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As filed with the Securities and Exchange Commission on June 9, 1999
REGISTRATION NO. 333-76505
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
TOYOTA AUTO RECEIVABLES TRUSTS
(Issuer with respect to the Securities)
TOYOTA MOTOR CREDIT CORPORATION
(Issuer of the TMCC Demand Notes)
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
CALIFORNIA 6146 33-036836
(State or other (Primary Standard Industrial (I.R.S Employer
jurisdiction of Classification Code Number) Identification
Incorporation or No.)
organization
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.
c/o TOYOTA MOTOR CREDIT CORPORATION
19001 SOUTH WESTERN AVENUE
TORRANCE, CALIFORNIA 90509
(310) 787-1310
(Name, address, including zip code, and telephone number,
including area code, of agent for service with respect to the Registrant)
-----------------------
COPIES TO:
DAVID J. JOHNSON, JR., ESQ.
AND DANIEL F. PASSAGE, ESQ.
O'MELVENY & MYERS LLP
400 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
(213) 430-6605
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plan, please check the following
box []
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering []_______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering []__________________
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED TITLE OF SECURITIES PROPOSED MAXIMUM PROPOSED OFFERING AMOUNT OF MAXIMUM REGISTRATION
TO BE REGISTERED AMOUNT TO BE REGISTERED PRICE PER UNIT (1) AGGREGATE OFFERING PRICE (1) FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Securities $2,500,000,000 100% $2,500,000,000 $695,000(3)
- -----------------------------------------------------------------------------------------------------------------------------
TMCC Demand Notes (2) (2) (2) (2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit
(2) The TMCC Demand Notes represent investments by the Trust of Collection in
demand notes issued from time to time by TMCC
(3) Of which $278.00 previously has been paid.
-----------------------
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 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus
relating to the offering of one or more series of Asset Backed Notes and/or
Asset Backed Certificates by various Trusts created from time to time by Toyota
Motor Credit Recievables Corporation and (ii) two forms of Prospectus Supplement
relating to the offering by each separate trust of a particular series of Asset
Backed Certificates or of Asset Backed Notes and Asset Backed Certificates
described therein. Each form of Prospectus Supplement relates only to the
securities described therein and is a form which may be used, among others, by
Toyota Motor Credit Recievables Corporation to offer Asset Backed Notes and/or
Asset Backed Certificates under this Registration Statement.
<PAGE>
PROSPECTUS
TOYOTA AUTO RECEIVABLES TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
THE TRUSTS -
- A new trust will be formed to issue each series of securities.
- The assets of each trust:
- will be described in a related prospectus supplement;
- will primarily be a pool of retail installment sales
contracts secured by new or used automobiles and light duty
trucks;
- will include related assets such as:
- security interests in the financed vehicles;
- proceeds from claims on related insurance policies;
and
- amounts deposited in specified bank accounts.
THE SECURITIES -
- will be asset-backed securities sold periodically in one or more
series;
- will be paid only from the assets of the related trust;
- will be issued in one or more classes; and
- will consist of:
- notes (which will be treated as indebtedness of the trust)
and/or
- certificates (which will represent an undivided ownership
interest in the trust).
The amounts, prices and terms of each offering of securities will be
determined at the time of sale and will be described in a prospectus supplement
that will be attached to this prospectus.
The date of this Prospectus is ___________, 1999.
YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE 7 OF THIS PROSPECTUS AND IN THE RELATED PROSPECTUS SUPPLEMENT.
This prospectus does not contain complete information about the offering of
securities. You are urged to read both this prospectus and the related
prospectus supplement that will provide additional information about the
securities being offered to you. No one may use this prospectus to offer and
sell the securities unless it is accompanied by the related prospectus
supplement. If any statement in the prospectus supplement conflicts with
statements in this prospectus, the statements in the prospectus supplement will
control.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS PROSPECTUS OR THE PROSPECTUS
SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Notes of a given series issued by a trust will be obligations of that trust
only. Certificates of a given series issued by a trust will represent beneficial
interests in that trust only. The securities will not be obligations of,
interests in, and are not guaranteed or insured by, Toyota Motor Credit
Corporation, Toyota Motor Credit Receivables Corporation, Toyota Motor Sales,
U.S.A., Inc. or any of their affiliates. Neither the securities nor the
receivables owned by the trust are insured or guaranteed by any governmental
agency.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
Information about the securities is provided in two separate documents
that progressively provide more detail:
- this prospectus, which provides general information, some of which
may not apply to a particular series of securities including your
series; and
- the accompanying prospectus supplement, which will describe the
specific terms of your series of securities including:
- the timing of interest and principal payments;
- the priority of interest and principal payments;
- financial and other information about the receivables
owned by the trust;
- information about the credit enhancement for each
class;
- the rating of each class; and
- the method for selling the securities.
IF THE TERMS OF A PARTICULAR SERIES OF SECURITIES VARY BETWEEN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN
THE PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and
the accompanying prospectus supplement, including any information incorporated
by reference. No one has been authorized to provide you with different
information. The securities are not being offered in any state where their offer
is not permitted.
Cross-references in this prospectus and in the prospectus supplement
have been provided to captions in these materials where you can find further
related discussions. Cross-references are contained in the introductory summary
which will direct you elsewhere in this prospectus to more detailed descriptions
of a particular topic. The Table of Contents on the back cover page of this
prospectus provides the pages on which these captions are located.
You can find a listing of the pages where capitalized terms used in
this prospectus are defined under the caption "Index of Terms" beginning on page
___ in this prospectus.
<PAGE>
SUMMARY OF TERMS
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS
DOCUMENT AND PROVIDES A GENERAL OVERVIEW OF RELEVANT TERMS OF THE SECURITIES .
TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING, YOU SHOULD READ CAREFULLY THIS
ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
ISSUER The trust to be formed for each series of securities.
If the trust issues notes and certificates, it will
be formed by a trust agreement between the seller
and the trustee of the trust. If the trust issues
only certificates, it will be formed by a pooling
and servicing agreement among the seller, the
servicer and the trustee of the trust.
SELLER Toyota Motor Credit Receivables Corporation. The
principal executive offices of Toyota Motor Credit
Receivables Corporation are located at 19001 South
Western Avenue, Torrance, California 90509 and its
telephone number is (310) 787-1310.
SERVICER Toyota Motor Credit Corporation. The principal
executive offices of Toyota Motor Credit Corporation
are located at 19001 South Western Avenue, Torrance,
California 90509, its telephone number is (310)
787-1310 and its facsimile number is (310) 787-6194.
TRUSTEE The trustee for each series of securities will be
named in the prospectus supplement for that series.
INDENTURE TRUSTEE If the trust issues notes, the trustee for the
indenture will be named in the prospectus supplement
for that series.
SECURITIES NOTES - A series of securities may include one or
more classes of notes. Notes of a series will be
issued pursuant to an indenture.
CERTIFICATES - Each series of securities will include
one or more classes of certificates, whether or not a
class of notes is issued as part of the series. If a
series of securities includes classes of notes,
holders of notes may have the right to receive their
payments before holders of certificates are paid. In
addition, classes of notes may have the right to
receive their payments before holders of other
classes of notes are paid, and classes of
certificates may have the right to receive their
payments before holders of other classes of
certificates are paid. This is referred to as
"subordination". The prospectus supplement will
describe the terms of any subordination provisions
that apply to a class of notes or certificates.
TERMS - The terms of each class of notes and
certificates in a series will be described in the
prospectus supplement including:
- stated principal amount (notes) and stated
certificate balance (certificates); and
- interest rate (which may be fixed, variable,
adjustable or some combination of these rates)
or method of determining the interest rate.
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A class of notes may differ from other classes of
notes and a class of Certificates may differ from
other classes of certificates in certain respects
including:
- timing and priority of payments;
- seniority;
- allocations of losses;
- interest rate or formula;
- amount of principal or interest payments;
- whether interest or principal will be payable
to holders of the class if certain events occur;
and
- the right to receive collections from designated
portions of the receivables owned by the trust.
FORM - If you acquire a beneficial ownership interest
in the securities you will generally hold them
through The Depository Trust Company in the United
States, or Cedelbank or the Euroclear System in
Europe or Asia. This is referred to as "book-entry"
form. As long as the securities are held in
book-entry form, you will not receive a definitive
certificate representing the securities.
FOR MORE DETAILED INFORMATION, YOU SHOULD REFER TO
"CERTAIN INFORMATION REGARDING THE SECURITIES
--BOOK-ENTRY REGISTRATION" IN THIS PROSPECTUS.
DENOMINATION - Securities will be issued in the
denominations specified in the related prospectus
supplement.
THE TRUST PROPERTY The assets of each trust:
- will be described in the prospectus supplement;
- will primarily be a pool of retail installment
sales contracts (the "receivables") secured by
new or used automobiles and light duty trucks
("financed vehicles") and amounts due or
collected under the contracts on or after a
specified cutoff date; and
- will include related assets such as:
- security interests in the financed
vehicles,
- proceeds from claims on related insurance
policies, and
- amounts deposited in specified bank
accounts.
Purchasers of Toyota and Lexus cars and light duty
trucks often finance their purchases by entering into
retail installment sales contracts with Toyota and
Lexus dealers who then resell the contracts to Toyota
Motor Credit Corporation. The purchasers of the
financed vehicles are referred to as the "obligors"
under the receivables. The terms of the contracts
must meet specified Toyota Motor
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Credit Corporation requirements.
On or before the date the securities of a series are
issued, Toyota Motor Credit Corporation will sell a
specified amount of receivables to Toyota Motor
Credit Receivables Corporation, the seller. The
seller will, in turn, sell them to the trust. The
sale by the seller to the trust will be documented
under:
- a pooling and servicing agreement among the
seller, the servicer and the trustee (if the
trust will be treated as a grantor trust for
federal income tax purposes).
- a sale and servicing agreement among the seller,
the servicer and the trust (if the trust will
not be treated as a grantor trust for federal
income tax purposes); or
The receivables to be sold by Toyota Motor Credit
Corporation to the seller and resold to the trust
will be selected based on criteria specified in the
sale and servicing agreement or the pooling and
servicing agreement, whichever is applicable. These
criteria will be described in the applicable
prospectus supplement.
The trust will use collections on the receivables to
pay interest and principal to holders of each
class of securities. The prospectus supplement will
describe whether:
- collections received each month will be passed
through to holders of securities on a monthly
basis; or
- whether payments will instead be made on a
quarterly, semi-annual, annual or other basis.
If payments are made other than monthly, the trust
will need to invest the collections until the
relevant payment date. These investments will be
highly rated. The prospectus supplement will describe
these investments in more detail. Because of the
administrative difficulties involved in obtaining
investments that will provide payments to the trust
on the day before payments are to be made to holders
of securities and that earn a sufficient amount of
interest, in many cases the investments will be
demand notes issued by Toyota Motor Credit
Corporation. These demand notes will be unsecured
general obligations of Toyota Motor Credit
Corporation and will rank equally with all other
outstanding unsecured and unsubordinated debt of
Toyota Motor Credit Corporation.
YOU SHOULD REFER TO THE APPLICABLE PROSPECTUS
SUPPLEMENT FOR MORE INFORMATION ABOUT THE TERMS AND
CONDITIONS OF ANY TMCC DEMAND NOTES. IN ADDITION, YOU
SHOULD REFER TO "TMCC DEMAND NOTES" IN THIS
PROSPECTUS.
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CREDIT AND CASH FLOW
ENHANCEMENT The trusts may include certain features designed to
provide protection to one or more classes of
securities. These features are referred to as "credit
enhancement". Credit enhancement may include any one
or more of the following:
- subordination of one or more other classes of
securities;
- reserve fund;
- over-collateralization;
- letters of credit or other credit facilities;
- surety bonds;
- guaranteed investment contracts;
- repurchase obligations;
- cash deposits; or
- other agreements or arrangements providing for
other third party payments or other support.
In addition, the trusts may include certain features
designed to ensure the timely payment of amounts owed
to securityholders. These features may include any
one or more of the following:
- yield maintenance agreements;
- swap transactions;
- liquidity facilities;
- cash deposits; or
- other agreements or arrangements providing for
other third party payments or other support.
The specific terms of any credit or cash flow
enhancement applicable to a trust or to the
securities issued by a trust will be described in
detail in the applicable prospectus supplement,
including any limitations or exclusions from
coverage.
SERVICING Toyota Motor Credit Corporation will be appointed to
act as servicer for the receivables. In that
capacity, the servicer will handle all collections,
administer defaults and delinquencies and otherwise
service the contracts. The trust will pay the
servicer a monthly fee equal to 1/12 of 1.00% of the
total principal balance of the receivables as of the
first day of the preceding month. The servicer will
also receive additional servicing compensation in the
form of investment earnings, late fees and other
administrative fees and expenses or similar charges
received by the servicer during such month.
The servicer will also be obligated to advance to the
trust interest on the receivables that is due but
unpaid by the obligor. In addition, the servicer will
be obligated to advance to the trust principal of any
receivables that are classified as precomputed
receivables rather than as simple interest
receivables. The servicer will not be required to
make
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any advance if it determines that it will not be able
to recover an advance from an obligor.
The trust will reimburse the servicer from late
collections on the receivables for which it has made
advances, or from collections generally if the
servicer determines that an advance will not be
recoverable with respect to such receivable.
FOR MORE DETAILED INFORMATION ON ADVANCES AND
REIMBURSEMENT OF ADVANCES, SEE "DESCRIPTION OF THE
TRANSFER AND SERVICING AGREEMENT--ADVANCES" IN THIS
PROSPECTUS.
OPTIONAL REDEMPTION The servicer or the seller may redeem any outstanding
certificates when the outstanding aggregate principal
balance of the receivables declines to 10% or less of
the original total principal balance of the
receivables as of the cutoff date.
FOR MORE DETAILED INFORMATION, YOU SHOULD REFER TO
"DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENT
- SERVICING COMPENSATION AND PAYMENT OF EXPENSES" IN
THIS PROSPECTUS.
TAX STATUS GRANTOR TRUSTS - The applicable prospectus supplement
will specify whether a trust will be treated as a
grantor trust for federal income tax purposes. If a
trust is treated as a grantor trust for federal
income tax purposes, special tax counsel to the trust
will be required to deliver an opinion that:
- the trust will be treated as a grantor trust
for federal income tax purposes; and
- the trust will not be subject to federal income
tax.
TRUSTS NOT TREATED AS GRANTOR TRUSTS - If the trust
will not be treated as a grantor trust, special tax
counsel to the trust will be required to deliver an
opinion for federal income tax purposes and
California income and franchise tax purposes:
- as to the characterization as debt of the notes
issued by the trust;
- that the trust will not be characterized as an
association (or a publicly traded partnership)
taxable as a corporation.
If a trust is not a grantor trust:
- by purchasing a note you will be agreeing to
treat the note as indebtedness for tax
purposes; and
- by purchasing a certificate, you will be
agreeing to treat the trust as a partnership in
which you are a partner for federal income tax
purposes and California income and franchise
tax purposes.
Applicable taxing authorities could impose
alternative tax characterizations of the trust and
the certificates. However, these characterizations
will not result in material adverse tax consequences
to certificateholders.
FOR ADDITIONAL INFORMATION CONCERNING THE APPLICATION
OF FEDERAL AND CALIFORNIA TAX LAWS, YOU SHOULD REFER
TO "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" AND
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"CERTAIN STATE TAX CONSEQUENCES" IN THIS PROSPECTUS.
ERISA CONSIDERATIONS NOTES - Notes will generally be eligible for purchase
by employee benefit plans.
UNSUBORDINATED GRANTOR TRUST CERTIFICATES -
Certificates of a class issued by a grantor trust
that are not subordinated to any other class will
generally be eligible for purchase by employee
benefit plans.
