehicle, the related
Contract of which has reached its Maturity Date, and which Leased Vehicle has
been returned to the Servicer on behalf of the Titling Trust (or the Titling
Trustee on behalf of the Titling Trust), regardless of the status of the sale or
disposition of such Leased Vehicle as of the date of such return.
"MATURITY DATE" means, with respect to any Contract, the date on which the
last scheduled Monthly Payment shall be due and payable, as such date may be
extended in accordance with the provisions of the UTI Supplement and any
applicable SUBI Supplement or SUBI Servicing Supplement.
"MONTHLY PAYMENT" means, with respect to any Contract, the amount of each
fixed monthly payment payable by the related Obligor in accordance with the
terms thereof, net of any portion of such monthly payment that represents
collections allocable to payments to be made by such Obligor
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for sales taxes or similar items, and excluding any portion thereof relating to
the payment of insurance premiums (unless such premiums are included in the
related capitalized cost), late payment charges, extension fees or other similar
items.
"MONTHLY REMITTANCE CONDITIONS" means that (i) TMCC is the Servicer, (ii)
either (a) TMCC's short-term unsecured debt is rated at least P-1 by Moody's and
A-1 by Standard & Poor's (so long as Moody's and Standard & Poor's are Rating
Agencies), or (b) certain arrangements are made that have been approved in
writing by each Rating Agency that has rated any class of securities issued in
connection with a Securitized Financing at the request of the Grantor and (iii)
no Early Amortization Event or Event of Servicing Termination as defined in any
SUBI Supplement shall have occurred and be continuing.
"MOODY'S" means Moody's Investors Service, Inc., and its successors.
"OBLIGEE" means each Person who is the lessor under a Contract or the
assignee thereof, including the Titling Trust or the Titling Trustee on behalf
of the Titling Trust.
"OBLIGOR" means the Person who is the lessee under a Contract.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a certificate
signed by the President, any Vice President, the Chief Financial Officer, the
Chief Accounting Officer, the Treasurer or any Assistant Treasurer, the
Secretary or any Assistant Secretary thereof.
"OPINION OF COUNSEL" means, with respect to any Person, a written opinion
of counsel which counsel shall be reasonably acceptable to the indicated
recipient; provided that, in the case of opinions to be delivered by TMCC or
TLI, such counsel may be an employee of or outside counsel to the Transferor or
the Servicer.
"ORIGINATION CRITERIA" means, with respect to any Contract, TMCC's written
underwriting criteria in effect as of the date of origination of any specific
Contract, and as the same may be amended, supplemented or modified from time to
time by TMCC in the ordinary course of business.
"OTHER PROCEEDS" means monies arising from the sale, exchange, lease,
collection or other disposition of lease contracts and related leased vehicles
or other receivables that are not Titling Trust Assets but as to which the
Servicer is acting as servicer.
"OUTSTANDING PRINCIPAL BALANCE" means, with respect to any Contract as of
any date, the amount to which the capitalized cost of a Contract has been
amortized at any point in time, which will be an amount equal to (i) the sum of
all Monthly Payments remaining to be made, including overdue Monthly Payments
(provided, however, that Payments Ahead received but not yet applied are deemed
to be Monthly Payments remaining to be made), less any unearned finance or other
similar unearned lease charges relating to the period beginning after the next
succeeding Payment Date on such Contract (determined on a constant yield basis)
in accordance with the Servicer's usual
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practices, plus (ii) the Booked Residual Value of the related Leased Vehicle.
The term "principal amount" and "principal balance" as used in relation to any
Contract or Contracts shall refer, as of such date of determination, to the
Outstanding Principal Balance of such Contract or Contracts computed as of such
time.
"PAYMENT AHEAD" means any payment of one or more Monthly Payments (not
constituting a Prepayment) remitted by an Obligor with respect to a Contract in
excess of the Monthly Payment due with respect to such Contract, which sums the
Obligor has instructed the Servicer to hold and apply to Monthly Payments due in
one or more immediately subsequent calendar months.
"PAYMENT DATE" means, as to each Contract, the date each month therein set
forth as the date Monthly Payments are due.
"PERMITTED INVESTMENTS" means any one or more of the following instruments,
obligations or securities, in each case subject to any further criteria
specified in the related SUBI Supplement:
(a) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of the United
States;
(b) general obligations of or obligations guaranteed by FNMA or any
state of the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each Rating Agency
for such obligations;
(c) certificates of deposit issued by any depository institution or
trust company (including any Securitization Trustee) incorporated under the laws
of the United States or of any state thereof, the District of Columbia or the
Commonwealth of Puerto Rico and subject to supervision and examination by
banking authorities of one or more of such jurisdictions, provided that the
short-term unsecured debt obligations of such depository institution or trust
company are then rated the highest available rating of each Rating Agency for
such obligations;
(d) certificates of deposit, demand or time deposits of, bankers'
acceptances issued by, or federal funds sold by, any depository institution or
trust company (including any Securitization Trustee) incorporated under the laws
of the United States or any State and subject to supervision and examination by
federal and/or State banking authorities and the deposits of which are fully
insured by the Federal Deposit Insurance Corporation, so long as at the time of
such investment or contractual commitment providing for such investment either
such depository institution or trust company has the Required Rating (or if such
investment will mature after more than one month, the long-term, unsecured debt
of the issuer has the highest available rating from each Rating Agency) or such
Securitization Trustee shall have received a letter from each Rating Agency to
the effect that such investment would not result in the qualification,
downgrading or withdrawal of the ratings then assigned to any Rated
Certificates;
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(e) certificates of deposit issued by any bank, trust company, savings
bank or other savings institution and fully insured by the FDIC having the
Required Rating (or if such investment will mature after more than one month,
the long-term, unsecured debt of the issuer has the highest available rating
from each Rating Agency);
(f) repurchase obligations held by any Securitization Trustee that are
acceptable to the Securitization Trustee with respect to any security described
in clauses (a), (b) or (g) hereof or any other security issued or guaranteed by
any other agency or instrumentality of the United States, in either case entered
into with a federal agency or a depository institution or trust company (acting
as principal) described in clause (d) above (including any Securitization
Trustee); PROVIDED, HOWEVER, that repurchase obligations entered into with any
particular depository institution or trust company (including such
Securitization Trustee) will not be Permitted Investments to the extent that the
aggregate principal amount of such repurchase obligations with such depository
institution or trust company held by such Securitization Trustee on behalf of
the related Securitization Trust or of all of the Titling Trust Assets shall
exceed 10% of either the Aggregate Net Investment Value or the aggregate unpaid
principal balance or face amount, as the case may be, of all Permitted
Investments so held thereby;
(g) interests in any open-end or closed-end management type investment
company or investment trust (i) registered under the Investment Company Act, the
portfolio of which is limited to the obligations of, or guaranteed by, the
United States and to agreements to repurchase such obligations, which
agreements, with respect to principal and interest, are at least 100%
collateralized by such obligations marked to market on a daily basis and the
investment company or investment trust shall take delivery of such obligations
either directly or through an independent custodian designated in accordance
with the Investment Company Act and (ii) acceptable to each Rating Agency (as
approved in writing by each Rating Agency) as collateral for securities having
ratings equivalent to the ratings of the Rated Certificates on the Closing Date;
(h) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State so
long as at the time of such investment or contractual commitment providing for
such investment (i) the long-term, unsecured debt of such corporation has the
highest available rating from each Rating Agency, (ii) such corporation is TMCC
and TMCC's long term debt obligations shall at such time have a rating of at
least Aa3 from Moody's, and TMCC's short term debt obligations shall at such
time have a rating of at least A-1+ from Standard & Poor's and at least P-1 from
Moody's or (iii) a Securitization Trustee shall have received a letter from each
Rating Agency to the effect that such investment would not result in the
qualification, downgrading or withdrawal of the ratings then assigned to any
Rated Certificates or commercial paper or other short-term debt having the
Required Rating;
(i) money market funds so long as such funds are rated Aaa by Moody's
(so long as Moody's is a Rating Agency) and AAAm by Standard & Poor's (so long
as Standard & Poor's is a Rating Agency), and any other fund for which a
Securitization Trustee or an Affiliate of such Securitization Trustee serves as
an investment advisor, administrator, shareholder servicing agent
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and/or custodian or subcustodian, provided that any shares of such funds have a
credit rating of at least Aaa by Moody's (so long as Moody's is a Rating Agency)
and AAAm by Standard & Poor's (so long as Standard & Poor's is a Rating Agency)
and notwithstanding that (i) such Trustee or Affiliate charges and collects fees
and expenses from such funds for services rendered, (ii) such Trustee charges
and collects fees and expenses for services rendered pursuant to the related
Securitization Trust Agreement or under the Trust Agency Agreement and (iii)
services performed for such funds and pursuant to either such Agreement may
converge at any time. Each of the Transferor and the Servicer hereby
specifically authorizes the Securitization Trustee or Titling Trustee or
Affiliate thereof to charge and collect all fees and expenses from such funds
for services rendered to such funds, in addition to any fees and expenses such
Trustee may charge and collect for services rendered pursuant to either such
Agreement; and
(j) such other investments acceptable to each Rating Agency (as approved
in writing by each Rating Agency) as will not result in the qualification,
downgrading or withdrawal of the ratings then assigned to any Rated Certificates
by such Rating Agency;
provided that each of the foregoing investments shall mature no later than the
day specified in the related SUBI Supplement, and shall be required to be held
to such maturity.
None of the foregoing will be considered a Permitted Investment if:
(i) it constitutes a certificated security, bankers' acceptance,
commercial paper, negotiable certificate of deposit or other
obligation that constitutes an "instrument" within the meaning of
Section 9-105(1)(i) of the UCC and is susceptible of physical
delivery unless it is transferred to the Titling Trustee, a
Securitization Trustee or its Financial Intermediary in
accordance with Sections 8-313(1)(a), 8-313(1)(d)(i) or
8-313(1)(g) of the UCC, and such trustee obtains evidence that
any such property that is in registrable form has been registered
in its name or the name of its Financial Intermediary, its
custodian or its nominee;
(ii) it constitutes a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations,
unless, in accordance with applicable law, (A) a book-entry
registration thereof is made to an appropriate book-entry account
maintained with a Federal Reserve Bank by the Titling Trustee, a
Securitization Trustee or by a custodian therefor, (B) a deposit
advice or other written confirmation of such book-entry
registration is issued to such trustee or custodian, (C) any
such custodian makes entries in its books and records identifying
that such book-entry security is held through the Federal Reserve
System pursuant to federal book-entry regulations and belongs to
such trustee and indicating that such custodian holds such
Permitted Investment solely as agent for such Trustee, (D) such
trustee makes entries in its books and records establishing that
it holds such security solely as Titling Trustee or
Securitization Trustee for the Titling Trust or the related
Securitization Trust, as the case may be, and (E) any additional
or alternative procedures as may
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hereafter become necessary to effect complete transfer of ownership
thereof to such trustee are satisfied, consistent with changes in
applicable law or regulations or the interpretation thereof; or
(iii) it constitutes an uncertificated security under Article 8 of the
UCC that is not governed by clause (ii) above, unless the
transfer to, and ownership thereof by, the Titling Trustee or
Securitization Trustee, its Financial Intermediary, its custodian
or its nominee by the issuer of such security is registered by
the issuer thereof.
Notwithstanding anything to the contrary contained in this definition, no
Permitted Investment may be purchased at a premium and no Permitted Investment
shall be an interest only instrument. Any of the foregoing which constitutes an
uncertificated security shall not be considered a Permitted Investment if: (i) a
notation of the right of the issuer thereof to a lien thereon is contained in
the initial transaction statement therefor sent to the Titling Trustee; (ii) the
Titling Trustee has notice or actual knowledge of (A) any restriction on the
transfer thereof imposed by the issuer thereof, or (B) any adverse claim, or a
notation of any such restriction or of any specific adverse claim as to which
the issuer has a duty under the law of the state in which the Corporate Trust
Office is located at the time of registration is contained in the initial
transaction statement therefor sent to the Titling Trustee; or (iii) to the
Titling Trustee's actual knowledge, a creditor has served legal process upon the
issuer thereof at its chief executive office in the United States which legal
process attempts to place a Lien thereon prior to the registration thereof in
the name of the Titling Trustee.
Moreover, none of the foregoing (except long term debt obligations of TMCC
described in clause (h) above) will be a Permitted Investment with respect to
amounts on deposit in the Certificateholders' Account unless by its own terms it
matures on or before the Deposit Date succeeding the date of investment or it
includes a demand, put or similar feature such that the Securitization Trustee
(or the Servicer on behalf of the Securitization Trustee) is able to cause such
investment to mature on or before such Deposit Date.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation (excluding any "+" signs associated with such rating), or
such lower credit rating (as approved in writing by each Rating Agency) as will
not result in the qualification, downgrading or withdrawal of the rating then
assigned to any Rated Certificates by such Rating Agency. Also for purposes of
this definition, any reference to a Rating Agency refers only to a Rating Agency
that has, at the request of the Grantor, rated securities issued in the specific
securitized financing as to which this definition is being applied.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated association, Governmental Authority or any other entity.
"PLAN" means an "employee benefit plan," as such term is defined in Section
3(3) of ERISA.
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"PREPAYMENT" means, with respect to any Contract other than a Charged-off
Contract, payment to the Servicer of 100% of the Discounted Principal Balance of
such Contract, including an amount equal to the Booked Residual Value of the
related Leased Vehicle.
"PRINCIPAL COLLECTIONS" means, with respect to any Collection Period, all
Collections allocable to the principal component of any Contract, discounted to
the extent such Contract is a Discounted Contract.
"RATED CERTIFICATES" means the securities of any class or series issued in
a Securitized Financing that has been rated by a Rating Agency at the request of
the Grantor.
"RATING AGENCY" means each nationally recognized statistical rating
organization that rates a security in a Securitized Financing at the request of
the Grantor as of the related Closing Date and continues to do so.
"REGISTRAR OF TITLES" means any applicable department, agency or official
in a State responsible for accepting applications for, and maintaining records
regarding, Certificates of Title and liens thereon.
"REQUIRED RATING" means a rating on commercial paper or other short term
unsecured debt obligations of Prime-1 by Moody's so long as Moody's is a Rating
Agency and A-1+ by Standard & Poor's so long as Standard & Poor's is a Rating
Agency; and any requirement that deposits or debt obligations have the "Required
Rating" shall mean that such deposits or debt obligations have the foregoing
required ratings from Moody's and Standard & Poor's.
"RESIDUAL UTI CERTIFICATE" has the meaning set forth in Section 11.02 of
the UTI Supplement.
"RESIDUAL UTI UNIT" has the meaning set forth in Section 11.01 of the UTI
Supplement.
"RESIDUAL VALUE" means the actual Liquidation Proceeds, net of Liquidation
Expenses, received with respect to the disposition of any Leased Vehicle,
whether at maturity of the related Contract or otherwise, and whether or not
such Residual Value exceeds the Booked Residual Value.
"RESIDUAL VALUE INSURANCE POLICY" means Residual Value Insurance Policy
number RVI 97001 issued effective October 1, 1996 by Toyota Motor Insurance
Corporation of Vermont, in favor of the Titling Trust and naming TMCC as
additional insured and reinsured by RVI Guaranty Co., Ltd.
"RESPONSIBLE OFFICER" means an officer of the Titling Trustee or
Securitization Trustee assigned to the relevant Corporate Trust Office,
including the President, any Vice President, any trust officer, the corporate
Secretary and any assistant corporate Secretary or any other officer performing
functions similar to those performed by the persons who at the time shall be
such officers, and any
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other officer thereof to whom a matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION TRUSTEE" means any trustee appointed as such under the
Transaction Documents with respect to any Securitized Financing.
"SECURITIZED FINANCING" means (i) any financing transaction of any sort
undertaken by the related Beneficiary based on or secured by, directly or
indirectly, Titling Trust Assets, the UTI or any UTI Unit, any SUBI or any
interest in any of the foregoing, (ii) any sale by a Beneficiary of any interest
in one or more SUBIs or (iii) any other asset securitization, secured loan or
similar transaction involving Titling Trust Assets or any beneficial interest
therein or in the Titling Trust.
"SECURITY DEPOSIT" means the security deposit, reconditioning reserve or
similar deposit paid by an Obligor at the time of origination of the related
Contract; provided that the Titling Trust Assets shall include such deposits
only to the extent actually applied to cover excess wear and tear charges or may
otherwise lawfully be retained by the Titling Trust as lessor or its agents in
respect of fees, charges or reimbursable advances, payments or expenses thereby
under the related Contract.
"SERVICER" means TMCC, in its capacity as servicer under the Titling Trust
Agreement, or any successor to TMCC in such capacity.
"SERVICER EXPENSES" means all reasonable amounts expended by the Servicer
in connection with its performance of its duties under the Titling Trust
Agreement, including those incurred in connection with the preparation,
execution and delivery of all legal documentation relating to the formation of
the Titling Trust and the servicing of the UTI Assets prior to the creation of
the first SUBI, the making of any requisite license or other applications,
filings and related filing fees in connection with the commencement of
origination of leases and the recordation of related certificates of title in
the name of the Titling Trust and the perfection of security interests therein
or the registration of any offering of securities in any Securitized Financing,
the costs and expenses of preparing and delivering servicing, tax and other
reports as set forth in the Titling Trust Agreement and the costs and expenses
of providing any monitoring, billing and collection services with respect
thereto, in each case including any reasonable attorneys' fees and expenses, and
in each case excluding any costs and expenses to be paid out of the Servicing
Fee specified in any supplement to the Titling Trust Agreement.
"SERVICER REIMBURSEMENT" means the amount of any required reimbursement to
the Servicer of Servicer Expenses on a Closing Date or any other date (whether a
Distribution Date or otherwise) specified in the Transaction Documents with
respect to a Securitized Financing.
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"SERVICER'S CERTIFICATE" means a certificate of an officer or other
authorized signatory of the Servicer completed and executed pursuant to Section
5.01(b) of the related SUBI Servicing Supplement.
"SERVICING FEE" means (a) prior to the creation of the first SUBI, zero
and (b) after the creation of the first SUBI, the sum of each SUBI Servicing Fee
specified in a SUBI Supplement plus during any UTI Collection Period for which
TMCC is the Servicer, 1.00% of the outstanding balances of the Contracts in the
UTI Portfolio.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Incorporated, and its successors.
"STATE" means any state of the United States, the District of Columbia and
the Commonwealth of Puerto Rico in which, pursuant to the Origination Criteria,
a UTI Eligible Contract may be originated.
"SUBI" means any "special unit of beneficial interest" in the Titling Trust
comprised of a beneficial interest in a SUBI Sub-Trust.
"SUBI ACCOUNT" means, with respect to a SUBI, the SUBI Collection Account
or the SUBI Lease Funding Account.
"SUBI ASSETS" means, with respect to any SUBI, those Titling Trust Assets
that are identified as relating to and allocated to such SUBI by the Titling
Trustee upon the written direction of the UTI Beneficiary pursuant to the
Titling Trust Agreement and related SUBI Supplement.
"SUBI BENEFICIARY" means any Beneficiary that is a Beneficiary because it
is the holder or pledgee of a SUBI Certificate.
"SUBI CERTIFICATE" means, with respect to a SUBI, each of the certificates
evidencing such SUBI, substantially in the form included as an exhibit to each
SUBI Supplement, executed and delivered pursuant to the related SUBI Supplement.
"SUBI COLLECTION ACCOUNT" means, with respect to a SUBI, any account
denominated as such that is established and maintained in accordance with the
related SUBI Supplement and SUBI Servicing Supplement.
"SUBI COLLECTION PERIOD" means, with respect to any SUBI, the period
identified as the "Collection Period" in the related Transaction Documents.
"SUBI LEASE FUNDING ACCOUNT" means, with respect to a SUBI, any account
denominated as such that is established and maintained in accordance with the
related SUBI Supplement and SUBI Servicing Supplement.
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"SUBI PORTFOLIO" means, with respect to any SUBI, the related Contracts and
Leased Vehicles comprising the related SUBI Assets.
"SUBI SERVICING SUPPLEMENT" means any agreement supplementing the servicing
provisions of the Titling Trust Agreement that is executed by TMCC, the Titling
Trustee and one or more other parties in connection with a Securitized
Financing.
"SUBI SUB-TRUST" means a separate Sub-Trust of the Titling Trust (other
than the UTI Sub-Trust) that is established at the direction of the UTI
Beneficiary on the books and records of the Titling Trust by the Titling Trustee
and that is accounted for separately within the Titling Trust. The Titling
Trustee shall from time to time, as directed in writing by the UTI Beneficiary,
and subject to Section 3.01(d) of the Titling Trust Agreement, identify or cause
to be identified on the books and records of the Titling Trust one or more
separate Sub-Trusts to be accounted for separately within the Titling Trust
(each, a "SUBI Sub-Trust") and identify and allocate, or cause to be identified
and allocated, to such SUBI Sub-Trust on such books and records certain Titling
Trust Assets that are not then allocated to another SUBI Sub-Trust. Upon such
allocation, such related SUBI Assets shall no longer be assets of, or allocated
to, the UTI (unless and until specifically reallocated to the UTI from that SUBI
in accordance with the related SUBI Supplement). Each SUBI shall constitute a
separate series of the Titling Trust pursuant to Section 3806(b)(2) of the
Delaware Act and shall represent the beneficial interest in such SUBI and the
SUBI Assets allocated thereto from time to time. Each SUBI shall be represented
by one or more separate SUBI Certificates issued pursuant to the related SUBI
Supplement. The Titling Trustee shall issue each SUBI Certificate to or upon
the order of the UTI Beneficiary.
"SUBI SUPPLEMENT" means any of the one or more supplements to the Titling
Trust Agreement, substantially in the form attached thereto as an exhibit, the
execution and delivery of which by the UTI Beneficiary and the Titling Trustee
in accordance with Section 3.01(c) of the Titling Trust Agreement will effect
the creation of a SUBI.
"SUB-TRUST" means any of the sub-trusts of the Titling Trust established by
the Titling Trustee as directed by the UTI Beneficiary from time to time, and to
which the Titling Trustee will allocate Titling Trust Assets identified by the
UTI Beneficiary, having the name and beneficiaries designated by the UTI
Beneficiary and being a separate series of the Titling Trust pursuant to Section
3806(b)(2) of the Delaware Act.
"TITLE DOCUMENTS" with respect to any Leased Vehicle means the related
Certificate of Title and all related or ancillary documents or instruments
necessary for the recordation or transfer of title in each relevant
jurisdiction.
"TITLING TRUST" means Toyota Lease Trust, a Delaware business trust, formed
pursuant to the Titling Trust Agreement.
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"TITLING TRUST AGREEMENT" means the Trust and Servicing Agreement dated as
of October 1, 1996, among TMCC, TMTT, Inc., as Titling Trustee, and, for certain
limited purposes, First Bank, as Trust Agent, as amended and restated by the
Amended and Restated Trust and Servicing Agreement also dated as of October 1,
1996 among TMCC, TMTT, Inc., as Titling Trustee, and, for certain limited
purposes, First Bank, as Trust Agent.
"TITLING TRUST ASSETS" means: (i) any capital contributed by the Grantor;
(ii) the Contracts and all proceeds thereof; (iii) the Leased Vehicles and all
proceeds thereof, including each Certificate of Title and the Residual Value of
each Leased Vehicle, whether realized through the exercise by Obligors of
purchase options under the Contracts, the proceeds of sale of the Leased
Vehicles to Dealers or third parties or through payments received from any other
Person (directly or indirectly) under any related Insurance Policy (to the
extent not applied to repair or otherwise paid to a third Person or Governmental
Authority by the Servicer as required by law or pursuant to its normal
servicing practices) or as a subsidy or other funding of any modification of the
related Residual Value; (iv) all of the Titling Trust's rights with respect to
any Contract or Leased Vehicle, including the right to enforce and to proceeds
arising from all Dealer repurchase obligations arising under Dealer Agreements;
(v) all of TMCC's rights (but not its obligations) with respect to any Contract
or Leased Vehicle, including the right to enforce and to proceeds arising from
all Dealer repurchase obligations arising under Dealer Agreements; (vi) any
Insurance Policy and rights thereunder or proceeds therefrom relating to any of
the Contracts, Leased Vehicles or payments of the related Obligors with respect
thereto; (vii) any portion of any Security Deposit actually and properly applied
by the Servicer against amounts due under the related Contract, to the extent
not applied to making repairs to the related Leased Vehicle or paid to a third
party or Governmental Authority in accordance with the Servicer's normal
servicing practices; and (viii) all proceeds of any of the foregoing.
"TITLING TRUSTEE" means TMTT, Inc., in its capacity as such under the
Titling Trust Agreement, and any successor thereto in such capacity appointed
pursuant to the Titling Trust Agreement.
"TITLING TRUSTEE ACCOUNTS" means any of the separate UTI Collection
Account, Lease Funding Account, SUBI Collection Account and/or SUBI Lease
Funding Account established by the Titling Trustee with respect to the UTI or
the related SUBI as described in the Titling Trust Agreement and the related
SUBI Supplement and SUBI Servicing Supplement. Each such account maintained
with respect to Rated Certificates shall be an Eligible Account.
"TITLING TRUSTEE STOCK" means the issued and outstanding capital stock of
the Titling Trustee, together with any additional capital stock of the Titling
Trustee that may be issued from time to time.
"TITLING TRUST EXPENSES" means the aggregate of the Titling Trustee's
compensation and other Administrative Expenses with respect to the Titling
Trust, including those due under Section 6.13 of the Titling Trust Agreement.
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"TLI" means Toyota Leasing, Inc. and its successors.
"TMCC" means Toyota Motor Credit Corporation, a California corporation, its
successors and assigns.
"TMS" means Toyota Motor Sales U.S.A., Inc., a California corporation, its
successors and assigns.
"TRANSACTION DOCUMENTS" means and includes the Titling Trust Agreement, the
UTI Supplement and, with respect to any Securitized Financing involving the
creation of a SUBI, the related SUBI Supplement, SUBI Servicing Supplement, SUBI
Certificate(s), any agreement transferring ownership or other interests in the
related SUBI and SUBI Certificate, the related Securitization Trust Agreement,
indenture, trust agreement or similar instrument governing the securitization of
such SUBI and any securities offered or sold that are secured by interests in
the related SUBI, and any other documents ancillary thereto, in each case as the
same may be amended, supplemented or modified from time to time but only to the
extent that any such amendment, supplement or modification relates to such SUBI.
"TRANSFEROR" means TLI in its capacity as transferor under any
Securitization Trust Agreement and each other related Transaction Document.
"TRUST AGENCY AGREEMENT" means any of the one or more agency agreements
entered into by the Titling Trustee in furtherance of its execution of any of
the trusts or powers under the Titling Trust Agreement or performance of any
duties under the Titling Trust Agreement either directly or by or through agents
or attorneys or one or more custodians as set forth in the Titling Trust
Agreement. In addition, with respect to any Securitization Trustee, Trust
Agency Agreement means any of the one or more agency agreements entered into by
such Securitization Trustee in furtherance of its execution of any of the trusts
or powers under the related Securitization Trust Agreement or performance of any
duties under such Securitization Trust Agreement either directly or by or
through agents or attorneys or one or more custodians as set forth in such
Securitization Trust Agreement.
"TRUST AGENT" means any of the one or more Persons, including any Affiliate
of the Titling Trustee or any Securitization Trustee, engaged by the Titling
Trustee or such Securitization Trustee pursuant to a Trust Agency Agreement.
"TRUST ASSET TRANSFER" means the allocation to a SUBI Sub-Trust of Titling
Trust Assets not then allocated to any other SUBI Sub-Trust pursuant to Section
3.01(c) of the Titling Trust Agreement.
"TRUST STATES" initially means California, Florida, Michigan, Ohio and
Pennsylvania and after the date of this Agreement, means those States and such
other States as designated in writing from time to time to the Titling Trustee
by the Grantor in which Dealers are regularly originating Contracts and
assigning them to the Titling Trust as contemplated by the Titling Trust
Agreement.
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"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"UNITED STATES" means the United States of America, its territories and
possessions and areas subject to its jurisdiction.
"UNDIVIDED TRUST INTEREST" or "UTI" means the exclusive, undivided
beneficial interest in all Titling Trust Assets (including Contracts and Leased
Vehicles), other than SUBI Assets, held by the UTI Beneficiary.
"UNDIVIDED TRUST INTEREST CERTIFICATE" or "UTI CERTIFICATE" means the one
or more trust certificates (together with any replacements thereof) issued by
the Titling Trust at the direction of the UTI Beneficiary substantially in the
form attached as an exhibit to the form of UTI Supplement.
"UTI ACCOUNT" means any of the separate UTI Collection Accounts and/or
Lease Funding Account established by the Titling Trustee with respect to the
UTI pursuant to Section 12.01 of the UTI Supplement.
"UTI ASSETS" means all Titling Trust Assets that have not been allocated to
a SUBI Sub-Trust.
"UTI BENEFICIARY" means TMCC, in its capacity as the initial beneficiary of
the Titling Trust on the date of the UTI Supplement, and its successors and
assigns (exclusive of any pledgee of a UTI Pledge).
"UTI COLLECTION ACCOUNT" means the separate account established by the
Titling Trustee with respect to the UTI pursuant to Section 12.01 of the UTI
Supplement.
"UTI COLLECTION PERIOD" with respect to any Distribution Date, means the
preceding calendar month.
"UTI CONTRACT" means any Contract that is an asset of the UTI Sub-Trust.
"UTI ELIGIBLE CONTRACT" means a Contract as to which the following criteria
are satisfied as of the date the Contract is originated and assigned by the
relevant Dealer to the Titling Trust:
(a) that was originated (i) by a Dealer, (ii) in the ordinary
course of its retail business, (iii) pursuant to a Dealer Agreement, and
(iv) in compliance with the customary underwriting standards employed by
the Grantor in originating leases for its own account;
(b) which Contract and the related Leased Vehicle are free of
all liens and other interests (including tax liens, mechanics liens and
liens that arise by operation of law, but excluding any Administrative
Lien);
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(c) that was originated in compliance with, and complies with,
all material applicable legal requirements, including, to the extent
applicable, the Federal Consumer Credit Protection Act (including the
Consumer Leasing Act), as amended, Regulation M of the Board of Governors
of the Federal Reserve System, as amended, all State leasing and consumer
protection laws and all State and federal usury, fair credit billing, fair
credit reporting, equal credit opportunity, and fair debt collection
practices laws;
(d) as to which 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 in connection with (i) the origination of such Contract, (ii)
the execution, delivery and performance by such originator of such Contract
and (iii) the acquisition by the Titling Trust of such Contract and the
related Leased Vehicle have been duly obtained, effected or given and were
in full force and effect as of such date of creation or acquisition;
(e) that is the legal, valid and binding full-recourse payment
obligation of the Obligor thereunder, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity);
(f) that, according to the records of the Grantor, is not
subject to any right of rescission, setoff, counterclaim or any other
defense (including defenses arising out of violations of usury laws) of the
Obligor thereunder to payment of the amounts due thereunder, and no such
right of rescission, setoff, counterclaim or other defense has been
asserted or threatened;
(g) as to which each of the originating Dealer, the Servicer and
the Titling Trust has satisfied all obligations required to be fulfilled on
its part;
(h) that is payable solely in United States dollars in the
United States;
(i) the Obligor of which is a Person located in one of the
United States and is not the Grantor, the Transferor or any of their
respective Affiliates;
(j) that requires the Obligor thereunder to maintain in full
force and effect during the term of such Contract a public liability and a
comprehensive and collision physical damage Insurance Policy, with coverage
in amounts not less than that required by applicable State law, and that
includes a term requiring such Insurance Policy to name the Titling Trust,
the Titling Trustee or an agent of the Titling Trust on behalf of the
Titling Trust as a "loss payee" and an "additional insured";
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(k) the related Leased Vehicle of which is titled in the name of
the Titling Trust or the Titling Trustee on behalf of the Titling Trust (or
properly completed applications for such title have been submitted to the
appropriate titling authority) and all transfer and similar taxes imposed
in connection therewith have been paid;
(l) that is fully assignable and that does not require the
consent of the Obligor thereunder as a condition to any transfer, sale or
assignment of the rights of the originator under such Contracts;
(m) that is a "true lease", as opposed to a lease intended as
security, under the laws of the State in which it was originated as such
laws relate to the perfection of security interests therein;
(n) that meets the Origination Criteria and, in the case of any
Contract included in a SUBI Portfolio, meets any Additional Origination
Criteria specified in the related SUBI Supplement;
(o) that was fully and properly executed by the parties thereto
and, upon conveyance to the Titling Trust pursuant to the Titling Trust
Agreement, shall have been validly assigned by the originating Dealer to
the Titling Trust in accordance with the terms of the Dealer Agreement
under which it was originated and immediately thereafter shall be owned by
the Titling Trust;
(p) that is substantially identical to one of the forms of
Contract attached to the UTI Supplement (or such other form as may be
approved from time to time by TMCC in the ordinary course of business);
(q) as to which the information set forth in the Schedule of
Contracts and Leased Vehicles with respect to such Contract and related
Leased Vehicle as of such Cutoff Date is true and correct in all material
respects;
(r) the Obligor under which Contract, according to the records
of the Servicer, has not filed or had filed against it any petition for
relief, rearrangement of its debts or other protection from its creditors
under any State or federal bankruptcy or insolvency laws, except as
otherwise permitted by the Origination Criteria;
(s) in respect of which the Grantor has taken no action such
that such Contract has been satisfied, subordinated, amended, waived,
restricted, rescinded, held to be invalid or unenforceable, altered or
modified in any respect, except (i) to the extent that such action (A) does
not render such Contract not in conformity with any other criteria for an
Eligible Contract, and (B) was made in accordance with the Grantor's
obligations under the Titling Trust Agreement, and (ii) if such action was
made pursuant to a document, instrument or writing, such document,
instrument or writing is included in the related Contract Documents;
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(t) as to which the Grantor, consistent with its standard
underwriting procedures, has reviewed and verified the material information
contained in the related Contract application;
(u) as to which, according to the records of the Grantor, no
default, breach, violation or event permitting acceleration under the terms
of the Contract exists, and no continuing condition that, with notice or
lapse of time, or both, would constitute a default, breach, violation or
event permitting acceleration under the terms of the Contract has arisen,
the Grantor has not waived any of the foregoing, and the related Leased
Vehicle has not been repossessed without reinstatement;
(v) that has not been originated in, and is not subject to the
laws of, any jurisdiction under which the sale, transfer, and assignment of
such Contract under its terms or pursuant to which transfers of the
Contracts or of the related Certificates of Title are unlawful, void or
voidable;
(w) as to which there is only one executed original, which will
be conveyed by the Dealer to the Titling Trustee or to the Grantor or
Servicer as the agent of the Titling Trustee, in each case on behalf of the
Titling Trust;
(x) that constitutes "chattel paper" as defined in the UCC;
(y) that was originated without any fraud or misrepresentation
on the part of the Grantor;
(z) as to which all taxes of any nature or description
whatsoever relating thereto that are due and owing as of the date of
origination have been paid or provided for in full except for (i) any state
transfer taxes payable in connection with the transfer of any Contracts to
the Titling Trustee and (ii) similar transfer taxes to which the Titling
Trustee has consented to; and
(aa) as to which the related Leased Vehicle was a new vehicle
(which may be a dealer demonstrator vehicle driven fewer than 20,000 miles)
or used vehicle (four model years old or less at the time of origination of
the related Contract, and which may be a certified used vehicle or
manufacturers' program vehicle), whether an automobile, light duty truck,
minivan or sports utility vehicle. As used in this clause (bb), certified
used vehicle means a vehicle purchased by a dealer, reconditioned and
certified to meet certain Toyota or Lexus required standards and sold or
leased with an extended warranty, and manufacturers' program vehicle means
a vehicle that has been sold to a rental car company, repurchased by the
manufacturer and subsequently purchased by a dealer to sell or lease as a
current model year or one year old used vehicles with 20,000 miles or less.
"UTI LEASED VEHICLE" means any Leased Vehicle that is an asset of the UTI
Sub-Trust.
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"UTI PLEDGE" means a pledge of and grant of a security interest in the UTI
and UTI Certificate, or any interest therein, in connection with any Securitized
Financing, and the terms and conditions thereof set forth in the related
documentation.
"UTI PORTFOLIO" means the Contracts and Leased Vehicles comprising the
Undivided Trust Interest.
"UTI SUB-TRUST" means the separate Sub-Trust of the Titling Trust
containing all Titling Trust Assets that have not been allocated to any SUBI
Sub-Trust.
"UTI SUPPLEMENT" means any of the one or more supplements or amendments to
the Titling Trust Agreement, substantially in the form attached thereto as an
exhibit, the execution and delivery of which by the UTI Beneficiary and the
Titling Trustee in accordance with Section 3.01(b) of the Titling Trust
Agreement will effect the creation of a UTI.
"UTI UNIT CERTIFICATE" has the meaning described in Section 11.02 of the
UTI Supplement.
"UTI UNIT" has the meaning described in Section 11.01 of the UTI
Supplement.
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ANNEX OF SUPPLEMENTAL DEFINITIONS
Unless otherwise specified in the agreement to which this Annex of
Supplemental Definitions is attached or which refers to this Annex of
Supplemental Definitions, the following terms have the indicated meanings. In
the event of a conflict between a definition set forth both herein and in the
Annex of Definitions, that set forth herein shall prevail. Terms defined herein
but not directly or indirectly used or referenced in any agreement shall not be
deemed to have any meaning or significance with respect to such agreement.
"1998-C CONTRACTS" means the Contracts allocated to the 1998-C SUBI and
1998-C SUBI Sub-Trust pursuant to the 1998-C SUBI Supplement, including
Subsequent Contracts allocated during the Revolving Period.
"1998-C LEASED VEHICLES" means the Leased Vehicles allocated to the 1998-C
SUBI and 1998-C SUBI Sub-Trust pursuant to the 1998-C SUBI Supplement, including
Subsequent Leased Vehicles allocated during the Revolving Period.
"1998-C SECURITIZATION TRUST" means the Toyota Auto Lease Trust 1998-C
created by the 1998-C Securitization Trust Agreement, the estate of which
consists or will consist of (i) the 1998-C SUBI Certificate, the 1998-C SUBI
Assets evidenced thereby and all monies due and to become due thereunder from
and after the Cutoff Date; (ii) such monies as are from time to time deposited
in each of the 1998-C SUBI Accounts (excluding any proceeds of the Residual
Value Insurance Policies which are the property of the Beneficiary of the 1998-C
SUBI Insurance Certificate and are not subject to the Lien of the 1998-C
Securitization Trust Agreement); (iii) all rights accruing to the holder of the
1998-C SUBI Certificate as a third-party beneficiary of the Titling Trust
Agreement, the 1998-C SUBI Supplement, the 1998-C Servicing Supplement and
certain amounts held in the Reserve Fund; and (iv) all proceeds of the
foregoing.
"1998-C SECURITIZATION TRUST AGREEMENT" means that certain Securitization
Trust Agreement, dated as of December 1, 1998, between the Transferor and 1998-C
Securitization Trustee, pursuant to which the 1998-C SUBI Certificate will be
transferred to the 1998-C Securitization Trustee, in that capacity, in
connection with the Securitized Financing of the 1998-C SUBI.
"1998-C SECURITIZATION TRUSTEE" means U.S. Bank National Association, in
its capacity as trustee under the 1998-C Securitization Trust Agreement and any
successor trustee appointed thereunder.
"1998-C SUBI" means the SUBI created pursuant to the 1998-C SUBI
Supplement.
"1998-C SUBI ACCOUNT" means each or any of the 1998-C SUBI Collection
Account, the 1998-C SUBI Certificateholders' Account and the 1998-C SUBI Lease
Funding Account.
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"1998-C SUBI ASSETS" means the 1998-C Contracts, 1998-C Leased Vehicles
and related Titling Trust Assets allocated to the 1998-C SUBI and 1998-C SUBI
Sub-Trust pursuant to the 1998-C SUBI Supplement, including those allocated
during the Revolving Period.
"1998-C SUBI CERTIFICATE" means the certificate issued by the Titling Trust
pursuant to the 1998-C SUBI Supplement evidencing beneficial interests in the
assets of the 1998-C SUBI other than proceeds of the Residual Value Insurance
Policies evidenced by the 1998-C SUBI Insurance Certificate.
"1998-C SUBI CERTIFICATEHOLDERS' ACCOUNT" means the account established by
the 1998-C Securitization Trustee pursuant to the 1998-C Securitization Trust
Agreement for the benefit of the Investor Certificateholders pursuant to the
1998-C Securitization Trust Agreement.
"1998-C SUBI COLLECTION ACCOUNT" means the SUBI Collection Account
established by the 1998-C Securitization Trustee pursuant to the 1998-C SUBI
Supplement and designated as the "1998-C SUBI Collection Account".
"1998-C SUBI INSURANCE CERTIFICATE" means the SUBI Certificate issued by
the Titling Trust pursuant to the 1998-C SUBI Supplement evidencing beneficial
interests in the assets of the 1998-C SUBI that are proceeds of the Residual
Value Insurance Policies insofar as such Insurance Policies relate to the 1998-C
Leased Vehicles and the 1998-C Contracts.