OTHER CERTIFICATES - Subordinated classes of
certificates issued by a grantor trust and
certificates issued by trusts that are not grantor
trusts will not be eligible for purchase by an
employee benefit plan or individual retirement
account unless the prospectus supplement states
otherwise.
FOR MORE DETAILED INFORMATION REGARDING THE ERISA
ELIGIBILITY OF ANY CLASS OF SECURITIES, YOU SHOULD
REFER TO "ERISA CONSIDERATIONS" IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT.
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RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS IN DECIDING WHETHER TO
PURCHASE SECURITIES OF ANY CLASS. IN ADDITION, YOU SHOULD REFER TO THE SECTION
CAPTIONED "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT FOR A
DESCRIPTION OF FURTHER MATERIAL RISKS TO YOUR INVESTMENT IN THE SECURITIES.
THE TRUST'S SECURITY INTERESTS IN FINANCED VEHICLES MAY BE
UNENFORCEABLE OR DEFEATED.
The certificates of title for vehicles financed by Toyota Motor Credit
Corporation name Toyota Motor Credit Corporation as the secured party. The
certificates of title for financed vehicles under contracts assigned to the
trust will not be amended to identify the trust as the new secured party because
it would be administratively burdensome to do so. However, financing statements
showing the transfer to the trust of Toyota Motor Credit Corporation's and the
seller's interest in the receivables will be filed with the appropriate
governmental authorities. Toyota Motor Credit Corporation, as servicer, will
retain the documentation for the receivables and the certificates of title.
Because of these arrangements, another person could acquire an interest
in the receivables and the financed vehicles that is judged by a court of law to
be superior to the trust's interest. Examples of these persons are other
creditors of the obligors, a subsequent purchaser of a financed vehicle or
another lender who finances the vehicle. Some of the ways this could happen are
described in this prospectus under the caption "Certain Legal Aspects of the
Receivables". In some circumstances, either the seller or the servicer will be
required to purchase receivables if a security interest superior to the claims
of others has not been properly established and maintained. The details of this
obligation are described in this prospectus under the caption "Certain Legal
Aspects of the Receivables".
BANKRUPTCY OF TOYOTA MOTOR CREDIT CORPORATION COULD RESULT IN LOSSES OR
DELAYS IN PAYMENTS ON THE SECURITIES.
If Toyota Motor Credit Corporation becomes subject to bankruptcy
proceedings, you could experience losses or delays in the payments on your
securities. Toyota Motor Credit Corporation will sell the receivables to the
seller, and the seller will in turn transfer the receivables to the trust.
However, if Toyota Motor Credit Corporation becomes subject to a bankruptcy
proceeding, the court in the bankruptcy proceeding could conclude that Toyota
Motor Credit Corporation effectively still owns the receivables by concluding
that the sale to the seller was not a "true sale" or that the seller should be
consolidated with Toyota Motor Credit Corporation for bankruptcy purposes. If a
court were to reach this conclusion, you could experience losses or delays in
payments on the securities as a result of, among other things:
- the "automatic stay" which prevents secured creditors from
exercising remedies against a debtor in bankruptcy without
permission from the court and provisions of the U.S. Bankruptcy
Code that permit substitution for collateral in certain
circumstances;
- certain tax or government liens on Toyota Motor Credit
Corporation property (that arose prior to the transfer of a
receivable to the trust) having a prior claim on collections
before the collections are used to make payments on your
securities; and
- the trust not having a perfected security interest in (a) one or
more of the vehicles securing the receivables or (b) any cash
collections held by Toyota Motor Credit Corporation at the time
Toyota Motor Credit Corporation becomes the subject of a
bankruptcy proceeding.
The seller will take steps in structuring each transaction described in
this prospectus to minimize the risk that a court would consolidate the seller
with Toyota Motor Credit Corporation for bankruptcy purposes or conclude that
the sale of receivables to the seller was not a "true sale." See "Certain Legal
Aspects of the Receivables - Certain Bankruptcy Considerations" in this
prospectus.
RECEIVABLES THAT FAIL TO COMPLY WITH CONSUMER PROTECTION LAWS MAY BE
UNENFORCEABLE, RESULTING IN DELAYS IN RECEIPT OF COLLECTIONS.
Numerous federal and state consumer protection laws regulate consumer
contracts such as the receivables. If any of the receivables do not comply with
one or more of these laws, the servicer may be prevented from or delayed in
collecting the receivables. If that happens, payments on the certificates could
be delayed or reduced. The seller will make representations and warranties
relating to the receivables' compliance with law and the trust's ability to
enforce the contracts. If the seller breaches any of these representations or
warranties, the trust's sole
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remedy will be to require the seller to repurchase the affected receivables. See
"Certain Legal Aspects of the Receivables--Consumer Protection Laws" in this
prospectus.
FUNDS HELD BY THE SERVICER THAT ARE INTENDED TO BE USED TO MAKE
PAYMENTS ON THE SECURITIES MAY BE EXPOSED TO A RISK OF LOSS.
The servicer generally may retain all payments and proceeds collected
on the receivables during each collection period. The servicer is generally not
required to segregate those funds from its own accounts until the funds are
deposited in the collection account on each distribution date. Until any
collections or proceeds are deposited into the collection account, the servicer
will be able to invest those amounts for its own benefit at its own risk. The
trust and securityholders are not entitled to any amount earned on the funds
held by the servicer. If the servicer does not deposit the funds in the
collection account as required on any distribution date, the trust may be unable
to make the payments owed on your securities.
IF THE TRUST ENTERS INTO A CURRENCY OR AN INTEREST RATE SWAP, PAYMENTS
ON THE SECURITIES WILL BE DEPENDANT ON PAYMENTS MADE UNDER THE SWAP AGREEMENT.
If the trust enters into a currency swap, interest rate swap or a
combined currency and interest rate swap, its ability to protect itself from
shortfalls in cash flow caused by currency or interest rate changes will depend
to a large extent on the terms of the swap agreement and whether the swap
counterparty performs its obligations under the swap. If the trust does not
receive the payments it expects from the swap, the trust may not have adequate
funds to make all payments to securityholders when due, if ever.
If the trust issues securities denominated in a currency other than
U.S. dollars, the trust will need to make payments on the securities in a
currency other than U.S. dollars, as described in the related prospectus
supplement. Payments collected on the receivables, however, will be in U.S.
dollars. In this circumstance, the trust may enter into a currency swap to
reduce its exposure to changes in currency exchange rates. A currency swap
requires one party to provide a specified amount of a currency to the other
party at specified times in exchange for the other party providing a different
currency at a predetermined exchange ratio. For example, if the trust issues
securities denominated in swiss francs, it might enter into a swap agreement
with another party, the "swap counterparty", under which the trust would use the
collections on the receivables to pay U.S. dollars to the swap counterparty in
exchange for receiving swiss francs at a predetermined exchange rate to make the
payments owed on the securities.
If the trust issues securities with adjustable interest rates, interest
will be due on the securities at adjustable rates, while interest will be earned
on the receivables at fixed rates. In this circumstance, the trust may enter
into an interest rate swap to reduce its exposure to changes in interest rates.
An interest rate swap requires one party to make payments to the other party in
an amount calculated by applying an interest rate (for example a floating rate)
to a specified notional amount in exchange for the other party making a payment
calculated by applying a different interest rate (for example a fixed rate) to
the same notional amount. For example, if the trust issues $100 million of
securities bearing interest at a floating LIBOR rate, it might enter into a swap
agreement under which the trust would pay interest to the swap counterparty in
an amount equal to an agreed upon fixed rate on $100 million in exchange for
receiving interest on $100 million at the floating LIBOR rate. The $100 million
would be the "notional" amount because it is used simply to make the
calculation. In an interest rate swap, no principal payments are exchanged.
In some cases, a trust may enter into a swap with Toyota Motor Credit
Corporation as the swap counterparty. The terms of any swap will be described in
more detail in the applicable prospectus supplement.
TERMINATION OF A SWAP AGREEMENT WILL CAUSE TERMINATION OF THE TRUST.
A swap agreement may be terminated if certain events occur. Most of
these events are generally beyond the control of the trust or the swap
counterparty. If a termination occurs, the trustee will sell the assets of the
trust and the trust will terminate. In this type of situation, it is impossible
to predict how long it would take to sell the assets of the trust. Some of the
possible adverse consequences of such a sale are:
- The proceeds from the sale of assets under such circumstances may
not be sufficient to pay all amounts owed to you.
- Amounts available to pay you will be further reduced if the trust
is required to make a termination payment to the swap
counterparty.
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- The termination of the swap agreement may expose the trust to
currency or interest rate risk, further reducing amounts
available to pay you.
- The sale may result in payments to you significantly earlier than
expected.
- Conversely, a significant delay in arranging a sale could result
in a delay in principal payments. This would, in turn, increase
the weighted average life of the securities and could reduce the
yield to maturity.
See "The Swap Agreement--Early Termination of Swap Agreement" for more
information concerning the termination of a swap agreement and the sale of trust
assets. Additional information about this subject, including a description of
how the proceeds of a sale would be distributed, will be included in the
applicable prospectus supplement.
THE RATING OF A SWAP COUNTERPARTY AND THE ISSUER OF DEMAND NOTES MAY
AFFECT THE RATINGS OF THE SECURITIES.
If a trust enters into a swap or invests in Toyota Motor Credit
Corporation demand notes, the rating agencies that rate the trust's securities
will consider the provisions of the swap agreement and the demand notes and the
rating of the swap counterparty and Toyota Motor Credit Corporation, as issuer
of the demand notes in rating the securities. Toyota Motor Credit Corporation
may also be the swap counterparty. If a rating agency downgrades the debt rating
of the swap counterparty or Toyota Motor Credit Corporation, it is also likely
to downgrade the rating of the securities. Any downgrade in the rating of the
securities could have severe adverse consequences on their liquidity or market
value.
As of the date of this prospectus, Toyota Motor Credit Corporation's
long-term debt is rated Aal by Moody's and AAA by Standard & Poor's. During 1998
and early 1999, the long-term debt rating of Toyota Motor Corporation and its
affiliates (including Toyota Motor Credit Corporation) was under review by
Moody's and Standard & Poor's and was downgraded by Moody's to Aa1 from Aaa.
Standard & Poor's reaffirmed the AAA long-term debt rating but continues to
maintain a negative outlook on the rating. If the rating agencies lower the
rating of Toyota Motor Corporation, they will likely lower Toyota Motor Credit
Corporation's rating to the same extent.
The credit rating of Japan has also been under review by the rating
agencies. As of the date of this prospectus, Moody's is maintaining a negative
outlook on certain borrowings by Japan. As a result, Moody's is also maintaining
a negative outlook on certain borrowings by Toyota Motor Corporation and its
subsidiaries (including Toyota Motor Credit Corporation). If Japan's credit
rating is lowered below that of Toyota Motor Corporation, the credit rating of
Toyota Motor Corporation and its subsidiaries (including Toyota Motor Credit
Corporation) will likely be lowered to the same extent.
To provide some protection against the adverse consequences of a
downgrade, the swap counterparty may be permitted, but not required, to take the
following actions if the rating agencies reduce its debt ratings below certain
levels:
- 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 rating
agencies.
If Toyota Motor Credit Corporation is the swap counterparty, it may be
able to cure the effects of a downgrade by taking the actions described above.
However, if Toyota Motor Credit Corporation is both the demand note issuer and
the swap counterparty, these actions may not be sufficient to prevent a
downgrade.
Any swap or demand notes involve a high degree of risk. A trust will be
exposed to this risk should it use either of these mechanisms. For this reason,
only investors capable of understanding these risks should invest in the
securities. You are strongly urged to consult with your financial advisors
before deciding to invest in the securities if a swap or demand notes are
involved.
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COMPLICATIONS ASSOCIATED WITH YEAR 2000 DATE CONVERSION COULD AFFECT
OPERATIONS, IMPAIRING ABILITY TO COLLECT RECEIVABLES.
The year 2000 issue concerns the inability of computer systems and
related applications to function properly in the year 2000 and beyond. Toyota
Motor Credit Corporation will have significant obligations to the trust in its
role as servicer. It may also act as swap counterparty and demand note issuer.
It is therefore important that Toyota Motor Credit Corporation resolve any year
2000 issues that will affect its ability to fulfill these obligations. A
description of Toyota Motor Credit Corporation's year 2000 compliance efforts is
contained under "The Servicer - Year 2000 Date Conversion".
Toyota Motor Credit Corporation's failure to resolve all material year
2000 issues could have significant adverse consequences to the trust. In
particular, this failure could affect Toyota Motor Credit Corporation's ability
to service the receivables and provide the information and technology necessary
to pay securityholders, provide reports, administer the demand notes and perform
its duties under any swap agreement, as applicable.
The inability of Toyota Motor Credit Corporation or of third parties
who deal with Toyota Motor Credit Corporation to make the necessary year 2000
modifications of their systems could have a significant adverse effect on Toyota
Motor Credit Corporation's operations and financial results. Possible adverse
consequences include being unable to collect on receivables, pay obligations,
process new business and occupy facilities. These consequences could have a
material adverse effect on the value of your securities.
THE CALCULATIONS FOR THE PAYMENTS OF PRINCIPAL OR INTEREST MAY BE BASED
ON AN INDEX WHICH MAY RESULT IN PAYMENTS TO YOU OF LESS PRINCIPAL OR INTEREST
THAN A NON-INDEXED SECURITY.
The calculation of interest or principal on a series of securities may
be based on a currency, commodity, interest rate or other index. In this
situation, the amount of principal or interest payable on the securities may be
less than that payable on a conventional debt security issued at the same time,
including the possibility that no interest or principal will be paid. In
addition, if the formula for calculating the payments on the securities includes
a feature that multiplies the effect of any change in the index, changes to the
index could result in even greater changes in the value of the securities or the
payments to be made on the securities.
You may not be able to easily trade these types of securities after you
purchase them. This is referred to as a "secondary market." It cannot be
predicted whether there will be a secondary market for these types of securities
or if one develops, how liquid it would be. The secondary market for these types
of securities will be affected by a number of factors that are not dependent on
the performance of the trust and its assets. These factors include the
complexity and volatility of the index, the method of calculating the principal
and interest payments on the securities, the time remaining to the maturity of
the securities, the outstanding amount of the securities and market interest
rates. The value of the index will depend on a number of interrelated factors
which cannot be controlled by the trust, including economic, financial and
political events. For these reasons, you may not be able to readily sell your
securities or receive the price you expected for their sale.
In recent years, many indices have been highly volatile, and the
volatility may continue in the future. You should review carefully the
historical experience of any index to which a series of securities are pegged,
but should not take that historical experience as a predictor of future
performance of the index during the term of any security. The credit ratings
assigned to the securities do not reflect the potential impact of the factors
discussed above, or what the impact may be on your securities' market value at
any time. For this reason, only investors capable of understanding the risks
involved should invest in indexed securities. In addition, investors whose
investment activities are restricted by law or subject to regulation may not be
able to purchase these types of securities. Investors are responsible for
determining whether they may purchase indexed securities. You are strongly urged
to consult with your financial advisors before deciding to invest in indexed
securities.