"1998-C SUBI LEASE FUNDING ACCOUNT" means the SUBI Lease Funding Account,
if any, established pursuant to Section 17.02 of the 1998-C SUBI Supplement.
"1998-C SUBI PORTFOLIO" means the SUBI Portfolio that includes the 1998-C
Contracts and 1998-C Leased Vehicles allocated to the 1998-C SUBI and 1998-C
SUBI Sub-Trust pursuant to the 1998-C SUBI Supplement.
"1998-C SUBI PURCHASE AND SALE AGREEMENT" means the 1998-C SUBI Certificate
Purchase and Sale Agreement, dated as of December 1, 1998, pursuant to which
TMCC will sell to the Transferor, without recourse, all of its right, title and
interest in and to the 1998-C SUBI, the 1998-C SUBI Certificate and the 1998-C
SUBI Insurance Certificate and all proceeds thereof.
"1998-C SUBI SECURITIES ACCOUNT" means the account established by U.S. Bank
National Association in its capacity as SUBI Securities Intermediary pursuant to
the 1998-C SUBI Securities Account Control Agreement, dated as of December,
1998.
"1998-C SUBI SERVICING SUPPLEMENT" means the Servicing Supplement to the
Titling Trust Agreement dated as of December 1, 1998, and relating to the
servicing of the 1998-C SUBI.
"1998-C SUBI SUB-TRUST" means the SUBI Sub-Trust created pursuant to the
1998-C SUBI Supplement including as its assets the 1998-C SUBI Portfolio and the
related Titling Trust Assets.
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"1998-C SUBI SUPPLEMENT" means the SUBI Supplement to the Titling Trust
Agreement dated as of December 1, 1998 pursuant to which the Titling Trustee, at
the direction of the UTI Beneficiary, creates the 1998-C SUBI Sub-Trust and the
1998-C SUBI and issues the 1998-C SUBI Certificate and the 1998-C SUBI Insurance
Certificate.
"ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Monthly Allocation Date following the termination of the Revolving Period, the
portion of the Investor Percentage of Interest Collections in respect of the
related Collection Period that remains after required allocations, applications
and payments have been made, including required deposits into the Reserve Fund
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.
"ACCUMULATION DATE" means the calendar day preceding the earliest to occur
of [April ___, 1999], and Accumulation Event or a Swap Termination.
"ACCUMULATION EVENT" means any of the following events:
(i) failure by the Servicer (a) to make any payment or deposit required
with respect to the 1998-C SUBI or the Investor Certificates under the 1998-C
Securitization Trust Agreement, the Titling Trust Agreement or the 1998-C
Servicing Supplement, within ten 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 from the Servicer's receipt of notice thereof
from the 1998-C Securitization Trustee, the Titling Trustee or any other Person;
(ii) failure by 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 the 1998-C Securitization Trust Agreement, the Titling
Trust Agreement or the 1998-C Servicing Supplement (other than as described in
clause (i) above), which failure materially and adversely affects the rights of
the holder of the 1998-C SUBI Certificate or of the Investor Certificateholders
and which continues unremedied and continues to affect materially and adversely
the rights of the holder of the 1998-C SUBI Certificate or of the Investor
Certificateholders which continues unremedied for a period of 60 days after the
date on which written notice of such failure, is given (a) to the Transferor or
the Servicer, as the case may be, by the 1998-C Securitization Trustee or the
Titling Trustee, or (b) to the Transferor or the Servicer, as the case may be,
and to the 1998-C Securitization Trustee, by the Holders of Investor
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 any representation or warranty made
by TMCC in the Titling Trust Agreement or by the Transferor in the 1998-C
Securitization Trust Agreement, or the representation and warranty made by the
Servicer in Section 2.01 of the 1998-C Servicing Supplement or any certificate
given pursuant to Section 5.01 of the 1998-C Servicing Supplement, that is
incorrect in any material respect when made or given, as a result of which the
interests of the holder of the 1998-C SUBI Certificate or of the Investor
Certificateholders are materially and adversely affected and which continues to
be incorrect in any material respect and continues to materially and adversely
affect the interests or rights of the holder of the 1998-C
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SUBI Certificate 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 to TMCC, the Transferor or the Servicer, as the
case may be, and to the 1998-C Securitization Trustee or the Titling Trustee,
by the Holders of Investor 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; PROVIDED, HOWEVER, that an Accumulation
Event pursuant to this subparagraph (iii) shall not be deemed to have
occurred hereunder with respect to any breach of warranty by the Servicer
under Section 3.01(c) or 3.02(b) of the 1998-C SUBI Servicing Supplement, if
the Servicer has made the Reallocation Payment contemplated by Section 3.03
of the 1998-C Servicing Supplement and has reallocated the relevant 1998-C
Contract and 1998-C Leased Vehicle to the UTI Portfolio within the time
provided therefor;
(iv) any Lien, other than Liens permitted under the 1998-C
Securitization Trust Agreement, the Titling Trust Agreement or the 1998-C
Servicing Supplement, shall be created on or extend to or otherwise arise
upon or burden the 1998-C SUBI, the 1998-C SUBI Certificate, or the 1998-C
Contracts or the 1998-C Leased Vehicles, or any part thereof or any interest
therein or the proceeds thereof, and not be released within 60 days
thereafter;
(v) the Servicer determines on the last day of any calendar month
(commencing in October 1998) 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;
(vi) an Event of Servicing Termination; or
(vii) if on any Monthly Allocation Date the aggregate amount withdrawn from
the Reserve Fund and deposited into the 1998-C SUBI Collection Account or the
1998-C SUBI Certificateholders' Account on or prior to such Monthly Allocation
Date (without giving effect to any deposits into the Reserve Fund) exceeds
$2,749,842.61 (i.e., 0.25% of the Aggregate Net Investment Value as of the
Cutoff Date).
"ACCUMULATION PERIOD" means, with respect to any Class of Investor
Certificates, the period from the earlier of the Accumulation Date or the day on
which an Accumulation Event occurs through the earlier of the related Targeted
Maturity Date or the occurrence of a Swap Termination.
"ADDITIONAL LOSS AMOUNT" means, with respect to any Collection Period, an
amount equal to the sum of (a) all amounts of losses incurred in respect of any
uninsured liability to third parties (I.E., litigation risk) on the part of the
Titling Trust that is ultimately borne by the 1998-C SUBI Assets during such
Collection Period, whether such liability is incurred (i) with respect to the
1998-C SUBI Assets and is therefore allocated to the 1998-C SUBI Assets pursuant
to the 1998-C SUBI Supplement, (ii) with respect to the Titling Trust Assets
generally and a pro rata portion of such liability is allocated to the 1998-C
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 and a portion thereof is therefore allocated
to the 1998-C SUBI pursuant to the Titling Trust Agreement and (b) all monies
reserved within the
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1998-C SUBI Collection Account against future losses in respect of such
liabilities by the Servicer on behalf of the 1998-C Securitization Trustee as
of the last day of such Collection Period.
"ADDITIONAL LOSS CONTRACT" means, with respect to any SUBI Portfolio, a
Contract included in such SUBI Portfolio as to which the related Leased Vehicle
and other assets have been sold or otherwise disposed of by the Servicer, acting
on behalf of the Titling Trust, to pay an Additional Loss Amount with respect to
the related SUBI.
["ADJUSTABLE RATE CLASS B CERTIFICATES"]
"ADJUSTED CLASS A-1 CERTIFICATE BALANCE" means the Initial Class A-1
Certificate Balance less: (i) amounts allocated and deposited into the
Certificateholders' Account in respect of the Adjusted Class A-1 Certificate
Balance; (ii) without duplicating the foregoing, amounts paid to the Class A
Certificateholders in respect of the Adjusted Class A-1 Certificate Balance; and
(iii) the amount of unreimbursed Certificate Principal Loss Amounts allocated
thereto.
"ADJUSTED CLASS A-2 CERTIFICATE BALANCE" means the Initial Class A-2
Certificate Balance less: (i) amounts allocated and deposited into the
Certificateholders' Account in respect of the Adjusted Class A-2 Certificate
Balance; (ii) without duplicating the foregoing, amounts paid to the Class A
Certificateholders in respect of the Adjusted Class A-2 Certificate Balance; and
(iii) the amount of unreimbursed Certificate Principal Loss Amounts allocated
thereto.
"ADJUSTED CLASS A-3 CERTIFICATE BALANCE" means the Initial Class A-3
Certificate Balance less: (i) amounts allocated and deposited into the
Certificateholders' Account in respect of the Adjusted Class A-3 Certificate
Balance; (ii) without duplicating the foregoing, amounts paid to the Class A
Certificateholders in respect of the Adjusted Class A-3 Certificate Balance; and
(iii) the amount of unreimbursed Certificate Principal Loss Amounts allocated
thereto.
"ADJUSTED CLASS B CERTIFICATE BALANCE" means the Initial Class B
Certificate Balance less: (i) amounts allocated and deposited into the
Certificateholders' Account in respect of the Adjusted Class B Certificate
Balance; (ii) without duplicating the foregoing, amounts paid to the Class B
Certificateholders in respect of the Adjusted Class B Certificate Balance; and
(iii) the amount of unreimbursed Certificate Principal Loss Amounts allocated
thereto.
"ADJUSTED INVESTOR BALANCE" means the sum of the Adjusted Class A-1
Certificate Balance, the Adjusted Class A-2 Certificate Balance, the Adjusted
Class A-3 Certificate Balance and the Adjusted Class B Certificate Balance.
"ADVANCE" has the meaning ascribed thereto in the Annex of Definitions but
also includes any Inventory Advance made by the Servicer.
"AGGREGATE NET INVESTMENT VALUE" means, as of any day, the sum of (i) the
aggregate of the Discounted Principal Balances of all 1998-C Contracts at such
date, each such Discounted Principal Balance being derived from the Schedule of
Contracts and Leased Vehicles as in effect on such date (provided that as of the
last day of any Collection Period, there shall be eliminated from the Schedule
of Contracts and Leased Vehicles for the purpose of this definition (including
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the determination at any subsequent time of the Aggregate Net Investment
Value as of the last day of any Collection Period) each 1998-C Contract that
became a Charged-off Contract, Liquidated Contract, Matured Contract or
Additional Loss Contract before the end of such Collection Period), (ii) the
aggregate of the Residual Values of those 1998-C Leased Vehicles that are
covered by Matured Contracts to the extent such Matured Contracts have been
terminated 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, each such Residual Value being
derived from the Schedule of Contracts and Leased Vehicles as in effect on
such date, plus certain related charges, and (iii) during the Revolving
Period, the aggregate amount of unreinvested Principal Collections and
reimbursed Loss Amounts and Certificate Principal Loss Amounts that have not
been reinvested in additional 1998-C Contracts and 1998-C Leased Vehicles
pursuant to Section 3.02 of the 1998-C Servicing Supplement. As of the
Cutoff Date, the Aggregate Net Investment Value was $[1,099,937,045.30.]
"AGGREGATE NET LOSSES" means, with respect to a Collection Period, an
amount equal to the aggregate Discounted Principal Balances of all 1998-C
Contracts that became Charged-off Contracts during such Collection Period minus
the sum of (i) Net Liquidation Proceeds collected during such Collection Period
with respect to all Charged-off Contracts and (ii) the portion of amounts
subsequently received in respect of Charged-off Contracts designated as such in
prior Collection Periods.
"ANNEX OF DEFINITIONS" means the Annex of Definitions attached to the
Titling Trust Agreement.
"AVAILABLE INTEREST" means, with respect to any Monthly Allocation Date, an
amount equal to the sum of (i) the Investor Percentage of Interest Collections
for the related Collection Period, plus (ii) investment income (net of
investment losses) on Permitted Investments of amounts deposited in the 1998-C
SUBI Certificateholders' Account in respect of the Class A-1 Notional Interest
Accrual Amount, any Class A-1 Swap Interest Shortfall Amounts, the Class A-2
Notional Interest Accrual Amount, any Class A-2 Swap Interest Shortfall Amounts,
the Class A-3 Notional Interest Accrual Amount, any Class A-3 Swap Interest
Shortfall Amounts, the Class B Notional Interest Accrual Amount, any Class B
Swap Interest Shortfall Amounts, the Class B Fixed Rate Interest Accrual Amount
and any Class B, Interest Shortfall Amounts.
"BENEFIT PLAN" means employee benefit plan, trust or account subject to
Title I of ERISA, or subject to Section 4975 of the Code, or a governmental plan
defined in section 3(22) of ERISA subject to any federal, state or local law
which is, to a material extent, similar to the foregoing provisions of ERISA or
the Code.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which banking institutions in New York, New York, Chicago, Illinois, or
San Francisco, California are authorized or obligated by law, regulation,
executive order or governmental decree to be closed; provided that (i) solely
for the purposes of identifying any Certificate Payment Date with respect to the
making of payments on the Class A-1, Class A-2 and Class A-3 Certificates in
Luxembourg or any other jurisdiction in which payments are to be made by a
paying agent there located, "Business Day" shall also exclude any day on which
banking institutions located in that
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jurisdiction are authorized or obligated by law, regulation, governmental
order or decree to be closed, whether or not payments are made in any other
jurisdictions on such Certificates on such date. This definition of "Business
Day" supersedes the definition of "Business Day" set forth in the Annex of
Definitions attached to the Titling Trust Agreement whenever used with
respect to the 1998-C SUBI, or proceeds thereof, or the identification of any
Monthly Allocation Date, Certificate Payment Date, Distribution Date,
Determination Date or Deposit Date in relation to or affecting the 1998-C
Securitization Trust, the Investor Certificates or any 1998-C SUBI Account.
"CAPITALIZED COST" with respect to any Contract means the original
principal balance thereof, which may exceed the manufacturer's suggested retail
price and may include certain origination fees.
"CAPPED CONTINGENT AND EXCESS LIABILITY PREMIUMS" means, with respect to
any Monthly Allocation Date, an amount 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 1998-C SUBI, up to but not
exceeding $300,000 in any calendar year.
"CAPPED SECURITIZATION TRUST ADMINISTRATIVE EXPENSES" means, with respect
to any Monthly Allocation Date, an amount sufficient to pay or reserve for
payment the 1998-C Securitization Trustee's compensation, the reasonable fees
and disbursements of the Transferor's accountants and attorneys and other
Administrative Expenses with respect to the 1998-C Securitization Trust payable
or reimbursable thereto on such Monthly Allocation Date under the 1998-C
Securitization Trust Agreement, including those due under Section 6.05 of the
1998-C Securitization Trust Agreement; provided that the amount so payable
and/or reimbursable on such Monthly Allocation Date, taken together with all
such compensation and Administrative Expenses paid or reimbursed since the
beginning of the calendar year in which such Monthly Allocation Date occurs,
will not exceed $75,000 (or $125,000 in a calendar year in which a Swap
Termination occurs with respect to which the 1998-C Securitization Trustee sells
or otherwise disposes of the property of the 1998-C Securitization Trust
pursuant to SECTION 8.02 ? of the 1998-C Securitization Trust Agreement).
"CAPPED TITLING TRUST ADMINISTRATIVE EXPENSES" means, with respect to
any Monthly Allocation Date, an amount sufficient to pay or reserve for
payment one-twelfth of the aggregate of the Titling Trustee's compensation
and other Administrative Expenses with respect to the Titling Trust allocable
to the 1998-C SUBI and payable or reimbursable thereto on such Monthly
Allocation Date under the 1998-C Securitization Trust Agreement, including
those due under Section 6.13 of the Titling Trust Agreement; provided that
the amount so payable and/or reimbursable on such Monthly Allocation Date,
taken together with all such compensation and Administrative Expenses paid or
reimbursed since the beginning of the calendar year in which such Monthly
Allocation Date occurs, will not exceed $100,000.00 in any calendar year.
"CEDEL BANK" means Cedel Bank, societe anomyme.
["CERTIFICATE DISTRIBUTION AMOUNT" means, with respect to any Monthly
Allocation Date and any Class of Certificates, the aggregate of the amounts
being allocated and applied or paid to the Holders thereof on such date.]
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"CERTIFICATE OWNER" means, with respect to any Certificate, any Person
holding or owning a beneficial interest therein, whether or not such Person
is a Holder.
"CERTIFICATE PAYMENT DATE" means, with respect to any Class of Investor
Certificates, (i) prior to the related Targeted Maturity Date, on each Monthly
Allocation Date in March, June, September and December (with respect to
applications and payments in respect of interest related items with respect to
the Class A and Class B Certificates), (ii) the related Targeted Maturity Date
(with respect to applications and payments in respect of interest and principal
related items with respect to the Class A and Class B Certificates), (iii) if
the related Class is not paid in full on the related Targeted Maturity Date,
each subsequent Monthly Allocation Date until the Monthly Allocation Date on
which the Adjusted Class A-1 Certificate Balance, Adjusted Class A-2 Certificate
Balance, Adjusted Class A-3 Certificate Balance or Adjusted Class B Certificate
Balance is reduced to zero, as appropriate (with respect to applications and
payments in respect of interest and principal related items with respect to the
related Class A Certificates and/or Class B Certificates), and (iv) in
connection with a Swap Termination or the exercise by the Transferor of its
option to repurchase the 1998-C SUBI Certificate, the Monthly Allocation Date
following the receipt by the 1998-C Securitization Trustee of the proceeds of
such liquidation or option to exercise (with respect to applications and
payments in respect of interest and principal related items with respect to the
Class A and Class B Certificates).
"CERTIFICATE PRINCIPAL LOSS AMOUNTS" means, with respect to the relevant
Class of Certificates on any Monthly Allocation Date, the aggregate amount of
Loss Amounts allocated to the Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance or
Adjusted Class B Certificate Balance, as the case may be, pursuant to Section
3.01 of the 1998-C Securitization Trust Agreement, less any reimbursement
thereof from amounts withdrawn from the Reserve Fund, Transferor Amounts or
Available Interest applied to cover such Loss Amounts in accordance with Article
III of the 1998-C Securitization Trust Agreement.
"CERTIFICATE REGISTER" means the register of Certificateholders maintained
by the 1998-C Securitization Trustee pursuant to Section 4.03 of the 1998-C
Securitization Trust Agreement.
"CERTIFICATE REGISTRAR" means the 1998-C Securitization Trustee unless a
successor thereto is appointed pursuant to Section 4.03 of the 1998-C
Securitization Trust Agreement.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name such
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to the
1998-C Securitization Trust Agreement, the interest evidenced by any Certificate
held by or registered in the name of the Transferor, TMCC, or any Person
controlling, controlled by or under common control with the Transferor or TMCC,
shall not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request or demand shall have been
obtained.
"CERTIFICATES" means, collectively, the Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class B Certificates and the
Transferor Certificate.
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<PAGE>
"CHARGE-OFF RATE" means, with respect to any Collection Period, the
Aggregate Net Losses with respect to 1998-C Contracts that became Charged-off
Contracts during such Collection Period 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.
"CHARGED-OFF AMOUNT" means, with respect to any Collection Period, the
aggregate of the Discounted Principal Balances of all 1998-C Contracts that
became Charged-off Contracts during such Collection Period, less any related Net
Charged-off Vehicle Proceeds.
"CHARGED-OFF CONTRACT" means a 1998-C Contract (i) with respect to which
the related 1998-C Leased Vehicle has been repossessed and sold or otherwise
disposed of or (ii) 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.
"CHARGED-OFF VEHICLE EXPENSES" means, with respect to any Collection
Period, all reasonable out-of-pocket expenses incurred by the Servicer during
such Collection Period in connection with the repossession of Repossessed Leased
Vehicles or other vehicles that were covered by Charged-off Contracts,
including, without limitation, any unpaid Monthly Payments, any unpaid payments
of taxes, vehicle registration charges, clearance of parking tickets and similar
items, and any expenses and charges payable by the Obligors not paid thereby or
paid by the Servicer on behalf of Obligors.
"CHARGED-OFF VEHICLE PROCEEDS" with respect to any Collection Period, means
proceeds received in connection with the sale or other disposition of
Repossessed Leased Vehicles or other vehicles that were covered by Charged-off
Contracts, if any, that have been repossessed or returned to the Servicer or its
agent during such Collection Period or any prior Collection period, in each case
through the date of disposition of the related Leased Vehicle.
"CLASS A CERTIFICATEHOLDER" means any Holder of or Certificate Owner with
respect to a Class A-1 Certificate, Class A-2 Certificate or Class A-3
Certificate, as indicated by the context.
"CLASS A CERTIFICATES" means, collectively, the Class A-1, Class A-2 and
Class A-3 Certificates.
"CLASS A-1 CERTIFICATE" means one of the Certificates executed by the
1998-C Securitization Trustee and authenticated by the 1998-C Securitization
Trustee, or a duly appointed authenticating agent, in substantially the form
of a Class A-1 Certificate set forth as an exhibit in the 1998-C
Securitization Trust Agreement.
"CLASS A-1 CERTIFICATE BALANCE" means (a) the Initial Class A-1 Certificate
Balance less all amounts paid to Class A-1 Certificateholders on each relevant
Certificate Payment Date in respect of principal and (b) zero, from and after
the Certificate Payment Date on which the Adjusted Class A-1 Certificate Balance
is reduced to zero.
"CLASS A-1 CERTIFICATEHOLDER" means any Holder of or Certificate Owner
with respect to a Class A-1 Certificate, as indicated by the context.
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<PAGE>
"CLASS A-1 INTEREST CARRYOVER SHORTFALL AMOUNT" means, with respect to
any Monthly Allocation Date, the excess, if any, of (x) the Class A-1
Notional Interest Accrual Amount plus any outstanding Class A-1 Interest
Carryover Shortfall Amount from the immediately preceding Monthly Allocation
Date, over (y) the aggregate of the amounts of Available Interest allocated
and applied or paid for the benefit of Class A-1 Certificateholders in
respect of interest on such Monthly Allocation Date.
"CLASS A-1 NOTIONAL INTEREST ACCRUAL AMOUNT" means the amount of interest
that is deemed to accrue during a Monthly Interest Period at the Class A-1 Rate
Notional on the sum of the Adjusted Class A-1 Certificate Balance and
unreimbursed Certificate Principal Loss Amounts previously allocated thereto.
"CLASS A-1 NOTIONAL RATE" means ___% per annum, the rate at which interest
amounts will be deemed to accrue in respect of the Adjusted Class A-1
Certificate Balance and unreimbursed Certificate Principal Loss amounts
allocated to the Adjusted Class A-1 Certificate Balance.
"CLASS A-1 RATE" means (i) for any Interest Payment Period commencing
prior to the Class A-1 Targeted Maturity Date three-month LIBOR, plus ___%
per annum, except that for the Interest Payment Period relating to the
Certificate Payment Date in ________________, 1998, Class A-1 Rate means the
rate determined by using the Interpolation Method and (ii) for any Interest
Payment Period commencing on or after the Class A-1 Targeted Maturity Date,
one-month LIBOR plus ___% per annum.
"CLASS A-1 STATED MATURITY DATE" means December 25, 2001, or if such
day is not a Business Day, the next succeeding Business Day.
"CLASS A-1 SWAP INTEREST AMOUNT" means, with respect to any relevant
Certificate Payment Date, the sum of (i) the relevant Class A-1 Notional
Interest Accrual Amounts for the Monthly Interest Periods commencing on or
after the preceding relevant Certificate Payment Date and ending prior to
such relevant Certificate Payment Date (commencing on or after the Closing
Date, in the case of the Certificate Payment Date in March, 1999) and (ii) an
amount equal to interest accrued at the related Required Rate during such
Monthly Interest Periods on amounts deposited into the 1998-C
Certificateholders' Account in respect of the Adjusted Class A-1 Certificate
Balance on prior Monthly Allocation Dates.
"CLASS A-1 SWAP INTEREST SHORTFALL AMOUNT" means, on any relevant
Certificate Payment Date the amount by which the Class A-1 Swap Interest
Amount exceeds the aggregate of the amounts paid or available to be paid by
the 1998-C Securitization Trust to the Swap Counterparty in respect of
interest accrued on the Class A-1 Certificates.
"CLASS A-2 SWAP INTEREST SHORTFALL AMOUNT" means, on any relevant
Certificate Payment Date the amount by which the Class A-2 Swap Interest Amount
exceeds the aggregate of the amounts paid or available to be paid by the 1998-C
Securitization Trust to the Swap Counterparty in respect of interest accrued on
the Class A-2 Certificates.
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<PAGE>
"CLASS A-3 SWAP INTEREST SHORTFALL AMOUNT" means, on any relevant
Certificate Payment Date the amount by which the Class A-3 Swap Interest
Amount exceeds the aggregate of the amounts paid or available to be paid by
the 1998-C Securitization Trust to the Swap Counterparty in respect of
interest accrued on the Class A-3 Certificates.
"CLASS B SWAP INTEREST SHORTFALL AMOUNT" means, on any relevant
Certificate Payment Date the amount by which the Class B Swap Interest Amount
exceeds the aggregate of the amounts paid or available to be paid by the
1998-C Securitization Trust to the Swap Counterparty in respect of interest
accrued on the Class B Certificates.
"CLASS A-1 TARGETED MATURITY DATE" means December 25, 2000, or if such
day is not a Business Day, the next succeeding Business Day.
"CLASS A-2 CERTIFICATE" means one of the Certificates executed and
authenticated by the 1998-C Securitization Trustee, or a duly appointed
authenticating agent, in substantially the form set forth as an exhibit in
the 1998-C Securitization Trust Agreement.
"CLASS A-2 CERTIFICATE BALANCE" means (a) the Initial Class A-2
Certificate Balance less all amounts paid to Class A-2 Certificateholders on
each relevant Certificate Payment Date in respect of principal and (b) zero,
from and after the Certificate Payment Date on which the Adjusted Class A-2
Certificate Balance is reduced to zero.
"CLASS A-2 CERTIFICATEHOLDER" means any Holder of or Certificate Owner
with respect to a Class A-2 Certificate, as indicated by the context.
"CLASS A-2 INTEREST CARRYOVER SHORTFALL AMOUNT" means, with respect to
any Monthly Allocation Date, the excess, if any, of (x) the Class A-2
Notional Interest Accrual Amount plus any outstanding Class A-2 Interest
Carryover Shortfall Amount from the immediately preceding Monthly Allocation
Date, over (y) the aggregate of the amounts of Available Interest allocated
and applied or paid for the benefit of Class A-2 Certificateholders in
respect of interest on such Monthly Allocation Date.
"CLASS A-2 NOTIONAL INTEREST ACCRUAL AMOUNT" means the amount of
interest that is deemed to accrue during a Monthly Interest Period at the
Class A-2 Rate on the sum of the Adjusted Class A-2 Certificate Balance and
unreimbursed Certificate Principal Loss Amounts previously allocated thereto.
"CLASS A-2 NOTIONAL RATE" means ___% per annum, the rate at which
interest amounts will be deemed to accrue in respect of the Adjusted Class
A-2 Certificate Balance and unreimbursed Certificate Principal Loss Amounts
allocated to the Adjusted Class A-2 Certificate Balance.
"CLASS A-2 RATE" means (i) for any Interest Payment Period commencing
prior to the Class A-2 Targeted Maturity Date three-month LIBOR, plus ___%
per annum, except that for the Interest Payment Period relating to the
Certificate Payment Date in ____________, 1998, the Class A-2 Rate means the
rate determined by using the Interpolation Method and (ii) for any Interest
Payment
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<PAGE>
Period commencing on or after the Class A-2 Targeted Maturity Date, one-month
LIBOR plus % per annum.
"CLASS A-2 STATED MATURITY DATE" means February 25, 2002, or if such
day is not a Business Day, the next succeeding Business Day.
"CLASS A-2 SWAP INTEREST AMOUNT" means, with respect to any relevant
Certificate Payment Date, the sum of (i) the relevant Class A-2 Notional
Interest Accrual Amounts for the Monthly Interest Periods commencing on or
after the preceding relevant Certificate Payment Date and ending prior to
such relevant Certificate Payment Date (commencing on or after the Closing
Date, in the case of the Certificate Payment Date in March, 1999) and (ii) an
amount equal to interest accrued at the related Required Rate during such
Monthly Interest Periods on amounts deposited into the 1998-C
Certificateholders' Account in respect of the Adjusted Class A-2 Certificate
Balance on prior Monthly Allocation Dates.
"CLASS A-2 TARGETED MATURITY DATE" means December 25, 2001, or if such
day is not a Business Day, the next succeeding Business Day.
"CLASS A-3 CERTIFICATE" means one of the Certificates executed and
authenticated by the 1998-C Securitization Trustee, or a duly appointed
authenticating agent, in substantially the form set forth as an exhibit in
the 1998-C Securitization Trust Agreement.
"CLASS A-3 CERTIFICATE BALANCE" means (a) the Initial Class A-3
Certificate Balance less all amounts paid to Class A-3 Certificateholders on
each relevant Certificate Payment Date in respect of principal and (b) zero,
from and after the Certificate Payment Date on which the Adjusted Class A-3
Certificate Balance is reduced to zero.
"CLASS A-3 CERTIFICATEHOLDER" means any Holder of or Certificate Owner
with respect to a Class A-3 Certificate, as indicated by the context.
"CLASS A-3 INTEREST CARRYOVER SHORTFALL AMOUNT" means, with respect to
any Monthly Allocation Date the excess, if any, of (x) the Class A-3 Notional
Interest Accrual Amount plus any outstanding Class A-3 Interest Carryover
Shortfall Amount from the immediately preceding Monthly Allocation Date, over
(y) the aggregate of the amounts of Available Interest allocated and applied
or paid for the benefit of Class A-3 Certificateholders in respect of
interest on such Monthly Allocation Date.
"CLASS A-3 NOTIONAL INTEREST ACCRUAL AMOUNT" means the amount of
interest that is deemed to accrue during a Monthly Interest Period at the
Class A-3 Rate on the sum of the Adjusted Class A-3 Certificate Balance and
unreimbursed Certificate Principal Loss Amounts previously allocated thereto.
"CLASS A-3 NOTIONAL RATE" means ___% per annum , the rate at which
interest amounts will be deemed to accrue in respect of the Adjusted Class
A-3 Certificate Balance and unreimbursed Certificate Principal Loss Amounts
allocated to the Adjusted Class A-3 Certificate Balance.
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"CLASS A-3 RATE" means (i) for any Interest Payment Period commencing
prior to the Class A-3 Targeted Maturity Date three-month LIBOR, plus ___%
per annum, except that for the Interest Payment Period relating to the
Certificate Payment Date in ____________________, 1998, the Class A-3 Rate
means the rate determined by the Servicer using the Interpolation Method and
(ii) for any Interest Payment Period commencing on or after the Class A-3
Targeted Maturity Date, one-month LIBOR plus ___% per annum.
"CLASS A-3 STATED MATURITY DATE" means December ___, ___, or if such
day is not a Business Day, the next succeeding Business Day.
"CLASS A-3 SWAP INTEREST AMOUNT" means, with respect to any relevant
Certificate Payment Date, the sum of (i) the relevant Class A-3 Notional
Interest Accrual Amounts for the Interest Periods commencing on or after the
preceding relevant Certificate Payment Date and ending prior to such relevant
Certificate Payment Date (commencing on or after the Closing Date, in the
case of the Certificate Payment Date in ________________,
____________________) and (ii) an amount equal to interest accrued at the
related Required Rate during such Monthly Interest Periods on amounts
deposited into the 1998-C Certificateholders' Account in respect of the
Adjusted Class A-3 Certificate Balance on prior Monthly Allocation Dates.
"CLASS A-3 SWAP INTEREST SHORTFALL AMOUNT" means, on any relevant
Certificate Payment Date the amount by which the Class A-3 Swap Interest
Amount exceeds the aggregate of the amounts paid as available to be paid by
the 1998-C Securitization Trust to the Swap Counterparty in respect of
interest accrued on the Class A-3 Certificates.
"CLASS A-3 TARGETED MATURITY DATE" means March 25, 2002, or if such day
is not a Business Day, the next succeeding Business Day.
"CLASS B CERTIFICATE" means any one of the Certificates executed by the
1998-C Securitization Trustee and authenticated by the 1998-C Securitization
Trustee, or a duly appointed authenticating agent, in substantially the form
of a Class B Certificate set forth as an exhibit in the 1998-C Securitization
Trust Agreement.
"CLASS B CERTIFICATE BALANCE" means (a) the Initial Class B Certificate
Balance less all amounts paid to Class B Certificateholders on each relevant
Certificate Payment Date in respect of principal and (b) zero, from and after
the Certificate Payment Date on which the Adjusted Class B Certificate
Balance is reduced to zero.
"CLASS B CERTIFICATEHOLDER" means any Holder of or Certificate Owner
with respect to a Class B Certificate, as indicated by the context.
"CLASS B FIXED RATE" refers to the rate at which interest will accrue
in respect of the portion of the Adjusted Class B Certificate Balance
represented by any fixed Rate Class B Certificates and on any unreimbursed
Certificate Principal Loss amounts allocated thereto), which rate will not
exceed __% per annum.
"CLASS B FIXED RATE INTEREST ACCRUAL AMOUNT" means the amount of
interest that accrues during a Monthly Interest Period at the Class B Fixed
Rate on the sum of the portion of the
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Adjusted Class B Certificate Balance represented by the Fixed Rate Class B
Certificates and unreimbursed Certificate Principal Loss Amounts previously
allocated thereto.
"CLASS B INTEREST CARRYOVER SHORTFALL AMOUNT" with respect to any
Monthly Allocation Date will equal the excess, if any, of (x) the Class B
Fixed Rate Interest Accrual Amount, plus any outstanding Class B Interest
Carryover Shortfall Amount from the immediately preceding Monthly Allocation
Date, over (y) the aggregate of the amounts of Available Interest allocable
to any Fixed Rate Class B Certificates allocated and applied or paid for the
benefit of Fixed Rate Class B Certificateholders in respect of interest on
such Monthly Allocation Date.
"CLASS B NOTIONAL INTEREST ACCRUAL AMOUNT" means the amount of interest
that is deemed to accrue during a Monthly Interest Period at the Class B
Notional Rate on the sum of the portion of the Adjusted Class B Certificate
Balance represented by the Adjustable Rate Class B Certificates and
unreimbursed Certificate Principal Loss Amounts previously allocated thereto.
"CLASS B NOTIONAL RATE" means ___% per annum, the rate at which
interest amounts will be deemed to accrue in respect of the Adjusted Class B
Certificate Balance and unreimbursed Certificate Principal Loss amounts
allocated to the Adjusted Class B Certificate Balance.
"CLASS B ADJUSTABLE RATE" means (i) for any Interest Payment Period
commencing prior to the Class B Targeted Maturity Date three-month LIBOR,
plus ___% per annum, except that for the Interest Payment Period relating to
the Certificate Payment Date in ____________________, 1998, the Class B Rate
means the rate determined by the Servicer using the Interpolation Method and
(ii) for any Interest Payment Period commencing on or after the Class A-3
Targeted Maturity Date, one-month LIBOR plus ___% per annum..
"CLASS B RESERVE AMOUNT" means the portion of the amounts on deposit in
the Reserve Fund that is available exclusively for payment of accrued and
unpaid interest with respect to the Class B Certificates, and on the Class B
Targeted Maturity Date, for reduction of the Adjusted Class B Certificate
Balance until the Adjusted Class B Certificate Balance has been reduced to
zero. The Class B Reserve Amount will be $_____ as of the Closing Date, and
on any date of determination thereafter will be $______ less the aggregate of
Class B Reserve Amounts previously withdrawn from the Reserve Fund and
applied in respect of the amounts described in the previous sentence;
provided that upon the reduction of the Adjusted Class B Certificate balance
to zero, the Class B Reserve Amount shall be deemed to be zero.
"CLASS B STATED MATURITY DATE" means May 25, 2005, or if such day is
not a Business Day, the next succeeding Business Day.
"CLASS B SWAP INTEREST AMOUNT" means, with respect to any relevant
Certificate Payment Date, the sum of (i) the relevant Class B Notional
Interest Accrual Amounts for the Interest Periods commencing on or after the
preceding relevant Certificate Payment Date and ending prior to such relevant
Certificate Payment Date (commencing on or after the Closing Date, in the
case of the Certificate Payment Date inMarch, 1999) and (ii) an amount equal
to interest accrued at the related Required Rate during such Monthly Interest
Periods on amounts deposited into the
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1998-C Certificateholders' Account in respect of the Adjusted Class B
Certificate Balance on prior Monthly Allocation Dates.
"CLASS B SWAP INTEREST SHORTFALL AMOUNT" means, on any relevant
Certificate Payment Date the amount by which the Class B Swap Interest Amount
exceeds the aggregate of the amounts paid or available to be paid by the
1998-B Securitization Trust to the Swap Counterparty in respect of interest
accrued on the Class B Certificates.
"CLASS B TARGETED MATURITY DATE" means September 25, 2003, or if such
day is not a Business Day, the next succeeding Business Day.
"CLOSING DATE" means December ___, 1998.
"COLLECTION PERIOD" with respect to each Monthly Allocation Date, means
the preceding calendar month; provided, however, that with respect to the
Monthly Allocation Date in [October 1998,] amounts collected by the Servicer
during [July, August and September 1998] will be allocated and used to make
applications and payments on such Monthly Allocation Date pursuant to the
priorities set forth in the 1998-C Securitization Trust Agreement as though
all such amounts had been collected during the Collection Period of
[September 1998.]
"COLLECTIONS" means with respect to any Collection Period, all net
collections received in respect of the 1998-C Contracts and 1998-C 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, Reallocation Payments,
Reallocation Deposit Amounts, Net Matured Leased Vehicle Proceeds, Net
Charged-off Vehicle Proceeds and other Net Liquidation Proceeds, less (i)
amounts representing Payments Ahead with respect to future Collection
Periods, (ii) Additional Loss Amounts in respect of such Collection Period
and excluding any proceeds of Residual Value Insurance Policies and (iii)
reimbursement of Advances.
"CONTINGENT AND EXCESS LIABILITY POLICIES" means those contingent and
excess liability insurance policies maintained by TMCC pursuant to the 1998-C
SUBI Servicing Supplement providing certain bodily injury and property damage
coverages as to which the Titling Trust is an additional named insured.
"CORPORATE TRUST OFFICE" means the principal office of the Titling
Trustee, the Trust Agent and the 1998-C Securitization Trustee at which its
corporate trust business shall be administered. The Corporate Trust Office
of the Titling Trustee, Trust Agent and the 1998-C Securitization Trustee is
located at 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601,
Attention: Toyota Lease Trust. After the Closing Date, the Corporate Trust
Office for any of the Titling Trustee, the Trust Agent and the Securitization
Trustee or any successor thereto may be changed by delivering a notice in
writing of the new address of the corporate office to the Servicer and the
Beneficiaries.
"CURRENT CONTRACT" means a 1998-C Contract that is not a Charged off
Contract, a Liquidated Contract, a Matured Contract or an Additional Loss
Contract.
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"CURRENT LIABILITY" means, with respect to any Plan, the present value
of the accrued benefits under the Plan, as set forth in the most recent
audited consolidated financial statements of TMS and its subsidiaries.
"CUTOFF DATE" means [December ____, 1998.]
"DEFERRAL FEE" means any fee paid by an Obligor in connection with the
deferral of all or any portion of a Scheduled Monthly Payment, as specified
in the related 1998-C Contract.
"DEFINITIVE CERTIFICATES" means any Certificates not outstanding in
book-entry form.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period,
(i) the number of all outstanding 1998-C Contracts 60 days or more delinquent
(after taking into account permitted deferrals) as of the last day of such
Collection Period (excluding 1998-C Contracts as to which the 1998-C Leased
Vehicle has been sold or otherwise disposed of during such Collection
Period), determined in accordance with the Servicer's normal practices, plus
(ii) the number of Repossessed Leased Vehicles that have not been sold or
otherwise disposed of (to the extent the related 1998-C Contract is not
otherwise reflected in clause (i) above), expressed as a percentage of the
aggregate number of 1998-C Contracts that are Current Contracts on the last
day of such Collection Period.
"DEPOSIT DATE" means the Business Day immediately preceding each
Monthly Allocation Date.
"DETERMINATION DATE" means the nineteenth day of each month, or if such
day is not a Business Day, the next succeeding Business Day.
"DISCOUNTED CONTRACT" means a 1998-C Contract with a Lease Rate less
than 8.75% per annum.
"DISCOUNTED PRINCIPAL BALANCE" means (i) with respect to any Discounted
Contract, an amount equal to the sum of all remaining scheduled Monthly
Payments on such 1998-C Contract, plus the Booked Residual Value of the
related Leased Vehicle, discounted by the Discount Rate, and (ii) with
respect to any other 1998-C Contract, its Outstanding Principal Balance at
such time.
"DISCOUNT RATE" means 8.75% per annum.