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THE TRUSTS
The Seller will establish each trust (each, a "Trust") pursuant to a
Trust Agreement (as amended and supplemented from time to time the "Trust
Agreement") or Pooling and Servicing Agreement (as amended from time to time,
the "Pooling and Servicing Agreement"), as applicable. The property of each
Trust will include a pool (a "Receivables Pool") of retail installment sales
contracts (the "Receivables") between Toyota and Lexus dealers (the "Dealers")
and the obligors (the "Obligors") of new and used automobiles and/or light duty
trucks and all payments due thereunder on and after the applicable cutoff date
(the "Cutoff Date"), as specified in the related Prospectus Supplement. The
Dealers will originate, and TMCC will purchase, the Receivables of each
Receivables Pool in the ordinary course of business pursuant to agreements with
Dealers (the "Dealer Agreements"). On the applicable Closing Date, the Seller
will sell the Receivables comprising the related Receivables Pool to the Trust
pursuant to, if the trust is to be treated other than as a grantor trust for
federal income tax purposes, the related Sale and Servicing Agreement among the
Seller, the Servicer and the Trust (as amended and supplemented from time to
time, the "Sale and Servicing Agreement") or, if the Trust is to be treated as a
grantor trust for federal income tax purposes, the related Pooling and Servicing
Agreement.
The property of each Trust will also include (i) such amounts as from
time to time may be held in separate trust accounts established and maintained
by the Servicer with the Trustee pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement; (ii) security interests in the
vehicles financed by the Receivables (the "Financed Vehicles") and any
accessions thereto; (iii) the rights to proceeds from claims on certain physical
damage, credit life and disability insurance policies covering the Financed
Vehicles or the Obligors, as the case may be; (iv) the right of the Seller to
receive any proceeds from Dealer Recourse, if any, on Receivables or Financed
Vehicles; (v) the rights of the Seller under the Sale and Servicing Agreement or
the Pooling and Servicing Agreement, as applicable; (vi) the right to realize
upon any property (including the right to receive future Liquidation Proceeds)
that shall have secured a Receivable and that shall have been repossessed by or
on behalf of the applicable Trust; and (vii) any and all proceeds of the
foregoing. Various forms of credit enhancement may be used to provide credit
enhancement for the benefit of holders of the related Securities, including a
Yield Maintenance Account or a Reserve Fund. Additionally, pursuant to contracts
between TMCC and the Dealers, the Dealers will be required to repurchase
Receivables as to which Dealers have made certain misrepresentations.
The terms of each series of notes (the "Notes") or certificates (the
"Certificates" and, together with the Notes, the "Securities") issued by each
Trust (the "Issuer"), and additional information concerning the assets of each
Trust and any applicable credit enhancement will be set forth in a supplement to
this Prospectus (a "Prospectus Supplement").
THE TRUSTEE
The trustee for each Trust (the "Trustee") or the trustee under any
Indenture pursuant to which Notes are issued (the "Indenture Trustee") will be
specified in the related Prospectus Supplement. The Trustee's liability in
connection with the issuance and sale of the related Securities is limited
solely to the express obligations of such Trustee or Indenture Trustee set forth
in the related Trust Agreement and the Sale and Servicing Agreement, Indenture
or the related Pooling and Servicing Agreement, as applicable. A Trustee or
Indenture Trustee may resign at any time, in which event the Servicer, or its
successor, will be obligated to appoint a successor thereto. The Administrator
of a Trust that is not a grantor trust and the Servicer in respect of a Trust
that is a grantor trust may also remove a Trustee or Indenture Trustee that
ceases to be eligible to continue in such capacity under the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, or becomes
insolvent. In such circumstances, the Servicer or, in the case of a series that
includes Notes, the Administrator, as the case may be, will be obligated to
appoint a successor thereto. Any resignation or removal of a Trustee or
Indenture Trustee and appointment of a successor trustee will not become
effective until acceptance of the appointment by such successor.
THE SELLER
Toyota Motor Credit Receivables Corporation (the "Seller") was
incorporated in the State of California on June 24, 1993, as a wholly-owned,
limited purpose subsidiary of Toyota Motor Credit Corporation. The principal
executive offices of the Seller are located at 19001 South Western Avenue,
Torrance, California 90509 and its telephone number is (310) 618-4000.
The Seller was organized primarily for the purpose of acquiring
installment sales contracts similar to the Receivables and associated rights
from TMCC, causing the issuance of certificates similar to the Certificates and
engaging in related transactions. The Seller's articles of incorporation limit
the activities of the Seller to the foregoing purposes and to any activities
incidental to and necessary for such purposes.
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THE SERVICER
Toyota Motor Credit Corporation ("TMCC" or the "Servicer") was
incorporated in California on October 4, 1982, and commenced operations in
May 1983. At March 31, 1999, TMCC had three regional offices and 33 branches
in various locations in the United States, a branch in Puerto Rico and a
centralized customer service center in Iowa. The address of TMCC's principal
executive offices is 19001 South Western Avenue, Torrance, California 90509.
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 other financial services to
authorized Toyota and Lexus vehicle dealers and their customers in Puerto
Rico, a wholly-owned limited purpose subsidiary formed to acquire and
securitize retail finance receivables and a wholly-owned limited purpose
subsidiary formed to acquire and securitize lease receivables. TMCC and its
subsidiaries are collectively referred to as the "TMCC".
TMCC provides retail and wholesale financing, retail leasing 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 the Commonwealth of Puerto Rico. In addition, each of
TMCC' s branches provides underwriting and loan servicing support to dealers and
customers for most financial services offered by TMCC. TMCC's primary business
is providing vehicle retail and wholesale financing and retail leasing. 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). Substantially all of TMS's
products are purchased from Toyota Motor Corporation, the parent of TMS, or
its affiliates.
UNDERWRITING OF MOTOR VEHICLE LOANS
TMCC purchases automobile and/or light truck retail installment sales
contracts from approximately 1,200 Toyota and Lexus dealers located throughout
the United States, excluding Hawaii. Underwriting of such retail installment
sales contracts is performed by each branch using similar underwriting
standards. Dealers originate these receivables in accordance with TMCC's
requirements as specified in existing agreements between TMCC and such dealers.
The receivables are purchased in accordance with TMCC's underwriting standards
which emphasize, among other factors, the applicant's willingness and ability to
pay and the value of the vehicle to be financed.
Applications received from Dealers must be signed by the applicant
and must contain, among other information, the applicant's name, address,
residential status, source and amount of monthly income and amount of monthly
rent or mortgage payment. Dealers then send completed applications via
facsimile or data transmission to one of TMCC's retail branches where they
are entered into TMCC's internally-developed Application Processing System
("APS"). The APS then automatically generates and transmits credit bureau
requests to one of the major credit bureaus which provide a credit report to
TMCC. Key data from the bureaus are combined with data from the customer
applications, including ratios such as car payment to income and total debt
payments to total income, and weighted by a statistically validated credit
scoring process to provide objective evaluations of customer repayment
probabilities. The branches receive credit scores, bureau data (both
summarized and in raw form) and applicant information and TMCC credit
investigators then perform income and employment verification on non-"A"
rated risks. Once income and employment have been verified, all data is
passed on-line to TMCC credit analysts for decisions. The final credit
decision is made based upon the degree of credit risk perceived and the
amount of credit requested. If an application is conditionally approved or
rejected, the dealer is notified of the conditions required for the approval
or reasons for rejection. Additionally, an Equal Credit Opportunity Act
adverse action notice is sent to the customer specifying the reasons for
modification or rejection of the application for credit.
TMCC's retail installment sales contracts require obligors to maintain
specific levels of physical damage insurance during the term of the contract. At
the time of purchase, an obligor signs a statement indicating he has or will
have in effect the levels of insurance required by TMCC and provides the name
and address of his insurance company and agent. Obligors are generally required
to provide TMCC with evidence of compliance with the foregoing insurance
requirements.
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SERVICING OF MOTOR VEHICLE LOANS
Each branch services the loans it originates using the same servicing
system and procedures, except that centralized tracking units monitor the
maintenance of insurance and bankruptcy administration and recovery. The
collection department of each branch manages the liquidation of each receivable.
TMCC considers an obligor to be past due if less than 90% of a regularly
scheduled payment is received by the due date. TMCC uses an on-line
collection system that prioritizes loans for collections efforts, including the
generation of past-due notices and signaling TMCC collections personnel to
attempt to make telephone contact with delinquent obligors based on a behavioral
scoring method (which analyzes borrowers' past performance to predict future
payment behavior). TMCC generally determines whether to commence repossession
efforts before a receivable is 60 days past due. Repossessed vehicles are held
in inventory to comply with statutory requirements and then sold at public
auctions. Any deficiencies remaining after sale or after full charge-off are
pursued by TMCC to the extent practical and legally permitted. See "Certain
Legal Aspects of the Receivables --Deficiency Judgments and Excess Proceeds".
Collections of deficiencies are administered at a centralized facility. TMCC's
policy is to charge-off an auto loan as soon as disposition of the vehicle has
been effected and sales proceeds have been received. When repossession and
disposition of the collateral has not been effected, the charge-off occurs as
soon as TMCC determines that the vehicle cannot be recovered.
YEAR 2000 DATE CONVERSION
The year 2000 issue concerns the inability of computer systems and
related applications to function properly in the year 2000 and beyond. As a
wholly-owned subsidiary of TMS, TMCC is participating in TMS' comprehensive
action plan to identify and address year 2000 issues. As part of the year 2000
action plan, TMCC is identifying and evaluating potential year 2000 problems and
is implementing changes designed to yield year 2000 compliance in its
information technology systems, including mainframe, distributed and desktop
computer systems, networks and telecommunications (collectively, "IT systems")
and its non-information technology systems, including security and HVAC systems,
automated access readers and other machinery and equipment (collectively,
"embedded systems"). An additional component of the year 2000 action plan
involves TMCC's communications with its external business partners for the
purpose of assessing and reducing the risk that TMCC's operations could be
adversely affected by such third parties' noncompliance with year 2000 issues.
PHASES. The year 2000 action plan consists of four phases, some of
which are being conducted concurrently:
INVENTORY AND ASSESSMENT. During this phase an inventory is
taken of all software and/or hardware components of significant
applications or systems. Software and hardware that is no longer in use
or is planned to be replaced before the year 2000, is identified and
removed from the scope of the project. Once the inventory is completed
and verified, a preliminary determination of whether the software or
hardware is likely to have year 2000 date issues is made either by
manual review, vendor inquiry or by use of software tools designed to
search for date impacts. Once the assessment is completed, a business
critical prioritized plan is developed for remediation, testing, and
implementing the remediated hardware or software in the remaining
phases.
REMEDIATION. During this phase, software for which TMS or TMCC
owns the source code will be scanned and corrected. In most instances,
TMCC will use the "windowing" approach to fix source code which uses
program logic to correct year 2000 date issues. In some cases, it will
be necessary to expand the year field from two to four digits where the
year 2000 date issue can not be solved with the "windowing" method.
Software for which TMS or TMCC does not own the source code will be
remediated by obtaining the year 2000 ready version of the software
from the vendor. For hardware and operating system software, the year
2000 ready component will also be obtained from the vendor.
TESTING. The testing phase focuses mainly on remediated
hardware and software that supports business critical functions. Test
plans and test cases are expected to be developed and performed for
each application. For software modified by TMCC, tests will be designed
to demonstrate that application functionality has not changed as a
result of the remediation.
IMPLEMENTATION. During this phase, the remediated hardware and
software components will be implemented in the production environment.
At this time, policies and procedures will be implemented to
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ensure that additional modifications to remediated and tested hardware
and/or software are year 2000 compliant.
STATE OF READINESS. TMCC has identified the following six areas for
specific review and remediation in connection with its year 2000 compliance
efforts:
CRITICAL BUSINESS SYSTEMS APPLICATIONS. Includes distributed
and mainframe applications used in operations such as retail and lease
financing, customer account processing, collections, insurance
operations and accounting systems. TMCC has completed the inventory and
remediation of these systems. Certain business critical applications
have been tested and implemented back into production. Testing,
validation and implementation of the remaining business critical
applications is expected to continue through the third quarter of
calendar year 1999.
DESKTOP SYSTEMS. Includes commercial off-the-shelf software as
well as custom developed applications. TMCC has substantially completed
the inventory and assessment of these systems and related software
applications. Remediation and testing of business critical custom
developed systems is underway with implementation expected by the third
quarter of calendar year 1999. Replacement of non-compliant
off-the-shelf software applications is expected by the second quarter
of calendar year 1999.
TECHNICAL INFRASTRUCTURE. Includes mainframe, distributed and
PC systems, networks, and telecommunications. TMCC has completed the
inventory of its technical infrastructure with the assessment phase
expected to be completed by the second quarter of calendar year 1999.
Testing of business critical components is expected to begin in the
second quarter of calendar year 1999 with implementation expected by
the third quarter of calendar year 1999.
EMBEDDED SYSTEMS. Includes non-information technology systems
described above. TMCC has completed an inventory of embedded systems at
its owned facilities. Assessment of these systems is being conducted
through communication with manufacturers and/or suppliers and will
include remediation and onsite testing of critical systems.
Implementation is expected to be completed by the second quarter of
calendar year 1999. With respect to embedded systems located at
facilities leased by TMCC, TMCC is presently in the inventory and
assessment phase. TMCC intends to establish contingency plans for
coping with problems that may arise from embedded systems in leased
facilities that are not year 2000 compliant.
EXTERNAL COMPLIANCE. Includes financial institutions, dealers,
suppliers, trustees, underwriters and affiliates ("business partners").
Critical business partners have been identified and prioritized.
Letters and surveys have been sent to business partners to assess the
risk associated with those business partners' failure to remediate
their own year 2000 issues. TMCC has completed the assessment phase of
critical business partners. Testing of business critical systems with
external business partners will follow the assessment phase and
continue through calendar year 1999.
NON-CRITICAL SYSTEMS. Includes systems and applications from
the above-listed areas which have been prioritized as non-critical.
Such systems and applications will be reviewed on an ongoing basis and
assessed for year 2000 compliance throughout calendar year 1999.
TMS has contacted its affiliates and others involved in the manufacture
of Toyota and Lexus vehicles and equipment to determine the status of year 2000
product compliance, and based on information received to date, TMCC is not aware
of any year 2000 problems that would affect the operational safety of these
products.
YEAR 2000 COSTS. Costs associated with the year 2000 systems and
software modifications are generally expensed as incurred. TMS is allocating a
portion of its year 2000 costs to TMCC. TMCC's total cost (including allocated
costs from TMS) for the year 2000 issue is estimated not to exceed $20 million.
The estimated total cost to be incurred by TMCC in connection with its year 2000
compliance efforts is not expected to have a material adverse effect on TMCC's
results of operations, liquidity or capital resources. As a result of the
application of resources to year 2000 compliance efforts, certain information
technology projects previously scheduled to be initiated or implemented in
fiscal 1999 may be deferred. Such deferral is not expected to have a material
adverse effect on TMCC's results of operations, liquidity or capital resources.
YEAR 2000 RISKS. The most reasonably likely worst case scenario with
respect to the year 2000 issue is the failure of a business partner,
particularly another financial institution, to be year 2000 compliant. Although
TMCC
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does not currently anticipate that it will experience significant business
disruptions as a result of year 2000 problems, there remains uncertainty in this
area. The failure to achieve year 2000 compliance by energy and water utilities,
governmental agencies or other private or public suppliers of general
infrastructure could present substantial difficulties to TMCC's business
operations in the affected geographic areas. The inability of TMCC, its external
business partners or the public and private suppliers of general infrastructure
to identify and timely resolve year 2000 problems could result in a significant
adverse affect on TMCC's operations and financial results, including an
inability to collect receivables, pay obligations, process new business, raise
capital and occupy facilities.
YEAR 2000 CONTINGENCY PLAN. TMCC is currently developing a contingency
plan to address problems resulting from year 2000 noncompliance. TMCC's
contingency planning will focus on identifying systems of TMCC and its business
partners that TMCC believes would be the most likely to experience year 2000
problems. The contingency plan is expected to include arrangements with back-up
vendors, suppliers and other resources to permit operations to be conducted
temporarily on a manual basis. Completion of the contingency plan is expected by
the third quarter of calendar year 1999, although continuing revisions will be
made on an ongoing basis throughout the year as circumstances change and
additional information becomes available.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The foregoing description under "Year 2000 Date Conversion" contains
various "forward looking statements" within the meaning of Section 27A of the
Securities Act 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 TMCC's action plan for year 2000
compliance efforts will be carried out as described under "Year 2000 Date
Conversion - PHASES" and "- STATE OF READINESS"; that TMCC expects to complete
its year 2000 compliance efforts on its critical systems on a timely basis; that
the total estimated cost in connection with the year 2000 issue is not expected
to exceed $20 million, and is not expected to have a material adverse effect on
TMCC's results of operations, liquidity or capital resources; that deferral of
certain information technology projects is not expected to have a material
adverse effect on TMCC's results of operations, liquidity or capital resources;
that the risk to TMCC with respect to year 2000 issues is as described under
"Year 2000 Date Conversion - YEAR 2000 RISKS"; that TMCC's contingency plan to
address year 2000 issues will be as described under "Year 2000 Date Conversion -
YEAR 2000 CONTINGENCY PLAN" and completion of TMCC's contingency plan relating
to the year 2000 issue is expected by the third quarter of calendar year 1999.
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 following:
unanticipated problems or delays in the completion by TMCC of its year 2000
action plan; failure of TMCC's business partners to timely resolve their year
2000 issues and the failure of TMCC to develop and implement an adequate
contingency plan relating to year 2000 issues. Results actually achieved thus
may differ materially from expected results included in these statements.
WHERE YOU CAN FIND MORE INFORMATION ABOUT YOUR SECURITIES
THE TRUST - The Trustee, will provide to securityholders
("Securityholders") (which shall be Cede & Co. as the nominee of DTC unless
definitive Securities are issued under the limited circumstances described
herein) unaudited monthly and annual reports concerning the Receivables and
certain other matters. See "Certain Information Regarding the Securities
- --Reports to Securityholders" and "Description of the Transfer and Servicing
Agreements --Evidence as to Compliance" in the Prospectus. If and for so long as
any Securities listed on an exchange and the rules of such exchange so require,
each such report (including a statement of the outstanding principal balance of
each class of Securities) also shall be delivered to such exchange on the
related Distribution Date or date for delivery of such reports. Copies of such
reports may be obtained at no charge at the offices specified in the applicable
Prospectus Supplement.
THE SELLER - Toyota Motor Credit Receivables Corporation, as Seller of
the Receivables, has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (the "Registration Statement") under
the Securities Act of 1933 (the "Securities Act") of which this Prospectus forms
a part. The Registration Statement is available for inspection without charge at
the public reference facilities maintained at the principal office of the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois
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60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. You
may obtain information on the operation of the SEC's reference room by calling
the SEC at (800) SEC-0330. You may obtain copies of such materials at prescribed
rates by writing to the Public Reference Section of the SEC at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a website
(http://www.sec.gov) that contains reports, registration statements, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC.
TMCC - If the trust invests in demand notes issued by TMCC, TMCC, in
its capacity as issuer of demand notes, will be a registrant under the
Registration Statement. In that capacity, TMCC will be subject to the
informational requirements of the United States Securities Exchange Act. In
accordance with that law, TMCC will file annual, quarterly and special reports
and other information with the SEC. If you want more information about TMCC, you
may review the Registration Statement and TMCC's periodic filings, obtain copies
of such documents at prescribed rates or access the SEC's website. The relevant
contact information for the SEC is set forth in the paragraph captioned "The
Seller" above.
TMCC's filed periodic reports contain important information regarding
TMCC. Any information contained in reports filed with the SEC subsequent to the
date of this Prospectus will automatically update this Prospectus. TMCC, as swap
counterparty or issuer of demand notes, incorporates by reference the reports
listed below and any filings made by it with the SEC under Sections 13(a) or
15(d) of the United States Securities Exchange Act after the initial filing of
the registration statement.
- Annual Report on Form 10-K for the year ended September 30,
1998; and
- Quarterly Reports on Form 10-Q for the quarters ended December
31, 1998 and March 31, 1999.
If and for so long as Securities are listed on an exchange and the
rules of such exchange so require, the applicable Prospectus Supplement will
include the address of an office in the jurisdictions specified by the rules of
such exchange at which copies of the Registration Statement filed by TMCRC and
TMCC (including all documents incorporated therein) and TMCC's periodic SEC
reports can be obtained for so long as those Securities are outstanding. If so
required by the rules of such exchange, copies of those documents will also be
filed with such exchange for so long as those Securities are outstanding. Copies
of the operative agreements relating to the Securities will also be filed with
the SEC and with any such exchange that so requires.
THE RECEIVABLES POOLS
The Receivables Pools will include the Receivables purchased as of the
Cutoff Date. The Receivables were originated by Dealers in accordance with
TMCC's requirements and subsequently purchased by TMCC. The Receivables evidence
the indirect financing made available by TMCC to the related obligors (the
"Obligors") in connection with the purchase by such Obligors of the vehicles
financed thereby (the "Financed Vehicles"). On or before the date of initial
issuance of the Securities (the "Closing Date"), TMCC will sell the Receivables
to the Seller pursuant to the receivables purchase agreement (the "Receivables
Purchase Agreement") between the Seller and TMCC. The Seller will, in turn, sell
the Receivables to the Trust pursuant to the related Transfer and Servicing
Agreement. During the term of the related Transfer and Servicing Agreement,
neither the Seller nor TMCC may substitute any other retail installment sales
contract for any Receivable sold to the Trust.
The Receivables in each Receivables Pool will have been purchased by
the Servicer from Dealers in the ordinary course of business through its
branches located in the United States. The Receivables are purchased from
Dealers pursuant to Dealer Agreements. TMCC purchases Receivables originated in
accordance with its credit standards which are based upon the vehicle buyer's
ability and willingness to repay the obligation as well as the value of the
vehicle being financed.
The Receivables to be held by each Trust for inclusion in a Receivables
Pool will be randomly selected from TMCC's portfolio of auto and/or light duty
truck retail installment sales contracts that meet several criteria. Unless
otherwise provided in the related Prospectus Supplement, these criteria require
that each Receivable (i) is secured by a new or used vehicle, (ii) was
originated in the United States or a particular state, (iii) provides for
monthly payments that fully amortize the amount financed over its original term
to maturity, and (iv) satisfies the other criteria, if any, set forth in the
related Prospectus Supplement. No selection procedures believed by the Seller to
be adverse to the Securityholders of any series will be used in selecting the
related Receivables.
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Each Receivable will provide for the allocation of payments according
to (i) the simple interest method ("Simple Interest Receivables"), (ii) the
"actuarial" method ("Actuarial Receivables") or (iii) the "sum of periodic
balances" or "sum of monthly payments" method ("Rule of 78s Receivables" and,
together with the Actuarial Receivables, the "Precomputed Receivables").
SIMPLE INTEREST RECEIVABLES. Payments on Simple Interest Receivables
will be applied first to interest accrued through the date immediately preceding
the date of payment and then to unpaid principal. Accordingly, if an Obligor
pays an installment before its due date, the portion of the payment allocable to
interest for the payment period will be less than if the payment had been made
on the due date, the portion of the payment applied to reduce the principal
balance will be correspondingly greater, and the principal balance will be
amortized more rapidly than scheduled. Conversely, if an Obligor pays an
installment after its due date, the portion of the payment allocable to interest
for the payment period will be greater than if the payment had been made on the
due date, the portion of the payment applied to reduce the principal balance
will be correspondingly less, and the principal balance will be amortized more
slowly than scheduled, in which case a larger portion of the principal balance
may be due on the final scheduled payment date. No adjustment to the scheduled
monthly payments is made in the event of early or late payments, although in the
case of late payments the Obligor may be subject to a late charge.
ACTUARIAL RECEIVABLES. An Actuarial Receivable provides for
amortization of the loan over a series of fixed level monthly installments. Each
Scheduled Payment is deemed to consist of an amount of interest equal to 1/12 of
the stated annual percentage rate ("APR") of the Receivable multiplied by the
scheduled principal balance of the Receivable and an amount of principal equal
to the remainder of the Scheduled Payment. No adjustment to the scheduled
monthly payments is made in the event of early or late payments, although in the
case of late payments the Obligor may be subject to a late charge.
RULE OF 78s RECEIVABLES. A Rule of 78s Receivable provides for the
payment by the Obligor of a specified total amount of payments, payable in
monthly installments on the related due date, which total represents the
principal amount financed and finance charges in an amount calculated on the
basis of the related APR for the term of such Receivable. The rate at which such
amount of finance charges is earned and, correspondingly, the amount of each
Scheduled Payment allocated to reduction of the outstanding principal balance of
a Rule of 78s Receivable are calculated in accordance with the Rule of 78s.
Under the Rule of 78s, the portion of each payment allocable to interest is
higher during the early months of the term of a Rule of 78s Receivable and lower
during later months than that under a constant yield method for allocating
payments between interest and principal. Notwithstanding the foregoing, all
payments received by the Servicer on or in respect of the Rule of 78s
Receivables will be allocated pursuant to the related Transfer and Servicing
Agreement, as the case may be, on an actuarial basis. No adjustment is made in
the event of early or late payments, although in the case of late payments the
Obligor may be subject to a late charge.
In the event of a prepayment in full (voluntarily or by acceleration)
of a Precomputed Receivable, a "rebate" will be made to the Obligor of that
portion of the total amount of payments under the Receivable allocable to
"unearned" add-on interest. In the event of the prepayment in full (voluntarily
or by acceleration) of a Simple Interest Receivable, a "rebate" will not be made
to the Obligor, but the Obligor will be required to pay interest only to the
date immediately preceding the date of prepayment. The amount of a rebate under
a Precomputed Receivable will always be less than or equal to the remaining
scheduled payments of interest that would have been due under a Simple Interest
Receivable for which all remaining payments were made on schedule. Payments to
Securityholders will not be affected by such rebates under the Rule of 78s
Receivables because pursuant to the related Transfer and Servicing Agreement
such payments will be determined using the actuarial method.
Unless otherwise provided in the related Prospectus Supplement, each
Trust will account for the Rule of 78s Receivables as if such Receivables were
Actuarial Receivables. Amounts received upon prepayment in full of a Rule of 78s
Receivable in excess of the then outstanding principal balance of such
Receivable and accrued interest thereon (calculated pursuant to the actuarial
method) will not be paid to the Noteholders or passed through to the
Certificateholders of the applicable series but will be deemed to be an Excess
Amount and released to the Seller or otherwise applied as set forth in the
related Prospectus Supplement.
Additional information with respect to each Receivables Pool will be
set forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition, the distribution by APR and by the states of
origination, the portion of such Receivables Pool consisting of Precomputed
Receivables and of Simple Interest Receivables and the portion of such
Receivables Pool secured by new vehicles and by used vehicles.
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DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning TMCC's experience pertaining to
delinquencies, repossessions and net losses with respect to its portfolio of new
and used retail automobile and/or light duty truck receivables (including
receivables previously sold which TMCC continues to service) will be set forth
in each Prospectus Supplement. There can be no assurance that the delinquency,
repossession and net loss experience on any Receivables Pool will be comparable
to prior experience or to such information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average lives of the Securities of any series will
generally be influenced by the rate at which the principal balances of the
related Receivables are paid, which payment may be in the form of scheduled
amortization or prepayments. For this purpose, the term "prepayments" includes
prepayments in full, partial prepayments (including those related to rebates of
extended warranty contract costs and insurance premiums), liquidations due to
default, as well as receipts of proceeds from physical damage, credit life and
disability insurance policies and repurchases or purchases by the Seller or
TMCC, as the case may be, of certain Receivables for administrative reasons or
for breaches of representations and warranties. The term "weighted average life"
means the average amount of time during which each dollar of principal of a
Receivable is outstanding.
All of the Receivables will be prepayable at any time without penalty
to the Obligor. However, partial prepayments on the Precomputed Receivables made
by Obligors will not be paid on the Distribution Date following the Collection
Period in which they were received but will be retained and applied towards
payments due in later Collection Periods. If prepayments in full are received on
the Precomputed Receivables or if full or partial prepayments are received on
the Simple Interest Receivables, the actual weighted average life of the
Receivables may be shorter than the scheduled weighted average life of the
Receivables set forth in the related Prospectus Supplement. The rate of
prepayment of automotive receivables is influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the Financed Vehicle securing a Receivable without the consent
of the Seller.
No prediction can be made as to the rate of prepayment on the
Receivables in either stable or changing interest rate environments. TMCC
maintains limited records of the historical prepayment experience of the
automobile retail installment sales contracts included in its portfolio and is
not aware of any publicly available industry statistics for the entire industry
on an aggregate basis that set forth principal prepayment experience for retail
installment sales contracts similar to the Receivables over an extended period
of time. TMCC believes that its prepayment experience is consistent with that
generally found in the industry. However, no assurance can be given that
prepayments on the Receivables will conform to historical experience and no
prediction can be made as to the actual prepayment experience on the
Receivables. The rate of prepayment on the Receivables may also be influenced by
the structure of the related loan. In addition, under certain circumstances, the
Seller or Servicer will be obligated to repurchase Receivables from a given
Trust pursuant to the related Sale and Servicing Agreement or Pooling and
Servicing Agreement as a result of breaches of certain representations and
warranties or covenants. See "Description of the Transfer and Servicing
Agreements --Sale and Assignment of Receivables" and " --Servicing Procedures".
See also "Description of the Transfer and Servicing Agreements --Termination"
regarding the Servicer's and the Seller's option to purchase the Receivables
from a given Trust and " --Insolvency Event" regarding the sale of the
Receivables owned by a trust that is not a grantor trust if an Insolvency Event
with respect to the Seller occurs and "The Swap Agreement - Termination Events"
regarding events that would result in a termination of a swap. Any reinvestment
risk resulting from the rate of prepayments of the Receivables and the payment
of such prepayments to Securityholders will be borne entirely by the
Securityholders. In addition, early retirement of the Securities may be effected
by the exercise of the option of the Seller or the Servicer, or any successor to
the Servicer, to purchase all of the Receivables remaining in the Trust when the
Pool Balance is 10% or less of the Pool Balance as of the Cutoff Date.
In addition, pursuant to agreements between TMCC and the Dealers, each
Dealer is obligated to repurchase from TMCC contracts which do not meet certain
representations and warranties made by such Dealer (such Dealer repurchase
obligations are referred to herein as "Dealer Recourse"). Such representations
and warranties relate primarily to the origination of the contracts and the
perfection of the security interests in the related Financed Vehicles, and do
not typically relate to the creditworthiness of the related Obligors or the
collectability of such contracts. Although the Dealer Agreements with respect to
the Receivables will not be assigned to the Trustee, the related Sale and
Servicing Agreement or Pooling and Servicing Agreement will require that TMCC
deposit any recovery in respect of any Receivable pursuant to any Dealer
Recourse in the related Collection Account. The sales by the Dealers of
installment sales contracts to TMCC do not generally provide for recourse
against the Dealers for unpaid amounts in the event of a default by an Obligor
thereunder, other than in connection with the breach of the
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foregoing representations and warranties. See "Description of the Transfer and
Servicing Agreements --Sale and Assignment of Receivables" and " --Servicing
Procedures".
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Securities of a given series
on each Distribution Date, since such amount will depend, in part, on the amount
of principal collected on the related Receivables Pool during the applicable
Collection Period. No prediction can be made as to the actual prepayment
experience on the Receivables, and any reinvestment risks resulting from a
faster or slower incidence of prepayment of Receivables will be borne entirely
by the Securityholders of a given series.