"ELIGIBLE CONTRACT" means a Contract which satisfies the criteria
specified in the definition of "Eligible Contract" set forth in the Annex of
Definitions as of the date of the 1998-C SUBI Supplement, and also satisfies
the following criteria as of such date:
(a) such Contract was originated in the United States, after
[December ___, 1996,] in the case of the Initial Contracts, and on or before
[June ___, 1998], in the case of the Subsequent Contracts and had, at
origination, a scheduled termination date on or after [December ____, 1998],
and no later than [May ___, 2003] in the case of the Initial Contracts, and
no later than [June ___, 2003], in the case of the Subsequent Contracts;
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(b) such Contract was not more than 60 days past due as of the
Cutoff Date or the related Transfer Date, as the case may be, and has not
been deferred more than 4 times or extended by more than 12 months in the
aggregate (or by more than sixteen months with the inclusion of any
deferrals) or otherwise modified except in accordance with the Servicer's
normal credit and collection policies and practices;
(c) such Contract is not an asset of any SUBI other than the
1998-C SUBI; and
(d) such Contract is a closed-end lease contract having an
original scheduled maturity of not more than 60 months, will have been
written for a Capitalized Cost, plus a lease charge which is based on the
Lease Rate. Substantially all of the 1998-C Contracts 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 Contract to an amount equal to the
Booked Residual Value and provides that such Contract will allow the related
Obligor voluntarily to terminate such Contract by paying the related Payoff
Amount.
"EUROCLEAR" means the Euroclear System.
"EVENTS OF DEFAULT" under the Swap Agreement (each, an "Event of
Default") are limited to: (i) the failure of the 1998-C Securitization Trust
or the Swap Counterparty to pay any amount when due under the Swap Agreement
after giving effect to the applicable grace period, if any; (ii) the
occurrence of certain events of insolvency or bankruptcy of the 1998-C
Securitization Trust or the Swap Counterparty and (iii) certain other
standard events of default under the 1992 Master Agreement including "Breach
of Agreement" (not applicable to the 1998-C Securitization Trust),
"Misrepresentation" (not applicable to the 1998-C Securitization Trust) and
"Merger without Assumption", as described in Sections 5(a)(ii), 5(a)(iv) and
5(a)(viii) of the 1992 Master Agreement.
"EVENT OF SERVICING TERMINATION" means any of the following events:
(i) failure by the Servicer to deliver to the Titling Trustee for
allocation and application or payment to holders of interests in the 1998-C
SUBI or to the 1998-C Securitization Trustee for required payments in respect
of the Investor Certificates, 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 1998-C Securitization
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, or failure, for any reason,
of the 1998-C Securitization Trust to pay in full any Class of Investor
Certificates on the related Stated Maturity Date which failure is not cured
within ten Business Days;
(ii) failure by the Servicer to deliver to the Titling Trustee or the
1998-C Securitization Trustee any report relating to the 1998-C SUBI
Sub-Trust and required to be delivered to it pursuant to the 1998-C Servicing
Supplement within ten Business Days after discovery or written notice thereof
as described in clause (i) above;
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(iii) failure by the Servicer duly to observe or perform in any material
respect any other of its covenants or agreements in the Titling Trust
Agreement or 1998-C Servicing Supplement which failure materially and
adversely affects the rights of holders of interests in the 1998-C SUBI or
the Certificateholders and which continues unremedied for 90 days after
written notice thereof as described in clause (i) above;
(iv) the occurrence of an Insolvency Event with respect to the Servicer;
(v) any representation, warranty or statement of the Servicer made in
the 1998-C Servicing Supplement or any certificate, report or other writing
delivered pursuant thereto or to any related Transaction Document shall prove
to be incorrect in any material respect as of the time when the same shall
have been made and such circumstance or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured within 30 days after discovery or written
notice thereof as described in clause (i) above as a result of which the
interests of the holder of the 1998-C SUBI Certificate or of the Investor
Certificateholders are materially and adversely affected and which continues
to be incorrect in any material respect and continues to materially and
adversely affect the interests of the holder of the 1998-C SUBI 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 TMCC, the Transferor or the Servicer, as the case may be, by the
1998-C Securitization Trustee or the Titling Trustee, or (ii) to TMCC, the
Transferor or the Servicer, as the case may be, and to the 1998-C
Securitization Trustee by the Holders of Investor 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;
(vi) the Servicer shall have failed to make an Advance (other than any
Nonrecoverable Advance) to the extent, at the time and in the amount required
by Section 4.05 of the 1998-C Servicing Supplement, which failure continues
for five Business Days after discovery of such failure by an officer of the
Servicer or within three Business Days after discovery or written notice
thereof as described in clause (i) above; or
(vii) the Servicer shall have failed to perform its obligations under
the 1998-C Servicing Supplement with respect to maintenance of the Contingent
and Excess Liability Insurance Policies.
Notwithstanding the foregoing, a delay or failure in the performance
referred to under clause (i) or (vi) above for a period of ten Business Days,
or referred to in clause (ii) above for a period of 20 Business Days, or
referred to in clause (v) for a period of 90 days, or referred to in clause
(vii) for a period of 60 days, shall NOT constitute an Event of Servicing
Termination if such delay or failure in performance arises from an event or
circumstance of force majeure.
"EXCESS AMOUNTS" means, with respect to any Monthly Allocation Date,
the amount distributable to the Transferor (unless otherwise applied on a
Monthly Allocation Date) specified in Section 3.01(c)(xiv) of the 1998-C
Securitization Trust Agreement.
["FIXED RATE CLASS B CERTIFICATES"]
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"HOLDER" See definition of Certificateholder.
"INDENTURE" means that certain Indenture dated as of December 1, 1998,
between TMCC and U.S. Bank National Association, as trustee.
"INDENTURE TRUSTEE" means U.S. Bank National Association in such
capacity under the Indenture, or any successor trustee appointed as such
pursuant to the Indenture.
"INITIAL CLASS A-1 CERTIFICATE BALANCE" means $_____.
"INITIAL CLASS A-2 CERTIFICATE BALANCE" means $_____.
"INITIAL CLASS A-3 CERTIFICATE BALANCE" means $_____.
"INITIAL CLASS B CERTIFICATE BALANCE" means $_____.
"INITIAL CONTRACTS" means the 1998-C Contracts listed on the Schedule
of Contracts and Leased Vehicles delivered on the Closing Date.
"INITIAL INVESTOR BALANCE" means 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.
"INTEREST COLLECTIONS" with respect to any Collection Period, means
generally an amount equal to the amount by which Collections exceed
Principal Collections with respect to such Collection Period.
"INTEREST DETERMINATION BUSINESS DAY" means any day on which
commercial banks are open for business in London for purposes of determining
the Class A-1 Rate, Class A-2 Rate, Class A-3 Rate and Class B Rate,
provided, however, that in any event the references to New York, New York and
San Francisco, California in the definition of "Business Day" for purposes
of making payments shall not be deleted.
"INTEREST DETERMINATION DATE" means the second Interest Determination
Business Day preceding the first day of each Interest Period.
"INTEREST PAYMENT PERIOD" [means (i)] for each Class of Certificates
[(other than any Fixed Rate Class B Certificates)] and any Certificate
Payment Date means the period from and including the 25th day of the calendar
month that includes the preceding Certificate Payment Date to but excluding
the 25th day of the calendar month that includes the current Certificate
Payment Date, [and (ii) for any Fixed Rate Class B Certificates and any related
Certificate Payment Date the period from and including the 25th day of the
calendar month that includes the current Certificate Payment Date] except that
the first Interest Payment Period for each Class of Certificates will be the
period from and including the Closing Date to but excluding [March ____, 1999].
Each Interest Payment Period will generally consist of approximately three
months until the related Targeted Maturity Date. Thereafter, the related
Interest Payment Period generally will be comprised of approximately one
month.
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"INTERPOLATION METHOD" means ___________________.
"INVENTORY ADVANCE" with respect to any Monthly Allocation Date, means
an Advance by the Servicer of amounts it expects to recover as Liquidation
Proceeds with respect to 1998-C Leased Vehicles that are held in inventory
during the related Collection Period pending liquidation.
"INVESTOR CERTIFICATE" means any Class A Certificate or Class B
Certificate.
"INVESTOR CERTIFICATEHOLDER" means any Class A Certificateholder or
Class B Certificateholder.
"INVESTOR INTEREST" means the aggregate of the interests of the
Investor Certificateholders.
"INVESTOR PERCENTAGE" means, with respect to any Collection Period:
(i) with respect to Interest Collections and Loss Amounts allocable to
the 1998-C SUBI, the percentage equivalent of a fraction (not to exceed
100%), the numerator of which is the Adjusted Investor Balance as of the last
day of the immediately preceding Collection Period (or, in the case of the
first Collection Period, the Initial Investor 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, the Cutoff Date); and
(ii) with respect to Principal Collections allocable to the 1998-C
SUBI, the percentage equivalent of a fraction (not to exceed 100%), the
numerator of which is the Adjusted Investor Balance and the denominator of
which is the Aggregate Net Investment Value, calculated in each case as of
the last day of the last Collection Period that commenced during the
Revolving Period.
"LIBOR" means the London interbank offered rate.
"LIQUIDATED CONTRACT" means a 1998-C Contract that has been the subject
of a Prepayment in full, regardless of whether all or any part of such
payment has been made by the Obligor under the related 1998-C Lease, the
Servicer pursuant to the 1998-C Servicing Supplement, or an insurer pursuant
to an Insurance Policy.
"LIQUIDATION EVENT" means the occurrence of either (i) an Insolvency
Event or (ii) that the Trust or the Titling Trust becomes subject to
registration as an investment company for purposes of the Investment Company
Act of 1940.
"LIQUIDATION EXPENSES" means, with respect to any Collection Period,
reasonable out-of-pocket expenses incurred by the Servicer in connection with
the realization of the full amounts due or to become due under any 1998-C
Contract, including Charged-off Vehicle Expenses, Matured Leased Vehicle
Expenses and other expenses incurred in connection with the sale or other
disposition of a 1998-C Leased Vehicle, whether upon repossession or upon
return of a 1998-C Leased Vehicle related to a Matured Contract or
Charged-off Contract, any collection
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effort (whether or not resulting in a lawsuit against the Obligor under such
1998-C Contract) or any application for Insurance Proceeds.
"LIQUIDATION PROCEEDS" with respect to any Collection Period, means the
sum of all amounts received in connection with the realization of the amounts
due under any 1998-C Contract through the date of such disposition,
including, without limitation, all Matured Leased Vehicle Proceeds and
Charged-off Vehicle Proceeds received by the Servicer during such Collection
Period.
"LOSS AMOUNT" means, with respect to any Monthly Allocation Date, an
amount equal to the sum of any Charged-off Amount, Residual Value Loss Amount
and Additional Loss Amount for the related Collection Period.
"MATURED CONTRACT" means any 1998-C Contract that (i) has been
terminated not more than 30 days prior to the termination date specified
therein, as such termination date may have been deferred or extended by the
Servicer in accordance with its normal servicing procedures and in compliance
with the 1998-C Servicing Supplement, or (ii) has been terminated 31 or more
days prior to the termination date specified therein, as such termination
date may have been deferred or extended as described in clause (i), and as to
which all scheduled Monthly Payments have been made by or on behalf of the
related Obligor.
"MATURED LEASED VEHICLE EXPENSES" means, with respect to any Collection
Period, all reasonable out-of-pocket expenses incurred by the Servicer during
such Collection Period in connection with the realization of Matured Leased
Vehicle Proceeds, including any unpaid payments of taxes, vehicle
registration charges, clearance of parking tickets and similar items and
expenses and charges payable by the Obligors or paid by the Servicer on
behalf of Obligors, any unpaid Monthly Payments and the reasonable expenses
in connection with the disposition of such vehicles incurred by the Servicer
in accordance with its standard procedures and practices.
"MATURED LEASED VEHICLE INVENTORY" means, with respect to any date,
each 1998-C Leased Vehicle that is the subject of a Matured Contract that has
been terminated within the three immediately preceding Collection Periods,
but which remains unsold and not otherwise disposed of by the Servicer for no
more than three full Collection Periods as of the last day of the most recent
Collection Period.
"MATURED LEASED VEHICLE PROCEEDS" means, with respect to any Collection
Period, all proceeds received by the Servicer during such Collection Period
from the sale or other disposition of 1998-C Leased Vehicles that are the
subject of Matured Contracts, including payments for excess mileage and
excess wear and tear, in each case through the date of disposition of the
related 1998-C Leased Vehicles.
"MATURITY ADVANCE" means any advance made by the Transferor for the
purpose of reducing the Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance or
Adjusted Class B Certificate Balance to zero, or to reimburse Loss Amounts or
Certificate Principal Loss Amounts allocated thereto, on the related Targeted
Maturity Date or any subsequent relevant Certificate Payment Date if the
aggregate of other amounts available in the 1998-C SUBI Certificateholders'
Account, the 1998-C SUBI
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Collection Account or from other sources to be paid as principal thereof
pursuant to Section 3.01 of the 1998-C Securitization Trust Agreement are
insufficient to reduce such Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance or
Adjusted Class B Certificate Balance to zero on such date and to reimburse
all Loss Amounts and Certificate Principal Loss Amounts previously allocated
thereto.
"MONTHLY ALLOCATION DATE" means the day on which Collections in respect
of the 1998-C Contracts and 1998-C Leased Vehicles represented by the 1998-C
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 [December ___, 1998.]
"MONTHLY INTEREST PERIOD" means, for each Class of Certificates and any
Monthly Allocation Date, the period from and including the 25th day of the
preceding calendar month, to but excluding the 25th day of the calendar month
in which such Monthly Allocation Date occurs, except that the first Monthly
Interest Period shall be the period from and including the Closing Date, to
but excluding [December 25, 1998.]
"NET CHARGED-OFF VEHICLE PROCEEDS" means, with respect to any
Collection Period, the aggregate Charged-off Vehicle Proceeds net of the
aggregate Charged-off Vehicle Expenses for such Collection Period.
"NET INSURANCE PROCEEDS" means, with respect to any Collection Period,
(i) recoveries pursuant to each Insurance Policy obtained and maintained by
an Obligor pursuant to a 1998-C Contract (or payment by TMCC of the
deductibles as to which it has indemnified the Securitization Trust), (ii)
recoveries pursuant to the Contingent and Excess Liability Insurance Policies
to the extent they relate to the 1998-C Contracts or 1998-C Leased Vehicles
and (iii) amounts paid by any insurer under any other insurance policies
relating to the 1998-C Contracts or the related 1998-C Leased Vehicles, in
each case net of certain sums applied to the repair of the related Leased
Vehicles and, in all cases, excluding the proceeds of any Residual Value
Insurance Policies, the proceeds of which will be a 1998-C SUBI Asset but
will not be transferred by the Transferor to the 1998-C Securitization Trust.
"NET LIQUIDATION PROCEEDS" means, with respect to any Collection
period, all Liquidation Proceeds net of all Liquidation Expenses for such
Collection Period.
"NET MATURED LEASED VEHICLE PROCEEDS" means, with respect to any
Collection Period, all Matured Leased Vehicle Proceeds net of all Matured
Leased Vehicle Expenses.
"NONRECOVERABLE ADVANCE" means any Advance that, in the Servicer's
reasonable judgment, may not be ultimately recoverable by the Servicer from
Net Liquidation Proceeds or otherwise (excluding proceeds of any Residual
Value Insurance Policy).
"ONE-MONTH LIBOR" means LIBOR for U.S. Dollar deposits having a
maturity of one month.
"OTHER SUBI" means any SUBI other than the 1998-C SUBI.
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"OTHER SUBI ASSETS" means the SUBI Assets allocated to any SUBI other
than the 1998-C SUBI.
"OTHER SUBI CERTIFICATE" means any SUBI Certificate other than the
1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate.
"OUTSTANDING ADVANCES" means, with respect to a 1998-C Contract and the
last day of a Collection Period, the sum of all Advances made with respect
thereto on or prior to such date, minus any portion of subsequent Collections
applied to reimburse such Advances.
"PAYING AGENT"
"PAYOFF AMOUNT" means the amount owed by the related Obligor under any
1998-C Contract upon termination at or before maturity where such Obligor is
not in default, does not exercise its option to purchase the related 1998-C
Leased Vehicle and does not pay all remaining scheduled Monthly Payments
required thereunder through the original termination date, determined by (i)
adding all unpaid Monthly Payments and any incidental charges owing under
such 1998-C Contract, less unearned lease charges to the Booked Residual
Value, (ii) subtracting the actual wholesale price or the wholesale price
otherwise determined by TMCC, as servicer, in a commercially reasonable
manner or by third party appraisal (if elected by the Obligor), and (iii)
applying the Security Deposit, if any, to reduce any deficiency.
"PERCENTAGE INTEREST" means, as to any Investor Certificate, the
percentage obtained by dividing the outstanding principal balance of such
Investor Certificate by the Class Certificate Balance of the related Class;
provided, however, that where the Percentage Interest is relevant in
determining whether the vote of the requisite percentage of Investor
Certificateholders necessary to effect any consent, waiver, request or demand
shall have been obtained, the aggregate Percentage Interest shall be deemed
to be reduced by the amount equal to the Percentage Interest (without giving
effect to this provision) represented by the interests evidenced by any such
Investor Certificate that is registered in the name of the Transferor, TMCC
or any person controlling, controlled by or under common control with the
Transferor or TMCC.
"PERMITTED INVESTMENTS" means as used in the 1998-C SUBI Supplement,
the 1998-C SUBI Servicing Supplement, the 1998-C Securitization Trust
Agreement and the Titling Trust Agreement with respect to any investments to
be made with respect to any 1998-C SUBI Assets or proceeds thereof,
(notwithstanding the definition of "Permitted Investments" set forth in the
Annex of Definitions), any one or more of the following instruments,
obligations or securities, in each case subject to any further criteria
specified in the related SUBI Supplement:
(a) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States;
(b) (i) general obligations of or obligations guaranteed by FNMA, or
(ii) any state of the United States, the District of Columbia or the
Commonwealth of Puerto Rico then rated the highest available credit rating of
each Rating Agency for such obligations;
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(c) certificates of deposit issued by any depository institution or
trust company (including any Securitization Trustee) incorporated under the
laws of the United States or of any state thereof, the District of Columbia
or the Commonwealth of Puerto Rico and subject to supervision and examination
by banking authorities of one or more of such jurisdictions, provided that
the short-term unsecured debt obligations of such depository institution or
trust company are then rated the highest available rating of each Rating
Agency for such obligations;
(d) certificates of deposit, demand or time deposits of, bankers'
acceptances issued by, or federal funds sold by, any depository institution
or trust company (including any Securitization Trustee) incorporated under
the laws of the United States or any State and subject to supervision and
examination by federal and/or State banking authorities and the deposits of
which are fully insured by the Federal Deposit Insurance Corporation, so long
as at the time of such investment or contractual commitment providing for
such investment either such depository institution or trust company has the
Required Rating (or if such investment will mature after more than one month,
the long-term, unsecured debt of the issuer has the highest available rating
from each Rating Agency) or such Securitization Trustee shall have received a
letter from each Rating Agency to the effect that such investment would not
result in the qualification, downgrading or withdrawal of the ratings then
assigned to any Rated Certificates issued by the 1998-C Securitization Trust;
(e) certificates of deposit issued by any bank, trust company, savings
bank or other savings institution and fully insured by the FDIC having the
Required Rating (or if such investment will mature after more than one month,
the long-term, unsecured debt of the issuer has the highest available rating
from each Rating Agency);
(f) repurchase obligations held by the 1998-C Securitization Trustee
that are acceptable to the 1998-C Securitization Trustee with respect to any
security described in clauses (a), (b) or (g) hereof or any other security
issued or guaranteed by any other agency or instrumentality of the United
States, in either case entered into with a federal agency or a depository
institution or trust company (acting as principal) described in clause (d)
above (including the 1998-C Securitization Trustee); provided, however, that
repurchase obligations entered into with any particular depository
institution or trust company (including the 1998-C Securitization Trustee)
will not be Permitted Investments to the extent that the aggregate principal
amount of such repurchase obligations with such depository institution or
trust company held by the 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust or of all of the Titling Trust Assets shall
exceed 10% of either the related Aggregate Net Investment Value or the
aggregate unpaid principal balance or face amount, as the case may be, of all
Permitted Investments so held thereby;
(g) interests in any open-end or closed-end management type investment
company or investment trust (i) registered under the Investment Company Act,
the portfolio of which is limited to the obligations of, or guaranteed by,
the United States and to agreements to repurchase such obligations, which
agreements, with respect to principal and interest, are at least 100%
collateralized by such obligations marked to market on a daily basis and the
investment company or investment trust shall take delivery of such
obligations either directly or through an independent custodian designated in
accordance with the Investment Company Act and (ii) acceptable to each Rating
Agency (as approved in writing by each Rating Agency) as collateral
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for securities having ratings equivalent to the ratings (as of the Closing
Date) of the Rated Certificates issued by the 1998-C Securitization Trust;
(h) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State so
long as at the time of such investment or contractual commitment providing
for such investment (i) the long-term, unsecured debt of such corporation has
the highest available rating from each Rating Agency, (ii) such corporation
is TMCC or its successor or (iii) the 1998-C Securitization Trustee shall
have received a letter from each Rating Agency to the effect that such
investment would not result in the qualification, downgrading or withdrawal
of the ratings then assigned to any Rated Certificates issued by the 1998-C
Securitization Trust or commercial paper or other short-term debt earning the
Required Rate;
(i) money market funds so long as such funds are rated Aaa by Moody's
(so long as Moody's is a Rating Agency) and AAAm by Standard & Poor's (so
long as Standard & Poor's is a Rating Agency), including any such fund for
which the 1998-C Securitization Trustee or an Affiliate thereof serves as an
investment advisor, administrator, shareholder servicing agent and/or
custodian or subcustodian, and notwithstanding that (i) such Person charges
and collects fees and expenses from such funds for services rendered, (ii)
such Person charges and collects fees and expenses for services rendered
pursuant to the 1998-C Securitization Trust Agreement or under the Trust
Agency Agreement and (iii) services performed for such funds and pursuant to
either such Agreement may converge at any time. Each of the Transferor and
the Servicer hereby specifically authorizes the 1998-C Securitization Trustee
or Titling Trustee or an Affiliate thereof to charge and collect all fees
and expenses from such funds for services rendered to such funds, in addition
to any fees and expenses such Person may charge and collect for services
rendered pursuant to either such Agreement; and
(j) such other investments acceptable to each Rating Agency (as
approved in writing by each Rating Agency) as will not result in the
qualification, downgrading or withdrawal of the ratings then assigned by such
Rating Agency to any Rated Certificates issued by the 1998-C Securitization
Trust; provided that each of the foregoing investments shall mature no later
than the day specified in the 1998-C SUBI Supplement, and shall be required
to be held to such maturity.
None of the foregoing will be considered a Permitted Investment if:
(i) it constitutes a certificated security, bankers' acceptance,
commercial paper, negotiable certificate of deposit or other obligation that
constitutes "financial assets" within the meaning of Section 8-102(a)(9)(c)
of the UCC unless a security entitlement with respect to such Permitted
Investment has been created, in favor of the Titling Trustee or the 1998-C
Securitization Trustee, as appropriate, in accordance with Section 8-501(b)
of the UCC and the related securities intermediary has agreed not to comply
with entitlement orders of any secured party other than the 1998-C
Securitization Trustee or the Titling Trustee, as the case may be; or
(ii) it constitutes a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, unless, in
accordance with applicable law, (A) a book-entry registration thereof is made
to an appropriate book-entry account maintained with a
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Federal Reserve Bank by the Titling Trustee or the 1998-C Securitization
Trustee, as appropriate, or by a custodian therefor, (B) a deposit advice or
other written confirmation of such book-entry registration is issued to such
trustee or custodian, (C) any such custodian makes entries in its books and
records identifying that such book-entry security is held through the Federal
Reserve System pursuant to federal book-entry regulations and belongs to such
trustee and indicating that such custodian holds such Permitted Investment
solely as agent for the 1998-C Securitization Trustee or the Titling Trustee,
as appropriate, (D) the 1998-C Securitization Trustee or Titling Trustee, as
appropriate, makes entries in its books and records establishing that it
holds such security solely in such capacity, and (E) any additional or
alternative procedures as may hereafter become necessary to effect complete
transfer of ownership thereof to such trustee are satisfied, consistent with
changes in applicable law or regulations or the interpretation thereof.
Notwithstanding anything to the contrary contained in this definition,
no Permitted Investment may be purchased at a premium and no Permitted
Investment shall be an "interest only" instrument.
Notwithstanding anything to the contrary contained in this definition:
if the 1998-C Securitization Trust has invested in TMCC Demand Notes as a
Permitted Investment and, if for any reason, Standard & Poor's reduces TMCC's
short term debt rating to a rating less than A-1+ or Standard & Poor's
reduces TMCC's long term debt rating to a rating less than AA, Moody's
reduces TMCC's short term debt rating to a rating less than P-1 or Moody's
reduces TMCC's long term debt rating to a rating less than Aa3 and the 1998-C
Securitization Trustee determines that at such time one or more Permitted
Investments having substantially the same maturities, similar demand features
and bearing interest at the relevant Required Rates are available and
investment therein rather than in TMCC Demand Notes will not, by itself,
cause a Rating Agency to reduce or withdraw its rating of any Class of
Certificates, the 1998-C Securitization Trustee may invest in such Permitted
Investment (the "Successor Permitted Investments") notwithstanding the
requirements of the next succeeding paragraph.
None of the foregoing (except long term debt obligations of TMCC or its
successor described in clause (h) above or any Successor Permitted
Investment) will be a Permitted Investment with respect to amounts on deposit
in the Certificateholders' Account unless by its own terms it matures on or
before the Deposit Date preceding the next relevant Certificate Payment Date
and it includes a demand, put or similar feature such that the 1998-C
Securitization Trustee is able to cause such investment to mature before such
Deposit Date to the extent set forth in Section 3.02(a) of the 1998-C
Securitization Trust Agreement.
Moreover, the Transferor will have the right to notify the 1999-B
Securitization Trustee and the Titling Trustee that it intends to rely on the
Requested Exemption. In connection therewith, the Servicer shall notify the
Titling Trustee and the 1998-C Securitization Trustee of the limitations on
Permitted Investments contained in the Requested Exemption and thereafter the
Servicer shall not instruct the Titling Trustee or 1998-C Securitization
Trustee to make any investment inconsistent therewith and shall indemnify the
1998-C Securitization Trust, the 1998-C Securitization Trustee, the Trust
Agent and the Titling Trustee against any liability arising from any
instruction by the Servicer to make any investment inconsistent therewith.
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For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation (excluding any "+" signs associated with such rating), or
such lower credit rating (as approved in writing by each Rating Agency) as
will not result in the qualification, downgrading or withdrawal of the rating
then assigned by such Rating Agency to any Rated Certificates issued by the
1998-C Securitization Trust. Also for purposes of this definition, any
reference to a Rating Agency refers only to a Rating Agency that has, at the
request of the Grantor, rated securities issued by the 1998-C Securitization
Trust.
"PRINCIPAL COLLECTIONS" means, with respect to any Collection Period,
all Collections allocable to the principal component of any 1998-C Contract
discounted to the extent described below. With respect to any Collection
Period, Collections will be allocated as "Principal Collections" up to the
sum of: (i) the principal portion of each Monthly Payment due during such
Collection Period with respect to each Contract that has not yet reached
maturity, and as to which there has been no repossession, charge-off or
Prepayment; (ii) amounts received during such Collection in connection with
the prepayment of any Contract that are allocable to principal thereof
(including the Residual Value thereof); and (iii) amounts received during
such Collection Period as Liquidation Proceeds (net of Liquidation Expenses)
with respect to any Contract not specified in (i) or (ii) above, up to the
sum of (a) the principal portion of all unpaid Monthly Payments through the
maturity date specified in each related lease contract plus (b) the Residual
Value of each related lease contract. For purposes of determining Principal
Collections, the principal component of all payments (including any payment
in respect of the Booked Residual Value thereof) made or to be made on or in
respect of a 1998-C Contract (or the related 1998-C Leased Vehicle) with a
Lease Rate less than 8.75% per annum will be discounted at a per annum rate
of 8.75%, thereby effectively reallocating a portion of the payments received
in respect of the principal component of the 1998-C Contracts to Interest
Collections.
"REALLOCATION DEPOSIT AMOUNT" means the amount required to be deposited
by the Servicer into the 1998-C SUBI Collection Account pursuant to Section
3.03 of the 1998-C SUBI Servicing Supplement in connection with any 1998-C
Contract as to which certain breaches of representations or warranties
specified in such Section 3.03 are not cured as provided in such Section
3.03, which amount will equal the amount by which the Transferor Interest
would be reduced to less than zero in connection with the reallocation of the
related 1998-C SUBI Contract as a UTI Asset.
"REALLOCATION PAYMENT" means the amount required to be deposited by the
Servicer into the 1998-C SUBI Collection Account pursuant to Section 3.03 of
the 1998-C SUBI Servicing Supplement in connection with any 1998-C Contract
as to which certain breaches of representations or warranties specified in
such Section 3.03 are not cured as provided in such Section 3.03, which
amount will equal the Discounted Principal Balance of such 1998-C 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 1998-C
Contract at the related Lease Rate that was delinquent as of the end of such
Collection Period.
"RECORD DATE" means, the day immediately preceding each relevant
Certificate Payment Date or, if definitive Certificates for any Class are
issued, the last Business Day of the calendar month immediately preceding the
month in which such Certificate Payment Date occurs.
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"REFERENCE BANKS" means the four major banks in the London interbank
market, selected by the 1998-C Securitization Trustee, whose quotes to prime
banks in the London interbank market for one and six certain deposits will,
under certain circumstances, be used to determine one-month LIBOR and
three-month LIBOR.
"REPOSSESSED LEASED VEHICLES" means any 1998-C Leased Vehicle actually
repossessed by the Servicer or its agent or returned by the related Obligor
31 or more days prior to the termination date specified in the related 1998-C
Contract, as such termination date may have been deferred as described
herein, but as to which one or more scheduled Monthly Payments has not been
made by or on behalf of the Obligor.
["REQUESTED EXEMPTION" means that certain administrative exemption
requested by TMCC of the Department of Labor as the same has been published
on July ___, 1998 in the Federal Register (63 Fed. Reg. 36946), and as the
same may be amended through the date of its final grant.]
"REQUIRED AMOUNT" means, as of any Deposit Date, the lesser of (a) the
amounts then on deposit in the Reserve Fund and (b) sum of (1) the excess of
(a) the sum of any anticipated amounts to be allocated and applied or paid as
set forth in Section 3.01(c) clauses (i), (ii), (iii), (viii), (ix) and (x)
of the 1998-C Securitization Trust Agreement with respect to the related
Monthly Allocation Date (including pursuant to any other Section of Article
III), over (b) the amount of Available Interest allocable, applicable or
payable in respect thereof on the related Monthly Allocation Date, (2) if
such Deposit Date relates to a relevant Certificate Payment Date , the
amount remaining on deposit in the Reserve Fund to the extent of any Swap
Spread Deficit, and (3) on the Stated Maturity Date, the amount remaining on
deposit in the Reserve Fund to the extent necessary to reduce the Adjusted
Class A-1 Certificate Balance, Adjusted Class A-2 Certificate Balance,
Adjusted Class A-3 Certificate Balance and Adjusted Class B Certificate
Balance to zero (including reimbursements of Loss Amounts and Certificate
Principal Loss Amounts previously allocated thereto).
"REQUIRED RATE" means, with respect to any Permitted Investment of
amounts held in the Certificateholders' Account in respect of (i) the
Adjusted Class A-1 Certificate Balance will be the Class A-1 Notional Rate,
(ii) the Adjusted Class A-2 Certificate Balance will be the Class A-2
Notional Rate, (iii) the Adjusted Class A-3 Certificate Balance will be the
Class A-3 Notional Rate, (iv) the portion of the Adjusted Class B Certificate
Balance represented by any Adjustable Rate Class B Certificates will be the
Class B Notional Rate, (v) the portion of the Adjusted Class B Certificate
Balance represented by any Fixed Rate Class B Certificates will be the Class
B Fixed Rate and (vi) in respect of amounts allocated in respect of the Class
A-1 Notional Interest Accrual Amount or any Class A-1 Swap Interest Shortfall
Amount, the Class A-2 Notional Interest Accrual Amount or any Class A-2 Swap
Interest Shortfall Amount, the Class A-3 Notional Interest Accrual Amount or
any Class A-3 Swap Interest Shortfall Amount, the Class B Notional Interest
Accrual Amount or any Class B Swap Interest Shortfall Amount or Class B Fixed
Rate Interest Accrual Amount or Class B Interest Carryover Shortfall Amount
will be the one month commercial paper rate, which rate will reset monthly as
described in the Indenture.
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"RESERVE FUND" means the account designated as such and established and
maintained pursuant to Section 3.02(b) of the 1998-C Securitization Trust
Agreement.
"RESERVE FUND INITIAL DEPOSIT" means the amount to be deposited in the
Reserve Fund by the Transferor on the Closing Date equal to
$___________________ (___% of the Aggregate Net Investment Value as of the
Cutoff Date).
"RESERVE FUND SECURITIES INTERMEDIARY" means U.S. Bank National
Association in its capacity as securities intermediary (as such term is
defined in Section 8-102 of the New York UCC) with respect to the Reserve
Fund established pursuant to the 1998-C Securitization Trust Agreement.
["RESERVE FUND WITHDRAWAL AMOUNT" means, with respect to a Monthly
Allocation Date, the lesser of (a) the Required Amount for such Monthly
Allocation Date and (b) the amount on deposit in the Reserve Fund.]
"RESIDUAL CERTIFICATE" means the Certificate of any Class, if any,
issued on the Closing Date pursuant to Section 4.01 of the 1998-C
Securitization Trust Agreement to represent a principal amount less than
$1,000.
"RESIDUAL VALUE INSURANCE POLICIES" means, collectively, (i) the
Residual Value Insurance Policy number [RVI 97001] issued effective
[October 1, 1996] by Toyota Motor Insurance Corporation of Vermont in favor
of the Titling Trust and naming TMCC as additional insured and loss payee and
reinsured by RVI Guaranty Co., Ltd. and (ii) the Residual Value Insurance
policy number [RVI 02-02-10-0094] issued effective [February 1, 1998], as
supplemented effective [July ___, 1998], by RVI Guaranty co. Ltd., in favor
of the Titling Trust and naming TMCC as additional insured and loss payee.
"RESIDUAL VALUE LOSS AMOUNT" means, as of any Monthly Allocation Date,
the sum of (a) the aggregate of the Booked Residual Values of all 1998-C
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 Booked
Residual Values of all 1998-C 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.
"RESIDUAL VALUE SURPLUS" means, with respect to any Collection Period,
the excess, if any, of the aggregate of Matured Leased Vehicle Proceeds with
respect to 1998-C Leased Vehicles net of related Matured Leased Vehicle
Expenses incurred with respect to 1998-C Leased Vehicles during such
Collection Period over the aggregate of the Booked Residual Values of such
1998-C Leased Vehicles.
"RESIDUAL VALUE TEST" will not be satisfied as of any Determination
Date if (i) with respect to the related Collection Period the number of
1998-C Leased Vehicles returned to the Servicer relating to Matured Contracts
and sold during such period is greater than 25% of all 1998-C Contracts that,
as of their respective origination dates, had been scheduled to become
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<PAGE>
Matured Contracts during such period (provided that at least 500 such 1998-C
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 is less than 75% of
the average Booked Residual Values of 1998-C Leased Vehicles disposed of or
liquidated during such period.
"REVOLVING PERIOD" means the period from the Cutoff Date through the
calendar day preceding the earliest to occur of the Accumulation Date, the
date of an Accumulation Event or the date of any Swap Termination.
"SCHEDULE OF CONTRACTS AND LEASED VEHICLES" means the list of 1998-C
Contracts and 1998-C Leased Vehicles, on computer diskette, microfiche,
microfilm or hard paper copy, that are included as Titling Trust Assets in
the Titling Trust, as such list may be revised and supplemented from time to
time (which Schedules may be prepared on either a cumulative or additive
basis) pursuant to Section 5.01 of the 1998-C Servicing Supplement, and which
shall set forth the following information with respect to each such Contract
in separate columns:
Contract Number
Date of Origination
Maturity Date
Monthly Payment
Original Principal Balance
Outstanding Principal Balance as of the last day of the
immediately
preceding calendar month
Booked Residual Value
Security Deposit
Sub-Trust to which Contract is assigned
Vehicle Identification Number
Model Year
Make
Model
"SECURITY DEPOSIT" means any Security Deposit (as defined in the Annex
of Definitions attached to the Titling Trust Agreement) under any 1998-C
Contract.
"SECURITIZATION TRUST DOCUMENTS" means each of the Transaction
Documents relating to the Securitized Financing contemplated by the 1998-C
SUBI Supplement and the 1998-C Securitization Trust Agreement.
"SERVICER" means TMCC, in its capacity as servicer under the Titling
Trust Agreement and the 1998-C Servicing Supplement, or any successor to TMCC
in such capacities.
"SERVICER'S CERTIFICATE" means the report prepared monthly by the
Servicer substantially in the form of Exhibit B to the 1998-C SUBI Servicing
Supplement.
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"SERVICING RATE PORTION" means, with respect to any Monthly Allocation
Date, one-twelfth of 1.00% of the Aggregate Net Investment Value as of the
first day of the related Collection Period.
"SPECIFIED RESERVE FUND BALANCE" means, with respect to any Monthly
Allocation Date, $____________________ (___% 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 $____________________ (___% 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
Adjusted Investor Balance.
"STATEMENT TO CERTIFICATEHOLDERS" means the statement provided to
Certificateholders pursuant to Section 3.03(a) of the 1998-C Securitization
Trust Agreement.
"SUBI SECURITIES INTERMEDIARY" means U.S. Bank National Association in
its capacity as securities intermediary (as such term is defined in Section
8-102 of the New York UCC) with respect to the TLI SUBI Securities Account,
the TMCC SUBI Securities Account and the 1998-C SUBI Securities Account.
"SUBSEQUENT CONTRACTS" means those additional retail closed-end lease
contracts in which, during the Revolving Period, payments made on or in
respect of the 1998-C SUBI Assets allocable to principal and certain
reimbursed Loss Amounts and Certificate Principal Loss Amounts will be
reinvested pursuant to Section 3.02 of the 1998-C Servicing Supplement.
"SUBSEQUENT LEASED VEHICLES" means the automobiles and light duty
trucks relating to the Subsequent Contracts.
"SWAP AGREEMENT" means the ISDA Master Agreement dated
[December ___, 1998]between the 1998-C Securitization Trust and the Swap
Counterparty, together with the Schedule and Confirmations thereto.
"SWAP AVAILABLE SPREAD" means, with respect to any Certificate Payment
Date, the aggregate of the amounts, if any, allocated and applied or paid
pursuant to Section 3.01(c) clauses (i), (ii) and (iii) on each Monthly
Allocation Date since the preceding relevant Certificate Payment Date
(including the current Certificate Payment Date), plus the aggregate amount
of net investment income for the related Interest Period on investments in
Permitted Investments made in respect of amounts deposited into the
Certificateholders' Account in respect of the Adjusted Class A-1 Certificate
Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class A-3
Certificate Balance and the Adjusted Class B Certificate Balance on each
Monthly Allocation Date since the preceding relevant Certificate Payment Date
(excluding the current Certificate Payment Date).
"SWAP COUNTERPARTY" means TMCC in its capacity as such under the Swap
Agreement, and where indicated by the context, any successor thereto in such
capacity pursuant to the provisions of the Swap Agreement.
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"SWAP SPREAD DEFICIT" means, with respect to any Certificate Payment
Date, the amount, if any, by which the sum of the related Class A-1 Swap
Interest Amount, Class A-2 Swap Interest Amount, Class A-3 Swap Interest
Amount and the Class B Swap Interest Amount exceeds the Swap Available Spread.
"SWAP TERMINATION" means the occurrence of an Early Termination Date
(as defined in the Swap Agreement) following an Event of Default (as defined
in the Swap Agreement) or Termination Event (as defined in the Swap
Agreement).
"TERMINATION EVENT" under the Swap Agreement consist of the following:
(i) certain events of insolvency or bankruptcy of the Transferor; (ii) the
1998-C Securitization Trust or the Transferor becomes subject to registration
as an "investment company" under the Investment Company Act of 1940; and
(iii) certain standard termination events under the 1992 Master Agreement
including "Illegality" (which generally relates to changes in law causing it
to become unlawful for either of the parties to perform its obligations under
the Swap Agreement), "Tax Event" (which generally relates to either party to
the Swap Agreement, receiving payments thereunder from which an amount has
been deducted or withheld for or on account of certain taxes) and "Tax Event
Upon Merger" (which generally relates to a party to the Swap Agreement
receiving a payment under the Swap Agreement from which an amount has been
deducted or withheld for or on account of certain taxes as a result of a
party merging with another entity), each as more fully described in Sections
5(b)(i), 5(b)(ii) and 5(b)(iii) of the 1992 Master Agreement; provided,
however, that the occurrence of a "Tax Event" or "Tax Event Upon Merger" will
only constitute a Termination Event if at least 51% by Voting Interests of
the Class A Certificateholders directs the 1998-C Securitization Trustee to
terminate the Swap Agreement and liquidate the assets of the 1998-C
Securitization Trust.