The related Prospectus Supplement may set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to the particular Receivables Pool and the related series of
Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each payment with respect to
such class of Notes. The Note Pool Factor represents the remaining outstanding
principal balance of such class of Notes, as of the close of business on the
applicable Distribution Date, as a fraction of the initial outstanding principal
balance of such class of Notes. The "Certificate Balance" for each class will
initially equal the principal balance as of the relevant Closing Date (the
"Original Certificate Balance") and, on each Distribution Date thereafter, will
be reduced by all amounts allocable to principal paid on or prior to the
Distribution Date in respect of each class of Notes. The "Certificate Pool
Factor" for each class of Certificates will be a seven-digit decimal which the
Servicer will compute prior to each payment with respect to such class of
Certificates indicating the remaining Certificate Balance of such class of
Certificates, as of the close of business on the applicable Distribution Date,
as a fraction of the initial Certificate Balance of such class of Certificates.
Each Note Pool Factor and each Certificate Pool Factor will initially be
1.0000000 and thereafter will decline to reflect reductions in the outstanding
principal balance of the applicable class of Notes, or the reduction of the
Certificate Balance of the applicable class of Certificates, as the case may be.
A Noteholder's portion of the aggregate outstanding principal balance of the
related class of Notes is the product of (i) the original denomination of such
Noteholder's Note and (ii) the applicable Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding Certificate Balance for
the related class of Certificates is the product of (a) the original
denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor.
Unless otherwise provided in the related Prospectus Supplement with
respect to each Trust, the Securityholders will receive reports on or about each
Distribution Date concerning (i) with respect to the Collection Period
immediately preceding such Distribution Date, payments received on the
Receivables, the Pool Balance (as such term is defined in the related Prospectus
Supplement, the "Pool Balance"), each Certificate Pool Factor or Note Pool
Factor, as applicable, and various other items of information, and (ii) with
respect to the Collection Period second preceding such Distribution Date, as
applicable, amounts allocated or paid on the preceding Distribution Date and any
reconciliation of such amounts with information provided by the Servicer prior
to such current Distribution Date. In addition, Securityholders of record during
any calendar year will be furnished information for tax reporting purposes not
later than the latest date permitted by law. See "Certain Information Regarding
the Securities --Reports to Securityholders".
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the
Trust will use the net proceeds from the sale of the Securities of a given
series to purchase Receivables from the Seller and to make the initial deposit
into any Reserve Fund or Yield Maintenance Account, if applicable. Unless
otherwise specified in the related Prospectus Supplement, the Seller will use
the net proceeds so paid to it by any such Trust to purchase Receivables from
TMCC and for general corporate purposes.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes
(each, a "class") of Notes of the related series will be issued pursuant to the
terms of an indenture (the "Indenture"), a form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes and
the Indenture.
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Unless otherwise specified in the related Prospectus Supplement, each
class of Notes will initially be represented by one or more Notes, in each case
registered in the name of the nominee of DTC (together with any successor
depository selected by the Trust, the "Depository") except as set forth below.
Notes will be available for purchase in the denominations specified in the
related Prospectus Supplement in book-entry form only (unless otherwise
specified in the related Prospectus Supplement). The Seller has been informed by
DTC that DTC's nominee will be Cede, unless another nominee is specified in the
related Prospectus Supplement. Accordingly, such nominee is expected to be the
holder of record of the Notes (a "Noteholder") of each class. Unless and until
Definitive Notes are issued under the limited circumstances described herein or
in the related Prospectus Supplement, no Noteholder will be entitled to receive
a physical certificate representing a Note. All references herein and in the
related Prospectus Supplement to actions by Noteholders refer to actions taken
by DTC upon instructions from its participating organizations (the "DTC
Participants") and all references herein and in the related Prospectus
Supplement to payments, notices, reports and statements to Noteholders refer to
payments, notices, reports and statements to DTC or its nominee, as the
registered holder of the Notes, for distribution to Noteholders in accordance
with DTC's procedures with respect thereto. See "Certain Information Regarding
the Securities --Book-Entry Registration" and " -- Definitive Securities".
PRINCIPAL AND INTEREST ON THE NOTES
The related Prospectus Supplement will describe the timing and priority
of payment, seniority, allocations of losses, interest rate (the "Interest
Rate") and amount of or method of determining payments of principal and interest
on each class of Notes of a given series. The right of holders of any class of
Notes to receive payments of principal and interest may be senior or subordinate
to the rights of holders of any other class or classes of Notes of such series.
Payments of interest on the Notes will generally be made prior to payments of
principal. A series may include one or more classes of Notes (the "Strip Notes")
entitled to (i) principal payments with disproportionate, nominal or no interest
payments or (ii) interest payments with disproportionate, nominal or no
principal payments. Each class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate (and which may be
zero for certain classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each class
of Notes of a given series or the method for determining such Interest Rate. See
also "Certain Information Regarding the Securities --Fixed Rate Securities" and
" -- Floating Rate Securities". One or more classes of Notes of a series may be
redeemable in whole or in part, including as a result of the Servicer or the
Seller exercising its option to purchase the related Receivables Pool or other
early termination of the related trust.
One or more classes of Notes of a given series may have fixed principal
payment schedules, in the manner and to the extent set forth in the related
Prospectus Supplement. Noteholders of such Notes would be entitled to receive as
payments of principal on any given Distribution Date the amounts set forth on
such schedule with respect to such Notes.
Unless otherwise specified in the related Prospectus Supplement,
payments to Noteholders of all classes within a series in respect of interest
will have the same priority. Under certain circumstances, on any Distribution
Date the amount available for such payments could be less than the amount of
interest payable on the Notes. If this is the case, each class of Noteholders
will receive its ratable share (based upon the aggregate amount of interest due
to such class of Noteholders) of the aggregate amount of interest available for
payment on the Notes. See "Description of the Transfer and Servicing Agreements
- --Payments" and " -- Credit and Cash Flow Enhancement".
If a series of Notes includes two or more classes of Notes, the
sequential order and priority of payment in respect of principal and interest,
and any schedule or formula or other provisions applicable to the determination
thereof, of each such class will be set forth in the related Prospectus
Supplement. Payments in respect of principal and interest of any class of Notes
will be made on a pro rata basis among all the Noteholders of such class.
THE INDENTURE
MODIFICATION OF INDENTURE. If a Trust has issued Notes pursuant to an
Indenture, the Trust and the Indenture Trustee may, with the consent of the
holders of not less than 51% of the outstanding Notes of the related series,
execute a supplemental indenture to add provisions to, change in any manner or
eliminate any provisions of, the related Indenture, or modify (except as
provided below) in any manner the rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby no supplemental indenture will: (i) change the
due date of any installment of principal of or interest on any such Note or
reduce the principal amount thereof, the interest rate specified thereon or the
redemption price with respect thereto or change any place of payment where
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or the coin or currency in which any such Note or any interest thereon is
payable; (ii) impair the right to institute suit for the enforcement of certain
provisions of the related Indenture regarding payment; (iii) reduce the
percentage of the aggregate amount of the outstanding Notes of such series, the
consent of the holders of which is required for any such supplemental indenture
or the consent of the holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such Indenture; (iv) modify
or alter the provisions of the related Indenture regarding the voting of Notes
held by the applicable Trust, any other obligor on such Notes, the Seller or an
affiliate of any of them; (v) reduce the percentage of the aggregate outstanding
amount of such Notes, the consent of the holders of which is required to direct
the related Indenture Trustee to sell or liquidate the Receivables if the
proceeds of such sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes of such series; (vi)
decrease the percentage of the aggregate principal amount of such Notes required
to amend the sections of the related Indenture which specify the applicable
percentage of aggregate principal amount of the Notes of such series necessary
to amend such Indenture or certain other related agreements; or (vii) permit the
creation of any lien ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral for such Notes or,
except as otherwise permitted or contemplated in such Indenture, terminate the
lien of such Indenture on any such collateral or deprive the holder of any such
Note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trust and the applicable Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; provided
that such action will not materially and adversely affect the interest of any
such Noteholder.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the
Notes of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of: (i)
a default for five days or more in the payment of any interest on any such Note;
(ii) a default in the payment of the principal of or any installment of the
principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
applicable Trust made in the related Indenture and the continuation of any such
default for a period of 90 days after notice thereof is given to such Trust by
the applicable Indenture Trustee or to such Trust and such Indenture Trustee by
the holders of at least 25% in principal amount of such Notes then outstanding
acting together as a single class; (iv) any representation or warranty made by
such Trust in the related Indenture or in any certificate delivered pursuant
thereto or in connection therewith having been incorrect in a material respect
as of the time made, and such breach not having been cured within 30 days after
notice thereof is given to such Trust by the applicable Indenture Trustee or to
such Trust and such Indenture Trustee by the holders of at least 25% in
principal amount of such Notes then outstanding acting together as a single
class; or (v) certain events of bankruptcy, insolvency, receivership or
liquidation of the applicable Trust. However, the amount of principal required
to be paid to Noteholders of such series under the related Indenture will
generally be limited to amounts available to be deposited in the Collection
Account. Therefore, unless otherwise specified in the related Prospectus
Supplement, the failure to pay principal on a class of Notes generally will not
result in the occurrence of an Event of Default until the final scheduled
Distribution Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a majority
in principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in the
related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount of
such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have the
applicable Trust maintain possession of such Receivables and continue to apply
collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
however, such Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes as such payments would have
become due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66 2/3% of the aggregate
outstanding amount of such Notes.
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Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such Indenture
at the request or direction of any of the holders of such Notes, if such
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to the provisions for indemnification and
certain limitations contained in the related Indenture, the holders of not less
than 51% of the principal amount of the outstanding Notes of a given series will
have the right to direct the time, method and place of conducting any proceeding
or any remedy available to the applicable Indenture Trustee, and the holders of
a majority in principal amount of such Notes then outstanding may, in certain
cases, waive any default with respect thereto, except a default in the deposit
of collections or other required amounts, any required payment from amounts held
in any trust account in respect of amounts due on the Notes, payment of
principal or interest or a default in respect of a covenant or provision of such
Indenture that cannot be modified without the waiver or consent of all the
holders of such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note of any series will have the right to institute any proceeding
with respect to the related Indenture, unless (i) such holder previously has
given to the applicable Indenture Trustee written notice of a continuing Event
of Default, (ii) the holders of not less than 25% in principal amount of the
outstanding Notes of such series have made written request to such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee, (iii)
such holder or holders have offered such Indenture Trustee reasonable indemnity,
(iv) such Indenture Trustee has for 60 days failed to institute such proceeding
and (v) no direction inconsistent with such written request has been given to
such Indenture Trustee during such 60-day period by the holders of a majority in
principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor
the related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of such Trust contained in the
applicable Indenture.
CERTAIN COVENANTS. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless, among other
things, (i) the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the District of
Columbia, (ii) such entity expressly assumes such Trust's obligation to make due
and punctual payments upon the Notes of the related series and the performance
or observance of every agreement and covenant of such Trust under the Indenture,
(iii) no Event of Default shall have occurred and be continuing immediately
after such merger or consolidation, (iv) such Trust has been advised that the
rating of the Securities of such series then in effect would not be reduced or
withdrawn by the Rating Agencies as a result of such merger or consolidation and
(v) such Trust has received an opinion of counsel to the effect that such
consolidation or merger would have no material adverse tax consequence to the
Trust or to any related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and Servicing
Agreements or certain related documents with respect to such Trust
(collectively, the "Related Documents"), sell, transfer, exchange or otherwise
dispose of any of the assets of such Trust, (ii) claim any credit on or make any
deduction from the principal and interest payable in respect of the Notes of the
related series (other than amounts withheld under the Code or applicable state
law) or assert any claim against any present or former holder of such Notes
because of the payment of taxes levied or assessed upon such Trust, (iii) except
as expressly permitted by the Related Documents, dissolve or liquidate in whole
or in part, (iv) permit the validity or effectiveness of the related Indenture
to be impaired or permit any person to be released from any covenants or
obligations with respect to such Notes under such Indenture except as may be
expressly permitted thereby or (v) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the assets of such Trust or any part thereof,
or any interest therein or the proceeds thereof.
No Trust may engage in any activity other than as specified in this
Prospectus or in the related Prospectus Supplement. No Trust will incur, assume
or guarantee any indebtedness other than indebtedness incurred pursuant to the
related Notes and the related Indenture, pursuant to any Advances made to it by
the Servicer or otherwise in accordance with the Related Documents.
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ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture, the
amount, interest rate and maturity date of certain indebtedness owing by such
Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be
discharged with respect to the collateral securing the related Notes upon the
delivery to the related Indenture Trustee for cancellation of all such Notes or,
with certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Issuer will be obligated to appoint a successor
thereto for such series. The Issuer or Administrator may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to continue as
such under the related Indenture or if such Indenture Trustee becomes insolvent.
In such circumstances, the Issuer will be obligated to appoint a successor
thereto for the applicable series of Notes. Any resignation or removal of the
Indenture Trustee and appointment of a successor thereto for any series of Notes
will not become effective until acceptance of the appointment by such successor.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust that issues Certificates, one or more
classes (each, a "class") of Certificates of the related series will be issued
pursuant to the terms of a Trust Agreement or a Pooling and Servicing Agreement,
a form of each of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement or
Pooling and Servicing Agreement, as applicable.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given series purchased by the Seller,
each class of Certificates will initially be represented by one or more
Certificates registered in the name of the nominee for DTC, except as set forth
below. Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given series purchased by the Seller,
the Certificates will be available for purchase in the denominations specified
in the related Prospectus Supplement in book-entry form only (unless otherwise
specified in the related Prospectus Supplement). The Seller has been informed by
DTC that DTC's nominee will be Cede, unless another nominee is specified in the
related Prospectus Supplement. Accordingly, such nominee is expected to be the
holder of record of the Certificates (a "Certificateholder") of any series that
are not purchased by the Seller. Unless and until Definitive Certificates are
issued under the limited circumstances described herein or in the related
Prospectus Supplement, no Certificateholder (other than the Issuer) will be
entitled to receive a physical certificate representing a Certificate. All
references herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related Prospectus Supplement
to distributions, notices, reports and statements to Certificateholders refer to
distributions, notices, reports and statements given, made or sent to DTC or its
nominee, as the case may be, as the registered holder of the Certificates, for
distribution to Certificateholders in accordance with DTC's procedures with
respect thereto. See "Certain Information Regarding the Securities --Book-Entry
Registration" and " --Definitive Securities". Any Certificates of a given series
owned by the Seller or its affiliates will be entitled to equal and
proportionate benefits under the applicable Trust Agreement, except that such
Certificates will be deemed not to be outstanding for the purpose of determining
whether the requisite percentage of Certificateholders have given any request,
demand, authorization, direction, notice, consent or other action under the
Related Documents (other than the commencement by the related Trust of a
voluntary proceeding in bankruptcy as described under "Description of the
Transfer and Servicing Agreements --Insolvency Event").