"THREE-MONTH LIBOR" means LIBOR for U.S. Dollar depositors having
maturities of three months.
"TLI SUBI SECURITIES ACCOUNT" means the account established by U.S.
Bank National Association in its capacity as SUBI Securities Intermediary
pursuant to the TLI SUBI Securities Account Control Agreement, dated as of
December ___, 1998.
"TMCC DEMAND NOTES" means the unsecured debt obligations of TMCC issued
from time to time as a Permitted Investment pursuant to the terms of the
Indenture.
"TMCC SUBI SECURITIES ACCOUNT" means the account established by U.S.
Bank National Association in its capacity as SUBI Securities Intermediary
pursuant to the TMCC SUBI Securities Account Control Agreement, dated as of
December ___, 1998.
"TRANSFER DATE" means any of the one or more Business Days during the
Revolving Period selected by the Servicer each month on which the Servicer
will direct the Titling Trustee to reinvest Principal Collections and amounts
applied to reimburse Loss Amounts and Certificate Principal Loss Amounts
allocated to the Investor Interest in Subsequent Contracts and Subsequent
Leased Vehicles.
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"TRANSFEROR" means TLI, in its capacity as transferor under the 1998-C
Securitization Trust Agreement, and each successor thereto in the same
capacity pursuant to the 1998-C Securitization Trust Agreement.
"TRANSFEROR AMOUNTS" means, with respect to any Monthly Allocation
Date, amounts available for payment to the Transferor for such Monthly
Allocation Date pursuant to Section 3.01(i) of the 1998-C Securitization
Trust Agreement.
"TRANSFEROR CERTIFICATE" means the Certificate executed and
authenticated by the 1998-C Securitization Trustee in substantially the form
thereof set forth in the 1998-C Securitization Trust Agreement.
"TRANSFEROR INTEREST" means, as of any date, an amount equal to (i) the
Aggregate Net Investment Value less (ii) the Adjusted Investor Balance.
"TRANSFEROR PERCENTAGE" means 100% minus the applicable Investor
Percentage.
"TRUST OFFICER" when used with respect to the 1998-C Securitization
Trustee, means any officer within the Corporate Trust Office including any
Principal, Managing Director, Vice President, Assistant Vice President,
Secretary, Assistant Secretary Treasurer or Assistant Treasurer or any other
officer of the 1998-C Securitization Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge and familiarity with the
particular subject.
"UNALLOCATED PRINCIPAL COLLECTIONS" means, with respect to any Monthly
Allocation Date, the principal portion of any Transferor Amounts that are not
paid to the Transferor on such Monthly Allocation Date pursuant to the 1998-C
Securitization Trust Agreement because the Transferor Interest is less than
or equal to zero. Such amounts will be retained in the 1998-C SUBI
Collection Account until (a) applied to cover the Class A-1 Notional Interest
Accrual Amount, the Class A-2 Notional Interest Accrual Amount, the Class A-3
Notional Interest Accrual Amount, any Class A-1 Swap Interest Shortfall
Amount, any Class A-2 Swap Interest Shortfall Amount, any Class A-3 Swap
Interest Shortfall Amount, any Class B Notional Interest Accrual Amount, any
Class B Swap Interest Shortfall Amount, or any Loss Amounts or Certificate
Principal Loss Amounts allocable to the Adjusted Class A-1 Certificate
Balance, the Adjusted Class A-2 Certificate Balance, the Adjusted Class A-3
Certificate Balance or the Adjusted Class B Certificate Balance, (b) the
Adjusted Class A-1 Certificate Balance, Adjusted Class A-2 Certificate
Balance, the Adjusted Class A-3 Certificate Balance and Adjusted Class B
Certificate Balance have been reduced to zero (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).
"UNCAPPED SECURITIZATION TRUST ADMINISTRATION EXPENSES" with respect to
any Monthly Allocation Date will equal one-twelfth of the aggregate amounts
sufficient to pay the 1998-C Securitization Trustee's compensation and other
Administrative Expenses with respect to the 1998-C Securitization Trust payable
or reimbursable thereto on such Monthly Allocation Date under the 1998-C
Securitization Trust Agreement, including those due under Section 6.05 of the
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<PAGE>
1998-C Securitization Trust Agreement, not subject to the limitations set
forth in the definition of Capped Securitization Trust Administrative
Expenses.
"UNCAPPED TITLING TRUST ADMINISTRATIVE EXPENSES" with respect to any
Monthly Allocation Date will equal-one twelfth of the aggregate amounts
sufficient to pay the Titling Trustee's compensation and other Administrative
Expenses with respect to the Titling Trust allocable to the 1998-C SUBI and
payable or reimbursable thereto on such Monthly Allocation Date under the
1998-C Securitization Trust Agreement, including those due under Section 6.13
of the Titling Trust Agreement, not subject to the limitations set forth in
the definition of Capped Titling Trust Administrative Expenses.
"UNINVESTED PRINCIPAL COLLECTIONS" means, as of the end of the
Revolving Period, any Principal Collections with respect to the Revolving
Period (or amounts treated as Principal Collections pursuant to Section 3.01
of the 1998-C Securitization Trust Agreement) then on deposit in the 1998-C
SUBI Collection Account that have not been reinvested in Subsequent Contracts
and Subsequent Leased Vehicles as contemplated by Section 3.02 of the 1998-C
Servicing Supplement.
"U.S. BANK" means U.S. Bank National Association, formerly known as
First Bank National Association.
"U.S. PERSON" means any citizen or resident of the United States, a
corporation, partnership or other entity organized in or under the laws of
the United States or any State, an estate the income of which is subject to
United States federal income taxation regardless of its source, and a trust
as to which (i) a court within the United States is able to exercise primary
supervision over its administration and (ii) one or more United States
persons have the authority to control all substantial decisions of such
trust, and "restricted period" has the meaning given such term in the
regulations promulgated under Section 163(f) of the Code.
"VOTING INTEREST" means, as to any Investor Certificate, the percentage
obtained by dividing the Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance or
Adjusted Class B Certificate Balance that is represented by such Investor
Certificate (pro rata, according to the denominations of the Certificates of
such Class) by (i) the Adjusted Class A-1 Certificate Balance, Adjusted Class
A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance or Adjusted
Class B Certificate Balance, as the case may be or (ii) with respect to the
actions, notices or votes to be taken by all Classes voting or acting as a
single Class, the sum of the Adjusted Class A-1 Certificate Balance, Adjusted
Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance and the
Adjusted Class B Certificate Balance; PROVIDED, HOWEVER, that where the
Voting Interest is relevant in determining whether the vote of the requisite
percentage of Investor Certificateholders necessary to effect any consent,
waiver, request or demand shall have been obtained, the aggregate Percentage
Interest shall be deemed to be reduced by the amount equal to the Percentage
Interest (without giving effect to this provision) represented by the
interests evidenced by any such Investor Certificate that is registered in
the name of the Transferor, TMCC or any Person controlling, controlled by or
under common control with the Transferor or TMCC.
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STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On the _________ day of [___________] 1998, before me, a notary public in
and for of the State of California, personally appeared George E. Borst,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in the capacity or capacities
indicated in the within instrument, 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
[Notary Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On the _________ day of [___________] 1998, before me, a notary public in
and for of the State of Illinois, personally appeared Steven E. Charles,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in the capacity or capacities
indicated in the within instrument, 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
[Notary Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On the _________ day of [___________] 1998, before me, a notary public in
and for of the State of Illinois, personally appeared Steven E. Charles,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in the capacity or capacities
indicated in the within instrument, 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
[Notary Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On the _________ day of [___________] 1998, before me, a notary public in
and for of the State of _________, personally appeared _________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in the capacity or capacities
indicated in the within instrument, 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
[Notary Seal]
<PAGE>
EXHIBIT A
FORM OF 1998-C SUBI CERTIFICATE
TOYOTA LEASE TRUST
1998-C SUBI CERTIFICATE
Evidencing a fractional undivided interest in specified SUBI assets
within the 1998-C SUBI Sub-Trust (as defined below).
(This Certificate does not represent any obligation of, or an interest
in, Toyota Motor Credit Corporation, Toyota Motor Sales, U.S.A., Inc., TMTT,
Inc., Toyota Leasing, Inc. ("TLI") or any of their respective affiliates.)
Number ___
THIS CERTIFIES THAT is the registered owner of a nonassessable,
fully-paid, fractional undivided interest in specified assets of the 1998-C
SUBI (the "1998-C SUBI") which in turn is comprised of interests in the
assets of the 1998-C SUBI Sub-Trust (the "1998-C Sub-Trust") of the Toyota
Lease Trust, a Delaware business trust (the "Titling Trust") formed by Toyota
Motor Credit Corporation, as Grantor and UTI Beneficiary (in such capacities,
the "Grantor" and the "UTI Beneficiary" respectively), and TMTT, Inc., a
Delaware corporation, as trustee (the "Titling Trustee") pursuant to a Trust
and Servicing Agreement, as the same was amended and restated pursuant to an
Amended and Restated Trust and Servicing Agreement (the "Titling Trust
Agreement"), each dated and effective as of [_________], 1996, among the
Grantor, the Titling Trustee, and, for certain limited purposes set forth
therein, U.S. Bank National Association (formerly known as First Bank
National Association), a national banking association, as trust agent (the
"Trust Agent"). A summary of certain of the provisions of the Titling Trust
Agreement is set forth below. Capitalized terms used and not otherwise
defined herein have the meanings ascribed thereto in the Titling Trust
Agreement and 1998-C SUBI Supplement.
This 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate
are the only duly authorized SUBI Certificates issued under the 1998-C SUBI
Supplement to Amended and Restated Trust and Servicing Agreement (the "1998-C
SUBI Supplement") dated as of [___________], 1998, among the UTI Beneficiary,
the Titling Trustee, for certain limited purposes as set forth therein, the
Trust Agent and [_________________________], as 1998-C Securitization
Trustee. This 1998-C SUBI Certificate is subject to the terms, provisions and
conditions of the Titling Trust Agreement and the 1998-C SUBI Supplement, to
which agreements any Beneficiary of this 1998-C SUBI Certificate or any
interest herein by virtue of the acceptance hereof or of any interest herein
hereby assents and by which such SUBI Beneficiary is bound.
A-1
<PAGE>
Also issued or to be issued under the Titling Trust Agreement are
various other series of certificates evidencing undivided interests in other
Sub-Trusts of the Titling Trust. A single UTI Certificate, representing 100%
of the beneficial interests in the UTI, has been issued to the UTI
Beneficiary and the 1997-A SUBI Certificate, representing 100% of the
beneficial interests in the 1997-A SUBI and the 1997-A SUBI Sub-Trust, has
been issued on or before the date of the initial issue of this 1998-C SUBI
Certificate. SUBI Certificates representing 100% of the undivided interests
in each other SUBI to be formed will be issued at the time each related SUBI
Sub-Trust is formed.
The property of the Titling Trust is identified in the Titling Trust
Agreement and the property of the 1998-C SUBI Sub-Trust is identified in the
1998-C SUBI Supplement. Pursuant to the 1998-C SUBI Supplement, the 1998-C
SUBI Assets were identified and allocated on the records of the Titling Trust
as a separate SUBI Sub-Trust (the "1998-C SUBI Sub-Trust"), and the
beneficial interest in the 1998-C SUBI Sub-Trust was designated as a separate
SUBI known as the "1998-C SUBI". The assets of the 1998-C SUBI Sub-Trust are
represented by two SUBI Certificates: (i) this 1998-C SUBI Certificate
evidencing beneficial interests in all the 1998-C SUBI Assets other than the
proceeds of the Residual Value Insurance Policies; and (ii) the 1998-C SUBI
Insurance Certificate evidencing beneficial interests in the 1998-C SUBI
Assets that are proceeds of the Residual Value Insurance Policies. Any
holder of the 1998-C SUBI Certificate or the 1998-C SUBI Insurance
Certificate shall be considered a 1998-C SUBI Beneficiary. The rights of the
Beneficiaries of this 1998-C SUBI Certificate and the 1998-C SUBI Insurance
Certificate to certain of the proceeds of the 1998-C SUBI Assets are and will
be further set forth in the Titling Trust Agreement and the 1998-C SUBI
Supplement.
This 1998-C SUBI Certificate is limited in right of payment to certain
collections and recoveries respecting the Contracts (and the related
Obligors) and the Leased Vehicles allocated to the 1998-C SUBI Sub-Trust, all
to the extent and as more specifically set forth in the Titling Trust
Agreement and the 1998-C SUBI Supplement. Copies of the Titling Trust
Agreement and the 1998-C SUBI Supplement may be examined during normal
business hours at the principal office of the Titling Trustee, and at such
other places, if any, designated by the Titling Trustee, by each 1998-C SUBI
Beneficiary upon request.
By accepting this 1998-C SUBI Certificate or any interest herein, the
related SUBI Beneficiary waives any claim to any proceeds or assets of the
Titling Trustee and to all of the Titling Trust Assets other than those from
time to time included within the 1998-C SUBI Sub-Trust (except for those
evidenced by the 1998-C SUBI Insurance Certificate and those proceeds or
assets derived from or earned by the 1998-C SUBI Assets (except for those
assets evidenced by the 1998-C SUBI Insurance Certificate and the proceeds
therefrom). In addition, by accepting this 1998-C SUBI Certificate or any
interest herein, the related SUBI Beneficiary hereby expressly subordinates
any claim or interest in or to any proceeds or assets of the Titling Trustee
and to all of the Titling Trust Assets other than those from time to time
included within the 1998-C SUBI Sub-Trust that may be determined to exist in
favor of such SUBI Beneficiary notwithstanding the foregoing disclaimer to
the rights and interests of each SUBI Beneficiary with respect to another
SUBI.
A-2
<PAGE>
The 1998-C SUBI Supplement and the Titling Trust Agreement may be
amended from time to time, to the extent such amendment applies to or affects
only the 1998-C SUBI and the 1998-C SUBI Portfolio, by a writing signed by
the Titling Trustee, the UTI Beneficiary, each 1998-C SUBI Beneficiary and to
the extent that any such amendment affects any obligation or interest of the
Trust Agent, the Trust Agent, in each case only with the prior written
consent of the 1998-C Securitization Trustee and upon prior written notice to
each Rating Agency that includes the substance of the proposed amendment.
Any amendment of the Titling Trust Agreement or of any other SUBI Supplement
that applies to or affects any UTI or Other SUBI and this 1998-C SUBI shall
also be subject to the foregoing provisions. The foregoing does not apply to
any amendment of the Titling Trust Agreement or any other SUBI Supplement
that neither applies to nor affects the 1998-C SUBI or the 1998-C SUBI
Portfolio and such amendments shall not require the consent of any 1998-C
Beneficiary or the 1998-C Securitization Trustee. If approval of any 1998-C
SUBI Beneficiary is required, any such consent shall be conclusive and
binding on such Beneficiary and on all future Beneficiaries hereof whether or
not notation of such consent is made upon this 1998-C SUBI Certificate.
As provided in the Titling Trust Agreement and the 1998-C SUBI
Supplement, this 1998-C SUBI Certificate and the underlying interests
represented hereby may not be transferred or assigned, except in accordance
with the provisions thereof.
Prior to due presentation of this 1998-C SUBI Certificate for
registration of a permitted transfer, the Titling Trustee, the certificate
registrar and any of their respective agents may treat the person or entity
in whose name this 1998-C SUBI Certificate is registered as the owner hereof
for the purpose of receiving distributions and for all other purposes, and,
except as provided for in the Titling Trust Agreement, neither the Titling
Trustee, the certificate registrar nor any such agent shall be affected by
any notice to the contrary.
Unless this 1998-C SUBI Certificate shall have been executed by an
authorized officer of the Titling Trustee, by manual signature, this 1998-C
SUBI Certificate shall not entitle the holder hereof to any benefit under the
Titling Trust Agreement or the 1998-C SUBI Supplement or be valid for any
purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Titling Trustee on behalf of the Titling Trust and
not in its individual capacity has caused this 1998-C SUBI Certificate to be
duly executed.
Dated:
TOYOTA LEASE TRUST
By: TMTT, INC., as Titling Trustee
By: ________________________________
Authorized Officer
ATTEST:
______________________________
A-4
<PAGE>
EXHIBIT B
FORM OF 1998-C SUBI INSURANCE CERTIFICATE
TOYOTA LEASE TRUST
1998-C SUBI INSURANCE CERTIFICATE
Evidencing a fractional undivided interest in specified SUBI assets
within the 1998-C SUBI Sub-Trust (as defined below).
(This Certificate does not represent any obligation of, or an interest
in, Toyota Motor Credit Corporation, Toyota Motor Sales, U.S.A., Inc., TMTT,
Inc., Toyota Leasing, Inc. ("TLI") or any of their respective affiliates.)
Number ___
THIS CERTIFIES THAT is the registered owner of a nonassessable,
fully-paid, fractional undivided interest in specified assets of the 1998-C
SUBI (the "1998-C SUBI") which in turn is comprised of interests in the
assets of the 1998-C SUBI Sub-Trust (the "1998-C Sub-Trust") of the Toyota
Lease Trust, a Delaware business trust (the "Titling Trust") formed by Toyota
Motor Credit Corporation, as Grantor and UTI Beneficiary (in such capacities,
the "Grantor" and the "UTI Beneficiary" respectively), and TMTT, Inc., a
Delaware corporation, as trustee (the "Titling Trustee") pursuant to a Trust
and Servicing Agreement, as the same was amended and restated pursuant to an
Amended and Restated Trust and Servicing Agreement (the "Titling Trust
Agreement"), each dated and effective as of [_____________], 1996, among the
Grantor, the Titling Trustee, and, for certain limited purposes set forth
therein, U.S. Bank National Association (formerly known as First Bank
National Association), a national banking association, as trust agent (the
"Trust Agent"). A summary of certain of the provisions of the Titling Trust
Agreement is set forth below. Capitalized terms used and not otherwise
defined herein have the meanings ascribed thereto in the Titling Trust
Agreement and 1998-C SUBI Supplement.
This SUBI Insurance Certificate and the 1998-C SUBI Certificate are the
only duly authorized SUBI Certificates issued under the 1998-C SUBI
Supplement to Amended and Restated Trust and Servicing Agreement (the "1998-C
SUBI Supplement") dated as of [___________], among the UTI Beneficiary, the
Titling Trustee, for certain limited purposes as set forth therein, the Trust
Agent and [_________________________], as 1998-C Securitization Trustee.
This 1998-C SUBI Insurance Certificate is subject to the terms, provisions
and conditions of the Titling Trust Agreement and the 1998-C SUBI Supplement,
to which agreements any Beneficiary of this 1998-C SUBI Insurance Certificate
or any interest herein by virtue of the acceptance hereof or of any interest
herein hereby assents and by which such SUBI Beneficiary is bound.
Also issued or to be issued under the Titling Trust Agreement are
various other series of certificates evidencing undivided interests in other
Sub-Trusts of the Titling Trust. A single UTI
B-1
<PAGE>
Certificate, representing 100% of the beneficial interests in the UTI, has
been issued to the UTI Beneficiary and the 1997-A SUBI Certificate,
representing 100% of the beneficial interests in the 1997-A SUBI and the
1997-A SUBI Sub-Trust, has been issued on or before the date of initial issue
of this 1998-C SUBI Certificate. SUBI Certificates representing 100% of the
undivided interests in each other SUBI to be formed will be issued at the
time each related SUBI Sub-Trust is formed.
The property of the Titling Trust is identified in the Titling Trust
Agreement and the property of the 1998-C SUBI Sub-Trust is identified in the
1998-C SUBI Supplement. Pursuant to the 1998-C SUBI Supplement, the 1998-C
SUBI Assets were identified and allocated on the records of the Titling Trust
as a separate SUBI Sub-Trust (the "1998-C SUBI Sub-Trust"), and the
beneficial interest in the 1998-C SUBI Sub-Trust was designated as a separate
SUBI known as the "1998-C SUBI". The assets of the 1998-C SUBI Sub-Trust are
represented by two SUBI Certificates: (i) this SUBI Insurance Certificate
evidencing beneficial interests in the 1998-C SUBI Assets that are proceeds
of the Residual Value Insurance Policies; and (ii) the 1998-C SUBI
Certificate evidencing beneficial interests in all of the 1998-C SUBI Assets
other than the proceeds of the Residual Value Insurance Policies. Any holder
of the 1998-C SUBI Certificate or the 1998-C SUBI Insurance Certificate shall
be considered a 1998-C SUBI Beneficiary. The rights of the Beneficiaries of
this 1998-C SUBI Insurance Certificate and the 1998-C SUBI Certificate to
certain of the proceeds of the 1998-C SUBI Assets are and will be further set
forth in the Titling Trust Agreement and the 1998-C SUBI Supplement.
This 1998-C SUBI Insurance Certificate is limited in right of payment to
certain collections and recoveries respecting the Contracts (and the related
Obligors) and the Leased Vehicles allocated to the 1998-C SUBI Sub-Trust, all
to the extent and as more specifically set forth in the Titling Trust
Agreement and the 1998-C SUBI Supplement. Copies of the Titling Trust
Agreement and the 1998-C SUBI Supplement may be examined during normal
business hours at the principal office of the Titling Trustee, and at such
other places, if any, designated by the Titling Trustee, by each 1998-C SUBI
Beneficiary upon request.
By accepting this 1998-C SUBI Insurance Certificate or any interest
herein, the related SUBI Beneficiary waives any claim to any proceeds or
assets of the Titling Trustee and to all of the Titling Trust Assets other
than those from time to time included within the 1998-C SUBI Sub-Trust
(except for those evidenced by the 1998-C SUBI Certificate) and those
proceeds or assets derived from or earned by the 1998-C SUBI Assets that are
proceeds of Residual Value Insurance Policies (except for those evidenced by
the 1998-C SUBI Certificate and the proceeds thereof). In addition, by
accepting this 1998-C SUBI Insurance Certificate or any interest herein, the
related SUBI Beneficiary hereby expressly subordinates any claim or interest
in or to any proceeds or assets of the Titling Trustee and to all of the
Titling Trust Assets other than those from time to time included within the
1998-C SUBI Sub-Trust that may be determined to exist in favor of such SUBI
Beneficiary notwithstanding the foregoing disclaimer to the rights and
interests of each SUBI Beneficiary with respect to another SUBI.
The 1998-C SUBI Supplement and the Titling Trust Agreement may be
amended from time to time, to the extent such amendment applies to or affects
only the 1998-C SUBI and the 1998-C SUBI Portfolio, by a writing signed by
the Titling Trustee, the UTI Beneficiary, each
B-2
<PAGE>
1998-C SUBI Beneficiary and to the extent that any such amendment affects any
obligation or interest of the Trust Agent, the Trust Agent, in each case only
with the prior written consent of the 1998-C Securitization Trustee and upon
prior written notice to each Rating Agency that includes the substance of the
proposed amendment. Any amendment of the Titling Trust Agreement or of any
other SUBI Supplement that applies to or affects any UTI or Other SUBI and
this 1998-C SUBI shall also be subject to the foregoing provisions. The
foregoing does not apply to any amendment of the Titling Trust Agreement or
any other SUBI Supplement that neither applies to nor affects the 1998-C SUBI
or the 1998-C SUBI Portfolio and such amendments shall not require the
consent of any 1998-C SUBI Beneficiary or the 1998-C Securitization Trustee.
If approval of any 1998-C SUBI Beneficiary is required, any such consent
shall be conclusive and binding on such Beneficiary and on all future
Beneficiaries hereof whether or not notation of such consent is made upon
this 1998-C SUBI Certificate.
As provided in the Titling Trust Agreement and the 1998-C SUBI
Supplement, this 1998-C SUBI Insurance Certificate and the underlying
interests represented hereby may not be transferred or assigned, except in
accordance with the provisions thereof.
Prior to due presentation of this 1998-C SUBI Insurance Certificate for
registration of a permitted transfer, the Titling Trustee, the certificate
registrar and any of their respective agents may treat the person or entity
in whose name this 1998-C SUBI Insurance Certificate is registered as the
owner hereof for the purpose of receiving distributions and for all other
purposes, and, except as provided for in the Titling Trust Agreement, neither
the Titling Trustee, the certificate registrar nor any such agent shall be
affected by any notice to the contrary.
Unless this 1998-C SUBI Insurance Certificate shall have been executed
by an authorized officer of the Titling Trustee, by manual signature, this
1998-C SUBI Insurance Certificate shall not entitle the holder hereof to any
benefit under the Titling Trust Agreement or the 1998-C SUBI Supplement or be
valid for any purpose.
B-3
<PAGE>
IN WITNESS WHEREOF, the Titling Trustee on behalf of the Titling Trust and
not in its individual capacity has caused this 1998-C SUBI Insurance Certificate
to be duly executed.
Dated: [___________], 1998
TOYOTA LEASE TRUST
By: TMTT, INC., as Titling Trustee
By: _______________________________
Authorized Officer
ATTEST:
B-4
<PAGE>
SCHEDULE I
SCHEDULE OF 1998-C CONTRACTS AND
1998-C LEASED VEHICLES AS OF THE CUTOFF DATE
[Omitted. On file with the Servicer, the Titling Trustee and the 1998-C
Securitization Trustee.]
S-I
<PAGE>
- -------------------------------------------------------------------------------
1998-C SUBI SERVICING SUPPLEMENT
to
AMENDED AND RESTATED TRUST AND SERVICING AGREEMENT
Dated as of October 1, 1996
Among
TMTT, INC.,
as Titling Trustee,
TOYOTA MOTOR CREDIT CORPORATION,
as Servicer,
and
U.S. BANK NATIONAL ASSOCIATION,
as Trust Agent
Dated as of [_________], 1998
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS
<S> <C>
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SERVICER
2.1 Representations and Warranties of Servicer. . . . . . . . . . . . . . . . . . 3
ARTICLE III
CREATION OF 1998-C SUBI
3.1 Initial Creation of 1998-C SUBI Portfolio and 1998-C SUBI Sub-Trust . . . . . 4
3.2 Subsequent Additions to 1998-C SUBI Portfolio and 1998-C SUBI Sub-Trust . . . 5
3.3 Servicer Payment in Respect of Certain Contracts and Leased Vehicles. . . . . 6
3.4 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
SPECIFIC REQUIREMENTS FOR ADMINISTRATION AND SERVICING OF CONTRACTS IN 1998-C
SUBI PORTFOLIO
4.1 Servicer Bound by Titling Trust Agreement . . . . . . . . . . . . . . . . . . 7
4.2 Collection of Monthly Payments and Remittances; Application of Proceeds;
Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Collection and Application of Security Deposits . . . . . . . . . . . . . . . 15
4.5 Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Payment of Certain Fees and Expenses; No Offset . . . . . . . . . . . . . . . 16
4.7 Servicing Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 Repossession and Sale of Leased Vehicles. . . . . . . . . . . . . . . . . . . 17
4.9 Servicer to Act on Behalf of Titling Trust. . . . . . . . . . . . . . . . . . 19
4.10 Indemnificationby Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.11 Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.12 Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.13 Servicer Not to Resign; Assignment. . . . . . . . . . . . . . . . . . . . . . 22
4.14 Obligor Insurance Coverage in Respect of Leased Vehicles. . . . . . . . . . . 23
4.15 Corporate Existence; Status; Merger . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
STATEMENTS AND REPORTS
<S> <C>
5.1 Reporting by the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Annual Accountants' Reports . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Other Certificates And Notices From Servicer. . . . . . . . . . . . . . . . . 26
5.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
DEFAULT
6.1 Event of Servicing Termination; Termination of Servicer as to 1998-C
SUBI Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 No Effect on Other Parties. . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
MISCELLANEOUS
7.1 Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.5 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.7 Inspection and Audit Rights . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.8 Article and Section Headings. . . . . . . . . . . . . . . . . . . . . . . . . 31
7.9 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.10 Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.11 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.12 Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
EXHIBIT A Schedule of 1998-C Contracts and 1998-C Leased Vehicles
as of the Initial Cutoff Date . . . . . . . . . . . . . . . . . . .A-1
EXHIBIT B Form of Servicer's Certificate. . . . . . . . . . . . . . . . . . .B-1
EXHIBIT C Form of Power of Attorney . . . . . . . . . . . . . . . . . . . . .C-1
SCHEDULE I Addresses of Branch Offices
</TABLE>
iii
<PAGE>
1998-C SUBI SERVICING SUPPLEMENT TO THE AMENDED AND RESTATED TRUST AND
SERVICING AGREEMENT
1998-C SUBI SERVICING SUPPLEMENT TO THE AMENDED AND RESTATED TRUST AND
SERVICING AGREEMENT (the "1998-C SUBI Servicing Supplement"), dated as of
[_________], 1998, among TMTT, INC., a Delaware corporation, as Titling Trustee
of TOYOTA LEASE TRUST, a Delaware business trust (the "Titling Trust") on behalf
of the Titling Trust, TOYOTA MOTOR CREDIT CORPORATION, a California corporation,
as Servicer, and U.S. BANK NATIONAL ASSOCIATION (formerly known as First Bank
National Association), as Trust Agent.
RECITALS
A. Toyota Motor Credit Corporation ("TMCC"), the Titling Trustee
and, for certain limited purposes set forth therein, First Bank National
Association, as Trust Agent, have entered into that certain Amended and Restated
Trust and Servicing Agreement, dated as of October 1, 1996, amending and
restating that certain Trust and Servicing Agreement, dated as of October 1,
1996, among the same parties (as so amended and restated, and as it may be
further amended, supplemented or modified, the "Titling Trust Agreement"),
pursuant to which TMCC and the Titling Trustee formed the Titling Trust for the
purpose of taking assignments and conveyances of, holding in trust and dealing
in, various Titling Trust Assets in accordance with the Titling Trust Agreement.
B. Concurrently herewith, and as contemplated by the Titling Trust
Agreement, TMCC, the Titling Trustee and the Trust Agent are entering into that
certain 1998-C SUBI Supplement to the Titling Trust Agreement, dated as of
[_________], 1998, pursuant to which the Titling Trustee, on behalf of the
Titling Trust and at the direction of TMCC, as UTI Beneficiary, will create and
issue to or to the order of TMCC (i) a 1998-C SUBI Certificate evidencing
beneficial interests in the assets of the 1998-C SUBI other than the proceeds of
the Residual Value Insurance Policies, and (ii) a 1998-C SUBI Insurance
Certificate evidencing beneficial interests in the assets of the 1998-C SUBI
that are proceeds of the Residual Value Insurance Policies insofar as such
policies relate to the 1998-C Leased Vehicles and the 1998-C Contracts. It is
the intention of the parties hereto that the 1998-C SUBI Certificate and the
1998-C SUBI Insurance Certificate collectively represent a 100% beneficial
interest in the 1998-C SUBI, whose beneficiaries generally will be entitled to
the net cash flow arising from, but only from, the related 1998-C SUBI Assets,
all as set forth in the Titling Trust Agreement and the 1998-C SUBI Supplement.
C. Also concurrently herewith, TMCC and the Transferor are entering
into that certain 1998-C SUBI Certificate Purchase and Sale Agreement, dated as
of [_________], 1998, pursuant to which TMCC is selling to the Transferor,
without recourse, all of TMCC's right, title and interest in and to the 1998-C
SUBI, the 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate, all
moneys due thereon and paid thereon or in respect thereof and the
1
<PAGE>
right to realize on any property that may be deemed to secure the 1998-C SUBI,
and all proceeds thereof.
D. Also concurrently herewith, and as contemplated by the Titling
Trust Agreement, the Transferor and [_____________________], as 1998-C
Securitization Trustee, are entering into that certain Securitization Trust
Agreement, dated as of [_________], 1998 (the "1998-C Securitization Trust
Agreement"), pursuant to which the 1998-C SUBI Certificate will be transferred
to the 1998-C Securitization Trustee, in that capacity on behalf of the
Securitization Trust, in connection with a Securitized Financing thereof by the
Transferor. The 1998-C SUBI Insurance Certificate will not be transferred to
the 1998-C Securitization Trustee and the Transferor will retain the 1998-C SUBI
Insurance Certificate.
E. The parties desire to supplement the servicing provisions of the
Titling Trust Agreement, insofar as they apply to the 1998-C SUBI, the 1998-C
SUBI Sub-Trust, the 1998-C SUBI Certificate and the 1998-C SUBI Insurance
Certificate, to provide for further specific servicing obligations that will
benefit the holders of the 1998-C SUBI Certificate and the 1998-C SUBI Insurance
Certificate and the parties to and other beneficiaries of the Transaction
Documents relating to the Securitized Financing contemplated by the 1998-C
Securitization Trust Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each party hereto,
the parties hereto agree to the following supplemental obligations with regard
to the 1998-C SUBI Sub-Trust:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS.
For all purposes of this 1998-C SUBI Servicing Supplement, except
as otherwise expressly provided or unless the context otherwise requires,
capitalized terms used and not otherwise defined herein shall have the
meanings ascribed thereto in the Annex of Definitions attached to the Titling
Trust Agreement or in the Annex of Supplemental Definitions attached to the
1998-C SUBI Supplement for all purposes of this 1998-C SUBI Servicing
Supplement. In the event of any conflict between a definition set forth in
the Annex of Definitions and the Annex of Supplemental Definitions, the
definition set forth in the Annex of Supplemental Definitions shall prevail.
In the event of any conflict between a definition set forth both herein and
in the Annex of Definitions or Annex of Supplemental Definitions, the
definition set forth herein shall prevail. All terms used in this 1998-C
SUBI Servicing Supplement include, as appropriate, all genders and the plural
as well as the singular. All references such as "herein", "hereof" and the
like shall refer to this 1998-C SUBI Servicing Supplement as a whole and not
to any particular article or section within this 1998-C SUBI Servicing
Supplement. All references such as "includes" and variations thereon shall
mean "includes without limitation" and references to "or"
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shall mean "and/or". Any reference herein to the "Titling Trustee, acting on
behalf of the Titling Trust", or words of similar import, shall be deemed to
mean the Titling Trustee, acting on behalf of Toyota Lease Trust and all
beneficiaries thereof. Any reference herein to the "1998-C Securitization
Trustee, acting on behalf of the 1998-C Securitization Trust", or words of
similar import, shall be deemed to mean the 1998-C Securitization Trustee,
acting on behalf of the Toyota Auto Lease Trust 1998-C and all beneficiaries
thereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SERVICER
2.01 REPRESENTATIONS AND WARRANTIES OF SERVICER.
The Servicer represents and warrants to the Titling Trustee, the
1998-C Securitization Trustee and each SUBI Beneficiary as follows:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and now
has, corporate power, authority and legal right to acquire, own, sell and
service the Contracts and related Leased Vehicles and to hold the related
Contract Documents and Certificates of Title as custodian on behalf of the
Titling Trust.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business
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 (including the servicing of the
Contracts and related Leased Vehicles as required by this Agreement) requires
such qualifications.
(c) POWER AND AUTHORITY. The Servicer has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATIONS. This 1998-C SUBI Servicing Supplement
constitutes a legal, valid and binding obligation of the Servicer enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally or by general principles of equity.
(e) NO CONFLICT. The consummation of the transactions contemplated
by this 1998-C SUBI Servicing Supplement and the fulfillment of the terms of
this 1998-C SUBI Servicing Supplement does 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 articles of incorporation or
bylaws of the Servicer, or conflict with or breach any of the material terms or
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provisions of, or constitute (with or without notice or lapse of time) a default
under, any indenture, agreement or other instrument to which the Servicer 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 1998-C SUBI Servicing
Supplement); nor violate any law or, to the best of the Servicer's knowledge,
any order, rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer 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 Servicer.
(f) NO PROCEEDINGS. To the Servicer's actual knowledge, there is no
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending, or to the Servicer's knowledge,
threatened, against or affecting the Servicer (i) asserting the invalidity of
this 1998-C SUBI Servicing Supplement or (ii) seeking any determination or
ruling that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
1998-C SUBI Servicing Supplement.
ARTICLE III
CREATION OF 1998-C SUBI
3.01 INITIAL CREATION OF 1998-C SUBI PORTFOLIO AND 1998-C SUBI
SUB-TRUST.
(a) Pursuant to Section 3.01 of the Titling Trust Agreement and
Section 16.01 of the 1998-C SUBI Supplement, the Titling Trustee has been
directed to cause to be identified and allocated on the books and records of the
Titling Trust the separate 1998-C SUBI Sub-Trust consisting of the 1998-C SUBI
Portfolio and certain other associated Titling Trust Assets specified therein.
The Titling Trustee, on behalf of the Titling Trust, hereby directs that the
Servicer so identify and allocate such a separate SUBI Portfolio of Contracts
and related Leased Vehicles from among all Titling Trust Assets owned by the
Titling Trustee on behalf of the Titling Trust and currently accounted for as
part of the UTI Sub-Trust.
(b) The Servicer hereby identifies and allocates such a portfolio of
Contracts and related Leased Vehicles more particularly described on Exhibit A
hereto which is in substantially the form of a Schedule of Contracts and Leased
Vehicles, in order to create the initial 1998-C SUBI Portfolio.
(c) The Servicer hereby represents and warrants to the Titling
Trustee, the 1998-C Securitization Trustee and each SUBI Beneficiary that each
of the Contracts described on Exhibit A hereto is an Eligible Contract.
(d) It is the intent of the parties hereto that the proceeds of the
Residual Value Insurance Policies applicable to the 1998-C Leased Vehicles and
the 1998-C Contracts will be payable by the Servicer (or the insurer under the
Residual Value Insurance Policies) directly to the holder of the 1998-C SUBI
Insurance Certificate and will not, under any circumstances, be
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subject to the lien of the 1998-C Securitization Trust Agreement or be required
to be deposited in any SUBI Account.
3.02 SUBSEQUENT ADDITIONS TO 1998-C SUBI PORTFOLIO AND 1998-C SUBI
SUB-TRUST.
(a) The Titling Trustee is hereby directed to cause to be identified
and allocated on the books and records of the Titling Trust to the 1998-C SUBI
Sub-Trust on or before each Transfer Date certain additional Eligible Contracts,
related Leased Vehicles and other associated Titling Trust Assets not then
allocated, or reserved for allocation, to any other SUBI Portfolio or Sub-Trust.
Such Subsequent Contracts and Subsequent Leased Vehicles to be allocated to the
1998-C SUBI Portfolio and 1998-C SUBI Sub-Trust shall have an aggregate
Discounted Principal Balance as of the related Transfer Date of an amount not
greater than all Principal Collections received after the Cutoff Date (including
the amounts treated as Principal Collections pursuant to Section 3.01(c) and
3.01(k) of the 1998-C Securitization Trust Agreement) that have not been so
applied pursuant to this Section 3.02(a). The Titling Trustee, on behalf of the
Titling Trust, hereby directs the Servicer to select at least one Transfer Date
each month during the Revolving Period and to identify such Subsequent
Contracts, related Subsequent Leased Vehicles and other associated Titling Trust
Assets (as described in the 1998-C SUBI Supplement and meeting the other
requirements set forth therein) on or before each Transfer Date, and cause such
Subsequent Contracts and Subsequent Leased Vehicles to be specifically
identified on a supplemental Schedule of Contracts and Leased Vehicles (which,
when considered with all prior Schedules of Contracts and Leased Vehicles, shall
be considered to be the definitive Schedule of Contracts and Leased Vehicles) to
be delivered pursuant to Section 5.01 hereof. On each such Transfer Date, such
Subsequent Contracts, Subsequent Leased Vehicles and other associated Titling
Trust Assets shall be added to the 1998-C SUBI Portfolio and 1998-C SUBI
Sub-Trust, as the case may be, as additional 1998-C SUBI Assets.
(b) The Servicer shall give one Business Day's prior notice to the
Titling Trustee and the 1998-C Securitization Trustee of each Transfer Date. On
each Transfer Date, the Servicer shall be deemed to have represented and
warranted to the 1998-C Securitization Trustee on behalf of the 1998-C
Securitization Trust that (i) all Subsequent Contracts added to the 1998-C SUBI
Portfolio on that date were Eligible Contracts as of the relevant Transfer Date,
(ii) no adverse selection procedures were employed in selecting such Subsequent
Contracts, (iii) it is not aware of any bias in the selection of such Subsequent
Contracts that would cause delinquencies or losses with respect thereto to
differ from those of the Initial Contracts, other than the fact that such
Subsequent Contracts were selected from all Eligible Contracts not then
allocated to any SUBI Portfolio or reserved for allocation to another SUBI
Portfolio on a "first-in, first-out" basis, based on the date of origination,
and (iv) unless the 1998-C Securitization Trustee receives a letter from each
Rating Agency to the effect that the use of different criteria would not result
in the qualification, reduction or withdrawal of its then current rating on any
Investor Certificates rated by either Rating Agency, after giving effect to such
reallocation (A) each such 1998-C Contract will be allocated to the 1998-C
SUBI Portfolio based upon its Discounted Principal Balance as of the relevant
Transfer Date, (B) the weighted average remaining term of the 1998-C
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Contracts (including the Subsequent Contracts) will be not greater than 36
months, and (C) the weighted average Booked Residual Value of all 1998-C
Contracts (including the Subsequent Contracts), as a percentage of the
aggregate Outstanding Principal Balance of the 1998-C Contracts (including
the Subsequent Contracts), will be not greater than 65%, based on the
characteristics of all 1998-C Contracts (including the Subsequent Contracts)
as of its date of origination.