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PAYMENTS OF PRINCIPAL AND INTEREST
The timing and priority of payments, seniority, allocations of losses,
pass through rate (the "Pass Through Rate") and amount of or method of
determining payments with respect to principal and interest of each class of
Certificates will be described in the related Prospectus Supplement. Payments of
interest on such Certificates will be made on the dates specified in the related
Prospectus Supplement (each, a "Distribution Date"). To the extent provided in
the related Prospectus Supplement, a series may include one or more classes of
Certificates (the "Strip Certificates") entitled to (i) payments in respect of
principal with disproportionate, nominal or no interest payments or (ii)
interest payments with disproportionate, nominal or no payments in respect of
principal. Each class of Certificates may have a different Pass Through Rate,
which may be a fixed, variable or adjustable Pass Through Rate (and which may be
zero for certain classes of Strip Certificates) or any combination of the
foregoing. The related Prospectus Supplement will specify the Pass Through Rate
for each class of Certificates of a given series or the method for determining
such Pass Through Rate. See also "Certain Information Regarding the Securities
- --Fixed Rate Securities" and " --Floating Rate Securities". Unless otherwise
provided in the related Prospectus Supplement, payments in respect of the
Certificates of a given series that includes Notes may be subordinate to
payments in respect of the Notes of such series as more fully described in the
related Prospectus Supplement. The rights of holders of any class of
Certificates to receive payments of principal and interest may also be senior or
subordinate to the rights of holders of any other class or classes of
Certificates of such series as more fully described in the related Prospectus
Supplement. Payments in respect of interest on and principal of any class of
Certificates will be made on a pro rata basis among all the Certificateholders
of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment or
amount of payments in respect of interest and principal, and any schedule or
formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement.
If and as provided in the related Prospectus Supplement, certain
amounts remaining on deposit in the Collection Account after all required
payments to the related Securityholders have been made may be released to the
Seller, TMCC or one or more third party credit or liquidity enhancement
providers.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Any class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set forth in
the applicable Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes --Principal and Interest on the Notes" and
"Description of the Certificates --Payments of Principal and Interest".
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest during each
applicable Interest Period at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement.
The "Spread" is the number of basis points to be added to or subtracted
from the related Base Rate applicable to such Floating Rate Securities. The
"Spread Multiplier" is the percentage of the related Base Rate applicable to
such Floating Rate Securities by which such Base Rate will be multiplied to
determine the applicable interest rate on such floating Rate Securities. The
"Index Maturity" is the period to maturity of the instrument or obligation with
respect to which the Base Rate will be calculated.
The applicable Prospectus Supplement will designate one of the
following Base Rates as applicable to a given Floating Rate Security: (i) LIBOR
(a "LIBOR Security"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate
Security"), (iii) the Treasury Rate (a "Treasury Rate Security"), (iv) the
Federal Funds Rate (a "Federal Funds Rate Security"), (v) the CD Rate (a "CD
Rate Security") or (vi) such other Base Rate as is set forth in such Prospectus
Supplement.
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"H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates", or any successor publication, published by
the Board of Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations for
U.S. Government Securities" published by the Federal Reserve Bank of New York.
"Interest Reset Date" will be the first day of the applicable Interest Reset
Period, or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
Each applicable Prospectus Supplement will specify whether the rate of
interest on the related Floating Rate Securities will be reset daily, weekly,
monthly, quarterly, semiannually, annually or such other specified period (each,
an "Interest Reset Period") and the dates on which such Interest Rate will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Prospectus Supplement, the Interest Reset Date will be, in the case
of Floating Rate Securities which reset: (i) daily, each Business Day; (ii)
weekly, the Wednesday of each week (with the exception of weekly reset Treasury
Rate Securities which will reset the Tuesday of each week, except as specified
below); (iii) monthly, the third Wednesday of each month; (iv) quarterly, the
third Wednesday of March, June, September and December of each year; (v)
semiannually, the third Wednesday of the two months specified in the applicable
Prospectus Supplement; and (vi) annually, the third Wednesday of the month
specified in the applicable Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, if any
Interest Reset Date for any Floating Rate Security would otherwise be a day that
is not a Business Day, such Interest Reset Date will be postponed to the next
succeeding day that is a Business Day, except that in the case of a Floating
Rate Security as to which LIBOR is an applicable Base Rate, if such Business Day
falls in the next succeeding calendar month, such Interest Reset Date will be
the immediately preceding Business Day. Unless specified otherwise in the
applicable Prospectus Supplement, "Business Day" means a day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York,
or San Francisco, California are authorized or obligated by law, regulation,
executive order or decree to be closed. Unless otherwise specified in the
applicable Prospectus Supplement, with respect to Notes as to which LIBOR is an
applicable Base Rate, the definition of Business Day will include all London
Business Days. "London Business Day" means any day (a) if the Index Currency (as
defined below) is other than the Euro, on which dealings in deposits in such
Index Currency are transacted in the London interbank market or (b) if the Index
Currency is the Euro a day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer System ("TARGET system") is open and on which
commercial banks and foreign exchange markets settle payments in London and New
York.
Unless otherwise specified in the related Prospectus Supplement, if any
Distribution Date for any Floating Rate Security (other than the Final
Distribution Date) would otherwise be a day that is not a Business Day, such
Distribution Date will be the next succeeding day that is a Business Day except
that in the case of a Floating Rate Security as to which LIBOR is the applicable
Base Rate, if such Business Day falls in the next succeeding calendar month,
such Distribution Date will be the immediately preceding Business Day. Unless
otherwise specified in the related Prospectus Supplement, if the final
Distribution Date of a Floating Rate Security falls on a day that is not a
Business Day, the payment of principal, premium, if any, and interest will be
made on the next succeeding Business Day, and no interest on such payment shall
accrue for the period from and after such Final Distribution Date.
Except as otherwise specified in the applicable Prospectus Supplement,
each Floating Rate Security will accrue interest on an "Actual/360" basis, an
"Actual/Actual" basis, or a "30/360" basis, in each case as specified in the
applicable Prospectus Supplement. For Floating Rate Securities calculated on an
Actual/360 basis and Actual/Actual basis, accrued interest for each Interest
Period will be calculated by multiplying (i) the face amount of such Floating
Rate Security, (ii) the applicable interest rate, and (iii) the actual number of
days in the related Interest Period, and dividing the resulting product by 360
or 365, as applicable (or, with respect to an Actual/Actual basis Floating Rate
Security, if any portion of the related Interest Period falls in a leap year,
the product of (i) and (ii) above will be multiplied by the sum of (X) the
actual number of days in that portion of such Interest Period falling in a leap
year divided by 366 and (Y) the actual number of days in that portion of such
Interest Period falling in a non-leap year divided by 365). For Floating Rate
Securities calculated on a 30/360 basis, accrued interest for an Interest Period
will be computed on the basis of a 360-day year of twelve 30-day months,
irrespective of how many days are actually in such Interest Period. Unless
otherwise specified in the related Prospectus Supplement, with respect to any
Floating Rate Security that accrues interest on a 30/360 basis, if any
Distribution Date including the related Final Distribution Date falls on a day
that is not a Business Day, the related payment of principal or interest will be
made on the next succeeding Business Day as if made on the date such payment was
due, and no interest will accrue on the amount so payable for the period from
and after such Distribution Date. The "Interest Period" with respect to any
class of Floating Rate Securities will be set forth in the related Prospectus
Supplement.
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As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation agent
(each, a "Calculation Agent") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series, which may be the related
Trustee or Indenture Trustee with respect to such series. All determinations of
interest by the Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of Floating Rate
Securities of a given class. Unless otherwise specified in the applicable
Prospectus Supplement, all percentages resulting from any calculation on
Floating Rate Securities will be rounded to the nearest one hundred-thousandth
of a percentage point, with five one millionths of a percentage point rounded
upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or
..0987655)), and all dollar amounts used in or resulting from such calculation on
Floating Rate Securities will be rounded to the nearest cent (with one-half cent
being rounded upward).
CD RATE SECURITIES. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"CD Rate" for each Interest Reset Period shall be the rate as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
"CD Rate Determination Date") for negotiable certificates of deposit having the
Index Maturity designated in the applicable Prospectus Supplement as published
in H.15(519) under the heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
"CD Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate
Security and will be the arithmetic mean of the secondary market offered rates
as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for such CD Rate
Security for negotiable certificates of deposit of major United States money
market banks with a remaining maturity closest to the Index Maturity designated
in the related Prospectus Supplement in an amount that is representative for a
single transaction in that market at that time; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting offered
rates as mentioned in this sentence, the "CD Rate" for such Interest Reset
Period will be the same as the CD Rate for the immediately preceding Interest
Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the Business Day preceding the applicable Distribution Date.
COMMERCIAL PAPER RATE SECURITIES. Each Commercial Paper Rate Security
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Security as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement, as published by the Board of Governors of the Federal
Reserve System in H.15(519) under the heading "Commercial Paper - Nonfinancial"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). In the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date (as defined below) pertaining to such
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Commercial Paper Rate Determination Date, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield on such Commercial
Paper Rate Determination Date of the rate for commercial paper of the specified
Index Maturity as published in Composite Quotations under the heading
"Commercial Paper --Nonfinancial". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the "Commercial Paper Rate" for such Interest Reset Period
shall be the Money Market Yield of the arithmetic mean of the offered rates, as
of 11:00 a.m., New York City time, on such Commercial Paper Rate Determination
Date of three leading dealers of commercial paper in The City of New York
selected by the Calculation Agent for such Commercial Paper Rate Security for
commercial paper of the specified Index Maturity placed for an industrial issuer
whose bonds are rated "AA" or the equivalent by a nationally recognized rating
agency; provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting offered rates as mentioned in this sentence,
the "Commercial Paper Rate" for such Interest Reset Period will be the same as
the Commercial Paper Rate for the immediately preceding Interest Reset Period.
"Money Market Yield" means a yield (expressed as a percentage rounded
upward to the nearest one hundredthousandth of a percentage point) calculated in
accordance with the following formula:
D X 360
Money Market Yield = -------------------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper 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.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the related Distribution Date.
FEDERAL FUNDS RATE SECURITIES. Each Federal Funds Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Federal Funds Rate and the Spread or Spread Multiplier, if
any, specified in such Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be calculated by the Calculation Agent for such Federal Funds Rate
Securities and will be the arithmetic mean of the rates for the last transaction
in overnight United States dollar federal funds arranged by three leading
brokers of federal funds transactions in The City of New York selected by the
Calculation Agent prior to 9:00 A.M., New York City time on such Federal Funds
Rate Interest Determination Date; provided, however that if the brokers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Federal Funds Rate with respect to such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect for the preceding
Interest Reset Period.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
LIBOR SECURITIES. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and in
the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
with respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Security as follows:
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(i) On the second London Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "LIBOR Determination
Date"), the Calculation Agent for such LIBOR Security will determine
the arithmetic mean of the offered rates for deposits in U.S. dollars
for the period of the Index Maturity specified in the applicable
Prospectus Supplement, as either (a) if "LIBOR Reuters" is specified in
the applicable Prospectus Supplement, the arithmetic mean of the
offered rates (unless the specified Designated LIBOR Page (as defined
below) by its terms provides only for a single rate, in which case such
single rate shall be used) for deposits in the Index Currency (as
defined below) having the Index Maturity designated in the applicable
Prospectus Supplement, commencing on the second London Business Day
immediately following that LIBOR Determination Date, that appear on the
Designated LIBOR Page specified in the applicable Prospectus Supplement
as of 11:00 A.M. London time, on that LIBOR Determination Date, if at
least two such offered rates appear (unless, as aforesaid, only a
single rate is required) on such Designated LIBOR Page, or (b) if
"LIBOR Telerate" is specified in the applicable Prospectus Supplement,
the rate for deposits in the Index Currency having the Index Maturity
designated in the applicable Prospectus Supplement commencing on the
second London Business Day immediately following that LIBOR
Determination Date that appears on the Designated LIBOR Page specified
in the applicable Prospectus Supplement as of 11:00 A.M. London time,
on that LIBOR Determination Date. If fewer than two offered rates
appear, or no rate appears, as applicable, LIBOR in respect of the
related LIBOR Determination Date will be determined as if the parties
had specified the rate described in clause (ii) below.
(ii) With respect to a LIBOR Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be,
on the applicable Designated LIBOR Page as specified in clause (i)
above, the Calculation Agent will request the principal London offices
of each of four major reference banks in the London interbank market,
as selected by the Calculation Agent, to provide the Calculation Agent
with its offered quotation for deposits in the Index Currency for the
period of the Index Maturity designated in the applicable Prospectus
Supplement, commencing on the second London Business Day immediately
following such LIBOR Determination Date, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on such
LIBOR Determination Date and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time. If at least two such quotations are provided,
LIBOR determined on such LIBOR Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR determined on such LIBOR Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., (or
such other time specified in the applicable Prospectus Supplement), in
the applicable Principal Financial Center (as defined below), on such
LIBOR Determination Date by three major banks in such Principal
Financial Center selected by the Calculation Agent for loans in the
Index Currency to leading European banks, having the Index Maturity
designated in the applicable Prospectus Supplement and in a principal
amount that is representative for a single transaction in such Index
Currency in such market at such time; provided, however, that if the
banks so selected by the Calculation Agent are not quoting as mentioned
in this sentence, LIBOR determined on such LIBOR Determination Date
will be LIBOR in effect for the preceding Interest Reset Period.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Prospectus Supplement as the currency for which
LIBOR shall be calculated. If no such currency is specified in the applicable
Prospectus Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated in the applicable Pricing Supplement, the display on the Reuters
Monitor Money Rates Services on the page designated in the applicable Prospectus
Supplement (or such other page as may replace such designated page on that
service for the purpose of displaying London interbank rates of major banks) for
the applicable Index Currency, or (b) if "LIBOR Telerate" is designated in the
applicable Prospectus Supplement, the display on the Dow Jones Telerate Service
on the page designated in the applicable Prospectus Supplement (or such other
page as may replace such designated page on that service or such other service
or services as may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for the related Index
Currency) for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency. If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Prospectus Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, page 3750) had been specified.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars, Deutsche marks, Canadian dollars, Australian dollars, Italian lira,
Swiss francs, Dutch guilders and Euros, the Principal Financial Center shall be
The City of New York, Frankfurt, Toronto, Sydney, Rome, Zurich, Amsterdam and
London, respectively.
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TREASURY RATE SECURITIES. Each Treasury Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement
determined on the "Treasury Rate Determination Date" specified in such
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Period will be the rate for the most recent
auction of direct obligations of the United States ("Treasury bills") having the
Index Maturity specified in the applicable Prospectus Supplement, as such rate
shall be published in H.15(519) under the heading "U.S. Government Securities
- --Treasury bills --auction average (investment)" or, in the event that such rate
is not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Treasury Rate Determination Date, the
auction average rate (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity are
not published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held in a particular week, then
the "Treasury Rate" for such Interest Reset Period will be the rate published in
H.15(510) under the heading "U.S. Government Securities --Treasury Bills
- --Secondary Market" (expressed as a bond equivalent yield on the basis of a 365
or 366 day year, as applicable, on a daily basis), or if not published by 3:00
P.M. New York City time on the related Calculation Date, the Treasury Rate will
be calculated by the Calculation Agent for such Treasury Rate Security and shall
be the yield to maturity (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Treasury Rate Determination Date or, if such a day is not a business day, the
next succeeding business day or (b) the second business day preceding the date
any payment is required to be made for any period following the applicable
Interest Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities") in
which the principal amount payable on the final Distribution Date for such class
(the "Indexed Principal Amount") and/or the interest payable on any Distribution
Date is determined by reference to a measure (the "Index") which will be related
to the exchange rates of one or more currencies or composite currencies (the
"Index Currencies"); the price or prices of specified commodities; or specified
stocks, which may be based on U.S. or foreign stocks, on specified dates
specified in the applicable Prospectus Supplement, or such other price, interest
rate, exchange rate or other financial index or indices as are described in the
applicable Prospectus Supplement. Holders of Indexed Securities may receive a
principal amount on the related final Distribution Date that is greater than or
less than the face amount of the Indexed Securities depending upon the relative
value on the related final Distribution Date of the specified indexed item.