(c) From and after the date on which the 1998-C SUBI Lease Funding
Account is required to be maintained as specified in Section 17.02 of the
1998-C SUBI Supplement, on each Transfer Date the Servicer shall withdraw
from the 1998-C SUBI Collection Account (but excluding any amounts in fact
deposited therein that the Servicer has notified the 1998-C Securitization
Trustee are proceeds of a Residual Value Insurance Policy) an amount equal to
the aggregate Discounted Principal Balance as of the relevant Transfer Date
of the Subsequent Contracts then being added to the 1998-C SUBI Portfolio and
1998-C SUBI Sub-Trust pursuant to Section 16.01 of the 1998-C SUBI Supplement
and the Servicer shall direct the Titling Trustee to deposit such amount into
the 1998-C Lease Funding Account or for payment to the UTI Beneficiary, as
appropriate, directly in connection with the purchase of Subsequent Contracts
and Subsequent Leased Vehicles.
3.03 SERVICER PAYMENT IN RESPECT OF CERTAIN CONTRACTS AND LEASED
VEHICLES.
(a) The representations and warranties of the Servicer set forth in
Sections 3.01(c) and 3.02(b), with respect to each 1998-C Contract shall survive
delivery of the related Contract to the 1998-C SUBI Portfolio and the 1998-C
SUBI Sub-Trust and shall continue (speaking as of the dates made) so long as
each such 1998-C Contract remains outstanding, or until the termination of the
1998-C Securitization Trust Agreement pursuant to Section 7.01 thereof,
whichever occurs earlier. Upon discovery by the Titling Trustee, the 1998-C
Securitization Trustee or the Servicer that any such representation or warranty
was incorrect as of the time specified with respect to such representation and
warranty and such incorrectness materially and adversely affects such 1998-C
Contract, the party discovering such incorrectness shall give prompt written
notice to the others. Within 60 days of its discovery of such incorrectness or
notice to such effect to the Servicer, the Servicer shall cure in all material
respects the circumstances or condition in respect of which such representation
or warranty was incorrect. If the Servicer is unable or unwilling to do so
timely, it shall, as the sole remedy for such breach, promptly (i) deposit the
Reallocation Payment in respect of such 1998-C Contract into the 1998-C SUBI
Collection Account, (ii) reallocate such 1998-C Contract and the related Leased
Vehicle and other related Titling Trust Assets from the 1998-C SUBI Portfolio to
the UTI Portfolio, and (iii) indemnify, defend and hold harmless the holders of
the 1998-C SUBI Certificate (including without limitation the 1998-C
Securitization Trustee on behalf of the 1998-C Securitization Trust and the
Certificateholders), the holder of the 1998-C SUBI Insurance Certificate and any
subsequent servicer (if other than the current Servicer) from and against, any
and all loss or liability with respect to or resulting from any such 1998-C
Contract or related Leased Vehicle. Notwithstanding the foregoing, if any
reallocation described in clause (ii) would cause the Transferor Interest to be
equal to or less than zero, the Servicer also shall deposit promptly into
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the 1998-C SUBI Collection Account a Reallocation Deposit Amount in an amount
such that the Transferor Interest will not be reduced to less than zero, and
the reallocation will not be made until such deposit has been made.
(b) In the event that the Servicer receives funds from a Dealer that
is required, pursuant to a Dealer Agreement, to repurchase a Contract or Leased
Vehicle included in the 1998-C SUBI Portfolio, the Servicer shall, subject to
Section 17.01 of the 1998-C SUBI Supplement, within two Business Days of receipt
thereof, deposit such funds into the 1998-C SUBI Collection Account, which
deposit shall satisfy the UTI Beneficiary's obligations with respect to
enforcement of such Dealer repurchase obligation, and return to the repurchasing
Dealer the Certificate of Title and Contract with respect to such Leased
Vehicle.
(c) The obligations of the Servicer pursuant to this Section 3.03
shall survive any termination of the Servicer with respect to the 1998-C SUBI
Portfolio and 1998-C SUBI Sub-Trust under this 1998-C SUBI Servicing Supplement
or the Titling Trust Agreement.
3.04 FILINGS.
The Servicer will undertake all other and future actions and
activities as may be reasonably necessary to perfect (or evidence) and confirm
the foregoing allocations of Trust Assets to the 1998-C SUBI Sub-Trust and the
1998-C SUBI Portfolio, as the case may be, including filing or causing to be
filed UCC financing statements and executing and delivering all related filings,
documents or writings as may be reasonably necessary hereunder or under any
other Securitization Trust Documents, whether on its own behalf or pursuant to
the power of attorney granted by the Grantor in the 1998-C SUBI Supplement;
provided, however, that in no event shall the Servicer be required to take any
action to perfect a security interest that may be held by the 1998-C
Securitization Trustee in any 1998-C Leased Vehicle.
ARTICLE IV
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF CONTRACTS
IN 1998-C SUBI PORTFOLIO
4.01 SERVICER BOUND BY TITLING TRUST AGREEMENT.
(a) Except as otherwise specifically provided herein: (i) the
Servicer shall continue to be bound by all provisions of the Titling Trust
Agreement with respect to the Contracts, Leased Vehicles and other associated
Titling Trust Assets in the 1998-C SUBI Sub-Trust, including without limitation
the provisions thereof relating to the administration and servicing of 1998-C
Contracts; and (ii) the provisions set forth herein shall operate either as
additions to or modifications of the extant obligations of the Servicer under
the Titling Trust Agreement, as the context may require. In the event the
provisions of this 1998-C SUBI Servicing Supplement are more exacting or
specific than those contained in the Titling Trust Agreement or in the event of
any conflict between the provisions of this 1998-C SUBI Servicing
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Supplement with respect to the 1998-C SUBI, and those of the Titling Trust
Agreement, the provisions of this 1998-C SUBI Servicing Supplement shall govern.
(b) For purposes of determining the Servicer's obligations with
respect to the servicing of the 1998-C SUBI Sub-Trust under this 1998-C SUBI
Servicing Supplement (including without limitation pursuant to Article Four
hereof), general references in the Titling Trust Agreement to: (i) a SUBI
Account shall be deemed to refer more specifically to the 1998-C SUBI Account;
(ii) a SUBI Asset shall be deemed to refer more specifically to a 1998-C SUBI
Asset; (iii) an appropriate or applicable SUBI Collection Account shall be
deemed to refer more specifically to the 1998-C SUBI Collection Account; (iv) an
appropriate or applicable SUBI Lease Funding Account shall be deemed to refer
more specifically to the 1998-C SUBI Lease Funding Account; (v) a SUBI Portfolio
shall be deemed to refer more specifically to the 1998-C SUBI Portfolio; (vi) a
SUBI Sub-Trust shall be deemed to refer more specifically to the 1998-C SUBI
Sub-Trust; (vii) a SUBI Servicing Supplement shall be deemed to refer more
specifically to this 1998-C SUBI Servicing Supplement; and (viii) a SUBI
Supplement shall be deemed to refer more specifically to the 1998-C SUBI
Supplement.
(c) Coincident with the execution and delivery of this 1998-C SUBI
Servicing Supplement, the Servicer shall furnish the 1998-C Securitization
Trustee, on behalf of the 1998-C Securitization Trust, with an Officer's
Certificate listing the officers or other authorized signatories of the Servicer
currently involved in, or responsible for, the administration and servicing of
the Contracts in the 1998-C SUBI Portfolio, which list shall from time to time
be updated by the Servicer.
4.02 COLLECTION OF MONTHLY PAYMENTS AND REMITTANCES; APPLICATION OF
PROCEEDS; ACCOUNTS.
(a) The Servicer shall use commercially reasonable efforts,
consistent with its then current standards, policies and procedures or new
programs, whether or not implemented on a test basis, commenced in the ordinary
course of business, to (i) collect all payments required under the terms and
provisions of each Contract included in the 1998-C SUBI Portfolio; (ii) cause
each Obligor to make all payments in respect of the Contract included in the
1998-C SUBI Portfolio to which such Obligor is a party or otherwise obligated;
and (iii) to deposit all Collections (excluding proceeds of the Residual Value
Insurance Policies which are to be transferred directly to the holder of the
1998-C SUBI Insurance Certificate and which amounts shall not be deemed to be
Collections by the Servicer) and any Maturity Advance received from the
Transferor into the 1998-C SUBI Collection Account on or before the Deposit Date
relating to each Collection Period except as otherwise specified herein or in
Section 17.01 or Section 17.02 of the 1998-C SUBI Supplement (in connection with
any failure to satisfy the Monthly Remittance Conditions).
Notwithstanding the foregoing and notwithstanding the provisions
of Section 3.01 of the 1998-C Securitization Trust Agreement, in accordance with
the provisions of Section 7.01(c) of the Titling Trust Agreement, for so long as
TMCC is the Servicer and each
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Monthly Remittance Condition is satisfied, the Servicer will be entitled to
make deposits of Collections into the 1998-C SUBI Collection Account net of
amounts reimbursable or payable to the Servicer as compensation, in respect
of Advances or otherwise (including in respect of amounts advanced by the
Servicer in respect of amounts otherwise payable to the 1998-C Securitization
Trustee or to the Titling Trustee or Trust Agent), and net of amounts payable
or reimbursable (and actually so paid or reimbursed directly by the Servicer)
in respect of Titling Trust. To the extent the Servicer makes deposits net
of any such amounts, the Servicer will cause each relevant Servicer's
Certificate to correctly and accurately account for such amounts in providing
all information with respect to allocations, applications and payments to be
made pursuant to Section 3.01 of the 1998-C Securitization Trust Agreement on
the same basis as though such amounts were in fact deposited into the 1998-C
SUBI Collection Account. Moreover, as set forth in Section 3.01 of the
1998-C Securitization Trust Agreement, the Servicer will, in each relevant
Servicer's Certificate, instruct the 1998-C Securitization Trustee not to
make any distribution to the Servicer, Transferor or Titling Trustee to the
extent that the Servicer has made any deposit net of a corresponding amount,
and the 1998-C Securitization Trustee will have no obligation with respect to
or liability for following any such instruction by the Servicer.
(b) Consistent with the foregoing, the Servicer may in its discretion
(i) waive any late payment charge or similar charge, in whole or in part, in
connection with delinquent payments on or deferrals or extensions of a Contract
included in the 1998-C SUBI Portfolio and (ii) defer one or more payments under
a Contract or extend the Maturity Date of any Contract. Notwithstanding the
foregoing, the Servicer may not grant more than four deferrals of any 1998-C
Contract, and may not extend the Maturity Date of any 1998-C Contract by more
than twelve months in the aggregate (or by sixteen months with the inclusion of
any deferrals) or such that its Maturity Date will occur later than the last day
of the Collection Period related to the Class B Stated Maturity Date; provided,
however, that if the Servicer defers payments on any 1998-C Contract more than
four times or extends the Maturity Date thereof by more than twelve months in
the aggregate (or by more than sixteen months with the inclusion of any
deferrals) or so that the extended Maturity Date will occur later than the last
day of the Collection Period relating to the Class B Stated Maturity Date, then,
as the sole remedy therefor, the Servicer shall, on the Deposit Date related to
the Collection Period in which such extension was granted or on the Deposit Date
relating to the Collection Period in which the Servicer discovers or is notified
that an improper extension was granted, (y) deposit into the 1998-C SUBI
Collection Account an amount equal to the then Discounted Principal Balance of
such Contract plus an amount equal to the interest, or lease charge, portion of
any Monthly Payments with respect thereto at the related Lease Rate that were
accrued but unpaid as of the end of that Collection Period, and (z) reallocate
such 1998-C Contract and the related 1998-C Leased Vehicle from the 1998-C SUBI
Portfolio and 1998-C SUBI Sub-Trust to the UTI Portfolio and UTI Sub-Trust. The
obligations of the Servicer pursuant to this Section 4.02(b) shall survive any
termination of the Servicer's obligations with respect to the 1998-C SUBI
Portfolio under this 1998-C SUBI Servicing Supplement.
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(c) As to any Monthly Payments, Liquidation Proceeds, Insurance
Proceeds (excluding proceeds of the Residual Value Insurance Policies which are
to be transferred directly to the holder of the 1998-C SUBI Insurance
Certificate by the Servicer), Prepayments, Payments Ahead or any other payments
by or on behalf of any Obligor or otherwise (excluding any late fees or deferral
fees) with respect to any 1998-C Contract or related Leased Vehicle, including
(if applicable) any proceeds of recourse payments by the originating Dealer,
whether received by the Servicer through any lock box or similar mechanism used
for the collection of regular periodic payments on receivables owned or serviced
by it or received directly by the Servicer at any of its servicing offices, but
subject to Section 4.08 of this 1998-C SUBI Servicing Supplement with regard to
Liquidation Proceeds and Insurance Proceeds:
(i) Upon receipt of any such funds (including funds initially
deposited in any Servicer lock-box account), the Servicer shall deposit
such funds into its operating account and shall ascertain promptly the
following information: (A) the amount of each receipt, (B) the Contract
Number to which such receipt relates, (C) the nature of the payment (i.e.,
whether a Monthly Payment, other Liquidation Proceeds, a Prepayment,
payment of the Residual Value of the related Leased Vehicle or any other
payment by or on behalf of any Obligor), (D) the date such payment is
credited; and (E) that such Contract has been allocated to the 1998-C SUBI
Portfolio and 1998-C SUBI Sub-Trust (collectively, the "Payment
Information").
(ii) As to any such funds received by the Servicer after the
date, if any, on which it ceases to satisfy the Monthly Remittance
Conditions, the Servicer shall segregate all such funds from other SUBI
Sub-Trusts, and deposit all such funds (net of reimbursement of any
Liquidation Expenses incurred by the Servicer with respect to any 1998-C
Leased Vehicle whose Liquidation Proceeds are included among such funds and
excluding proceeds of the Residual Value Insurance Policies which are to be
transferred directly to the holder of the 1998-C SUBI Insurance Certificate
by the Servicer) into the 1998-C SUBI Collection Account maintained by the
Titling Trustee. Such amounts will thereafter be applied as set forth in
Section 17.01(d) of the 1998-C SUBI Supplement.
(iii) In the event that any proceeds of the Residual Value
Insurance Policies applicable to the 1998-C Leased Vehicles and the 1998-C
Contracts are deposited in any SUBI Account or another account maintained
by the Titling Trustee or the 1998-C Securitization Trustee, such amounts
shall be distributed to the holder of the 1988-A SUBI Insurance Certificate
by the Titling Trustee on the 1998-C Securitization Trustee, as applicable,
on the succeeding Monthly Allocation Date at the written direction of the
Servicer.
(iv) Upon the determination by the Servicer that any proceeds
received by it with respect to any 1998-C Contract constitute one or more
Payments Ahead, the Servicer shall, unless otherwise instructed by the
Titling Trustee, (A) maintain appropriate records of such Payment Ahead so
as to be able to timely apply such Payment Ahead as a Monthly Payment with
respect to the applicable Contract and (B) deposit such
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Payment Ahead into the 1998-C SUBI Collection Account on the Deposit Date
relating to the Collection Period during which such Payment Ahead is to be
applied, or, after the date, if any, on which it ceases to satisfy the
Monthly Remittance Conditions, with two Business Days of such date.
(d) The Servicer shall treat all Charged-Off Vehicle Proceeds and
Matured Leased Vehicle Proceeds in the manner provided for other Liquidation
Proceeds in the Titling Trust Agreement and 1998-C SUBI Supplement; provided,
however, as set forth in Section 4.07 of this 1998-C SUBI Servicing
Supplement, that the Servicer may be reimbursed for related Charged-Off
Vehicle Expenses, Matured Leased Vehicle Expenses, other Liquidation Expenses
and Insurance Costs as provided in Section 4.02(h).
(e) The Servicer shall deposit into the 1998-C SUBI Collection
Account on or before each Deposit Date each Security Deposit that was applied
in respect of a Contract during the related Collection Period and not paid to
a third party or to the Servicer as Liquidation Expenses or Matured Leased
Vehicle Expenses, or reimbursements in respect thereof.
(f) The Servicer, on behalf of the Titling Trustee, shall
establish and maintain the 1998-C SUBI Collection Account as set forth in
Section 17.01(a) of the 1998-C SUBI Supplement.
(g) On each Determination Date the Servicer shall make the
calculations necessary to allow the 1998-C Securitization Trustee to make
allocations, applications and payments to holders of, or to the 1998-C SUBI
Accounts on behalf of the holders of, the 1998-C SUBI Certificates on the
related Monthly Allocation Date in accordance with Section 3.01 of the 1998-C
Securitization Trust Agreement. In connection therewith, the Servicer shall
determine the amount of Titling Trust Expenses incurred or suffered during
the preceding Collection Period and shall allocate such Titling Trust
Expenses among the various Sub-Trusts, including the 1998-C SUBI Sub-Trust,
in good faith and so as not to disproportionately affect any Sub-Trust,
generally as provided for in Section 3.04 or 7.04, as appropriate, of the
Titling Trust Agreement.
(h) The Servicer will be entitled to reimbursement of Matured
Leased Vehicle Expenses, Charged-Off Vehicle Expenses and other Liquidation
Expenses. The Servicer is hereby authorized to net such expenses from
proceeds or Collections in respect of the related 1998-C Contracts or 1998-C
Leased Vehicles (including other Liquidation Proceeds), or to withdraw such
amounts from amounts on deposit in the 1998-C SUBI Collection Account. The
Servicer also will be entitled to reimbursement of certain payments it makes
on behalf of Obligors (including payments of taxes, vehicle registration
charges, clearance of parking tickets and similar items and expenses and
charges incurred by it in the ordinary course of servicing the 1998-C
Contracts) from Collections with respect to the 1998-C Contracts (whether or
not as separate payments thereof by the related Obligors) or from amounts
realized upon the final disposition of 1998-C Leased Vehicles. To the extent
such amounts are not reimbursed prior to or at the final disposition of the
related Leased Vehicle but remain unpaid by the related Obligor, such
unreimbursed amounts (together with any unpaid Monthly Payments under the
related
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Contract) will be treated as Matured Leased Vehicle Expenses or Liquidation
Expenses, as the case may be, and the Servicer is hereby authorized to offset
such reimbursable payments, expenses and charges against Matured Leased
Vehicle Proceeds or Liquidation Proceeds, as the case may be.
To the extent that during any Collection Period (i) Collections,
Matured Leased Vehicle Proceeds, Liquidation Proceeds or separate payments
from the Obligors in respect of such payments, charges and expenses are
deposited into the 1998-C SUBI Collection Account rather than so offset by
the Servicer, (ii) any Monthly Payments arising from a Contract allocated to
the 1998-C SUBI Sub-Trust are received by the Titling Trustee or deposited in
the 1998-C SUBI Collection Account with respect to any prior Collection
Period as to which the Servicer has outstanding an unreimbursed Advance,
rather than being netted from Collections by the Servicer; or (iii) any
amount of unreimbursed Advances already deposited in the 1998-C SUBI
Collection Account on any Deposit Date are reasonably determined by the
Servicer to be Nonrecoverable Advances, then, on the related Deposit Date,
the Servicer shall (y) notify the Titling Trustee and the 1998-C
Securitization Trustee in writing as to any such amount and (z) instruct the
Titling Trustee to, and the Titling Trustee shall, promptly transfer an
amount equal to the aggregate of such amounts from the 1998-C SUBI Collection
Account, to the 1998-C SUBI Lease Funding Account. Thereafter, the Titling
Trustee shall remit to the Servicer from the 1998-C SUBI Lease Funding
Account the total of such amounts, without interest (the "Servicer
Reimbursement"). In lieu of causing the Titling Trustee to transfer such
amounts to the 1998-C SUBI Lease Funding Account (or in the event the 1998-C
SUBI Lease Funding Account has not been required to be established as set
forth in Section 17.02 of the 1998-C SUBI Supplement), the Servicer is hereby
authorized to deduct such amounts from amounts on deposit or otherwise to be
deposited into the 1998-C SUBI Collection Account.
(i) The Servicer shall account to the Titling Trustee and the
1998-C Securitization Trustee with respect to the 1998-C SUBI Sub-Trust
separately from any other Sub-Trust.
(j) The Servicer shall direct the Titling Trustee or the 1998-C
Securitization Trustee, as applicable, to invest amounts held in the 1998-C
SUBI Accounts and the Reserve Fund in Permitted Investments as provided in
the Titling Trust Agreement, 1998-C SUBI Supplement and the 1998-C
Securitization Trust Agreement. The maximum permissible maturities of any
such investments pursuant to this clause on any date shall be not later than
the Business Day immediately preceding the Monthly Allocation Date next
succeeding the date of such investment, except for (i) investments on which
the Trust Agent or 1998-C Securitization Trustee, respectively, is the
obligor (including repurchase agreements as to which it, in its commercial
capacity, is liable as principal), or that are TMCC Demand Notes, which may
mature on such next succeeding Monthly Allocation Date, (ii) investments
during the Revolving Period of Principal Collections (including amounts
treated as Principal Collections pursuant to Sections 3.01(c) and 3.01(k) of
the 1998-C Securitization Trust Agreement) on deposit in the 1998-C SUBI
Collection Account, which may mature on such dates as specified by the 1998-C
Securitization Trustee at the Servicer's direction so as to maintain the
availability of sufficient
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cash to make payments pursuant to Section 3.02(c) hereof, and (iii) amounts
on deposit in the 1998-C Certificateholders' Account, which may mature on the
next succeeding relevant Certificate Payment Date or related Targeted
Maturity Date (as described in Section 3.01 of the 1998-C Securitization
Trust Agreement) as specified in the related TMCC Demand Note in accordance
with the terms of the Indenture.
(k) In the event the Servicer provides to the UTI Beneficiary, the
Titling Trustee and the 1998-C Securitization Trustee a letter from each
Rating Agency to the effect that the utilization by the Servicer of a
remittance schedule differing from those contemplated herein or in the 1998-C
SUBI Supplement with respect to Collections to be deposited in the 1998-C
SUBI Collection Account will not result in a qualification, downgrading or
withdrawal of the then-current rating assigned to the Rated Certificates by
such Rating Agency, (i) this 1998-C SUBI Servicing Supplement (and any
corresponding or related Sections in the 1998-C SUBI Supplement) may be so
modified without the consent of any Certificateholders and (ii) the Servicer
may remit such collections to the 1998-C SUBI Collection Account in
accordance with that alternative remittance schedule.
(l) The parties hereto acknowledge that the Titling Trustee, on
behalf of the Titling Trust, has made a complete transfer to the 1998-C
Securitization Trustee of the Collections in respect of the 1998-C SUBI
Assets contained in all accounts maintained by the Titling Trustee (excluding
proceeds of the Residual Value Insurance Policies, the rights to which are
evidenced by the 1998-C SUBI Insurance Certificate which is the sole property
of the Transferor) and, except as provided in this 1998-C SUBI Servicing
Supplement, the 1998-C SUBI Supplement and the 1998-C Securitization Trust
Agreement, neither the Titling Trustee nor the Servicer has any right to
direct such funds to a third party or to receive such funds (other than to
receive such funds pursuant to an investment thereof in Permitted Investments
on which such party is the obligor).
(m) In the event of a sale, disposition or other liquidation of
the 1998-C SUBI Certificate and the other property of the 1998-C
Securitization Trust pursuant to Section 7.02 or Section 8.02 of the 1998-C
Securitization Trust Agreement, the Servicer shall allocate the net proceeds
thereof as set forth in the 1998-C Securitization Trust Agreement.
4.03 RECORDS.
(a) As to any proceeds or other receipts with respect to any Trust
Asset, including without limitation Monthly Payments, Prepayments,
Liquidation Proceeds and any other payments by or on behalf of any Obligor or
otherwise with respect to any 1998-C Contract or 1998-C Leased Vehicle, the
Servicer shall maintain or cause to be maintained such computer and manual
records with respect to all such proceeds and other receipts in accordance
with the customary and usual procedures of institutions which service
closed-end automobile and light duty truck leases and, to the extent more
exacting, in conformity in all material respects with the procedures used by
the Servicer in respect of any such leases serviced by it for its own account
or the accounts of its Affiliates.
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(b) The Servicer shall retain or cause to be retained all data
(including, without limitation, computerized records), together with all
operating software and appropriate documentation, relating directly to or
maintained in connection with the servicing of the 1998-C Contracts (the
"Contract Records") consistent with its then applicable retention policies or
applicable law. The Servicer shall provide or cause to be provided to the
Titling Trustee, on behalf of the Titling Trust, upon its request, copies of
all such data and appropriate documentation retained by the Servicer at all
reasonable times and upon reasonable notice. The Servicer shall promptly
report to the Titling Trustee, on behalf of the Titling Trust, any failure on
its part to maintain the Contract Records as herein provided and promptly
take appropriate action to remedy any such failure.
(c) Upon the occurrence and during the continuance of an Event of
Servicing Termination or if the rights of the Servicer with respect to the
1998-C SUBI Portfolio are terminated in accordance with Section 6.01(b) of
this 1998-C SUBI Servicing Supplement or, if this 1998-C SUBI Servicing
Supplement is terminated pursuant to Section 7.01, the Servicer shall, on
demand of the Titling Trustee, on behalf of the Titling Trust (either at the
request of the 1998-C Securitization Trustee or, as provided in Section
6.01(b) of this 1998-C SUBI Servicing Supplement, upon demand of Investor
Certificateholders representing not less than 51% of the aggregate Voting
Interest), deliver to the 1998-C Securitization Trustee all such data,
operating software and appropriate documentation necessary for the servicing
of the 1998-C Contracts, including but not limited to the related Contract
Documents and Title Documents, all moneys collected by it and required to be
deposited in any 1998-C SUBI Account on behalf of the Titling Trust, or in
the 1998-C SUBI Collection Account or the Reserve Fund on behalf of the
1998-C Securitization Trust, all Security Deposits with respect to 1998-C
Contracts, and any 1998-C Leased Vehicle in the possession of the Servicer
that has been repossessed or is part of Matured Leased Vehicle Inventory and
in either case has not yet been sold or otherwise disposed of. In addition
to delivering such data, operating software and appropriate documentation and
moneys, if a new servicer is appointed, the Servicer shall use its
commercially reasonable efforts to effect the orderly and efficient transfer
of the servicing of the 1998-C Contracts to the party that will be assuming
responsibility for such servicing, including, without limitation, directing
Obligors to remit payments in respect of such Contracts to an account or
address designated by the Titling Trustee or such new servicer.
4.04 COLLECTION AND APPLICATION OF SECURITY DEPOSITS.
Subject to Section 4.03(c) of this 1998-C SUBI Servicing
Supplement, the Servicer shall retain each Security Deposit remitted to it
(or deemed remitted to it) as agent and bailee for the Obligor until such
time as the Titling Trust, the Titling Trustee on behalf of the Titling
Trust, or the Servicer may lawfully and under the terms of the related
Contract apply such Security Deposit against unpaid amounts owed under the
Contract, damages to the related Leased Vehicle, excess wear and tear
charges, expenses in connection with the refurbishment and disposal of the
related Leased Vehicle or against fees, charges, payments or expenses
advanced or paid by the Servicer in accordance with applicable law, its
customary and usual servicing procedures and the related Contract, from and
after which time such amounts will be 1998-C
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SUBI Assets, subject to any reimbursement due to the Servicer. To the extent
any Security Deposit or portion thereof is to be treated as proceeds of a
Contract or Leased Vehicle (because such Contract has become a Charged-Off
Contract), the related Security Deposit or such portion shall be deemed to be
Liquidation Proceeds. On each Deposit Date, but otherwise as provided in
Section 4.02(c)(ii) of this 1998-C SUBI Servicing Supplement, the Servicer
shall deposit into the 1998-C SUBI Collection Account each Security Deposit
that became Liquidation Proceeds during the previous month; otherwise, each
Security Deposit, after deduction for amounts applied towards the payment or
reimbursement of any amount described above, shall be returned to the related
Obligor by the Servicer upon termination of such Contract.
4.05 ADVANCES.
(a) On or prior to each Deposit Date, the Servicer shall make an
Advance with respect to each outstanding delinquent 1998-C Contract and each
1998-C Contract as to which payments have been deferred resulting in the
diminution of the amount to be received on any Due Date relative to the
amount of each originally scheduled Monthly Payment if such 1998-C Contract
has not been reallocated to the UTI Portfolio with an accompanying
Reallocation Payment. Each such Advance will be made by deposit into the
1998-C SUBI Collection Account of an amount equal to the aggregate amount of
Monthly Payments due but not received during the related Collection Period.
(b) Notwithstanding any other provision of this 1998-C SUBI
Servicing Supplement, the Servicer shall not be obligated to make any Advance
in respect of any 1998-C Contract if the Servicer shall have reasonably
determined that any such Advance, if made, would constitute a Nonrecoverable
Advance. Any such determination relating to a claim by the Servicer for
reimbursement of Nonrecoverable Advances from monies on deposit on the 1998-C
SUBI Collection Account shall be evidenced by an Officer's Certificate (or
the statement to Certificateholders or the certification by any other
authorized signatory) of the Servicer furnished to each UTI Beneficiary, the
Titling Trustee and the 1998-C Securitization Trustee setting out the basis
for such determination, which determination shall be conclusive and binding
absent manifest error.
4.06 PAYMENT OF CERTAIN FEES AND EXPENSES; NO OFFSET.
(a) As part of its obligations hereunder, to the extent that cash
flows relating to the 1998-C SUBI Sub-Trust, as set forth in Section 3.01(c)
of the 1998-C Securitization Trust Agreement, are insufficient to provide for
the payment of all fees and expenses due to the Titling Trustee or the 1998-C
Securitization Trustee as Capped Titling Trust Administrative Expenses,
Capped Securitization Trust Administrative Expenses, Uncapped Titling Trust
Administrative Expenses or Uncapped Securitization Trust Administrative
Expenses, the Servicer shall advance an amount equal to such excess fees and
expenses as they become payable from time to time and agrees to indemnify the
Titling Trustee and the 1998-C Securitization Trustee and their respective
officers, directors, employees and agents for such amounts. The Servicer
shall be entitled to reimbursement of such advances as set forth the 1998-C
Securitization Trust
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Agreement. The obligations of the Servicer pursuant to this Section shall
survive any termination of the Servicer's rights and obligations with respect
to the 1998-C SUBI Portfolio under this 1998-C SUBI Servicing Supplement.
(b) Prior to the termination of the Servicer's rights and
obligations with respect to the 1998-C SUBI Sub-Trust and thereafter if such
termination results from an Event of Servicing Termination, the obligations
of the Servicer with respect to the 1998-C SUBI Sub-Trust shall not be
subject to any defense, counterclaim or right of offset that the Servicer has
or may have against any UTI Beneficiary, the Titling Trustee on behalf of the
Titling Trust, or the 1998-C Securitization Trustee, whether in respect of
this 1998-C SUBI Servicing Supplement, the 1998-C SUBI Supplement, any
Securitization Trust Document, any 1998-C Contract, any related Contract
Document, any 1998-C Leased Vehicle or otherwise.
4.07 SERVICING COMPENSATION.
(a) As compensation for the performance of its obligations under
this 1998-C SUBI Servicing Supplement, the Servicer shall be entitled to
receive from the Titling Trustee, on behalf of the Titling Trust, on each
Monthly Allocation Date, the Servicing Fee equal to the sum of:
(i) An amount (the "Servicing Rate Portion") equal to
one-twelfth of 1.00% of the Aggregate Net Investment Value as of the
first day of the related Collection Period; and
(ii) Any late fees, deferral fees and other administrative fees
or similar charges paid by any Obligor pursuant to a 1998-C Contract
during the related Collection Period;
PROVIDED, however, the Servicing Fee shall be paid out of cash flows and in
accordance with the priorities of payments specified in Section 3.01(c) of
the 1998-C Securitization Trust Agreement and the Servicer may be reimbursed
for advancing certain Administrative Expenses as provided in this 1998-C SUBI
Servicing Supplement. Further, as additional servicing compensation with
regard to the 1998-C SUBI Sub-Trust, the Servicer also shall receive income
as and to the extent provided in the 1998-C Securitization Trust Agreement.
The Servicing Rate Portion will be calculated and paid based upon a
360-day year consisting of twelve 30-day months. The Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement of such expenses except to the
extent they constitute Charged-Off Vehicle Expenses, Matured Lease Vehicle
Expenses or other Liquidation Expenses or, as provided in Section 4.12 of
this 1998-C SUBI Servicing Supplement, expenses recoverable under an
applicable Insurance Policy or repayments from the related Obligor, as
provided in Section 4.12 of this 1998-C SUBI Servicing Supplement. For so
long as there shall be only one Servicer for the Titling Trust, the Servicing
Fee shall be deemed to be an expense incurred with respect to the Titling
Trust Assets generally; if at any time the Servicer shall only service some
(but not all) Sub-Trusts, the Servicing Fee
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shall be deemed to be an expense incurred with respect to that discrete group
of Titling Trust Assets contained in the Sub-Trusts the Servicer then
services.
(b) So long as TMCC is the Servicer, the Servicer may, by notice
to the Titling Trustee and the 1998-C Securitization Trustee on or prior to
any Determination Date, waive its Servicing Fee with respect to the related
Collection Period, if the Servicer believes that sufficient collections will
be available from Interest Collections on one or more future Monthly
Allocation Dates (other than from amounts on deposit in the Reserve Fund) to
pay such waived Servicing Fee, without interest. If the Servicer waives such
Servicing Fee, the Servicing Fee with respect to such Collection Period shall
be deemed to be zero for all purposes, provided, however, that for purposes
of Section 3.01(c)(iv) of the 1998-C Securitization Trust Agreement, any such
waived Servicing Fee thereafter shall be treated as an unpaid Servicing Fee
with respect to a prior Collection Period (unless the Servicer continues to
waive such Servicing Fee for subsequent Monthly Allocation Dates or waives
such Servicing Fee permanently).
4.08 REPOSSESSION AND SALE OF LEASED VEHICLES.
In accordance with the procedures used by the Servicer in respect
of any comparable leases and leased vehicles serviced by it for its own
account or the accounts of its Affiliates (including procedures used in
connection with new programs commenced in the ordinary course of business,
whether or not implemented on a test basis), the Servicer shall use its
commercially reasonable efforts to (i) repossess the Leased Vehicle related
to any 1998-C Contract that the Servicer shall have determined to be in
default to the same extent the Servicer would repossess a vehicle pursuant to
a lease contract that is property of the Servicer or (ii) otherwise take
possession of any Leased Vehicle related to any 1998-C Contract to the same
extent the Servicer would take possession of a vehicle pursuant to a lease
contract that is property of the Servicer.
The Servicer shall, in accordance with the standards set forth in
the immediately preceding paragraph:
(a) follow such practices and procedures as it shall deem
necessary or advisable in its servicing of closed-end automobile and light
duty truck leases, which may include reasonable efforts to realize upon any
recourse to Dealers, consigning a Leased Vehicle to a motor vehicle dealer
for resale or selling a Leased Vehicle at public or private sale; and
(b) sell or otherwise dispose of each 1998-C Leased Vehicle that
is repossessed in accordance with the related 1998-C Contract or that becomes
part of Matured Leased Vehicle Inventory for the 1998-C SUBI Sub-Trust and,
if such related 1998-C Contract is in default, shall commence and prosecute
any proceedings in respect of such 1998-C Contract (and such Leased Vehicle)
in its own name or, if the Servicer deems it necessary, in the name of the
Titling Trustee, on behalf of the Titling Trust.
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The obligations of the Servicer under this Section are subject to
the provision that, in the event of damage to a 1998-C Leased Vehicle from a
cause for which the Obligor under the related 1998-C Contract was not
required to obtain casualty insurance or maintain such insurance in full
force and effect, the Servicer shall not be required to expend its own funds
in repairing such Leased Vehicle unless it shall reasonably determine that
such restoration will increase Liquidation Proceeds (net of Liquidation
Expenses) of the related 1998-C Contract by at least an equivalent amount.
The Servicer shall only expend funds in connection with the repossession
and/or sale of any 1998-C Leased Vehicle to the extent that it would do so in
connection with the sale or disposition of vehicles subject to lease
contracts that are its own property. The Servicer shall be responsible for
all other costs and expenses incurred by it in connection with any action
taken in respect of a 1998-C Contract or the related Leased Vehicle;
provided, however, that it shall be entitled to reimbursement of such costs
and expenses to the extent they constitute Charged-Off Vehicle Expenses,
Matured Leased Vehicle Expenses or other Liquidation Expenses or expenses
recoverable under an applicable Insurance Policy. All Matured Leased Vehicle
Expenses or other Liquidation Proceeds and Insurance Proceeds (other than
proceeds of the Residual Value Insurance Policies, the rights to which are
evidenced by the 1998-C SUBI Insurance Certificate, which is the sole
property of the Transferor) shall be deposited and transferred as provided in
Section 4.02 of this 1998-C Servicing Supplement. Notwithstanding the
foregoing, in the event the Servicer determines that, in accordance with its
normal servicing procedures, it will apply the Insurance Proceeds with
respect to a damaged or destroyed Leased Vehicle to the substitution of
another vehicle (for which the Contract will remain in force, but will relate
to such substituted vehicle), the Servicer shall be permitted to so apply
such Insurance Proceeds and shall not report or treat such funds as Insurance
Proceeds hereunder. Any such substituted vehicle shall thereafter be the
relevant 1998-C Leased Vehicle and such vehicle shall be the "related Leased
Vehicle" with respect to such 1998-C Contract, for all purposes of the 1998-C
SUBI Sub-Trust.
Notwithstanding the foregoing, prior to transferring any such funds
out of its operating account, the Servicer shall first deduct therefrom any
unreimbursed Charged-Off Vehicle Expenses, Matured Leased Vehicle Expenses or
other Liquidation Expenses and expenses recoverable under an applicable
Insurance Policy. In connection with this Section, the Titling Trustee, on
behalf of the Titling Trust, shall grant to the Servicer a power of attorney
in the form attached as Exhibit C with regard to the 1998-C Leased Vehicles,
with full power of substitution. The Servicer shall not conduct such a
substitution other than in the ordinary course of its business and on
substantially the same terms as are consistent with its past practices.
The Servicer is not required hereby to deduct from Charged-Off
Vehicle Proceeds, Matured Leased Vehicle Proceeds or other Liquidation
Proceeds or Insurance Proceeds with respect to any particular 1998-C Leased
Vehicle all related unreimbursed Charged-Off Vehicle Expenses, Matured Leased
Vehicle Expenses or other Liquidation Expenses or Insurance Expenses prior to
transferring such funds out of its operating account. Such expenses may
instead be reimbursed as provided in Section 4.02(h) of this 1998-C SUBI
Servicing Supplement.
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4.09 SERVICER TO ACT ON BEHALF OF TITLING TRUST.
(a) In order to facilitate the servicing of the 1998-C SUBI
Sub-Trust by the Servicer, the Titling Trustee, on behalf of the Titling
Trust, hereby appoints the Servicer as its agent, bailee and custodian to
retain possession of the related Contract Documents, Title Documents and any
other related items that from time to time come into possession of the
Servicer, and the Servicer hereby accepts such appointment.
(b) The Servicer shall maintain each such Contract Document and
Title Document at its offices identified on the attached Schedule I, or at
such other office as shall be specified by the Servicer to the Titling
Trustee on 30 days' prior notice. The Servicer shall promptly report to the
Titling Trustee any failure on its part to retain possession of any such
Contract Documents or Title Documents and promptly take appropriate action to
remedy any such failure.
(c) Upon written instructions from the Titling Trustee, on behalf
of the Titling Trust, setting forth a reasonable basis therefor, or in the
exercise of its duties and powers hereunder, the Servicer shall release any
Contract Document, Title Document, or other related item to the Titling
Trustee or its agent or designee, as the case may be, at such place or places
as the Titling Trustee may designate, as soon as practicable. The Servicer
shall not be responsible for any loss occasioned by the failure of the
Titling Trustee to return any document or any delay in doing so.
(d) The Servicer shall be deemed to have received proper
instructions with respect to any such Contract Document, Title Document, any
other related item or any Contract Record, upon its receipt of written
instructions by a Responsible Officer of the Titling Trustee. A certified
copy of a bylaw or a resolution of the Board of Directors of the Titling
Trustee shall constitute conclusive evidence of the authority of any such
Responsible Officer to act and shall be considered in full force and effect
until receipt by the Servicer of written notice to the contrary given by the
Titling Trustee.
(e) The Servicer shall identify from time to time all (i) periodic
sales and use tax or property (real or personal) tax reports, (ii) periodic
renewals of licenses and permits, (iii) periodic renewals of qualification to
act as a trust and a business trust and (iv) other periodic governmental
filing, registration or approvals (collectively, "Filings") arising with
respect to or required of the Titling Trust or the Titling Trustee,
including (in the case of clauses (ii) and (iv)) such licenses, permits, and
other Filings as are required for the Titling Trust or the Titling Trustee to
accept assignments of 1998-C Contracts and to be identified as the owner of
1998-C Leased Vehicles on their Certificates of Title. The Servicer shall
also identify any surety bonds or other ancillary undertakings required of
the Titling Trust or the Titling Trustee in respect of any Filing. The
Servicer shall timely prepare and file, or cause to be filed, with the
cooperation of the Titling Trustee, on behalf of the Titling Trustee, or the
Titling Trust with the appropriate Person each Filing and each such ancillary
undertaking with a copy to the Titling Trustee. In connection with this
Section, the Titling Trustee, on behalf of the Titling Trust, shall grant to
the Servicer such authority, including without limitation any necessary power
of attorney in the form
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attached as Exhibit C, as it may require in order to effect each such Filing
and ancillary undertaking. Should the Servicer at any time receive notice,
or have actual knowledge, of any non-compliance with any Filing requirement,
it shall promptly so notify the Titling Trustee.