Information as to the method for determining the principal amount payable on the
related final Distribution Date, if any, and, where applicable, certain
historical information with respect to the specific indexed item or items and
special tax considerations associated with investment in Indexed Securities,
will be set forth in the applicable Prospectus Supplement. Notwithstanding
anything to the contrary herein, for purposes of determining the rights of a
holder of a Security indexed as to principal in respect of voting for or against
amendments to the related Trust Agreement, Indenture, or other related
agreements as the case may be, and modifications and the waiver of rights
thereunder, the principal amount of such Indexed Security shall be deemed to be
the face amount thereof upon issuance.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
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Supplement. Any determination of such independent calculation agent shall, in
the absence of manifest error, be binding on all parties.
The applicable Prospectus Supplement will describe whether the
principal amount of the related Indexed Security, if any, that would be payable
upon redemption or repayment prior to the applicable final scheduled
Distribution Date will be the Face Amount of such Indexed Security, the Indexed
Principal Amount of such Indexed Security at the time of redemption or repayment
or another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, each
class of Securities offered hereby will be represented by one or more
certificates registered in the name of Cede, as nominee of the Depository Trust
Company ("DTC"). Unless otherwise specified in the related Prospectus
Supplement, Securityholders may hold beneficial interests in Securities through
the DTC (in the United States) or Cedelbank ("Cedelbank") or the Euroclear
System ("Euroclear") (in Europe or Asia) directly if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
No Securityholder will be entitled to receive a certificate
representing such person's interest in the Securities, except as set forth
below. Unless and until Securities of a class are issued in fully registered
certificated form ("Definitive Securities") under the limited circumstances
described below, all references herein to actions by Noteholders,
Certificateholders or Securityholders shall refer to actions taken by DTC upon
instructions from DTC Participants, and all references herein to distributions,
notices, reports and statements to Noteholders, Certificateholders or
Securityholders shall refer to distributions, notices, reports and statements to
Cede, as the registered holder of the Securities, for distribution to
Securityholders in accordance with DTC procedures. As such, it is anticipated
that the only Noteholder, Certificateholder or Securityholder will be Cede, as
nominee of DTC. Securityholders will not be recognized by the related Trustee as
Noteholders, Certificateholders or Securityholders as such terms will be used in
the relevant agreements, and Securityholders will only be permitted to exercise
the rights of holders of Securities of the related class indirectly through DTC
and DTC Participants, as further described below.
Cedelbank 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 Cedelbank 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 Cedelbank or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary. However, each such cross-market transaction will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines. The relevant European 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. Cedelbank Participants and Euroclear Participants
may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in
Cedelbank 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 securities settled during such processing will be reported to the
relevant Euroclear or Cedelbank participant on such business day. Cash received
in Cedelbank or Euroclear as a result of sales of Securities by or through a
Cedelbank 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 Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
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
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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 Securities 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 SEC.
Unless otherwise specified in the related Prospectus Supplement,
Securityholders that are not DTC Participants or Indirect DTC Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Securities may do so only through DTC Participants and Indirect DTC
Participants. DTC Participants will receive a credit for the Securities on DTC's
records. The ownership interest of each Securityholder will in turn be recorded
on respective records of the DTC Participants and Indirect DTC Participants.
Securityholders will not receive written confirmation from DTC of their
purchase, but Securityholders 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
Securityholder entered into the transaction. Transfers of ownership interests in
the Securities of any class will be accomplished by entries made on the books of
DTC Participants acting on behalf of Securityholders.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC will be registered in the name of Cede, a nominee of DTC.
The deposit of Securities with DTC and their registration in the name of Cede
will effect no change in beneficial ownership. DTC will have no knowledge of the
actual Securityholders and its records will reflect only the identity of the DTC
Participants to whose accounts such Securities are credited, which may or may
not be the Securityholders. DTC Participants and Indirect DTC Participants will
remain responsible for keeping account of their holdings on behalf of their
customers. While the Securities of a Series are held in book-entry form,
Securityholders will not have access to the list of Securityholders of such
Series, which may impede the ability of Securityholders to communicate with each
other.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect DTC Participants and by DTC
Participants and Indirect DTC Participants to Securityholders 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 Securities and is
required to receive and transmit payments of principal of and interest on the
Securities. DTC Participants and Indirect DTC Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders.
DTC's practice is to credit DTC Participants' accounts on each
Distribution 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 Distribution Date. Payments by DTC Participants and Indirect DTC
Participants to Securityholders will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such DTC Participant and not of DTC, the related Indenture
Trustee or Trustee (or any paying agent appointed thereby), the Seller 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
Securities to DTC will be the responsibility of the related Indenture Trustee or
Trustee (or any paying agent), disbursement of such payments to DTC Participants
will be the responsibility of DTC and disbursement of such payments to the
related Securityholders will be the responsibility of DTC Participants and
Indirect DTC Participants. As a result, under the book-entry format,
Securityholders 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 Securityholders.
Because DTC can only act on behalf of DTC Participants, who in turn act
on behalf of Indirect DTC Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
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DTC has advised the Seller that it will take any action permitted to be
taken by a Securityholder only at the direction of one or more DTC Participants
to whose account with DTC the Securities are credited. Additionally, DTC has
advised the Seller that it will take such actions with respect to specified
percentages of the Securityholders' 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 will consent or vote with respect to the
Securities. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the
related Indenture Trustee or Trustee as soon as possible after any applicable
Record Date for such a consent or vote. The Omnibus Proxy will assign Cede's
consenting or voting rights to those DTC Participants to whose accounts the
related Securities are credited on that record date (which record date will be
identified in a listing attached to the Omnibus Proxy).
Cedelbank is incorporated under the laws of Luxembourg as a
professional depository. Cedelbank holds securities for its participating
organizations ("Cedelbank Participants") and facilitates the clearance and
settlement of securities transactions between Cedelbank Participants through
electronic book entry changes in accounts of Cedelbank Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedelbank in any of 28 currencies, including United States dollars.
Cedelbank provides to Cedelbank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a professional depository, Cedelbank
is subject to regulation by the Luxembourg Monetary Institute. Cedelbank
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 or series of Securities offered
hereby. Indirect access to Cedelbank is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedelbank Participant, either directly or indirectly.
Euroclear 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" or "Euroclear"), under contract with Euroclear
Clearance System S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include any underwriters,
agents or dealers with respect to any class or series of Securities 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.
Payments with respect to Securities held through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such payments will be subject to tax
withholding in accordance with relevant United States tax laws and regulations.
See "Certain Federal Income Tax Consequences".
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Cedelbank or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by a Securityholder on behalf of a Cedelbank
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, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among participants of
DTC, Cedelbank 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 payments (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 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 SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the
Notes, if any, and the Certificates of a given series will be issued in fully
registered, certificated form ("Definitive Notes" and "Definitive Certificates",
respectively, and collectively referred to herein as "Definitive Securities") to
Noteholders or Certificateholders or their respective nominees, rather than to
DTC or its nominee, only if (i) DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
such Administrator or Trustee is unable to locate a qualified successor (and if
it is an Administrator that has made such determination, such Administrator so
notifies the applicable Trustee in writing), (ii) the Seller or the
Administrator or Trustee, as applicable, at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Default or a Servicer Default with respect to such Securities, holders
representing at least 51% of the outstanding principal amount of the Notes or
the Certificates, as the case may be, of such series, acting together as a
single class, advise the applicable Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a successor thereto) with
respect to such Notes or Certificates is no longer in the best interest of the
holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee or Indenture Trustee will be required to
notify all applicable Securityholders of a given series through Participants of
the availability of Definitive Securities. Upon surrender by DTC of the
definitive certificates representing the corresponding Securities and receipt of
instructions for re-registration, the applicable Trustee or Indenture Trustee
will reissue such Securities as Definitive Securities to such Securityholders.
Payments of principal of, and interest on, such Definitive Securities
will thereafter be made by the applicable Trustee or Indenture Trustee in
accordance with the procedures set forth in the related Indenture or the related
Trust Agreement or Pooling and Servicing Agreement, as applicable, directly to
holders of Definitive Securities in whose names the Definitive Securities were
registered at the close of business on the applicable Record Date specified for
such Securities in the related Prospectus Supplement. Such payments will be made
by check mailed to the address of such holder as it appears on the register
maintained by the applicable Trustee or Indenture Trustee. The final payment on
any such Definitive Security, however, will be made only upon presentation and
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surrender of such Definitive Security at the office or agency specified in the
notice of final payment to the applicable Securityholders. The applicable
Trustee or the Indenture Trustee will provide such notice to the applicable
Securityholders not less than 15 nor more than 30 days prior to the date on
which such final payment is expected to occur.
Definitive Securities will be transferable and exchangeable at the
offices of the applicable Trustee or of a registrar named in a notice delivered
to holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of such
series or one or more holders of such Notes evidencing not less than 25% of the
aggregate outstanding principal balance of such Notes may, by written request to
the related Indenture Trustee, obtain access to the list of all Noteholders
maintained by such Indenture Trustee for the purpose of communicating with other
Noteholders with respect to their rights under the related Indenture or under
such Notes. Such Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of Noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense of the requesting
Noteholders, to all Noteholders of such series.
Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Trustee, obtain access to the list of all
Certificateholders maintained by such Trustee for the purpose of communicating
with other Certificateholders with respect to their rights under the related
Trust Agreement or Pooling and Servicing Agreement or under such Certificates.
The Pooling and Servicing Agreement, Trust Agreement and Indenture will
not provide for the holding of annual or other meetings of Securityholders.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, on or
prior to each Distribution Date, the Servicer will prepare and provide to the
related Indenture Trustee a statement to be delivered to the related Noteholders
on such Distribution Date. With respect to each series of Securities that
includes Certificates, on or prior to each Distribution Date, the Servicer will
prepare and provide to the related Trustee a statement to be delivered to the
related Certificateholders. With respect to each series of Securities, each such
statement to be delivered to Securityholders will include (to the extent
applicable) the following information (and any other information so specified in
the related Prospectus Supplement) as to the Notes of such series and as to the
Certificates of such series with respect to such Distribution Date or the period
since the previous Distribution Date, as applicable:
(i) the amount of the payment allocable to the principal
amount of each class of such Notes and to the Certificate Balance of
each class of such Certificates;
(ii) the amount of the payment allocable to interest on or
with respect to each class of Securities of such series;
(iii) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note
Pool Factor for each class of such Notes, and the Certificate Balance
and the Certificate Pool Factor for each class of such Certificates,
each after giving effect to all payments reported under clause (i)
above on such date;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the Interest Rate or Pass Through Rate for the Interest
Period relating to the succeeding Distribution Date for any class of
Notes or Certificates of such series with variable or adjustable rates;
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(vii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding
statement;
(viii) the aggregate amount of monthly payments (or portions
thereof) determined by the Servicer to be due in one or more future
Collections Periods ("Payments Ahead") on deposit in the related
Payahead Account or held by the Servicer with respect to the related
Receivables and the change in such amount from the immediately
preceding Distribution Date;
(ix) the amount of Advances made in respect of the related
Receivables and the related Collection Period and the amount of
unreimbursed Advances on such Distribution Date; and
(x) the balance of any related Reserve Fund, Yield Maintenance
Account or other credit or liquidity enhancement on such date, after
giving effect to changes thereto on such date and the amount of such
changes.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the applicable
Trustee will mail to each person who at any time during such calendar year has
been a Securityholder with respect to such Trust and received any payment
thereon a statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain Federal
Income Tax Consequences".
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement pursuant to which a Trust
will purchase Receivables from the Seller and the Servicer will agree to service
such Receivables, each Trust Agreement (in the case of a grantor trust, the
Pooling and Servicing Agreement) pursuant to which a Trust will be created and
Certificates will be issued thereby and each Administration Agreement pursuant
to which TMCC will undertake certain administrative duties with respect to a
Trust that issues Notes (collectively, the "Transfer and Servicing Agreements").
Forms of the Transfer and Servicing Agreements have been filed as exhibits to
the Registration Statement of which this Prospectus forms a part. The provisions
of any of the Transfer and Servicing Agreements may differ from those described
in this Prospectus and, if so, will be described in the related Prospectus
Supplement. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Transfer
and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the Closing Date specified with respect to any given
Trust in the related Prospectus Supplement (the "Closing Date"), TMCC will sell
and assign to the Seller, without recourse, pursuant to a Receivables Purchase
Agreement (the "Receivables Purchase Agreement"), its entire interest in the
Receivables comprising the related Receivables Pool, including the security
interests in the Financed Vehicles. On the Closing Date, the Seller will
transfer and assign to the applicable Trustee on behalf of the Trust, without
recourse, pursuant to a Sale and Servicing Agreement or a Pooling and Servicing
Agreement, as applicable, its entire interest in the Receivables comprising the
related Receivables Pool, including its security interests in the related
Financed Vehicles. Each such Receivable will be identified in a schedule
appearing as an exhibit to such Sale and Servicing Agreement or such Pooling and
Servicing Agreement (a "Schedule of Receivables"). The applicable Trustee will,
concurrently with such transfer and assignment, on behalf of the Trust, execute
and deliver the related Notes and/or Certificates. Unless otherwise provided in
the related Prospectus Supplement, the net proceeds received from the sale of
the Certificates and the Notes of a given series will be applied to the purchase
of the related Receivables from the Seller and, to the extent specified in the
related Prospectus Supplement, to make any required initial deposit into the
Reserve Fund.
TMCC, pursuant to a Receivables Purchase Agreement, and the Seller,
pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, will represent and warrant, with respect to whether, among other
things: (i) the information provided in the related Schedule of Receivables
is true and correct in all material respects; (ii) the terms of each
Receivable require the related Obligor to maintain physical damage insurance
covering the Financed Vehicle in accordance with the Seller's normal
requirements; (iii) as of the applicable Closing Date, to the best of its
knowledge, the related Receivables are free and clear of all security
interests, liens, charges and encumbrances and no offsets, defenses or
counterclaims have been asserted or threatened; (iv) as of the Closing Date,
each of such
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Receivables is secured by a first perfected security interest in favor of TMCC
in the Financed Vehicle; (v) each related Receivable, at the time it was
originated, complied and, as of the Closing Date, complies in all material
respects with applicable federal and state laws, including, without limitation,
consumer credit, truth-in-lending, equal credit opportunity and disclosure laws;
and (vi) any other representations and warranties that may be set forth in the
related Prospectus Supplement are true and correct in all material respects.
Unless otherwise provided in the related Prospectus Supplement, as of
the last day of the second (or, if the Seller so elects, the first) month
following the discovery by or notice to the Seller of a breach of any
representation or warranty of the Seller that materially and adversely affects
the interests of the related Trust in any Receivable, the Seller, unless the
breach is cured, will repurchase such Receivable (a "Warranty Receivable") from
such Trust and, pursuant to the Receivables Purchase Agreement, TMCC will
purchase such Warranty Receivable from the Seller, at a price equal to the
Warranty Purchase Payment for such Receivable. The "Warranty Purchase Payment"
(1) for a Precomputed Receivable, will be equal to (a) the sum of (i) all
remaining Scheduled Payments (and any applicable Yield Maintenance Amounts),
(ii) all past due Scheduled Payments for which an Advance has not been made,
(iii) all outstanding Advances made by the Servicer in respect of such
Precomputed Receivable and (iv) an amount equal to any reimbursements of
outstanding Advances made by the Servicer with respect to such Precomputed
Receivable from collections made on or in respect of other Receivables, minus
(b) the sum of (i) the rebate, calculated on an actuarial basis, that would be
payable to the Obligor on a Precomputed Receivable were the Obligor to prepay
such Precomputed Receivable in full on such day and (ii) any other proceeds
previously received (e.g., insurance or other proceeds in respect of the
liquidation of such Precomputed Receivable) to the extent applied to reduce the
Principal Balance of such Precomputed Receivable and (2) for a Simple Interest
Receivable, will be equal to its unpaid principal balance, plus interest thereon
at a rate equal to the sum of the Interest Rate or Pass Through Rate specified
in the related Sale and Servicing Agreement or Pooling and Servicing Agreement
and the Servicing Fee Rate to the last day of the Collection Period relating to
such repurchase. This repurchase obligation will constitute the sole remedy
available to the Securityholders or the Trust for any such uncured breach by the
Seller. The obligation of the Seller to repurchase a Receivable will not be
conditioned on performance by TMCC of its obligation to purchase such Receivable
from the Seller pursuant to the Receivables Purchase Agreement.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing both the Receivables and the
Servicer's own portfolio of automobile and/or light duty truck installment sales
contracts, as well as to reduce administrative costs, the Seller and each Trust
will designate the Servicer as custodian to maintain possession, as such Trust's
agent, of the related installment sale contracts and any other documents
relating to the Receivables. The Receivables will not be physically segregated
from other automobile and/or light duty truck installment sales contracts of the
Servicer, or those which the Servicer services for others, to reflect the
transfer to the related Trust. However, UCC financing statements reflecting the
sale and assignment of the Receivables by TMCC to the Seller and by the Seller
to the applicable Trust will be filed, and the respective accounting records and
computer files of TMCC and the Seller will reflect such sale and assignment.