(f) The Titling Trustee shall deliver to the Servicer and the
1998-C Securitization Trustee, promptly upon their execution and delivery by
the parties thereto, each amendment and supplement to the Titling Trust
Agreement as any such amendment and supplement relates to the 1998-C SUBI
Sub-Trust. The Servicer shall not act contrary to any provision of the
Titling Trust Agreement as it relates to the 1998-C SUBI Sub-Trust, as so
amended or supplemented.
4.10 INDEMNIFICATION BY SERVICER.
The Servicer (for purposes of this Section, the "Indemnifying
Party") agrees to indemnify, defend and hold harmless the 1998-C
Securitization Trustee, the Titling Trustee and each of their respective
officers, directors, employees and agents (each an "Indemnified Party") for
any and all liabilities, losses, damages and expenses (including without
limitation reasonable fees and expenses of counsel) that may be incurred by
any Indemnified Party as a result of any act or omission by the Servicer in
connection with its maintenance and custody of the Contract Documents, Title
Documents, and Contract Records with respect to 1998-C Contracts and 1998-C
Leased Vehicles, the servicing of the 1998-C Contracts, the Servicer's
undertakings in clause (e) of Section 4.09 of this 1998-C SUBI Servicing
Supplement or any other activity undertaken or omitted by the Servicer with
respect to any 1998-C SUBI Asset. Promptly after receipt by an Indemnified
Party under this Section of notice of the commencement of any action, such
Indemnified Party will, if a claim in respect thereof is to be made against
the Indemnifying Party under this Section, notify the Indemnifying Party of
the commencement thereof. In case any such action is brought against any
Indemnified Party and it notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party will assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party (who may, unless there is,
as evidenced by an opinion of counsel to the Indemnified Party stating that
there is an unwaivable conflict of interest, be counsel to the Indemnifying
Party), and the Indemnifying Party will not be liable to such Indemnified
Party under this Section for any legal or other expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof
other than reasonable costs of investigation. The obligations set forth in
this Section shall survive the termination of this 1998-C SUBI Servicing
Supplement or the resignation or removal of the Servicer (generally or with
respect to the 1998-C SUBI Sub-Trust) or the 1998-C Securitization Trustee.
4.11 THIRD PARTY CLAIMS.
The Servicer shall immediately notify TLI (in the event that TMCC
is not acting as the Servicer hereunder), the Titling Trustee, on behalf of
the Titling Trust, the 1998-C Securitization Trustee, on behalf of the 1998-C
Securitization Trust, and any other holder of the 1998-C SUBI Certificate or
1998-C SUBI Insurance Certificate upon its learning that a claim of whatever
kind that would, if proven or converted to judgment, have a material adverse
impact on any UTI Beneficiary, the Transferor, the Titling Trustee, the
Titling Trust, the 1998-C
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Securitization Trust, the 1998-C Securitization Trustee, the Investor
Certificateholders, any 1998-C SUBI Asset or the Servicer is being made by a
third party with respect to any Contract or Leased Vehicle (whether or not
included in the 1998-C SUBI Sub-Trust) or the servicing thereof or with
respect to any other Titling Trust Asset (whether or not constituting a
1998-C SUBI Asset).
4.12 INSURANCE POLICIES.
So long as any 1998-C SUBI Certificates are outstanding, the
Servicer will maintain and pay when due all premiums with respect to, and the
Servicer may not terminate or cause the termination of the following (all
premiums with respect to which shall constitute Administrative Expenses):
(i) the Contingent and Excess Liability Insurance Policies unless (A) one or
more replacement insurance policies or binder(s) is obtained providing
coverage against third party claims that may be raised against the Titling
Trustee, on behalf of the Titling Trust, with respect to any Leased Vehicle
included in the 1998-C SUBI Sub-Trust in an amount at least equal to $10
million per claim, not subject to any annual or aggregate cap (which policy
or policies may be a blanket insurance policy or policies covering the
Servicer and one or more of its Affiliates), or (B) each Rating Agency has
delivered a letter to the 1998-C Securitization Trustee to the effect that
the obtaining of any such replacement insurance policy or policies, in and of
itself, will not cause its then-current rating of any of the Rated
Certificates to be qualified, reduced or withdrawn; or (ii) the Residual
Value Insurance Policies specified in clause (i) of the definition of
Residual Value Insurance Policies in the Amex of Supplemental Definitions,
unless the 1998-C Contracts may properly be treated as finance leases for
purposes of generally accepted accounting principles, consistently applied,
by virtue of some reason other than maintenance of that policy, and the
Servicer has provided to the Titling Trustee and the 1998-C Securitization
Trustee an Officer's Certificate to that effect, describing such reasons
which shall be in accordance with GAAP. On or before December 31 of each
year, the Servicer shall provide to the Titling Trustee one or more Officer's
Certificates (or certification by a duly authorized signatory of the
Servicer) certifying that the policies it is required to maintain pursuant to
this Section remain in full force and effect. The obligations of the
Servicer pursuant to this Section shall survive any termination of the
Servicer's obligations with respect to the 1998-C SUBI Sub-Trust under this
1998-C SUBI Servicing Supplement.
4.13 SERVICER NOT TO RESIGN; ASSIGNMENT.
(a) Except as provided in Section 6.01 of this 1998-C SUBI
Servicing Supplement, the Servicer shall not resign from the duties and
obligations hereby imposed on it as Servicer except upon determination by its
Board of Directors (or the Executive Committee thereof) that by reason of a
change in applicable legal requirements the continued performance by the
Servicer of its duties as Servicer under this 1998-C Servicing Supplement
would cause it to be in violation of such legal requirements in a manner that
would result in a material adverse effect on the Servicer or its financial
condition, said determination to be evidenced by a Board Resolution to such
effect accompanied by an Opinion of Counsel reasonably satisfactory to the
Titling Trustee of Independent counsel reasonably satisfactory to the Titling
Trustee, to such
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effect. No such resignation shall become effective unless and until a new
servicer is willing to service the Contracts and enters into a servicing
agreement with the Titling Trustee, on behalf of the Titling Trust, such
agreement to have substantially the same provisions as this Servicing
Agreement. The Titling Trustee, on behalf of the Titling Trust, shall not
unreasonably fail to consent to such a servicing agreement.
(b) If the Servicer resigns in the circumstances contemplated by
clause (a) above, in addition to the requirements set forth therein, the
Opinion of Counsel required thereby also shall be reasonably satisfactory to
the 1998-C Securitization Trustee. The 1998-C Securitization Trustee shall
not unreasonably fail to consent to a servicing agreement with a new servicer
that proposes to enter into a servicing agreement that meets the standards
required by this 1998-C SUBI Servicing Supplement. No such resignation shall
affect the obligation of the Servicer to remit moneys to the 1998-C SUBI
Collection Account (in lieu of unrecoverable insurance proceeds pursuant to
Section 4.14), or the obligations of the Servicer pursuant to Sections
3.03(a), 4.04, 4.06(a), 4.10 or 4.12 of this 1998-C SUBI Servicing
Supplement. No successor Servicer shall be required to undertake any of the
foregoing, other than (i) the obligations set forth in Section 4.04, to the
extent that such obligations are transferred to a successor Servicer pursuant
to Section 6.01 of this 1998-C SUBI Servicing Supplement, (ii) the obligation
set forth in Section 4.06(a) of this 1998-C SUBI Servicing Supplement (which
shall remain a joint and several obligation of the initial Servicer and any
successor Servicer) and (iii) the obligations set forth in Section 4.10,
which provision shall not require indemnification by any successor Servicer
for the actions of the Servicer under this 1998-C SUBI Servicing Supplement.
The Titling Trustee shall give prompt notice to each Rating Agency of any
such resignation of the Servicer, and the Titling Trustee and 1998-C
Securitization Trustee and of the proposed substitute servicer.
(c) The Servicer may not assign this Servicing Agreement or any of
its rights, powers, duties or obligations hereunder; provided, however, that
the Servicer may assign this Servicing Agreement in connection with a
consolidation, merger, conveyance, transfer or lease made in compliance with
Section 4.15 of this 1998-C SUBI Servicing Supplement.
(d) Except as provided above, the duties and obligations of the
Servicer under this 1998-C SUBI Servicing Supplement shall continue until
this 1998-C SUBI Servicing Supplement shall have been terminated as provided
in Section 7.01 of this 1998-C SUBI Servicing Supplement and shall survive
the exercise by the Titling Trustee, on behalf of the Titling Trust, of any
right or remedy under this 1998-C SUBI Servicing Supplement or the
enforcement by the Titling Trustee, on behalf of the Titling Trust, of any
provision of the Titling Trust Documents.
4.14 OBLIGOR INSURANCE COVERAGE IN RESPECT OF LEASED VEHICLES.
The Servicer shall use its normal servicing procedures (including
procedures used in connection with new programs commenced in the ordinary
course of business, whether or not implemented on a test basis) to ensure
that the Obligor under each Contract shall have, and
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maintain in full force and effect during the term of such Contract, a
comprehensive, collision and property damage insurance policy covering the
actual cash value of the related Leased Vehicle and naming the Titling Trust
or the Titling Trustee on behalf of the Titling Trust as a loss payee, as
well as public liability, bodily injury and property damage coverage in the
amounts required by applicable state law or as set forth in such Contract,
and naming the Titling Trust or the Titling Trustee on behalf of the Titling
Trust as an additional insured. Notwithstanding the foregoing, if an
insurance policy names the Servicer rather than the Titling Trust or the
Titling Trustee on behalf of the Titling Trust as loss payee or additional
insured, the Servicer shall not be required to correct such designation as
long as the Servicer is responsible for any increased deductibles under any
Contingent and Excess Liability Policy as provided in the following
paragraph. Except as otherwise set forth in this 1998-C SUBI Servicing
Supplement or in any other Transaction Document, the Servicer shall, on at
least a monthly basis, deposit into the 1998-C SUBI Collection Account any
proceeds of such Insurance Policy that the Servicer may receive with respect
to any 1998-C Leased Vehicle.
In each case as to which a deductible is applicable under any
Contingent and Excess Liability Policy, the Servicer will pay the deductible
on behalf of the insured. The foregoing obligation of the Servicer shall
survive the resignation of the Servicer or any termination of it as Servicer
under this 1998-C SUBI Servicing Supplement pursuant to Section 6.01 of this
1998-C SUBI Servicing Supplement.
4.15 CORPORATE EXISTENCE; STATUS; MERGER.
(a) The Servicer shall keep in full effect its existence, rights
and franchises (except as set forth in (b) below) as a California corporation
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings of
the Servicer and its subsidiaries considered as a whole, and in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of, or to permit the Servicer to perform its
obligations under, the Transaction Documents.
(b) The Servicer shall not consolidate with or merge into any
other corporation or convey, transfer or lease all or substantially all of
its assets as an entirety to any Person without the prior written consent of
the Titling Trustee, on behalf of the Titling Trust, unless (i) the
corporation formed by such consolidation or into which the Servicer has
merged or the Person which acquires by conveyance, transfer or lease all or
substantially all the assets of the Servicer as an entirety is (A) a citizen
of or an entity organized and existing under the laws of the United States or
any State and (B) either executes and delivers to the Titling Trustee, on
behalf of the Titling Trust, an agreement in form and substance reasonably
satisfactory to the Titling Trustee, that contains an assumption by such
successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Servicer under this
1998-C SUBI Servicing Supplement and the other Transaction Documents or is so
bound by
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operation of law, or (ii) the Servicer is the surviving corporation resulting
from such consolidation or merger.
ARTICLE V
STATEMENTS AND REPORTS
5.01 REPORTING BY THE SERVICER.
(a) On or prior to the 25th day of each calendar month, the
Servicer shall cause to be delivered to the Titling Trustee a report in
respect of the prior calendar month, setting forth (i) any information
relating to the 1998-C Contracts or the related Leased Vehicles that normally
would be available from a servicer of closed-end automobile and light-duty
truck leases and is reasonably requested by the Titling Trustee and (ii) if
required, any additional information required by the terms of any Securitized
Financing, and (iii) deliver such other reports, Officer's Certificates or
certificates from other authorized signatories as may be necessary pursuant
to this 1998-C SUBI Servicing Supplement to document to the 1998-C
Securitization Trustee the Servicer's right to any further reimbursement of
unreimbursed Servicer Expenses.
(b) On or prior to each Determination Date and each Transfer Date,
the Servicer shall deliver or cause to be delivered to the Titling Trustee
and the 1998-C Securitization Trustee a supplement to the Schedule of 1998-C
Contracts and 1998-C Leased Vehicles containing data reflecting the addition
or removal of 1998-C Contracts or 1998-C Leased Vehicles from the 1998-C SUBI
Portfolio as of the first day of the current Collection Period (in the case
of each Determination Date) or as of the related Subsequent Cutoff Date (in
the case of each Transfer Date). Any such supplement shall contain, in
addition to the data required by the definition of the term "Schedule of
Contracts and Leased Vehicles", an identification of the Discounted Principal
Balance of each 1998-C Contract added or removed. Such reports will be
delivered by the Servicer to the 1998-C Securitization Trustee and the
Luxembourg Stock Exchange, at such times as set forth in Section 3.03 of the
1998-C Securitization Trust Agreement and will be made available at the
offices of each Paying Agent. In addition, the Servicer shall, on or prior
to each Determination Date, cause to be delivered to the Titling Trustee, the
1998-C Securitization Trustee, each Rating Agency, and the Luxembourg Stock
Exchange a certificate in the name of the Servicer, executed by an officer or
authorized signatory therefor in respect of such Collection Period (the
"Servicer's Certificate") substantially in the form attached hereto as
Exhibit B (and setting forth such additional information as requested by each
Rating Agency from time to time and which information the Servicer is able to
reasonably provide), containing all information necessary to make the
allocations and applications or payments required by the 1998-C
Securitization Trust Agreement in respect of the Collection Period
immediately preceding such Determination Date, including the information
needed to prepare the statement required by Section 3.03 of the 1998-C
Securitization Trust Agreement. Any person may obtain a copy of a Servicer's
Certificate at no charge at the office of any Paying Agent or from the 1998-C
Securitization Trustee upon written request, and the 1998-C Securitization
Trustee shall have no obligation to determine whether such person is a
Certificateholder.
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(c) On or prior to each Determination Date the Servicer shall
calculate the Coupon Amount for the relevant Interest Period pursuant to
Section 3.01 of the 1998-C Securitization Trust Agreement. The calculation of
the Coupon Amount by the Servicer shall, in the absence of manifest error, be
final and binding upon all parties.
(d) In addition, within a reasonable period of time after the end of
each calendar year during the term of the 1998-C Securitization Trust Agreement,
the Servicer will forward to the Titling Trustee, the 1998-C Securitization
Trustee, the Luxembourg Stock Exchange and the 1998-C Securitization Trustee
will make available to each Certificateholder, a statement, setting forth the
amounts described in clauses (ii) through (x) in Section 3.03(a) of the 1998-C
Securitization Trust Agreement on an aggregate or annualized basis, as
appropriate as well as the amount paid in respect of interest on and principal
of each Class of Class A Certificates.
(e) Upon the occurrence of [__________________] of which the Servicer
has actual knowledge, the Servicer shall give prompt written notice thereof to
the 1998-C Securitization Trustee, specifying the cause or causes of such event.
5.02 ANNUAL ACCOUNTANTS' REPORTS.
Within 120 days after September 30 of each fiscal year for the
Servicer (commencing with the year ended September 30, 1998), the Servicer shall
deliver to the Titling Trustee, the 1998-C Securitization Trustee and the UTI
Beneficiary (if TMCC is no longer both the Servicer and the UTI Beneficiary) a
report prepared by the Independent Accountants of the Servicer concerning their
review of the activities of the Servicer during the preceding 12-month period
ended September 30 (or other applicable period in the case of the first such
report or letter) to the effect that such accountants have reviewed certain
records and documents relating to the servicing of the Contracts under this
Agreement (using procedures specified in such report or letter) and as a result
of such review, and in connection with such procedures, they are reporting such
exceptions, if any, as shall be set forth therein. Such report or letter shall
also indicate that the firm is independent with respect to the Transferor and
the Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
In the event such Independent Accountants require the 1998-C
Securitization Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the 1998-C Securitization Trustee in writing to so agree;
it being understood and agreed that the 1998-C Securitization Trustee will
deliver such letter of agreement in conclusive reliance upon the direction of
the Servicer, and the 1998-C Securitization Trustee makes no independent inquiry
or investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
5.03 OTHER CERTIFICATES AND NOTICES FROM SERVICER.
(a) Within 120 days after September 30 of each calendar year
(commencing with the year ended September 30, 1998), the Servicer shall deliver
an Officer's Certificate to the
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Titling Trustee and the 1998-C Securitization Trustee to the effect that a
review of the activities of the Servicer during the prior calendar year (or
since the commencement of the Titling Trust in the case of the first such
Officer's Certificate) has been made under the supervision of the officer
executing such Officer's Certificate with a view to determining whether
during such period the Servicer has performed and observed all of its
obligations under this 1998-C SUBI Servicing Supplement, and either (i)
stating that, to the best of his or her knowledge, no default by the Servicer
under this 1998-C SUBI Servicing Supplement has occurred and is continuing,
or (ii) if such a default has occurred and is continuing, specifying such
default and the nature and status thereof.
(b) In the event the rating of the Servicer's long-term unsecured
debt obligations falls below Baa1 by Moody's or BBB+ for Standard & Poor's as
determined by a Rating Agency, then on a quarterly basis, the Servicer shall
cause to be delivered to the 1998-C Securitization Trustee and each Rating
Agency an Officer's Certificate stating that neither the Titling Trust nor any
of its ERISA Affiliates: (i) maintains a Plan, which, as of its last valuation
date, has any unfunded current liability; (ii) anticipates that the value of the
assets of any Plan it maintains would not be sufficient to cover any Current
Liability; or (iii) is contemplating benefit improvements with respect to any
Plan then maintained by any such entity or the establishment of any new Plan,
either of which would cause any such entity to maintain a Plan with Unfunded
Current Liability.
5.04 TAX RETURNS.
As contemplated by Section 6.12 of the 1998-C Securitization Trust
Agreement, the Servicer shall direct the 1998-C Securitization Trustee to
prepare or cause to be prepared, on behalf of the Transferor, any required
federal tax information returns (in a manner consistent with the treatment of
the Investor Certificates as indebtedness). Also as contemplated by Section
6.12 of the 1998-C Securitization Trust Agreement, the Servicer shall timely
prepare or cause to be prepared any federal and state tax returns that may be
required with respect to the 1998-C Securitization Trust or the assets thereof
and shall timely deliver any such returns to the 1998-C Securitization Trustee
for signature.
ARTICLE VI
DEFAULT
6.01 EVENT OF SERVICING TERMINATION; TERMINATION OF SERVICER AS TO
1998-C SUBI PORTFOLIO.
(a) "Events of Servicing Termination" as used herein shall have the
meaning set forth in the attached Annex of Supplemental Definitions. Upon the
occurrence of an event or circumstance of force majeure, the Servicer shall not
be relieved from using all commercially reasonable efforts to perform its
obligations in a timely manner, and the Servicer shall provide to the Titling
Trustee, the 1998-C Securitization Trustee, the Transferor and the Investor
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Certificateholders prompt notice of such failure or delay, together with a
description of its efforts to perform its obligations.
(b) If any Event of Servicing Termination shall have occurred and
be continuing, the Titling Trustee may or at the direction of the 1998-C
Securitization Trustee shall (which direction will only be given pursuant to
Section 6.01(c)(iii) of the 1998-C Securitization Trust Agreement), terminate
all or a portion of the rights and powers of the Servicer under this 1998-C
SUBI Servicing Supplement, including all or a portion of the rights of the
Servicer to receive the servicing compensation provided for in Section 4.07
of this 1998-C SUBI Servicing Supplement with respect to all periods
following such termination. Upon any such termination, and subject to the
limitations set forth in Section 4.13(b) of this 1998-C SUBI Servicing
Supplement, all rights, powers, duties and responsibilities of the Servicer
under this 1998-C SUBI Servicing Supplement, whether with respect to the
related Contract Documents, the related Title Documents or Contract Records,
the Servicing Fee or otherwise, so terminated shall vest in and be assumed by
any successor servicer appointed by the Titling Trustee pursuant to a
servicing agreement with the Titling Trustee, on behalf of the Titling Trust,
containing substantially the same provisions as this 1998-C SUBI Servicing
Supplement (including with respect to the compensation of such successor
servicer), and the Titling Trustee is hereby irrevocably authorized and
empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments (including
any notices to Obligors deemed necessary or advisable by the Titling
Trustee), and to do or accomplish all other acts or things necessary or
appropriate to effect such vesting and assumption, including, without
limitation, directing some or all of the Obligors to remit Monthly Payments,
Prepayments and all other payments on or in respect of the 1998-C Contracts
and the 1998-C Leased Vehicles to an account or address designated by the
Titling Trustee or such new servicer. Further, in such event, the Servicer
shall use its commercially reasonable efforts to effect the orderly and
efficient transfer of the servicing of the affected 1998-C Contracts to the
new servicer (including transfer of the Security Deposits being held by the
Servicer pursuant to Section 4.04 of this 1998-C SUBI Servicing Supplement),
and as promptly as practicable, the Servicer shall provide to the new
servicer a current computer tape containing all information from the Contract
Records required for the proper servicing of the affected Contracts, together
with documentation containing any and all information necessary for use of
the tape.
(c) The Titling Trustee, on behalf of the Titling Trust, shall upon
the written direction of (i) if there is a UTI Pledge, the pledgee thereof or,
if not, the UTI Beneficiary, or (ii) the holder of the requisite percentage of
any SUBI (as set forth in the 1998-C SUBI Supplement), waive any default by the
Servicer in the performance of its obligations hereunder and its consequences
with regard to the Sub-Trust containing those Titling Trust Assets, as the case
may be. Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Servicing Termination arising therefrom shall be deemed
to have been remedied for every purpose of this Servicing Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
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6.02 NO EFFECT ON OTHER PARTIES.
Upon any termination of the rights and powers of the Servicer with
respect to the 1998-C SUBI Sub-Trust from time to time pursuant to Section 6.01
hereof, or upon any appointment of a successor to the Servicer with respect to
the 1998-C SUBI Sub-Trust, all the rights, powers, duties and obligations of the
Titling Trustee, the UTI Beneficiary and the Transferor under this 1998-C SUBI
Servicing Supplement, the 1998-C Securitization Trust Agreement, the 1998-C SUBI
Supplement, or any other Trust Document shall remain unaffected by such
termination or appointment and shall remain in full force and effect thereafter,
except as otherwise expressly provided herein or therein.
ARTICLE VII
MISCELLANEOUS
7.01 TERMINATION OF AGREEMENT.
(a) In connection with any purchase by the Transferor of the Investor
Certificateholders' interest in the corpus of the 1998-C Securitization Trust
pursuant to Section 7.02 of the 1998-C Securitization Trust Agreement, and the
Transferor's then succeeding to all of the interest in the 1998-C SUBI and if
the UTI Beneficiary shall thereafter succeed to such interest in the 1998-C
SUBI, the Servicer, upon the direction of the UTI Beneficiary as provided in
Section 16.05 of the 1998-C SUBI Supplement, shall reallocate all 1998-C
Contracts, 1998-C Leased Vehicles and related 1998-C SUBI Assets to the UTI
Sub-Trust.
(b) Except as provided in this Section, the respective duties and
obligations of the Servicer and the Titling Trustee with respect to the 1998-C
SUBI shall terminate upon the termination of the 1998-C Securitization Trust
Agreement pursuant to Section 7.01 thereof. Upon such a termination, the
Servicer shall pay over to the Titling Trustee or any other Person entitled
thereto all monies held by the Servicer with respect to the 1998-C SUBI
Sub-Trust pursuant to this 1998-C SUBI Servicing Supplement.
7.02 AMENDMENT.
(a) To the extent that any amendment or supplement deals with the
1998-C SUBI Sub-Trust, this 1998-C SUBI Servicing Supplement may be amended from
time to time in a writing signed by the Titling Trustee, on behalf of the
Titling Trust, the Trust Agent and the Servicer, with the prior written consent
of the 1998-C Securitization Trustee, on behalf of the 1998-C Securitization
Trust, which shall be given only in the circumstances contemplated by Section
9.01 of the 1998-C Securitization Trust Agreement.
(b) The Servicer shall provide each Rating Agency that rated the
Investor Certificates prior notice of the content of any proposed amendment to
this 1998-C SUBI Servicing Supplement, whether or not such amendment relates to
the 1998-C SUBI or requires approval of any Rating Agency.
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(c) Any amendment to the Titling Trust Agreement that applies to or
affects the UTI or other SUBI, in addition to the 1998-C SUBI Sub-Trust shall
also be subject to the foregoing provisions of this Section 7.02.
Notwithstanding the foregoing, this Section 7.02 does not modify or supersede
any provision in the Titling Trust Agreement. Without limiting the foregoing,
any amendment of the Titling Trust Agreement or any other SUBI Servicing
Agreement that neither applies to nor affects the 1998-C SUBI shall not require
the consent of the 1998-C Securitization Trustee or the Beneficiaries of the
1998-C SUBI Certificate or the 1998-C SUBI Insurance Certificate.
7.03 GOVERNING LAW.
This 1998-C SUBI Servicing Supplement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
Delaware, without reference to its conflicts of laws provisions, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws except for the rights, privileges, duties, liabilities
and immunities of the 1998-C Securitization Trustee which shall be governed by
and construed in accordance with the internal laws of the State of New York
without regard to any otherwise applicable principles of conflicts of laws.
7.04 NOTICES.
All demands, notices and communications hereunder shall be in
writing and shall be delivered or mailed by registered or certified
first-class United States mail, postage prepaid, hand delivery, any prepaid
courier service, or by telecopier, and addressed in each case as follows: (a)
if to TMCC or the Servicer (if the same as TMCC), at Toyota Motor Credit
Corporation, 19001 South Western Avenue, Torrance, California 90501,
Attention: Treasury Department--Corporate Treasury Manager (telecopier no.
(310) 787-6194); (b) if to the Titling Trustee, at 111 East Wacker Drive,
Suite 3000, Chicago, Illinois 60601 (Telecopier No. (312) 228-9401), with a
copy to the principal Trust Agent designated by the Titling Trustee and (c)
if to the 1998-C Securitization Trustee, at [____________________]. The
Servicer, the Titling Trustee or the 1998-C Securitization Trustee may change
its address for notices hereunder by giving notice of such change to the
other such Persons. All notices and demands (x) shall be deemed to have been
given upon delivery or tender of delivery thereof to any officer or other
duly authorized recipient of the Person entitled to receive such notices and
demands at the address of such Person for notices hereunder, (y) if given by
the Titling Trustee shall be deemed to have been given by all of the
beneficiaries of the Titling Trust and (z) if given by the 1998-C
Securitization Trustee shall be deemed to be given by the Investor
Certificateholders.
7.05 SEVERABILITY.
If one or more of the provisions of this 1998-C SUBI Servicing
Supplement shall be for any reason whatever held invalid or unenforceable, such
provisions shall be deemed severable from the remaining covenants, agreements
and provisions of this 1998-C SUBI Servicing Supplement, and such invalidity or
unenforceability shall in no way affect the validity
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<PAGE>
or enforceability of such remaining covenants, agreements and provisions, or
the rights of any parties hereto. To the extent permitted by law, the
parties hereto waive any provision of law that renders any provision of this
1998-C SUBI Servicing Supplement invalid or unenforceable in any respect.
7.06 NO PETITION.
The Servicer covenants and agrees that prior to the date which is one
year and one day after the date upon which all obligations under each
Securitized Financing has been paid in full, it will not institute against, or
join any other Person in instituting against, the Transferor, 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. This Section shall survive the termination of
this Agreement or the resignation or removal of the Titling Trustee under this
Agreement.
7.07 INSPECTION AND AUDIT RIGHTS.
The Servicer agrees that, on reasonable prior notice, it will permit
any representative or designee of the Titling Trustee, on behalf of the Titling
Trust, during the normal business hours of the Servicer, to examine all books of
account, records, reports and other papers of the Servicer relating to the
Titling Trust Assets, to make copies and extracts therefrom, to cause such books
to be audited by Independent Accountants selected by the Titling Trustee, and to
discuss the affairs, finances and accounts relating to the Titling Trust Assets
with its officers, employees and Independent Accountants (and by this provision
the Servicer hereby authorizes such Independent Accountants to discuss with such
representatives such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Such rights shall include,
but shall not be limited to, any off-site storage facilities at which any data
(including, without limitation, computerized records), together with all
operating software and appropriate documentation, may be held. The Titling
Trustee agrees to keep confidential all the confidential information of the
Servicer acquired during any such examination as if such information were its
own confidential information, except to the extent necessary for the purposes of
this 1998-C SUBI Servicing Supplement. The expenses incident to the exercise by
the Titling Trustee of any right under this Section shall be reimbursable by the
Servicer.
7.08 ARTICLE AND SECTION HEADINGS.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
7.09 EXECUTION IN COUNTERPARTS.
This 1998-C SUBI Servicing Supplement may be executed in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original, but all of which counterparts shall together constitute but one and
the same instrument.
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7.10 RIGHTS CUMULATIVE.
All rights and remedies from time to time conferred upon or reserved
to the Titling Trustee, on behalf of the Titling Trust, the Servicer or the
1998-C Securitization Trustee or to any or all of the foregoing are cumulative,
and none is intended to be exclusive of another. No delay or omission in
insisting upon the strict observance or performance of any provision of this
1998-C SUBI Servicing Supplement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy may be exercised from time to time
and as often as deemed expedient.
7.11 FURTHER ASSURANCES.
Each party will do such acts, and execute and deliver to any other
party such additional documents or instruments, as may be reasonably requested
in order to effect the purposes of this 1998-C SUBI Servicing Supplement and to
better assure and confirm unto the requesting party its rights, powers and
remedies hereunder.
7.12 THIRD-PARTY BENEFICIARIES.
This 1998-C SUBI Servicing Supplement, insofar as it relates to the
1998-C SUBI Sub-Trust, will inure to the benefit of and be binding upon the
parties hereto, their respective successors and permitted assigns, the 1998-C
Securitization Trustee, the Titling Trustee (on behalf of the Titling Trust),
and each of the holders of any legal or beneficial interest in the 1998-C SUBI
Certificates (including without limitation the 1998-C Securitization Trustee and
the Certificateholders), who shall be considered to be third-party beneficiaries
hereof. Except as otherwise provided in this 1998-C SUBI Servicing Supplement,
no other Person will have any right or obligation hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers duly authorized as of the day and
year first above written.
TOYOTA MOTOR CREDIT CORPORATION,
as Servicer
By:
-------------------------------------------------
Name: George E. Borst
Title: Senior Vice President and General
Manager
TOYOTA LEASE TRUST
By: TMTT, INC.,
as Titling Trustee
By:
-------------------------------------------------
Name: Steven E. Charles
Title: Vice President and Assistant Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Trust Agent
By:
-------------------------------------------------
Name: Steven E. Charles
Title: Vice President
Acknowledged and Agreed:
TOYOTA AUTO LEASE TRUST 1998-C
By: [_____________________],
as 1998-C Securitization Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
SCHEDULE OF 1998-C CONTRACTS AND
1998-C LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Titling Trustee and the
1998-C Securitization Trustee.]
A-1
<PAGE>
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
B-1
<PAGE>
EXHIBIT C
FORM OF POWER OF ATTORNEY
C-1
<PAGE>
SCHEDULE I
LIST OF BRANCH OFFICES
I-1
<PAGE>
1998-C SUBI CERTIFICATE PURCHASE AND SALE AGREEMENT
THIS 1998-C SUBI CERTIFICATE PURCHASE AND SALE AGREEMENT (the "Agreement")
is dated as of -, 1998, by and between TOYOTA MOTOR CREDIT CORPORATION, a
California corporation ("TMCC"), and TOYOTA LEASING, INC., a California
corporation ("TLI").
A. TMCC, the Titling Trustee and, for certain limited purposes set forth
therein, -, as Trust Agent, have entered into that certain Amended and Restated
Trust and Servicing Agreement, dated as of October 1, 1996, amending and
restating that certain Trust and Servicing Agreement, dated as of October 1,
1996, among the same parties (as so amended and restated, and as it may be
further amended, supplemented or modified, the "Titling Trust Agreement"),
pursuant to which TMCC and the Titling Trustee formed the Titling Trust for the
purpose of taking assignments and conveyances of, holding in trust and dealing
in, various Titling Trust Assets in accordance with the Titling Trust Agreement.
B. Concurrently herewith, and as contemplated by the Titling Trust
Agreement, TMCC, the 1998-C Securitization Trustee, the Titling Trustee and the
Trust Agent are entering into that certain 1998-C SUBI Supplement to the Titling
Trust Agreement, dated as of -, 1998, pursuant to which the Titling Trustee, on
behalf of the Titling Trust and at the direction of TMCC, as UTI Beneficiary,
will create and issue to TMCC two SUBI Certificates collectively representing a
100% beneficial interest in the 1998-C SUBI and the 1998-C SUBI Assets (the
1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate, as defined in
the 1998-C SUBI Supplement), whose beneficiaries generally will be entitled to
the net cash flow arising from, but only from, the related 1998-C SUBI Assets,
all as set forth in the Titling Trust Agreement and the 1998-C SUBI Supplement.
C. TMCC and TLI desire to enter into this Agreement to provide for the
sale by TMCC to TLI, without recourse, of all of TMCC's right, title and
interest in and to the 1998-C SUBI, the 1998-C SUBI Certificate and the 1998-C
SUBI Insurance Certificate.
D. The parties hereto desire that -, as securities intermediary (the
"SUBI Securities Intermediary"), credit the transfer of the 1998-C SUBI
Certificate and the 1998-C SUBI Insurance Certificate from the TMCC SUBI Account
to the TLI SUBI Account.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the Annex
of Definitions attached to the Titling Trust Agreement or the Annex of
Supplemental Definitions attached to the 1998-C SUBI Supplement;
1
<PAGE>
provided, however, that in the event of an inconsistency or conflict between a
definition in the Annex of Definitions or the Annex of Supplemental Definitions,
the definition in the Annex of Supplemental Definitions shall control. In the
event of any conflict between a definition set forth herein and that set forth
in the Annex of Definitions or the Annex of Supplemental Definitions, that set
forth herein shall prevail. All terms used in this agreement include, as
appropriate, all genders and the plural as well as the singular. All references
to words such as "herein", "hereof" and the like shall refer to this Agreement
as a whole and not to any particular article or section within this Agreement.
All references such as "includes" and all variations thereon shall mean
"includes without limitation" and references to "or" shall mean "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 Agreement.
ARTICLE II
PURCHASE AND SALE OF 1998-C SUBI
SECTION 2.01. SALE OF 1998-C SUBI.
(a)(l) In consideration of TLI's delivery to, or upon the order of, TMCC
of (i) cash in the amount of $ - representing the cash proceeds from the sale of
the Investor Certificates net of certain expenses, and (ii) $ - evidenced by a
subordinated non-recourse promissory note, TMCC does hereby absolutely sell,
assign and otherwise convey to TLI, without recourse, and TLI does hereby
purchase and acquire, as of the date set forth above:
1. all right, title and interest in and to the 1998-C SUBI evidenced
by the 1998-C SUBI Certificate and all monies due thereon and paid thereon or in
respect thereof;
2. the right to realize upon any property that underlies or may be
deemed to secure the 1998-C SUBI to the extent of amounts payable under the
1998-C SUBI Certificate; and
3. all proceeds of the foregoing.
(a)(2) In consideration of TLI's delivery to, or upon the order of, TMCC of
a subordinated non-recourse promissory note, the payment terms of which limit
amounts payable to the amounts due as policy premiums for the Residual Value
Insurance Policies and which is payable only from certain amounts paid as claims
or as premium refunds under the Residual Value Insurance Policies. TMCC does
hereby absolutely sell, assign and otherwise convey to TLI, without recourse,
and TLI does hereby purchase and acquire, as of the date set forth above:
1. all right, title and interest in and to the 1998-C SUBI evidenced
by the 1998-C SUBI Insurance Certificate and all monies due thereon and paid
thereon or in respect thereof;
2
<PAGE>
2. the right to realize upon any property that underlies or may be
deemed to secure the 1998-C SUBI to the extent of amounts, payable under the
1998-C SUBI Insurance Certificate; and
3. all proceeds of the foregoing.
The parties hereto agree that such note represents the value of the SUBI
Certificates.
(b) It is the express and specific intent of the parties that the transfer
of the 1998-C SUBI, the 1998-C SUBI Certificate and the 1998-C SUBI Insurance
Certificate from TMCC to TLI, as provided for in this Agreement, is and shall be
construed for all purposes as a true, complete and absolute sale of the 1998-C
SUBI, the 1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate and
all of the related property and rights as described in subsection (a) above.
The parties hereto represent and agree that the 1998-C SUBI, the 1998-C SUBI
Certificate and the 1998-C SUBI Insurance Certificate are hereby transferred
from TMCC to TLI for fair consideration and without the intent to hinder, delay
or defraud creditors of TMCC or TLI.
(c) In connection with the foregoing conveyance, TMCC agrees to record and
file, at its own expense, a financing statement with respect to the 1998-C SUBI
and 1998-C SUBI Certificate and all of the related property and rights specified
in subsection (a) above necessary (i) to provide third parties with notice of
the conveyance hereunder and (ii) to perfect the sale of the 1998-C SUBI, the
1998-C SUBI Certificate, the 1998-C SUBI Insurance Certificate, and the proceeds
thereof to TLI, (as well as to file any continuation statements required by
applicable state law to maintain the perfection afforded by the filing of such
financing statement), and to deliver a file-stamped copy of each such financing
statement (or continuation statement) or other evidence of such filings (which
may, for purposes of this Section, consist of telephone confirmation of such
filing with the file stamped copy of each such filing to be provided to TLI in
due course), as soon as is practicable after receipt by TMCC thereof.
The parties hereto intend that the conveyance hereunder be a sale. In the
event that the conveyance hereunder is not for any reason considered a sale, the
conveyance described above and all filings described in the foregoing paragraph
shall give TLI a first priority perfected security interest in, to and under the
property and rights conveyed hereunder and all proceeds of any of the foregoing
and that this Agreement constitute a security agreement under applicable law.
SECTION 2.02. ACCEPTANCE BY TLI.
TLI agrees to comply with all covenants and restrictions applicable to an
owner of the 1998-C SUBI, 1998-C SUBI Certificate, and the 1998-C SUBI Insurance
Certificate, whether set forth therein, in the Titling Trust Agreement, the
1998-C SUBI Supplement or otherwise, and assumes all obligations and
liabilities, if any associated therewith.
3
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SECTION 2.03. TRANSFER OF THE CERTIFICATES.
In connection with the transfer of the 1998-C SUBI Certificate and the
1998-C SUBI Insurance Certificate, TLI has established a "securities account" as
such term is defined in Section 8-501 (a) of the UCC with the SUBI Securities
Intermediary (the "TLI SUBI Account"). TLI shall accept the transfer of the
1998-C SUBI Certificate and the 1998-C SUBI Insurance Certificate to the TLI
SUBI Account. TMCC hereby agrees to instruct the SUBI Securities Intermediary
to credit the transfer of the SUBI Certificate and the 1998-C SUBI Insurance
Certificate from the TMCC SUBI Account to the TLI SUBI Account.
ARTICLE III
MISCELLANEOUS
Section 3.01. AMENDMENT.
This Agreement may be amended from time to time in a writing signed by the
parties hereto, with the prior written consent of the 1998-C Securitization
Trustee, which shall be given only in the circumstances contemplated by Section
9.01 of the 1998-C Securitization Trust Agreement.
SECTION 3.02. GOVERNING LAW.
This Agreement shall be created under and governed by and construed under
the internal laws of the State of California, without regard to any otherwise
applicable principles of conflict of laws and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 3.03. SEVERABILITY.
If one or more of the covenants, agreements, provisions or terms of this
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 Agreement, and shall in no
way affect the validity or enforceability of the other provisions of this
Agreement, or the rights of any parties hereto. To the extent permitted by law,
the parties hereto waive any provision of law that renders any provision of this
Agreement invalid or unenforceable in any respect.
SECTION 3.04. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the parties
hereto.
SECTION 3.05. ARTICLE AND SECTION HEADINGS.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
4
<PAGE>
SECTION 3.06. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
so executed and delivered shall be deemed to be an original, but all of which
counterparts shall together constitute but one and the same instrument.
SECTION 3.07. FURTHER ASSURANCES.
Each party will do such acts, and execute and deliver to any other party
such additional documents or instruments as may be reasonably requested in order
to effect the purposes of this Agreement and to better assure and confirm unto
the requesting party its rights, powers and remedies hereunder.
SECTION 3.08. THIRD-PARTY BENEFICIARIES.
This Agreement will inure to the benefit of and be binding upon each
subsequent holder of any legal or beneficial interest in the 1998-C SUBI
Certificate and/or the 1998-C SUBI Insurance Certificate (including without
limitation the 1998-C Securitization Trust and the holders of any securities
issued thereby), who shall be considered to be third-party beneficiaries hereof.
Except as otherwise provided in this Agreement, no other Person will have any
right or obligation hereunder.
SECTION 3.09. NO PETITION.
TLI, as transferee of the 1998-C SUBI Certificate and the 1998-C SUBI
Insurance Certificate covenants and agrees that prior to the date which is one
year and one day after the date upon which all obligations under each
Securitized Financing has been paid in full, it will not institute against, or
join any other Person in instituting against, TMCC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law. This Section
shall survive the termination of this Agreement.
[SIGNATURES ON NEXT PAGE]
5
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers duly authorized as of the day and
year first above written.
TOYOTA MOTOR CREDIT CORPORATION
By: ______________________________________
Name:
Title:
TOYOTA LEASING, INC.
By: ______________________________________
Name:
Title:
6
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
Indenture
dated as of December 1, 1998
$[__________]
TMCC Demand Notes
<PAGE>
CROSS-REFERENCE TABLE
(not a part of this Indenture)
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ----------
<S> <C>
(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
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
<PAGE>
(Section)317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
(Section)318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
- ---------
N.A. means not applicable
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE. . . . . . . . . . . 1
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Incorporation by Reference of TIA. . . . . . . . . . . . . 1
Section 1.03. Rules of Construction. . . . . . . . . . . . . . . . . . . 2
ARTICLE II. THE SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.01. Form; Title and Terms. . . . . . . . . . . . . . . . . . . 2
Section 2.02. Execution and Authentication . . . . . . . . . . . . . . . 3
Section 2.03. Securities Register. . . . . . . . . . . . . . . . . . . . 5
Section 2.04. Paying Agent to Hold Money in Trust. . . . . . . . . . . . 5
Section 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . . 5
Section 2.07. Replacement Securities . . . . . . . . . . . . . . . . . . 6
Section 2.08. Outstanding Securities . . . . . . . . . . . . . . . . . . 7
Section 2.09. Securities Not Outstanding . . . . . . . . . . . . . . . . 7
Section 2.10. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . 8
Section 2.13. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . 9
Section 2.14. Computation of Interest. . . . . . . . . . . . . . . . . . 9
ARTICLE III. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.01. Redemption . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.01. Payment of Securities. . . . . . . . . . . . . . . . . . . 9
Section 4.02. Maintenance of Office or Agency; Paying Agent and
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Section 4.03. Company Statement as to Compliance; Notice of
Certain Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE V. CONSOLIDATIONS AND MERGERS, ETC . . . . . . . . . . . . . . . .11
Section 5.01. Company May Consolidate, Etc., Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 5.02. Successor Person Substituted for Company . . . . . . . . .12
ARTICLE VI. DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . .12
Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . .12
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 6.06. Application of Money Collected . . . . . . . . . . . . . .15
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
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 . . . . . . . . . . . . . . .17
Section 6.12. Control by Holders of Securities . . . . . . . . . . . . .17
Section 6.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . .17
Section 6.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . .18
ARTICLE VII. TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . .18
Section 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . .19
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . .20
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . .20
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . .20
Section 7.06. Reports by Trustee to Holders. . . . . . . . . . . . . . .20
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . .21
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . .21
Section 7.09. Successor Trustee by Merger, Etc . . . . . . . . . . . . .22
Section 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . .23
Section 7.11. Preferential Collection of Claims Against Company. . . . .23
ARTICLE VIII. DEFEASANCE; SATISFACTION AND DISCHARGE. . . . . . . . . . . . .23
Section 8.01. Defeasance of the Indenture. . . . . . . . . . . . . . . .23
Section 8.02. Satisfaction and Discharge of the Indenture. . . . . . . .24
Section 8.03. Survival of Certain Obligations. . . . . . . . . . . . . .25
Section 8.04. Acknowledgment of Discharge by Trustee . . . . . . . . . .25
Section 8.05. Application of Trust Money . . . . . . . . . . . . . . . .25
Section 8.06. Repayment to the Company . . . . . . . . . . . . . . . . .26
Section 8.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . .26
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
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
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<S> <C>
Section 9.06. Trustee to Sign Amendments, Etc. . . . . . . . . . . . . .29
Section 9.07. Effect of Supplemental Indentures. . . . . . . . . . . . .29
ARTICLE X. MEETINGS OF AND ACTIONS BY HOLDERS. . . . . . . . . . . . . . .30
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 Holders May Not
be Hindered or Delayed by Call of Meeting . . . . . . . . . . . . . . . .32
Section 10.08. Evidence of Action Taken by Holders. . . . . . . . . . . .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 XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .34
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 . . . . . . . . . . . . . . . . . . . . . . . .36
Section 11.12. Duplicate Originals. . . . . . . . . . . . . . . . . . . .36
Section 11.13. Severability . . . . . . . . . . . . . . . . . . . . . . .36
Section 11.14. Headings and Table of Contents . . . . . . . . . . . . . .37
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
Annex I - Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Exhibit A - Form of Security . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Form of Demand . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
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INDENTURE dated as of December 1, 1998, 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 and binding legal obligations of the Company
in accordance with the terms of this Indenture.
C. 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 I.
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 Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
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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 II.
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.
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 and 9.05.
References herein and in the forms of Securities to "Security" or
"Securities"
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shall include references to the principal amounts issued thereunder as
evidenced by the appropriate notation on the Schedules.
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, shall be paid by wire transfer to an account specified by the Person
entitled thereto as proven by the names appearing in the Securities register.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
The Securities shall be executed on behalf of the Company by an Officer
of the Company. Any such signature may be by facsimile.
If an Officer 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 Securities and the principal amount in respect of the
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, Required Rate, or Interest Payment Date. It is envisioned that five
certificates representing potential investments related to the Securities shall
be issued hereunder and carry principal balances which will correspond to
amounts actually on deposit in the 1998-C SUBI Certificateholders' Account in
respect of the following amounts: (1) one certificate representing amounts
allocated as Class A-1 Notional Interest Accrual Amounts, any Class A-1 Interest
Carryover Shortfall Amount, Class A-2 Notional Interest Accrual Amounts, any
Class A-2 Interest Carryover Shortfall Amount, Class A-3 Notional Interest
Accrual Amounts, any Class A-3 Interest Carryover Shortfall Amount, Class B
Monthly Interest Accrual Amounts and any Class B Interest Carryover Shortfall
(the "Interest Demand Note") in a maximum aggregate principal amount equal to
$[__________]; (2) one certificate representing amounts allocated to make
applications in reduction of the Adjusted Class A-1 Certificate Balance in a
maximum aggregate principal amount equal to $[__________]; (6) one certificate
representing amounts allocated to make applications in reduction of the Adjusted
Class A-2 Certificate Balance in a maximum principal amount equal to
$[__________]; (7) one certificate representing amounts allocated to make
applications in reduction of the Adjusted Class A-3 Certificate Balance in a
maximum principal amount equal to $[__________]; and (8) one certificate
representing amounts allocated to make applications in reduction of the Adjusted
Class B Certificate Balance in a maximum principal amount equal to
$[__________]; provided that nothing herein shall limit the number of
certificates representing the Securities that may be issued hereunder. Each
certificate
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representing a 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 Required 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, (v) the amount
of the interest paid on such Security and the date on which such interest was
paid and (vi) the aggregate principal amount outstanding with respect to such
certificate representing a Security.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Entries 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.
The Trustee shall authenticate Securities for original issue in any
amount not to exceed the maximum aggregate principal amount as aforesaid,
upon a written order of the Company signed by an Officer of the Company. The
Trustee shall annotate and initial 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 an Officer of the
Company, or (ii) if an Officer's 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
facsimile (promptly confirmed in writing). Any such order shall specify the
principal amount in respect of the Securities to be issued and to which
certificate such amount shall be allocable, the applicable Required Rate, the
Stated Maturity Date and the date on which such issue of principal in respect
of the Securities is to be authenticated.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities and the Schedules attached thereto.
Unless otherwise provided in the appointment, an authenticating agent may
authenticate Securities and the Schedules attached thereto 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. The Trustee is initially appointed as the authentication agent by
the Company.
Notwithstanding the foregoing, in lieu of annotating the related
Schedule and initializing such entries, the Trustee may instead provide a
written confirmation to the Company of its receipt of and compliance with any
Company Order and of its receipt of each payment made by the Company in
respect of any principal amount of any Security or interest on any principal
amount of any Securities, which alternative written confirmations shall be
deemed to be conclusive evidence that the Trustee has received any such
Company Order or payment from the Company, in each case with the same force
and effect as if the Schedule had in fact been annotated and initialed as
described above; provided that the Company shall not be obligated to make any
payment at the Maturity of any Security unless and until the Trustee delivers
to the Company the related Schedule annotated with entries corresponding to
each such alternative confirmation and having each such annotation
authenticated as described above.
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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 appointed pursuant to Section 4.02 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 appointed pursuant to Section 4.02 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 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 in writing 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.
SECTION 2.05. HOLDER 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 Holders
furnished to it or maintained by it in its capacity as 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 Holders including an identification of the Securities
and the aggregate amount thereof.
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) The Trustee will not authenticate or deliver any Security in
connection with any registration of transfer to any person unless the Trustee
has received a certification from the transferring Holder to the effect that
(i) it is no longer the Securitization Trustee of the 1998-C Securitization
Trust and the proposed transferee is its successor in such capacity, or (ii)
a Swap Termination has occurred and such proposed transfer is made in
contemplation of a liquidation of the trust assets. Each certificate shall
bear a legend containing the foregoing transfer restrictions.
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(b) When Securities are presented to the Registrar or a co-Registrar
with a written request satisfying the requirements of clause (a) 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 written
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 Section
9.05 hereof 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 or other security, 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.
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 canceled 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.
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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 Date of any Securities, the Paying Agent
(other than the Company or a Subsidiary) holds U.S. Legal Tender sufficient
to pay all of the principal 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. 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 any
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 actually 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 Officer's 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.
SECTION 2.10. RESERVED.
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 canceled Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company, unless the
Company shall direct the Trustee, by a written order signed by an Officer of
the Company, to return the cancelled Securities to the Company.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company fails to pay any principal of or interest on any Security
on the due date therefor (whether upon acceleration, at the related Stated
Maturity Date or otherwise), the Company shall pay, from and after the
expiration of any cure period, interest thereon, at the rate per annum borne
by the Securities, to the extent permitted by law. 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 date shall be fixed in
the following manner:
(A) The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on such Security and
the date 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.
(B) 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 written notice given by
the Company to the Trustee of the proposed payment method pursuant to this
clause, such payment method shall be deemed practicable by the Trustee.
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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 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.
ARTICLE III.
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 IV.
COVENANTS.
SECTION 4.01. PAYMENT OF SECURITIES.
The Company will punctually pay the principal of 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
interest on any of the Securities becomes payable, whether at the Stated
Maturity Date thereof, by demand for payment by any Holder of a Security (i)
if for any reason Standard & Poor's reduces the Company's short-term debt to
a rating less than A-1+ or the Company's long-term debt to a rating of less
than AA or Moody's reduces the Company's short-term debt to a rating less
than P-1 or the Company's long-term debt to a rating less than Aa3 and the
Trustee determines, based on advice of [__________], its successor or its
independent public accountants, that at such time one or more Permitted
Investments having substantially the same maturities, similar demand features
and bearing interest at the relevant Required Rates are available and, based
on oral or written advice to such effect from each Rating Agency, that
investment therein rather than in the Company's Demand Notes will not, by
itself, cause a Rating Agency to reduce or withdraw its rating of any
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Class of Certificates or (ii) in connection with any Swap Termination, in the
form of Exhibit B hereto delivered to the Trustee, surrender the Securities
for repurchase, declaration of acceleration or otherwise, and 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 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 in writing of its action or failure so to act,
and of the amount of each such payment made to each Paying Agent.
On the second Business Day preceding each Monthly Allocation Date on
which Securities are to be issued or additional amounts are to be invested in
outstanding Securities, the Trustee will calculate the Commercial Paper Rate
for the relevant Interest Period for each Security in which an investment is
to be made, and shall inform the Company promptly in writing of each such
Commercial Paper Rate.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY; PAYING AGENT AND
REGISTRAR.
The Company will maintain in Chicago, Illinois, 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 payments on the Securities or under 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 Chicago, Illinois, and designates, for the purposes of this
Section 4.02, such agent as an agency where notices and demands to or upon
the Company in respect of payments on the Securities or under this Indenture
may be served. The parties hereto agree such agency is not an agency for
service of process.
SECTION 4.03. 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
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(b) to the best of his or her knowledge, based on such review, (i) 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 (ii) 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 V.
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 Company shall be the
surviving entity or 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 and interest on all the
Securities and the 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.
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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 VI.
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 any Security of such
series when it becomes due and payable at its Maturity, and continuance of
such default for a period of 10 days; 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
(d) any Insolvency Event of the Company.
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
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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:
(A) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel;
(B) all due and overdue installments of interest on all
Securities;
(C) 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; and
(D) 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
(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, and such default continues for a period of 10 days;
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.
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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.
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
and 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
relating to this Indenture.
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
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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
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 relating to this Indenture;
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
indemnity satisfactory to it against the costs, expenses and liabilities
(including counsel's fees, expenses and disbursements) to be incurred in
compliance with such request;
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(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;
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 Date or other Maturity
therefor specified in such Security (subject in each case to the respective
cure periods set forth in Section 6.01) 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
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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.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct in writing 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 law or
regulation, 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;
(3) such direction is not unduly prejudicial to the rights of
the other Holders of Securities of such series not joining in such action; and
(4) such direction shall not, in the good faith determination
of any Trust Officer of the Trustee, subject the Trustee to personal
liability unless such Holders have provided indemnity to the Trustee
satisfactory to it.
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 which has not been cured as provided in Section 6.02; or
(2) in respect of a covenant or provision hereof which under
Article IX 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
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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 Maturities expressed in such Security or interest on
any overdue principal of any Security.
ARTICLE VII.
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) Neither the Trustee nor any of its officers, directors or employees
shall be liable for its own negligent action, its own negligent failure to
act, or its own willful 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.
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(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 6.12 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 or obligations 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.
(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 satisfactory to it, against the costs,
expenses and liability (including counsel's fees, expenses and disbursements)
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 conclusively rely and be fully protected in acting
or refraining from acting on any document, resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order or
approval 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) Whenever in the administration of its duties and obligations
pursuant to this Indenture, before the Trustee acts or refrains from acting,
it may require an Officer's 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, agents, custodians and
nominees and shall not be responsible for the misconduct or negligence of any
attorney, agent, custodian or nominee 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.
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(e) In the event that the Trustee is also acting as Paying Agent,
authenticating agent or Registrar hereunder, the rights and protections
afforded to the Trustee pursuant to this Article VII shall also be afforded
to such Paying Agent, authenticating agent or Registrar.
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 written direction under any provision hereof, and the Trustee shall
not be accountable for the Company's use of the proceeds from the 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
actually known to a Trust Officer of the Trustee, the Trustee shall mail to
each Holder 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 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
Holders.
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 Holder, 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).
A copy of each report at the time of its mailing to Holders 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
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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 and its officers,
directors and employees 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) unless the Trustee or its officers, directors and employees acted
with 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, as soon as is reasonably practicable, of any claim
asserted against the Trustee for which it may seek indemnity; PROVIDED,
HOWEVER that the Trustee's failure to provide such notice shall not
constitute a waiver of its rights under this Section 7.07. The Company need
not reimburse any expense or indemnify against any loss or liability incurred
by the Trustee through negligence, willful misconduct or bad faith.
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 or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(d) hereof, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency,
reorganization or similar law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture or the earlier resignation or termination of the Trustee.
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 Holders. 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, by a court of competent
jurisdiction, 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 legally or otherwise incapable of
acting under and in accordance with the provisions of this Indenture.
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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 Holder. The predecessor Trustee shall not
be liable for any acts or omissions of any successor Trustee and the
successor Trustee shall not be liable for any acts or omissions of any
predecessor Trustee.
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.
If the Trustee fails to comply with Section 7.10 hereof, any Holder 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 or removed 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).
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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 VIII.
DEFEASANCE; SATISFACTION AND DISCHARGE.
SECTION 8.01. DEFEASANCE OF THE INDENTURE.
The Company shall be deemed to have satisfied and 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
reasonably satisfactory to the Trustee, as trust funds in trust solely for
the benefit of the Holders for that purpose, U.S. Legal Tender, in such
amounts as are sufficient, without consideration of the investment of any
such U.S. Legal Tender and after payment of all federal, state and local
taxes or other charges or 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 reasonably satisfactory to, the Trustee, to pay the principal of 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
in writing to apply such U.S. Legal Tender to the payment of said principal
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 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;
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(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 Officer's
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:
(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;
and the Company, in the case of (i) or (ii) above, has
irrevocably deposited in trust with the Trustee, pursuant to an
irrevocable trust agreement in form 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 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 in writing to apply such U.S. Legal Tender
to the payment of said principal and interest on the Securities;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
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(3) the Company has delivered to the Trustee an Officer's
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,
Sections 4.01, 4.02, 4.03, 6.08, 7.07, 7.08, 7.09, 7.10, 7.11, 8.03, 8.04, 8.05,
8.06 and 8.07, Article IX, and Sections 11.01, 11.02, 11.06, 11.07, 11.08,
11.10, 11.11 and 11.13 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, 8.07 and 11.10 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 Officer's 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 written 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. The Company shall reimburse the
Trustee for reasonable costs and expenses incurred by it in the performance of
its duties and obligations under this Section 8.04.
SECTION 8.05. APPLICATION OF TRUST MONEY.
The Trustee shall hold any U.S. Legal Tender 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 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 and interest on the Securities as and when the
same become due and payable. The U.S. Legal Tender 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.
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 held
by them for the payment of principal of or interest on the Securities that
remains unclaimed for two years after the date on which such payment shall have
become due (whether on or before the related Stated Maturity Date); provided,
however, that, before being required to make any such payment to the Company,
the Trustee may, at the
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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 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
moneys 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
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 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 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 held by the Trustee.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS.
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee, together, may amend or supplement this
Indenture or the Securities without notice to or consent of any Holder (i) 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
any such action does not, in the good faith judgment of the Company, materially
and adversely affect the rights or interests of any Holder of Securities, (ii)
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 (including to add any Events of Default),
(iii) 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 and (iv) to secure all of the Securities.
In addition to the requirements set forth in Section 9.06 herein, the Trustee
may require delivery of an Opinion of Counsel to the effect that such amendment
will not materially and adversely affect the interest of any Certificateholder
in connection with any such amendment or supplement, and the Trustee shall be
fully protected in relying upon such Opinion of Counsel.
In addition, this Indenture may be amended or supplemented by the Trustee
and the Company without the consent of any Holder or of any Certificate Owner
with respect to the Investor Certificates issued pursuant to the 1998-C
Securitization Trust Agreement or of the Trustee of the 1998-C Securitization
Trust to (i) reflect changes necessary or appropriate in
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connection with any event described under Section 5.01, Section 7.08 or
Section 7.09 or (ii) 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 with
the written consent of the Holders of at least a majority in aggregate principal
amount of the outstanding Securities (which consent will not be given except at
the written direction of Investor Certificateholders of at least 25% in
aggregate principal amount of the Class A Certificates) may amend or supplement
this Indenture or the Securities for the purpose of adding any provisions to or
changing in any manner, or eliminating any other provisions of this Indenture or
modifying in any manner the rights with respect to the Securities. 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 Holders.
Notwithstanding anything to the contrary in the foregoing provisions of
this Section 9.02, without the consent of each Holder and Investor
Certificateholder 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 any Security;
(4) alter the 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 or
interest on any Security which has not been cured as provided in Section 6.02;
(6) impair the right of Holders to institute suit for the
enforcement of any payment of the principal of or interest on the Securities on
or after the respective due dates therefor (after the expiration of any
applicable cure period);
(7) make any changes in Section 6.02, 6.08 or this second
paragraph of Section 9.02;
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(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;
(9) make any change to or modify the priority between the
Holders of the Securities and any other creditors of the Company; or
(10) provide for uncertificated Securities in addition to
certificated Securities.
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, supplement or waiver 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
Officer's 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 Officer's 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, 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.
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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 Officer's Certificate and an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article IX 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 Officer's 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.
ARTICLE X.
MEETINGS OF AND ACTIONS BY HOLDERS.
SECTION 10.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article X 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
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hereunder and its consequences, or to take any other action authorized to be
taken by Holders pursuant to any of the provisions of Article VI;
(b) to remove the Trustee or appoint a successor Trustee pursuant to the
provisions of Article VII;
(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 Holders to take any action
specified in Section 10.01 hereof, to be held at such time and at such place in
New York, New York or elsewhere as the Trustee shall determine. Notice of every
meeting of Holders, 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 Holders 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 Securities then outstanding, shall have
requested the Trustee to call a meeting of Holders 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 New York City 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 Holders, 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 Holders shall be the Persons entitled to vote at such
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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 Holders,
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 Holders as provided in Section 10.03, in which case the Company or
the Holders 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 Holder 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 Holders. At any meeting of Holders, 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 Holders duly 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.
SECTION 10.06. VOTING AT THE MEETING AND RECORD TO BE KEPT.
The vote upon any resolution submitted to any meeting of Holders 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
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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 Holders 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 HOLDERS MAY NOT BE HINDERED
OR DELAYED BY CALL OF MEETING.
Nothing contained in this Article X shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders 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 Holders under any of the provisions of this Indenture or of
the Securities.
SECTION 10.08. EVIDENCE OF ACTION TAKEN BY HOLDERS.
(a) In addition to the foregoing provisions of this Article X, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing, or
by combination of such instrument or instruments and the record of a meeting of
Holders duly called and held in accordance with this Article X. 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
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Company may, at its option, by or pursuant to an Officer's 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 Holder 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 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.
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ARTICLE XI.
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
requested, addressed as follows:
if to the Company:
Toyota Motor Credit Corporation
19001 South Western Avenue
Torrance, California 90501
Telecopier: (310) 787-6194
Attention: Treasury Department
if to the Trustee:
U. S. Bank National Association
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
Telecopier: (312) 228-9401
Attention: TMCC Demand Notes
The Company or the Trustee by written 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 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 Holder 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
Holders, it shall simultaneously mail a copy to the Trustee.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
34
<PAGE>
SECTION 11.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders 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 Officer's 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);
(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; and
(3) in the case of conditions precedent compliance with which is
subject to verification by accountants, the Company shall comply with Section
314(c)(3) of the Trust Indenture Act of 1939 ("TIA").
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each Officer's 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;
(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 Officer's Certificate or certificates of public officials.
At the request of the Trustee, any Officer's Certificate or Opinion of
Counsel shall address any particular condition precedent to such action.
35
<PAGE>
SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 11.07. LEGAL HOLIDAYS.
If a payment date is not a Business Day at a particular place where the
principal of or interest on the Securities is payable, payment may be made on
the next succeeding day that is a Business Day 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, Affiliate 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 Holder 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.
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
36
<PAGE>
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 and Table of Contents 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 as of the date first written above.
TOYOTA MOTOR CREDIT CORPORATION
By:
------------------------------------------
Name: George E. Borst
Title: Senior Vice President and General
Manager
U.S. Bank National Association,
as Trustee
By:
------------------------------------------
Name: Steven E. Charles
Title: Vice President
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On December ___,1998, before me, _______________________________, Notary
Public, personally appeared George E. Borst, 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
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On December ___, 1998, 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
<PAGE>
ANNEX I
TO
INDENTURE
DATED AS OF DECEMBER 1, 1998
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. Capitalized terms used in the
Indenture and the Securities not otherwise defined shall have the respective
meanings assigned thereto in the Annex of Definitions attached to the Amended
and Restated Trust and Servicing Agreement dated as of October 1, 1996 among
Toyota Motor Credit Corporation, TMTT, Inc. and (for certain limited purposes
only) First Bank National Association or in the Supplemental Annex of
Definitions attached to the 1998-C SUBI Supplement to the Amended and
Restated Trust and Servicing Agreement dated as of December 1, 1998, among
TMTT, Inc.(for certain limited purposes only), U.S. National Bank
Association, as Trust Agent, and U.S. Bank National Association, as 1998-C
Securitization Trustee. In the event of any conflict between a definition
set forth both herein and in the Annex of Definitions or Annex of
Supplemental Definitions, the definition set forth herein shall prevail.
"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. For purposes of this Indenture, the 1998-C
Securitization Trust (and the 1998-C Securitization Trustee on behalf of the
1998-C Securitization Trust) shall not be considered to be "Affiliates" of
the Company.
"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 generally or in any particular
respect to exercise the power of the board of directors of the Company.
"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.
I-1
<PAGE>
"Commercial Paper Rate" means the Money Market Yield on the
Calculation Date for commercial paper maturing in one month as such rate
appears at 11:00 a.m. New York City time on the Calculation Date on page 133
of the Dow Jones Telerate Service (or such other page as may replace such
page on that service or such other service or services as may succeed such
service) which shows information for such rate as of the prior business day
under the caption "Daily Commercial Paper Rates (Non financial) from the
Federal Reserve"(or similar heading of like import). If by 3:00 p.m., New
York City time, on the related Calculation Date such rate is not yet
available, then the Commercial Paper Rate will be the Money Market Yield of
the arithmetic mean of the offered rates at approximately 11:00 a.m., New
York City time, on such date of three leading dealers of commercial paper in
The City of New York for commercial paper having a maturity date of one month
placed for an industrial issuer whose bond rating is "AA", or the equivalent,
from a nationally recognized securities rating agency; PROVIDED, HOWEVER,
that if such dealers are not quoting as mentioned in this sentence, the
Commercial Paper Rate for such date shall be the Commercial Paper Rate as in
effect as of the immediately preceding Calculation Date. For purposes of
these definitions, "Calculation Date" shall mean the Business Day preceding
each of the original dates of investment in the Security (each of which is a
Monthly Allocation Date), and each Monthly Allocation Date thereafter, and
"Money Market Yield" shall mean a yield (expressed as a percentage rounded
upwards to the nearest one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
Money Market Yield = (D x 360/360-{D x M}) x 100
where "D" refers to the applicable per annum rate for commercial paper rate
quoted on a bank discount basis and expressed as a decimal, and "M" refers to
the actual number of days in the interest period for which interest is being
calculated. Such Commercial Paper Rate shall be calculated on each
Calculation Date by the Trustee.
"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.
"Corporate Trust Office" means an 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
111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, or at any other
such address as the Trustee may designate from time to time by notice to the
Holders.
"Date of Investment" means each Monthly Allocation Date on
which an amount is invested in the TMCC Demand Notes.
"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.
I-2
<PAGE>
"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.
"Holder" with respect to the TMCC Demand Notes, means a Person
in possession of a TMCC Demand Note, or a Person deemed an owner thereof
pursuant to Section 2.13 of the Indenture.
"Indenture" means the Indenture dated as of December 1, 1998
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" is any date on which interest is
payable as set forth in the Security.
"Maturity", with respect to any Security, means the date on
which the principal (and the accrued interest thereon to but excluding the
date on which such principal is paid) of such Security or an installment of
principal (and the accrued interest thereon to the date on which such
principal is paid) becomes due and payable as provided in or pursuant to the
Indenture, whether (i) at the Stated Maturity Date thereof, (ii) on the date
specified in a demand (as evidenced by the delivery to the Trustee of a
demand in the form of Exhibit B to the Indenture) for the payment of 100% of
the outstanding principal amount of the TMCC Demand Notes by any Holder
following (x) the occurrence of a Swap Termination or (y) in connection with
a reduction of the rating of the Company's short-term debt to a rating less
than "A-1+" by Standard & Poor's or "P-1" by Moody's or a downgrade of the
Company's long-term debt to a rating less than "AA" by Standard & Poor's or
"Aa3" by Moody's in the circumstances provided for in Section 4.01 of the
Indenture or (iii) upon declaration of acceleration upon the occurrence of an
Event of Default hereunder. A demand duly delivered to the Trustee in
accordance with clause (ii) above will cause the entire principal amount (and
the accrued interest thereon to but excluding the date on which such
principal is paid) of the outstanding Securities to become due and payable on
the date specified in such demand. A Maturity pursuant to clause (i) or (ii)
of this definition, in and of itself, shall not be an Event of Default or
Default hereunder.
"Officer" means the President or Vice President, the Chief
Financial Officer, the Chief Accounting Officer, the Treasurer, the
Controller, Secretary or Assistant Secretary of the Company.
"Officer's Certificate" means a certificate signed by any
Officer of the Company, and otherwise complying with the applicable
requirements of Sections 11.04 and 11.05 of the Indenture.
I-3
<PAGE>
"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 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 the day immediately preceding the related
Certificate Payment Date (whether or not a Business Day).
"Registrar" has the meaning specified in Section 4.02.
"Required Rate" with respect to any Monthly Allocation Date
and the principal amount outstanding as set forth on any of the Schedules
attached to a Security, means a per annum rate of interest which shall be
calculated as follows: first, calculate the amount of interest that would
have accrued on (i) the Interest Demand Note at the Commercial Paper Rate, as
such rate shall be adjusted monthly on the second Business Day preceding each
Monthly Allocation Date; (ii) on any Security representing the investment of
any amount allocated in reduction of the Adjusted Class A-1 Certificate
Balance, at 5.35% per annum; (iii) on any Security representing the
investment of any amount allocated in reduction of the Adjusted Class A-2
Certificate Balance, at 5.45% per annum; (iv) on any Security representing
the investment of any amount allocated in reduction of the Adjusted Class A-3
Certificate Balance, at 5.50% per annum; or (v) on any Security representing
the investment of any amount allocated in reduction of the Adjusted Class B
Certificate Balance, at 6.55% per annum, in each case for the number of days
in each Interest Period (as defined in the 1998-C Securitization Trust
Agreement) for such investment for such Class on the basis of months assumed
to consist of 30 days and years assumed to consist of 360 days, and, second,
express the amount of interest so accrued as a per annum rate on the amount
invested in such Security for the period from the date of investment in such
Security to but excluding the Maturity of such Security, on the basis of
months assumed to consist of 30 days and years assumed to consist of 360 days.
"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.
I-4
<PAGE>
"Stated Maturity Date" when used with respect to the principal
on the Securities means the date specified on the Schedule attached to the
certificate representing such Security as the fixed date on which the
principal thereof is due and payable, which date shall be (i) with respect to
the Interest Demand Note, the Business Day preceding the Certificate Payment
Date that immediately follows the related Date of Investment; and (ii) with
respect to any Security representing the investment of any amount allocated
in reduction of the Adjusted Class A-1 Certificate Balance, the Adjusted
Class A-2 Certificate Balance, Adjusted Class A-3 Certificate Balance or the
Adjusted Class B Certificate Balance, the Business Day preceding the Class
A-1 Targeted Maturity Date, the Class A-2 Targeted Maturity Date, the Class
A-3 Targeted Maturity Date or the Class B Targeted Maturity Date, as
applicable.
"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 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 such officer's knowledge
and familiarity with the particular subject.
"United States" and "U.S." each mean the United States of
America.
"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-5
<PAGE>
EXHIBIT A
THE TRUSTEE WILL NOT AUTHENTICATE OR DELIVER THIS SECURITY IN CONNECTION WITH
ANY REGISTRATION OF TRANSFER TO ANY PERSON UNLESS THE TRUSTEE HAS RECEIVED A
CERTIFICATION FROM THE TRANSFERRING HOLDER TO THE EFFECT THAT (i) IT IS NO
LONGER THE SECURITIZATION TRUSTEE OF THE 1998-C SECURITIZATION TRUST AND THE
PROPOSED TRANSFEREE IS ITS SUCCESSOR IN SUCH CAPACITY, OR (ii) A SWAP
TERMINATION HAS OCCURRED AND SUCH PROPOSED TRANSFER IS MADE IN CONTEMPLATION OF
A LIQUIDATION OF THE TRUST ASSETS.
FORM OF FACE OF SECURITY
TOYOTA MOTOR CREDIT CORPORATION
TMCC Demand Notes
For amounts allocated as Class A-1 Notional Interest Accrual Amounts, Class A-1
Interest Carryover Shortfall Amounts, Class A-2 Notional Interest Accrual
Amounts, Class A-2 Interest Carryover Shortfall Amounts, Class A-3 Notional
Interest Accrual Amounts, Class A-3 Interest Carryover Shortfall Amounts, Class
B Monthly Interest Accrual Amounts and/or Class B Interest Carryover Shortfalls
For amounts allocated to make applications in reduction of the Adjusted Class
A-1 Certificate Balance
For amounts allocated to make applications in reduction of the Adjusted Class
A-2 Certificate Balance
For amounts allocated to make applications in reduction of the Adjusted Class
A-3 Certificate Balance
For amounts allocated to make applications in reduction of the Adjusted Class B
Certificate Balance
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 U.S. Bank
National Association, in its capacity as 1998-C Securitization Trustee under the
1998-C Securitization Trust Agreement dated as of December 1, 1998, 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
A-1
<PAGE>
amount of principal, as set forth on the Schedule from time to time, from the
date such principal amount is originally issued and outstanding to the
Business Day next preceding the relevant Certificate Payment Date immediately
following the related Date of Investment (or from the most recent Interest
Payment Date to which interest has been paid or duly provided for to the
Business Day next preceding the relevant Certificate Payment Date immediately
following such Interest Payment Date)(1), (each an "Interest Payment Date"),
at the then applicable Required Rate as such rate shall be adjusted on each
Calculation Date(2), to but excluding the date on which 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 day (whether or not a 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, at the
election of the Company, (i) 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 (ii) may be paid in any other lawful manner, all as more fully
provided in the Indenture. Payment of the principal and interest on this
Security will be made at the office or agency of the Company maintained for
that purpose in Chicago, Illinois 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.
The date of Maturity with respect to the principal (and the accrued
interest thereon to, but excluding, the date on which such principal is paid)
amount evidenced by this Security shall be, the earlier of (x) the Targeted
Maturity Date for the Class A-1/A-2/A-3/B Certificates(3 )the Certificate
Payment Date immediately following the related Date of Investment(4) (y) the
date
- -----------------------
(1) Insert for TMCC Demand Notes issued in connection with the
investment of amounts allocated in reduction of the Adjusted Class A-1
Certificate Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class
A-3 Certificate Balance or Adjusted Class B Certificate Balance.
(2) Insert for TMCC Demand Notes issued in connection with the
investment of any Class A-1 Monthly Interest Accrual Amount, Class A-1
Interest Carryover Shortfall, Class A-2 Monthly Interest Accrual Amount,
Class A-2 Interest Carryover Shortfall, Class A-3 Monthly Interest Accrual
Amount, Class A-3 Interest Carryover Shortfall, Class B Monthly Interest
Accrual Amount or Class B Interest Carryover Shortfall.
(3) Insert for TMCC Demand Notes issued in connection with the
investment of amounts allocated in reduction of the Adjusted Class A-1
Certificate Balance, Adjusted Class A-2 Certificate Balance, Adjusted Class
A-3 Certificate Balance or Adjusted Class B Certificate Balance.
(4) Insert for TMCC Demand Notes issued in connection with the
investment of any
A-2
<PAGE>
specified in a demand (as evidenced by the delivery to the Trustee of a
demand in the form of Exhibit B to the Indenture) for the payment of 100% of
the outstanding principal amount of the TMCC Demand Notes by any Holder
following the occurrence of a Swap Termination or (z) the date upon which the
outstanding Securities become due and payable due to the declaration of
acceleration upon the occurrence of an Event of Default under the terms of
the Indenture.
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.
- -------------------------------------------------------------------------------
Class A-1 Monthly Interest Accrual Amount, Class A-1 Interest Carryover
Shortfall, Class A-2 Monthly Interest Accrual Amount, Class A-2 Interest
Carryover Shortfall, Class A-3 Monthly Interest Accrual Amount, Class A-3
Interest Carryover Shortfall, Class B Monthly Interest Accrual Amount or
Class B Interest Carryover Shortfall.,
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _____, 1998 TOYOTA MOTOR CREDIT CORPORATION
By:
-------------------------------
Name: George. E. Borst
Title: Senior Vice President
and General Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Indenture.
- --------------------------------------------------------------------------------
U.S. Bank National Association, U.S. Bank National Association,
- --------------------------------------------------------------------------------
as Trustee as Trustee
- --------------------------------------------------------------------------------
OR
- --------------------------------------------------------------------------------
By: By:
----------------------------- -------------------------
Authorized Signatory as Authenticating Agent
- --------------------------------------------------------------------------------
By:
-------------------------
Authorized Signatory
- --------------------------------------------------------------------------------
<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 ______________, 1998 (as the same may be amended or
supplemented from time to time, the "Indenture") between the Company and U.S.
Bank National Association, as Trustee (the "Trustee," which term includes any
successor trustee under the Indenture).
The Securities are unsecured 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 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: Toyota
Motor Credit Corporation, Attention: Treasury Department.
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.
The Trustee has been appointed to act as initial Paying Agent
and Registrar for the Securities in Chicago, Illinois. 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.
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.
A-5
<PAGE>
5. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are issuable only in registered form, without
coupons, in denominations of at least U.S. $0.01 and integral multiples of
$0.01 in excess thereof. The Securities may be transferred only in
accordance with the provisions of Section 2.06(a) of the Indenture. A Holder
may register the exchange of any Security only in accordance with the
provisions of Section 2.06 of the Indenture. 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 Chicago, Illinois, 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 held by them for the payment of the
principal of 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 must
look to the Company for such payment unless an applicable abandoned property
law designates another Person.
8. DISCHARGE PRIOR TO MATURITY.
If the Company irrevocably deposits with the Trustee U.S.
Legal Tender sufficient to pay the principal of and interest on the
Securities to 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, excluding its obligation to pay the principal of 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 in aggregate principal
amount of the Securities then outstanding, and compliance with any provision
or obligation under the Indenture or the Securities may be waived with the
consent of the Holders of a majority 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.
A-6
<PAGE>
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 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 which has not been cured as
provided in Section 6.02.
11. RESERVED.
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 or has satisfied the provisions set forth in the last paragraph of
Section 2.02 of the Indenture.
14. 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-7
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered Holder hereby
sell(s), assign(s) and transfer(s) unto
(Insert Taxpayer Identification No.) _________________
- --------------------
- --------------------
(Please print or typewrite name and address including postal 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.
A-8
<PAGE>
SCHEDULE TO
TMCC DEMAND NOTE
NUMBER _________
MAXIMUM AMOUNT $__________
<TABLE>
<CAPTION>
AMOUNTS INVESTED AMOUNTS PAID
----------------------------------------- ---------------------------------------------------
Date of
Investment Aggregate Current Stated Principal
or Amount of Amount Required Maturity Principal Interest Balance Initial of
Payment Investment Invested Rate Date Amount Amount Outstanding Trustee
------- ---------- -------- ---- ---- ------ ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE>
EXHIBIT B
FORM OF DEMAND
The undersigned hereby certifies to U.S. Bank National
Association, in its capacity as trustee (the "Trustee") under the Indenture
dated as of December 1, 1998 (the "Indenture") between the Trustee and Toyota
Motor Credit Corporation, that it is the holder of all or a portion of the
Securities issued and outstanding under the Indenture, and that pursuant to
the terms of the Indenture, it is demanding the payment in full of the
principal (plus accrued interest thereon to the date specified below) of the
outstanding Securities in connection with:
/ / the occurrence of a Swap Termination (which I hereby certify
is effective as of __________________________)
/ / the downgrade of the Company's short-term debt to a rating
less than "A-1+" by Standard & Poor's or "P-1" by Moody's or a downgrade of
the Company's long-term debt to a rating less than "AA" by Standard & Poor's
or "Aa3" by Moody's (and I hereby certify that I have obtained the advice of
_____________________________ pursuant to Section 4.01 of the Indenture and
have received the advice required by such Section concerning ratings
downgrades from _________________________ of Standard & Poor's and from
______________________ of Moody's Investor's Service
The date on which such principal and accrued interest is to be
paid is: ____________________________
Dated:
By:
----------------------------------
<PAGE>
(Multicurrency--Cross Border)
ISDA-Registered Trademark-
INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.
MASTER AGREEMENT
dated as of ____________________
______________________________ and ______________________________________
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other
confirming evidence (each a "Confirmation") exchanged between the parties
confirming those Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the
Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS.
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than
by payment), such delivery will be made for receipt on the due date in
the manner customary for the relevant obligation unless otherwise
specified in the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified in
this Agreement.
Copyright -C- 1992 by International Swap Dealers Association, Inc.
<PAGE>
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to
which such change applies unless such other party gives timely notice of a
reasonable objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise have
been payable by the other party, replaced by an obligation upon the party by
whom the larger aggregate amount would have been payable to pay to the other
party the excess of the larger aggregate amount over the smaller aggregate
amount.
The parties may elect in respect of two or more Transactions that a net
amount will be determined in respect of all amounts payable on the same date
in the same currency in respect of such Transactions, regardless of whether
such amounts are payable in respect of the same Transaction. The election may
be made in the Schedule or a Confirmation by specifying that subparagraph
(ii) above will not apply to the Transactions identified as being subject to
the election, together with the starting date (in which case subparagraph
(ii) above will not, or will cease to, apply to such Transactions from such
date). This election may be made separately for different groups of
Transactions and will apply separately to each pairing of Offices through
which the parties make and receive payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect.
If a party is so required to deduct or withhold, then that party ("X")
will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice that
such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full amount Y would
have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to
the extent that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section
3(f) to be accurate and true unless such failure would not have
occurred but for (I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the
date on which a Transaction is entered into (regardless of
whether such action is taken or brought with respect to a party
to this Agreement) or (II) a Change in Tax Law.
2
<PAGE>
(ii) LIABILITY. If:--
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to make any
deduction or withholding in respect of which X would not be required
to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount of
such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section 6(c),
be required to pay interest (before as well as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date for payment
to (but excluding) the date of actual payment, at the Default Rate. Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation
of an Early Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be settled by
delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be
deemed to be repeated by each party on each date on which a Transaction is
entered into and, in the case of the representations in Section 3(f), at all
times until the termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorise such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision
of its constitutional documents, any order or judgment of any court or
other agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganisation,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
3
<PAGE>
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations under this
Agreement or any Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator that is likely to affect the legality, validity
or enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material
respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may
have any obligation under this Agreement or under any Credit Support Document
to which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and completed
in a manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or,
if none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning
of such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated,
4
<PAGE>
organised, managed and controlled, or considered to have its seat, or in
which a branch or office through which it is acting for the purpose of this
Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other
party against any Stamp Tax levied or imposed upon the other party or in
respect of the other party's execution or performance of this Agreement by any
such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section 2(a)(i)
or 2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with
or performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party in
this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or
deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
5
<PAGE>
described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule)
which has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support Provider or
such Specified Entity (individually or collectively) in making one or
more payments on the due date thereof in an aggregate amount of not less
than the applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice requirement
or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding
or petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for its
winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect to
any of the events specified in clauses (1) to (7)(inclusive); or
(9) takes any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality
if the event is specified in (i) below, a Tax Event if the event is specified
in (ii) below or a Tax Event Upon Merger if the event is specified in (iii)
below, and, if specified to be applicable, a Credit Event
6
<PAGE>
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4)
(other than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
case as a result of a party consolidating or amalgamating with, or
merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
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6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and
is then continuing, the other party (the "Non-defaulting Party") may, by not
more than 20 days notice to the Defaulting Party specifying the relevant
Event of Default, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all outstanding
Transactions. If, however, "Automatic Early Termination" is specified in the
Schedule as applying to a party, then an Early Termination Date in respect of
all outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section
5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as
of the time immediately preceding the institution of the relevant proceeding
or the presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to
the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to its right
to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or
a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. IF:--
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect
to all Affected Transactions within 30 days after an Affected Party
gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a Tax
Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the case
of a Credit Event Upon Merger or an Additional Termination Event if
there is only one Affected Party may, by not more than 20 days notice to
the other party and provided that the relevant Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the
date so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions
of this Agreement. The amount, if any, payable in respect of an
Early Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e)) and
(2) giving details of the relevant account to which any amount
payable to it is to be paid. In the absence of written confirmation
from the source of a quotation obtained in determining a Market
Quotation, the records of the party obtaining such quotation will be
conclusive evidence of the existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on
the day that notice of the amount payable is effective (in the case
of an Early Termination Date which is designated or occurs as a
result of an Event of Default) and on the day which is two Local
Business Days after the day on which notice of the amount payable
is effective (in the case of an Early Termination Date which is
designated as a result of a Termination Event). Such amount will be
paid together with (to the extent permitted under applicable law)
interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early
Termination Date to (but excluding) the date such amount is paid,
at the Applicable Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date
occurs, the following provisions shall apply based on the parties'
election in the Schedule of a payment measure, either "Market Quotation"
or "Loss", and a payment method, either the "First Method" or the
"Second Method". If the parties fail to designate a payment measure or
payment method in the Schedule, it will be deemed that "Market
Quotation" or the "Second Method", as the case may be, shall apply. The
amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from
an Event of Default;--
(1) FIRST METHOD AND MARKET QUOTATION. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party over (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party.
(2) FIRST METHOD AND LOSS. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if
a positive number, the Non-defaulting Party's Loss in respect
of this Agreement.
(3) SECOND METHOD AND MARKET QUOTATION. If the Second Method
and Market Quotation apply, an amount will be payable equal to
(A) the sum of the Settlement Amount (determined by the
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Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if
it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(4) SECOND METHOD AND LOSS. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount
to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results
from a Termination Event:--
(1) ONE AFFECTED PARTY. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is
not the Affected Party, respectively, and, if Loss applies and
fewer than all the Transactions are being terminated, Loss
shall be calculated in respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the Terminated
Transactions, and an amount will be payable equal to (I)
the sum of (a) one-half of the difference between the
Settlement Amount of the party with the higher Settlement
Amount ("X") and the Settlement Amount of the party with
the lower Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to X less
(II) the Termination Currency Equivalent of the Unpaid
Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of
the party with the higher Loss ("X") and the Loss of the
party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of
that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination"
applies in respect of a party, the amount determined under this
Section 6(e) will be subject to such adjustments as are appropriate
and permitted by law to reflect any payments or deliveries made
by one party to the other under this Agreement (and retained by such
other party) during the period from the relevant Early Termination
Date to the date for payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a
reasonable pre-estimate of loss and not a penalty. Such amount is
payable for the loss of bargain and the loss of protection against
future risks and except as otherwise provided in this Agreement
neither party will be entitled to recover any additional damages
as a consequence of such losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will
be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the
amount in the Contractual Currency so received falls short of the amount in
the Contractual Currency payable in respect of this Agreement, the party
required to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in
the Contractual Currency so received exceeds the amount in the Contractual
Currency payable in respect of this Agreement, the party receiving the
payment will refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this
Agreement, (ii) for the payment of any amount relating to any early
termination in respect of this Agreement or (iii) in respect of a judgment or
order of another court for the payment of any amount described in (i) or (ii)
above, the party seeking recovery, after recovery in full of the aggregate
amount to which such party is entitled pursuant to the judgment or order,
will be entitled to receive immediately from the other party the amount of
any shortfall of the Contractual Currency received by such party as a
consequence of sums paid in such other currency and will refund promptly to
the other party any excess of the Contractual Currency received by such party
as a consequence of sums paid in such other currency if such shortfall or
such excess arises or results from any variation between the rate of exchange
at which the Contractual Currency is converted into the currency of the
judgment or order for the purposes of such judgment or order and the rate of
exchange at which such party is able, acting in a reasonable manner and in
good faith in converting the currency received into the Contractual Currency,
to purchase the Contractual Currency with the amount of the currency of the
judgment or order actually received by such party. The term "rate of
exchange" includes, without limitation, any premiums and costs of exchange
payable in connection with the purchase of or conversion into the Contractual
Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected by
judgment being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had
an actual exchange or purchase been made.
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9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and
supersedes all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced
by a facsimile transmission) and executed by each of the parties or confirmed
by an exchange of telexes or electronic messages on an electronic messaging
system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and 6
(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange
of electronic messages on an electronic messaging system, which in each
case will be sufficient for all purposes to evidence a binding
supplement to this Agreement. The parties will specify therein or
through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege
will not be presumed to preclude any subsequent or further exercise, of that
right, power or privilege or the exercise of any other right, power or
privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of
booking office or jurisdiction of incorporation or organisation of such
party, the obligations of such party are the same as if it had entered into
the Transaction through its head or home office. This representation will be
deemed to be repeated by such party on each date on which a Transaction is
entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any Credit
Support Document
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to which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including, but not limited to, costs of
collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered
(or attempted) or received, as applicable, after the close of business on a
Local Business Day, in which case that communication shall be deemed given
and effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and
on its behalf, service of process in any Proceedings. If for any
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reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute
process agent acceptable to the other party. The parties irrevocably
consent to service of process given in the manner provided for notices in
Section 12. Nothing in this Agreement will affect the right of either party
to serve process in any other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement of
any judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and irrevocably
agrees, to the extent permitted by applicable law, that it will not claim
any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b)
with respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party,
the Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified
as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
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"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed
in respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to
such recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of
such jurisdiction, or being or having been organised, present or engaged in a
trade or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding
a connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case
of tax matters, by the practice of any relevant governmental revenue
authority) and "LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) (a) in relation to any obligation
under Section 2(a)(i), in the place(s) specified in the relevant Confirmation
or, if not so specified, as otherwise agreed by the parties in writing or
determined pursuant to provisions contained, or incorporated by reference,
in this Agreement, (b) in relation to any other payment, in the place where
the relevant account is located and, if different, in the principal financial
centre, if any, of the currency of such payment, (c) in relation to any
notice or other communication, including notice contemplated under Section
5(a)(i), in the city specified in the address for notice provided by the
recipient and, in the case of a notice contemplated by Section 2(b), in the
place where the relevant new account is to be located and (d) in relation to
Section 5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any
gain resulting from any of them). Loss includes losses and costs (or gains)
in respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the
relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss
does not include a party's legal fees and out-of-pocket expenses referred to
under Section 11. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but need
not) determine its Loss by reference to quotations of relevant rates or
prices from one or more leading dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an
amount, if any, that would be paid to such party (expressed as a negative
number) or by such party (expressed as a positive number) in consideration of
an agreement between such party (taking into account any existing Credit
Support Document with respect to the obligations of such party) and the
quoting Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transaction or group of Terminated Transactions
that would, but for the occurrence of the relevant Early Termination Date,
have
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<PAGE>
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming
satisfaction of each applicable condition precedent) after that Early
Termination Date is to be included. The Replacement Transaction would be
subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the
extent reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable after the
relevant Early Termination Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by the party
obliged to make a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values. If
exactly three such quotations are provided, the Market Quotation will be the
quotation remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head
or home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seal, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an
amount under Section 6 is entitled or subject (whether arising under this
Agreement, another contract, applicable law or otherwise) that is exercised
by, or imposed on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
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<PAGE>
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety
or otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such
other party or any applicable Specified Entity of such other party) which is
a rate swap transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect to any of these
transactions), (b) any combination of these transactions and (c) any other
transaction identified as a Specified Transaction in this Agreement or the
relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto)
that is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation
or similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date
(a) if resulting from a Termination Event, all Affected Transactions and (b)
if resulting from an Event of Default, all Transactions (in either case) in
effect immediately before the effectiveness of the notice designating that
Early Termination Date (or, if "Automatic Early Termination" applies,
immediately before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or,
if the relevant Market Quotation or Loss (as the case may be), is determined
as of a later date, that later date, with the Termination Currency at the
rate equal to the spot exchange rate of the foreign exchange agent (selected
as provided below) for the purchase of such Other Currency with the
Termination Currency at or about 11:00 a.m. (in the city in which such
foreign exchange agent is located) on such date as would be customary for the
determination of such a rate for the purchase of such Other Currency for
value on the relevant Early Termination Date or that later date. The foreign
exchange agent will, if only one party is obliged to make a determination
under Section 6(e), be selected in good faith by that party and otherwise
will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable, a Credit Event Upon Merger or an
Additional Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date and (b) in respect of each Terminated Transaction, for each
obligation under Section 2(a)(i) which was (or would have been but for
Section 2(a)(iii)) required to be settled by delivery to such party on or
prior to such Early Termination Date and which has not been so settled as at
such Early Termination Date, an amount equal to the fair market
17
<PAGE>
value of that which was (or would have been) required to be delivered as of
the originally scheduled date for delivery, in each case together with (to
the extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding)
such Early Termination Date, at the Applicable Rate. Such Amounts of Interest
will be calculated on the basis of daily compounding and the actual number of
days elapsed. The fair market value of any obligation referred to in clause
(b) above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with affect from the date specified on the first page
of this document.
Toyota Motor Credit Corporation
- ------------------------------- -------------------------------
(Name of Party) (Name of Party)
By: By:
-------------------------------- ---------------------------
Name: Name:
Title: Title:
Date:
Date:
18
<PAGE>
SCHEDULE
TO THE
MASTER AGREEMENT
DATED AS OF DECEMBER [ ], 1998
BETWEEN
TOYOTA MOTOR CREDIT CORPORATION.
("PARTY A")
AND
TOYOTA AUTO LEASE TRUST 1998-C
("PARTY B")
Part 1. Termination Provisions.
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b)(iv), None
and in relation to Party B for the purpose of:
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b)(iv), None
(b) "SPECIFIED TRANSACTION" has the meaning specified in Section 14.
(c) The "BREACH OF AGREEMENT" provisions of Section 5(a)(ii) will not apply to
Party B.
The "CREDIT SUPPORT DEFAULT" provisions of Section 5(a)(iii) will not apply
to Party A or Party B.
The "MISREPRESENTATION" provisions of Section 5(a)(iv) will not apply to
Party B.
The "Default UNDER SPECIFIED TRANSACTION" provisions of Section 5(a)(v)
will not apply to Party A and will not apply to Party B.
The "CROSS DEFAULT" provisions of Section 5(a)(vi) will not apply to Party
A and will not apply to Party B.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a) will not apply
to Party A and will not apply to Party B; PROVIDED, HOWEVER, where an Event
of Default specified
<PAGE>
in Sections 5(a)(vii) (1), (3), (4), (5), (6) or, to the extent analogous
thereto, (8), is governed by a system of law which does not permit
termination to take place upon or after the occurrence of the relevant
Event of Default in accordance with the terms of this Agreement, then the
Automatic Early Termination provision of Section 6(a) will apply to
Party A and Party B.
If an Early Termination Date occurs under Section 6(a) as a result of
Automatic Early Termination, the Defaulting Party shall fully indemnify the
Non-defaulting Party on demand against all expense, loss, damage or
liability that the Non-defaulting Party may incur in respect of this
Agreement and each Transaction as a consequence of movements in interest,
currency, exchange or other relevant rates or prices or Market Quotations
between the Early Termination Date and the Local Business Day on which the
Non-defaulting Party first becomes aware that the Early Termination Date
has occurred under Section 6(a). The Non-defaulting Party may for this
purpose convert any expense, loss, damage or liability to the Termination
Currency.
(f) PAYMENTS ON EARLY TERMINATION. "Market Quotation" and "Second Method" will
apply for the purpose of Section 6(e) of this Agreement; PROVIDED, HOWEVER,
that in the case of an Event of Default as described under Section 5(a)(i)
or 5(a)(vii) with respect to Party A as the Defaulting Party, the related
Settlement Amount, if negative, will be deemed to be zero.
(g) "TERMINATION CURRENCY" means United States Dollars.
(h) The "TAX EVENT" provisions of Section 5(b)(ii) are hereby amended by (i)
inserting "(I)" after the caption "Tax Event." at the beginning thereof and
(ii) inserting "and (II) at least 51% by Voting Interests of the
Certificateholders (as defined in the Trust Agreement) directs the Trustee
to terminate this Agreement and to liquidate the assets of Party B" at the
end thereof before the semicolon.
(i) The "TAX EVENT UPON MERGER" provisions of Section 5(b)(iii) are hereby
amended by (i) inserting "(I)" after the caption "Tax Event Upon Merger."
at the beginning thereof and (ii) inserting "and (II) at least 51% by
Voting Interests of the Certificateholders directs the Trustee to terminate
this Agreement and to liquidate the assets of Party B" at the end thereof
before the semicolon.
(j) ADDITIONAL TERMINATION EVENT will apply. Any of the following shall
constitute an Additional Termination Event:
(i) INSOLVENCY OF TRANSFEROR. 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
2
<PAGE>
make any assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due;
or 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 (in which event
Party B shall be the Affected Party).
(ii) INVESTMENT COMPANY. Party B or the Transferor becomes subject
to registration as an "investment company" for purposes of the
Investment Company Act of 1940, as amended (in which event Party B
shall be the Affected Party).
Part 2. Tax Representations
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this Agreement,
each of Party A and Party B makes the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction of the agreement of the other party
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
satisfaction of the agreement of the other party contained in Section 4(d)
of this Agreement, PROVIDED that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other party
does not deliver a form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below:
(A) Party A makes the following representation: It is a corporation
duly organized and incorporated under the laws of the State of
California.
(B) Party B makes the following representation: It is a trust
organized or formed under the laws of the State of California.
Part 3. Agreement to Deliver Documents
3
<PAGE>
For the purpose of Section 4(a) of this Agreement, each party agrees to deliver
the following documents as applicable:
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO DATE BY WHICH TO BE
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DELIVERED
-------- ------------------------- ---------
Party A and Party B Any document required or Promptly upon the
reasonably requested to allow earlier of (i)
the other party to make reasonable demand by the
payments under this Agreement other party and (ii)
without any deduction or learning that the form
withholding for or on account or document is required
of any Tax or with such
deduction or withholding at a
reduced rate
(b) Other documents to be delivered are:
COVERED BY
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO BE SECTION 3(d)
DELIVER DOCUMENT CERTIFICATE DELIVERED REPRESENTATION
---------------- ----------- --------- --------------
Party A and Party B Certificate or other At or promptly Yes
documents evidencing following the
the authority of the execution of this
party entering into Agreement, and, if
this Agreement and a Confirmation so
the persons acting requires it on or
on behalf of such before the date set
party forth therein
Party A and Party B Legal Opinions in At or promptly No
the form reasonably following the
acceptable to the execution of this
other party Agreement
Part 4. Miscellaneous
(a) ADDRESSES FOR NOTICES: For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: 19001 South Western Avenue
Torrance, California 90509
Attention: Corporate Treasury Manager
Telex No.: 3719707
Facsimile No.: 310-787-6194
Answerback: TMSUSA Z
(For all purposes)
4
<PAGE>
Address for notices or communications to Party B:
Address: Toyota Auto Lease Trust 1998-C
c/o [Trustee]
[Address]
Attention: Structured Finance Group /[Name]
Fax: (212)250-6439
(For all purposes)
(b) PROCESS AGENT. For the purpose of Section 13(c):
Party A appoints as its Process Agent: Not Applicable
Party B appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. Party A will be the Calculation Agent. All
calculations by the Calculation Agent (the "CA") shall be made in good
faith and through the exercise of the CA's commercially reasonable
judgment.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:
Party A: Not Applicable
Party B: Not Applicable
(g) CREDIT SUPPORT PROVIDER.
Party A: Not Applicable
Party B: Not Applicable
(h) GOVERNING LAW. This Agreement and each Confirmation will be governed by
and construed in accordance with the laws of the State of New York, without
reference to its choice of law doctrine.
(i) WAIVER OF JURY TRIAL. Each party waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of
any proceedings relating to this Agreement.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
5
<PAGE>
Part 5. Other Provisions
(a) GROSS-UP, LIABILITY. Neither Party A nor Party B will in any circumstance
be required to pay additional amounts in respect of any Indemnifiable Tax
or be under any obligation to pay to the other any amount in respect of any
liability of such other for or on account of any Tax and, accordingly,
Section 2(d)(i)(4) and Section 2(d)(ii) of this Agreement shall not apply.
(b) EARLY TERMINATION.
(i) Section 6(b)(ii) is hereby amended to read in its entirety as follows:
TRANSFER TO AVOID TERMINATION EVENT.
(1) If an Illegality under Section 5(b)(i)(1) or a Tax Event or a Tax
Event Upon Merger occurs, if Party A is the Affected Party it will, and, if
Party B is the Affected Party it may request Party A to, as a condition to
its right, if any, to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require Party A to
incur a loss, excluding immaterial, incidental expenses) to transfer within
20 days after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected Transactions to
another of its Offices so that such Termination Event ceases to exist.
If Party A is not able to make such a transfer it will give notice to the
other party to that effect within such 20 day period.
Any such transfer under this Section 6(b)(ii)(1) will be subject to and
conditional upon the prior written consent of the other party, which
consent will not be withheld if such other party's policies in effect at
such time would permit it to enter into transactions with the transferee on
the terms proposed.
(2) No transfer or substitution pursuant to this Section 6(b)(ii) shall
occur unless and until the Trustee has received the written affirmation of
each of Standard & Poor's and Moody's that such transfer or substitution
shall not adversely affect the then-current ratings of the Certificates (as
defined in the Trust Agreement).
(c) Section 6(b)(iii) shall not apply.
(d) Section 6(b)(iv) is hereby amended by (i) deleting (A) the words "a Credit
Event Upon Merger" and (B) the words "or a Tax Event Upon Merger occurs and
the Burdened Party is not the Affected Party," from clause (2) of said
Section 6(b)(iv) and (ii) deleting the words from and including "either
party in the case of" to the end of Section 6(b)(iv) and adding the words
"either party in the case of an Illegality or an Additional Termination
Event, or Party B in the case of a Tax Event or a Tax Event upon Merger
may, by not more than 20 days notice to the other party and provided that
the relevant Termination Event is then continuing, designate a day not
earlier than the day such notice is effective as an Early Termination Date
in respect of all Affected Transactions." at the end of said Section
6(b)(iv).
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<PAGE>
(e) Section 7 is hereby amended to read in its entirety as follows:
Except as stated under Section 6(b)(ii) and as provided in this Section 7,
and except for the assignment by way of security in favor of the Trustee
under the Trust Agreement, neither Party A nor Party B is permitted to
assign, novate or transfer as a whole or in part any of its rights,
obligations or interests under this Agreement. Party A may transfer this
Agreement to another party (the "Transferee") on ten Business Days' prior
written notice, PROVIDED that (i) such notice shall be accompanied by a
guarantee of Party A of such Transferee's obligations in form and substance
reasonably satisfactory to the Trustee; (ii) Party A delivers an opinion of
independent counsel of recognized standing in form and substance reasonably
satisfactory to the Trustee confirming that as of the date of such transfer
the Transferee will not, as a result of such transfer, be required to
withhold or deduct on account of tax under this Agreement; (iii) a
Termination Event or Event of Default does not occur under this Agreement
as a result of such transfer and (iv) the Trustee has received written
affirmation of Standard & Poor's and Moody's (or their successors) that
such transfer shall not adversely affect the then-current ratings of the
Certificates. In addition, in the event the long-term debt rating of Party
A is reduced to a level below "Aa2" by Moody's (or its successor) or "AA-"
by Standard & Poor's (or its successor) or the short-term debt rating of
Party A is reduced to a level below P-1 by Moody's or A-1+ by Standard
Poor's, Party A may assign this Agreement to another party and thereby be
released from its obligations under this Agreement, PROVIDED that (i) such
Transferee, by a written instrument, accepts all of the obligations of
Party A under this Agreement to the reasonable satisfaction of the Trustee,
(ii) Party A delivers an opinion of independent counsel of recognized
standing in form and substance reasonably satisfactory to the Trustee
confirming that as of the date of such transfer the Transferee will not, as
a result of such transfer, be required to withhold or deduct on account of
tax under this Agreement, (iii) a Termination Event or Event of Default
does not occur under this Agreement as a result of such transfer and (iv)
the ratings assigned to the Certificates after such assignment and release
will be at least equal to the ratings assigned by Moody's and Standard &
Poor's (or their successors) to the Certificates at the time of such
reduction of the rating of Party A's long-term debt. Any cost of such
transfer will be borne by Party A or such Transferee and not by Party B.
(f) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by adding at the
end thereof the following Subparagraphs:
(g) It is entering into this Agreement and any other documentation
relating to this Agreement as principal (and not as agent or in any other
capacity, fiduciary or otherwise).
(h) It is an "eligible swap participant" as defined in 17 C.F.R. Section
35.1(b)(2) and has entered into this Agreement and each Transaction in
connection with its line of business including financial intermediation
services or the financing of its business.
(i) It hereby acknowledges and agrees that this Agreement and each
Transaction hereunder or thereunder is intended to be a "swap agreement" as
that term is defined in the U.S. Bankruptcy Code (as amended from time to
time) and that the rights granted to each party under Section 6 include a
contractual right to terminate a "swap agreement"
7
<PAGE>
and to offset and net out termination values and payment amounts in
connection therewith.
(g) AMENDMENTS. Section 9(b) of this Agreement is hereby amended to read:
AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing and executed by each of the
parties; PROVIDED, HOWEVER, that all such amendments, modifications or
waivers shall require the written affirmation of each of Standard & Poor's
and Moody's that such amendments, modifications or waivers shall not
adversely affect the then-current ratings of the Certificates.
(h) CONFIRMATIONS. Each Confirmation supplements, forms part of, and will be
read and construed as one with this Agreement.
(i) ADDITIONAL DEFINITIONS. Terms defined or referred to in the Trust
Agreement shall bear the same respective meanings herein. "Trust
Agreement" shall mean the 1998-C Securitization Trust Agreement, dated as
of November [ ], 1998, between Toyota Leasing, Inc. and [ ], as
trustee.
(j) INTEREST RATE AND CURRENCY EXCHANGES DEFINITIONS. Reference is hereby made
to the 1991 ISDA Definitions (the "Definitions"), published by the
International Swaps and Derivatives Association, Inc., which are hereby
incorporated by reference herein without regard to any revision or
subsequent edition thereof.
(k) Section 2(b) is hereby amended to read in its entirety as follows:
CHANGE OF ACCOUNT. Party A may change its account for receiving
payment or delivery by giving notice to Party B at least five Local
Business Days prior to the scheduled date for payment or delivery to
which such change applies unless Party B gives timely notice of a
reasonable objection to such change. Party B may change its account
for receiving payment or delivery by giving notice to Party A at least
five Local Business Days prior to the scheduled date for payment or
delivery to which such change applies unless Party A gives timely
notice of a reasonable objection to such change.
(l) PAYMENTS FROM PARTY B. Notwithstanding anything contained in this
Agreement to the contrary, any amount required to be paid by Party B
pursuant to this Agreement will be payable only to the extent and in
accordance with the priority provided in the Trust Agreement.
(m) NO SET-OFF. Without affecting the provisions of this Agreement requiring
the calculation of certain net payment amounts, all payments under this
Agreement will be made without set-off or counterclaims.
(n) INCONSISTENCY. In the event of an inconsistency among or between any of
the following documents, the relevant document first listed below shall
govern.
(i) Part 5(l) of the Schedule;
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<PAGE>
(ii) Part 5(m) of the Schedule;
(iii) Confirmation;
(iv) Schedule;
(v) Definitions;
(vi) Sections 1 through 14 of this Agreement.
(o) DEFAULT INTEREST; OTHER AMOUNTS. Section 2(e) of this Agreement is hereby
amended by adding the following at the end of the first sentence thereof:
; PROVIDED, HOWEVER, that this Section 2(e) shall not apply to either
Party A or Party B if its failure to pay is caused solely by such party
becoming required to deduct or withhold on account of any Tax as set out
in Section 2(d)(i).
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized officers as of November [ ], 1998.
TOYOTA MOTOR CREDIT CORPORATION
By:____________________________
Name: George E. Borst
Title: Senior Vice President and General Manager
Date:
TOYOTA AUTO LEASE TRUST 1998-C
By: [TRUSTEE],
as 1998-C Securitization Trustee
By:__________________________________
Name:
Title:
Date:
10
<PAGE>
Class A-2 Confirmation to the
ISDA Master Agreement
dated as of December [-], 1998
Toyota Auto Lease Trust 1998-C
c/o [Trustee]
[-]
[-]
Re: Transaction Ref. No. 2 between Toyota Motor Credit Corporation ("Party A")
and Toyota Auto Lease Trust 1998-C ("Party B")
Dear Sirs:
The purpose of this letter agreement is to confirm the terms and
conditions of the Swap Transaction entered into between you and us on the
Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA
Definitions (as published by the International Swaps and Derivatives
Association, Inc.) (the "Definitions") are incorporated in this Confirmation.
In the event of any inconsistency between those Definitions and this
Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement, dated as of December [-], 1998, as amended and
supplemented from time to time (the "Agreement"), between you and us. All
provisions contained in the Agreement govern this Confirmation except as
expressly modified below. Expressions used herein and not defined herein or
in the Definitions shall bear the meaning ascribed thereto in the Agreement.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
<TABLE>
<S> <C>
Party A: Toyota Motor Credit Corporation
Party B: Toyota Auto Lease Trust 1998-C
Trade Date: November [-], 1998
Effective Date: December [-], 1998
Termination Date: Class A-2 Targeted Maturity Date (as defined
in the Trust Agreement), subject to
adjustment in accordance with the Following
Business Day Convention.
<PAGE>
Party A Floating Amounts:
Party A Floating Rate
Payer: Party A
Party A Floating Rate
Payer Notional Amount: [The Class A-2 Certificate Balance (as
defined in the Trust Agreement) on the last
day of the Calculation Period.]
Party A Floating Rate Payer
Period End Dates: Each March 25, June 25, September 25 and
December 25, commencing on March 25, 1999, up
to and including the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Party A Floating Rate Payer
Payment Dates: Each March 25, June 25, September 25 and
December 25, commencing on March 25, 1999, up
to and including the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
[Party A will provide or cause to be provided
to [Trustee] a notice as to the amount to be
paid on each Party A Floating Rate Payer
Payment Date on the second Business Day prior
to each such Party A Floating Rate Payer
Payment Date.]
Party A Floating Rate Option: USD-LIBOR-BBA.
Designated Maturity: 3 months, with the exception of the initial
Calculation Period, [in which case the
Designated Maturity shall be the linear
interpolation of [-] months.]
Spread: Plus [-]%
Party A Floating Rate
for the initial
Calculation Period: [-]% (excluding the Spread)
Party A Floating Rate
Day Count Fraction: Actual/360
2
<PAGE>
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable.
Party B Fixed Amounts:
Party B Fixed Rate Payer: Party B
Party B Fixed Rate Payer
Notional Amount: [The Class A-2 Certificate Balance on the
last day of the Calculation Period.]
Party B Fixed Rate Payer
Period End Dates: Each March 25, June 25, September 25 and
December 25, commencing on March 25, 1999, up
to and including the Termination Date, with
no adjustment, with the exception of the
Termination Date, which shall be subject to
adjustment in accordance with the Following
Business Day Convention.
Party B Fixed Rate Payer
Payment Dates: Each March 25, June 25, September 25 and
December 25, commencing on March 25, 1999, up
to and including the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Party B Fixed Rate: [-]%
Party B Fixed Rate
Day Count Fraction: 30/360
Business Days: "Business Day" as defined in the Trust
Agreement
Calculation Agent: Party A
</TABLE>
3. Details of Variation to Agreement:
Taxation: If, as a result of the occurrence of any of the events described
in Section 5(b)(ii) or 5(b)(iii) of the Agreement, on any Party B Fixed Rate
Payer Payment Date Party A receives a payment from Party B from which an
amount has been deducted or withheld for or on account of a Tax, the payment
obligations of Party B hereunder with respect to such Payment Date shall be
reduced by the amount of any taxes so deducted or withheld and Party A's
payment obligations with respect to such Payment Date shall be reduced in
proportion to the amount by which Party
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<PAGE>
B's payment obligations are so reduced. If, as a result of the occurrence of
any of the events described in Section 5(b)(ii) or 5(b)(iii) of the
Agreement, on any Party A Floating Rate Payer Payment Date Party B receives a
payment from Party A from which an amount has been deducted or withheld for
or on account of a Tax, the payment obligations of Party A hereunder with
respect to such Payment Date shall be reduced by the amount of any taxes so
deducted or withheld and the payment obligations of Party B with respect to
such Payment Date shall remain the same.
Interest Deferral: If on any Party B Fixed Rate Payer Payment Date, the
amount allocated under the Trust Agreement and paid by Party B to Party A is
less than the Party B Fixed Amount due on such date (the amount of any such
insufficiency, the "Swap Interest Shortfall Amount"), the obligation of Party
A to pay Party A Floating Amounts on the corresponding Party A Floating Rate
Payer Payment Date will be reduced in the same proportion as the proportion
that such Swap Interest Shortfall Amount represents of the Party B Fixed
Amount otherwise due on such date. If on a subsequent Party B Fixed Rate
Payer Payment Date, amounts are available and are paid by Party B to Party A
pursuant to the Trust Agreement to reimburse all or any part of such Swap
Interest Shortfall Amount, then the obligation of Party A to pay Party A
Floating Amounts on the corresponding Party A Floating Rate Payer Payment
Date will be increased in the same proportion as the proportion that the
amount of such reimbursement represents of the Party B Fixed Amount otherwise
due on such date. If a Swap Interest Shortfall Amount shall exist on any
Early Termination Date, for purposes of computing the Market Quotation, the
aggregate amount of all outstanding Swap Interest Shortfall Amounts shall be
due on the first Party B Fixed Rate Payer Payment Date following the Early
Termination Date and the amount due from Party A on the first Party A
Floating Rate Payer Payment Date following the Early Termination Date will be
increased in the same proportion as the proportion that the amount of such
outstanding Swap Interest Shortfall Amounts represents of the Party B Fixed
Amount that would otherwise be due on such date.
Extension: If on the Party B Final Exchange Date, the
[Class A-2 Certificate Balance] has not been reduced to zero, the Termination
Date shall be extended to the Extension Period End Date, being the earlier of
(i) the Party A Floating Rate Payer Payment Date (as defined in Section 4
below) on which the Class A-2 Certificate Balance is reduced to zero and (ii)
the Stated Maturity Date (as defined in the Trust Agreement) for the Class
A-2 Certificates, subject to adjustment in accordance with the Following
Business Day Convention. The period from the Class A-2 Targeted Maturity
Date to the Extension Period End Date is referred to herein as the "Extension
Period".
4. During the Extension Period, instead of the Party B Fixed Amounts and
the Party A Floating Amounts described above in Section 2, the following
provisions will be applicable:
<TABLE>
<S> <C>
Party A Floating Amount
Floating Rate Payer: Party A
Party A Floating Rate
Payer Notional Amount: The Class A-2 Certificate Balance on the
last day of the Calculation Period.
4
<PAGE>
Initial Extension Period
Calculation Period: Commencing on the Class A-2 Targeted
Maturity Date.
Party A Floating Rate Payer
Period End Dates: The 25th of each month commending [-]
25, [-], subject to adjustment in
accordance with the Following Business
Day Convention, [and the Extension
Period End Date, subject to adjustment
in accordance with the Following
Business Day Convention].
Party A Floating Rate Payer
Payment Dates: The 25th day of each month commencing
[-] 25, [-], subject to adjustment in
accordance with the Following Business
Day Convention, [and the Extension
Period End Date, subject to adjustment
in accordance with the Following
Business Day Convention].
[Party A will provide or cause to be
provided to [Trustee] a notice as to
the amount to be paid on each Party A
Floating Rate Payer Payment Date on
the second Business Day prior to
each such Party A Floating Rate Payer
Payment Date.]
Party A Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 month
Spread: Plus [-]%
Floating Rate
Day Count Fraction: Actual/360
Reset Dates: First day of each Calculation Period.
Compounding: Inapplicable.
Party B Fixed Amount
Fixed Rate Payer: Party B
5
<PAGE>
Party B Fixed Rate
Payer Notional Amount: The Class A-2 Certificate Balance on the
last day of the Collection Period.
Initial Extension Period
Calculation Period: Commencing on the Class A-2 Targeted
Maturity Date.
Party B Fixed Rate
Payer Period End Dates: (i) The 25th day of each month, with no
adjustment [and (ii) the Extension
Period End Date, which shall be subject
to adjustment in accordance with the
Following Business Day Convention].
Party B Fixed Rate
Payer Payment Dates: The 25th day of each month, subject to
adjustment in accordance with the
Following Business Day Convention, [and
the Extension Period End Date, subject
to adjustment in accordance with the
Following Business Day Convention].
Party B Fixed Rate: [-]%
Fixed Rate
Day Count Fraction: 30/360
Reset Dates: First day of each Calculation Period.
</TABLE>
5. Account Details
<TABLE>
<S> <C>
Payments to Party A:
Account for Payments in USD: [-]
Payments to Party B:
Account for Payments in USD: [-]
</TABLE>
6. Party A Documentation and Operations Officers
<TABLE>
<S> <C>
Documentation: [-]
Operations: [-]
</TABLE>
6
<PAGE>
7. Relationship between Parties:
Each party will be deemed to represent to the other party on the date on
which it enters into the Agreement that (absent a written agreement between
the parties that expressly imposes affirmative obligations to the contrary):
NON-RELIANCE. It is acting for its own account, and it has made its own
independent decisions to enter into the Agreement and as to whether the
Agreement is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary. It is not
relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into the Agreement; it
being understood that information and explanations related to the terms and
conditions of the Agreement shall not be considered investment advice or a
recommendation to enter into the Agreement. No communication (written or
oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of the Agreement.
ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
the Agreement. It is also capable of assuming, and assumes, the risks of
the Agreement.
STATUS OF PARTIES. The other party is not acting as a fiduciary for or as
adviser to it in respect of the Agreement.
8. Governing Law: New York
7
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us.
TOYOTA MOTOR CREDIT
CORPORATION
By:
-------------------------------------
Name: George E. Borst
Title: Senior Vice President
and General Counsel
Confirmed as of the date first written:
TOYOTA AUTO LEASE TRUST 1998-C
By: [TRUSTEE],
as 1998-C Securitization Trustee
By:
-------------------------------------
Name:
Title:
8
<PAGE>
Exhibit 15.1
[PRICEWATERHOUSECOOPERS LETTERHEAD]
November 16, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Toyota Motor Credit Corporation has included our reports
dated February 12, 1998, May 7, 1998 and August 13, 1998 (issued pursuant to
the provisions of Statement on Auditing Standards No. 71) in the Prospectus
constituting part of its Registration Statement on Form S-3 (No. 333-57109)
to be filed on or about November 16, 1998. We are also aware of our
responsibilities under the Securities Act of 1933.
Yours very truly,
/s/ PricewaterhouseCoopers LLP
<PAGE>
Exhibit 23.3
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated October 31, 1997 appearing on page 24 of Toyota Motor Credit
Corporation's Annual Report on Form 10-K for the year ended September 30,
1997. We also consent to the references to us under the heading "Experts" in
such Prospectus.
/s/ PricewaterhouseCoopers
PricewaterhouseCoopers LLP
Los Angeles, California
November 16, 1998
<PAGE>
______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of
a Trustee Pursuant to Section 305(b)(2)___
---------------------------------------------------
U.S. BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
111 EAST WACKER DRIVE,
SUITE 3000
CHICAGO, ILLINOIS 60601 41-0417860
(Address of principal (Zip Code) I.R.S. Employer
executive offices) Identification No.
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Telephone (312) 228-9400
(Name, address and telephone number of agent for service)
TOYOTA MOTOR CREDIT CORPORATION
(Exact name of obligor as specified in its charter)
CALIFORNIA
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(Address of Principal Executive Offices) (Zip Code)
DEMAND NOTES
(Title of the Indenture Securities)
______________________________________________________________________________
<PAGE>
FORM T-1
ITEM 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
ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
None
Items 3-15 THERE IS NOT NOR HAS THERE BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. THE TRUSTEE IS A TRUSTEE UNDER
OTHER INDENTURES UNDER WHICH SECURITIES ISSUED BY THE OBLIGOR ARE
OUTSTANDING. THERE IS NOT AND THERE HAS NOT BEEN A DEFAULT WITH
RESPECT TO THE SECURITIES OUTSTANDING UNDER OTHER SUCH INDENTURES.
ITEM 16. LIST OF EXHIBITS: LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY AND QUALIFICATION.
1. A copy of the Articles of Association of the Trustee now in
effect, incorporated herein by reference to Exhibit 1 of
Form T-1, Registration No. 333-57109.*
2. A copy of the certificate of authority of the Trustee to
commence business, incorporated herein by reference to
Exhibit 2 of Form T-1, Registration No. 333-57109.*
3. A copy of the certificate of authority of the Trustee to
exercise corporate trust powers, incorporated herein by
reference to Exhibit 3 of Form T-1, Registration
No. 333-57109.*
4. A copy of the existing bylaws of the Trustee, as now in
effect, incorporated herein by reference to Exhibit 4 of
Form T-1, Registration No. 333-57109.*
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939, incorporated herein by reference
to Exhibit 6 of Form T-1, Registration No. 333-57109.*.
7. A 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 Exhibit 7 of Form T-1, Registration No. 333-56865.*
8. Not applicable.
9. Not applicable.
2
<PAGE>
* Exhibits thus designated are incorporated herein by reference to
Exhibits bearing identical numbers in Item 16 of the Form T-1 filed by the
Trustee with the Securities and Exchange Commission with the specific
references noted.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, has
duly caused this statement of eligibility and qualification to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Chicago, State of Illinois on the day of November 12, 1998.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ MICHAEL T. GOODWIN
----------------------
Michael T. Goodwin
Assistant Vice President and
Assistant Secretary
3