Because the Receivables will remain in the possession of the Servicer and will
not be stamped or otherwise marked to reflect the assignment to the Trustee, if
a subsequent purchaser were able to take physical possession of the Receivables
without knowledge of the assignment, the Trustee's interest in the Receivables
could be defeated. See "Certain Legal Aspects of the Receivables --Security
Interests". In addition, under certain circumstances the Trustee's security
interest in collections that have been received by the Servicer but not yet
remitted to the related Collection Account could be defeated.
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more accounts
(each, a "Collection Account"), in the name of the Indenture Trustee on behalf
of the related Securityholders, into which payments made on or with respect to
the related Receivables and amounts released from any Yield Maintenance Account,
Reserve Fund or other form of credit enhancement will be deposited for payment
to the related Securityholders. With respect to each Trust that does not issue
Notes, the Servicer will also establish and maintain a Collection Account and
any other Trust Account in the name of the related Trustee on behalf of the
related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish for each series of Securities an additional account (the "Payahead
Account"), in the name of the related Trustee or, if such Trust issues Notes,
the Indenture Trustee, into which, to the extent required by the Sale and
Servicing Agreement or Pooling and Servicing Agreement, early payments by or on
behalf of Obligors on Precomputed Receivables will be deposited until such time
as the related payment becomes due. Until such time as payments ahead are
transferred from the Payahead Account to a Collection Account, they will not
constitute collected interest or collected principal and will
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not be available for payment to the applicable Noteholders or
Certificateholders. The Payahead Account will initially be maintained with the
applicable Indenture Trustee or Trustee.
Any other accounts to be established with respect to a Trust, including
any Yield Maintenance Account or any Reserve Fund will be described in the
related Prospectus Supplement.
For any series of Securities, funds in the related Collection Account,
any Yield Maintenance Account, the Reserve Fund and such other accounts as may
be identified in the related Prospectus Supplement (collectively, the "Trust
Accounts") will be invested as provided in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement in Eligible Investments. "Eligible
Investments" are generally limited to investments acceptable to the Rating
Agencies rating such Securities as being consistent with the rating of such
Securities and may include retail installment sale contracts secured by new or
used automobiles and/or light duty trucks. Except as described below or in the
related Prospectus Supplement, Eligible Investments are limited to obligations
or securities that mature on or before the next Distribution Date for such
series. However, to the extent permitted by the Rating Agencies, funds in any
Trust Account may be invested in securities that will not mature prior to the
date of the next payment with respect to such Certificates or Notes and will not
be sold to meet any shortfalls. Thus, the amount of cash in any Reserve Fund at
any time may be less than the balance of the Reserve Fund. If the amount
required to be withdrawn from any Reserve Fund to cover shortfalls in
collections on the related Receivables (as provided in the related Prospectus
Supplement) exceeds the amount of cash in the Reserve Fund, a temporary
shortfall in the amounts paid to the related Noteholders or Certificateholders
could result, which could, in turn, increase the average life of the Notes or
the Certificates of such series. Except as otherwise specified in the related
Prospectus Supplement, investment earnings on funds deposited in the Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be released to the Servicer on each Distribution Date and
shall be the property thereof.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee (if it is the
Paying Agent under the Trust Agreement), as applicable, or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) which has either (A) a long-term unsecured debt rating
acceptable to the Rating Agencies or (B) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating Agencies and (ii) whose
deposits are insured by the FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, follow
such collection procedures as it follows with respect to comparable retail
installment sale contracts it services for itself or others. Consistent with its
normal procedures, the Servicer will be authorized to grant certain rebates,
adjustments or extensions with respect to the Receivables. However, if any such
modification alters the APR or the Amount Financed or the total number of
Scheduled Payments of a Receivable or extends the maturity of a Receivable
beyond the final scheduled maturity date set forth in the applicable Prospectus
Supplement (the "Final Maturity Scheduled Date"), the Servicer will be obligated
either to purchase such Receivable as described in the next paragraph or make
Advances on each subsequent Distribution Date in amounts equal to the amount of
any reduction to the related Scheduled Payments to be paid by the related
Obligors during the subsequent Collection Periods.
In the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Servicer will covenant that except as otherwise contemplated
therein, (i) it will not release any Financed Vehicle from the security interest
granted in the related Receivable, (ii) it will do nothing to impair the rights
of the Securityholders in the Receivables and (iii) it will not amend any
Receivable such that the total number of Scheduled Payments, the Amount Financed
or the APR is altered or the maturity of a Receivable is extended beyond the
Final Scheduled Maturity Date unless it is making Advances corresponding to
reductions to Scheduled Payments as described above. As of the last day of the
second (or, if the Servicer so elects, the first) Collection Period following
the Collection Period in which the Seller, the Servicer or the Trustee discovers
a breach of any such covenant that materially and adversely affects the
interests of the Certificateholders in a Receivable, the Servicer, unless the
breach is cured, will
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purchase the Receivable (an "Administrative Receivable") from the Trustee at a
price equal to the Administrative Purchase Payment for such Receivable. The
"Administrative Purchase Payment" (1) for a Precomputed Receivable, will be
equal to (a) the sum of (i) all remaining Scheduled Payments (plus any
applicable Yield Maintenance Payments), (ii) an amount equal to any
reimbursements of Advances made by the Servicer with respect to such Precomputed
Receivable from collections on or in respect of other Receivables and (iii) all
past due Scheduled Payments for which an Advance has not been made, minus (b)
all Payments Ahead in respect of such Precomputed Receivable held by the
Servicer or on deposit in the Payahead Account and (2) for a Simple Interest
Receivable, will be equal to its unpaid Principal Balance, plus interest thereon
at a rate equal to the sum of the Interest Rate or Pass Through Rate specified
in the related Sale and Servicing Agreement or Pooling and Servicing Agreement
and the Servicing Fee Rate to the last day of the Collection Period relating to
such purchase. Upon the purchase of any Administrative Receivable, the Servicer
will for all purposes of the Sale and Servicing Agreement or the Pooling
Agreement, as applicable, be deemed to have released all claims for the
reimbursement of outstanding Advances made in respect of such Receivable. This
purchase obligation will constitute the sole remedy available to the
Certificateholders or the Trustee for any such uncured breach by the Servicer.
If the Servicer determines that eventual payment in full of a
Receivable is unlikely, the Servicer will follow its normal practices and
procedures to recover all amounts due upon such Receivable, including the
repossession and disposition of the related Financed Vehicle at a public or
private sale, or the taking of any other action permitted by applicable law. See
"Certain Legal Aspects of the Receivables".
INSURANCE ON FINANCED VEHICLES
Each Receivable requires the related Obligor to maintain both
comprehensive and collision insurance covering the Financed Vehicle in an amount
not less than the actual cash value thereof pursuant to which TMCC is named as a
loss payee. Since the Obligors may select their own insurers to provide the
requisite coverage, the specific terms and conditions of their policies may
vary. TMCC monitors the maintenance of such insurance. If the Obligor fails to
maintain such insurance, TMCC may, at its option place limited dual insurance
coverage on such Financed Vehicle and charge the Obligor for such coverage. In
the event that the failure of an Obligor to maintain any such required insurance
results in a shortfall in amounts to be paid to Certificateholders, to the
extent such shortfall is not covered by amounts on deposit in the Reserve Fund
or other methods of credit enhancement, the Securityholders could suffer a loss
on their investment.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "Collection Period") into the related Collection
Account.
The Servicer may retain all payments on or in respect of the
Receivables received from Obligors and all proceeds of Receivables collected
during each Collection Period without segregation in its own accounts until
deposited in the Collection Account on the Business Day immediately preceding
the related Distribution Date unless and until (i) TMCC ceases to be the
Servicer, (ii) an Event of Default exists and is continuing or (iii) the
short-term unsecured debt of TMCC ceases to be rated at least P-1 by Moody's and
A-1 by Standard & Poor's, and alternative arrangements acceptable to the Rating
Agencies are not made. Thereafter, the Servicer will deposit all such payments
and proceeds into the Collection Account not later than two Business Days after
receipt. However, pending deposit into the Collection Account, collections may
be invested in Eligible Investments by the Servicer at its own risk and for its
own benefit and will not be segregated from its own funds, and the Servicer, at
its own risk and for its own benefit, may instruct the Trustee to invest amounts
held in the Collection Account from the time deposited until the related
Distribution Date in Eligible Investments. The Seller or the Servicer, as the
case may be, will remit the aggregate Warranty Purchase Payments and
Administrative Purchase Payments of any Receivables to be purchased from the
Trust into the Collection Account on or before the Business Day immediately
preceding the related Distribution Date.
If the Servicer were unable to remit such funds, Securityholders might
incur a loss. The Seller or TMCC, as the case may be, will remit the aggregate
Warranty Purchase Payments and Administrative Purchase Payments with respect to
any Receivables required to be purchased from the related Trust into the related
Collection Account on or before the Business Day immediately preceding the
related Distribution Date. To the extent set forth in the related Prospectus
Supplement, the Servicer may, in order to satisfy the requirements described
above, obtain a letter of credit or other security for the benefit of the
related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Warranty Purchase Payments and
Administrative Purchase Payments with respect to Receivables required to be
repurchased by the Seller or the Servicer, as applicable.
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Collections on or in respect of a Receivable made during a Collection
Period (including Warranty Purchase Payments and Administrative Purchase
Payments) which are not late fees, extension fees or certain other similar fees
or charges will be applied first to any outstanding Advances made by the
Servicer with respect to such Receivable, and then to the related Scheduled
Payment. Any collections on or in respect of a Receivable remaining after such
applications will be considered an "Excess Payment". Excess Payments
constituting a prepayment in full of Precomputed Receivables and any Excess
Payments relating to Simple Interest Receivables will be applied as a prepayment
in respect of such Receivable (each, a "Prepayment"). All other Excess Payments
in respect of Precomputed Receivables will be held by the Servicer (or if the
Servicer has not satisfied the conditions in clauses (i) through (iii) in the
second preceding paragraph, deposited in the Payahead Account), as a Payment
Ahead.
ADVANCES
Unless otherwise provided in the related Prospectus Supplement, if the
Scheduled Payment due on a Precomputed Receivable (other than an Administrative
Receivable or a Warranty Receivable) is not received in full by the end of the
month in which it is due, whether as the result of any extension granted to the
Obligor or otherwise, the amount of Payments Ahead, if any, not previously
applied with respect to such Precomputed Receivable, shall be applied by the
Servicer to the extent of the shortfall and the Payments Ahead shall be reduced
accordingly. If any shortfall remains, the Servicer will make an advance to the
Trust in an amount equal to the amount of such shortfall (each, a "Precomputed
Advance"). The Servicer will not be obligated to make a Precomputed Advance to
the extent that it determines, in its sole discretion, that such Precomputed
Advance will not be recovered from subsequent collections on or in respect of
the related Precomputed Receivable. All Precomputed Advances shall be
reimbursable to the Servicer, without interest, if and when a payment relating
to a Receivable with respect to which a Precomputed Advance has previously been
made is subsequently received (other than from Administrative Purchase
Payments). Upon the determination by the Servicer that reimbursement from the
preceding source is unlikely, it will be entitled to recover unreimbursed
Precomputed Advances from collections on or in respect of other Precomputed
Receivables.
In addition, if the Scheduled Payment on a Simple Interest Receivable
(other than an Administrative Receivable or a Warranty Receivable) is not
received in full by the end of the month in which it is due, the Servicer shall,
subject to the limitations set forth below, advance to the Trust an amount with
respect to such Simple Interest Receivable equal to the product of the Principal
Balance of such Simple Interest Receivable as of the first day of the related
Collection Period and one-twelfth of its APR minus the amount of interest
actually received on such Simple Interest Receivable during the related
Collection Period (each, a "Simple Interest Advance", and together with the
Precomputed Advances, the "Advances"). If such a calculation results in a
negative number, an amount equal to such negative amount shall be paid to the
Servicer in reimbursement of outstanding Simple Interest Advances. In addition,
in the event that a Simple Interest Receivable becomes a Liquidated Receivable,
the amount of accrued and unpaid interest thereon (but not including interest
for the current Collection Period) shall, up to the amount of all outstanding
Simple Interest Advances in respect thereof, be withdrawn from the related
Collection Account and paid to the Servicer in reimbursement of such outstanding
Simple Interest Advances. No advances of principal will be made with respect to
Simple Interest Receivables. The Servicer will not be obligated to make a Simple
Interest Advance (other than in respect of an interest shortfall arising from
the prepayment of a Simple Interest Receivable) to the extent that it
determines, in its sole discretion, that such Simple Interest Advance will not
be recovered from subsequent collections on or in respect of the related Simple
Interest Receivable.
The Servicer will also be required to make Advances with respect to
each Receivable that it does not purchase as described above under
" -- Servicing Procedures" as to which it has made any modification that reduces
the amount of Scheduled Payments to be paid by the related Obligor during
subsequent Collection Periods.
The Servicer will make all Advances by depositing into the related
Collection Account an amount equal to the aggregate of the Precomputed Advances
and Simple Interest Advances due in respect of a Collection Period on the
Business Day immediately preceding the related Distribution Date.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the Prospectus Supplement with respect to
any Trust, the Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to a specified percentage per annum (as set
forth in the related Prospectus Supplement, the "Servicing Fee Rate") of the
Pool Balance as of the first day of the related Collection Period (the
"Servicing Fee"). The Servicing Fee (together with any portion of the Servicing
Fee that remains unpaid from prior Distribution Dates) will be paid solely to
the extent of Available Interest. However, the Servicing Fee will be paid prior
to the payment of any portion of Available Interest to the Noteholders or the
Certificateholders of the given series.
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Unless otherwise provided in the related Prospectus Supplement with
respect to a given Trust, the Servicer will also be entitled to collect and
retain any late fees, prepayment charges, extension fees and other
administrative fees or similar charges allowed by applicable law with respect to
the related Receivables as additional servicing compensation and will be
entitled to reimbursement from such Trust for certain liabilities. The Servicer
may also be entitled to receive any interest earned during a Collection Period
from the investment of monies in the Trust Accounts. Payments by or on behalf of
Obligors will be allocated to scheduled payments and late fees and other charges
in accordance with the Servicer's normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of motor vehicle receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, providing payment information, paying costs of collections and
policing the collateral. The Servicing Fee also will compensate the Servicer for
administering the particular Receivables Pool, including making Advances,
accounting for collections and furnishing monthly and annual statements to the
related Trustee and Indenture Trustee with respect to payments and generating
federal income tax information for such Trust and for the related Noteholders
and Certificateholders. The Servicing Fee also will reimburse the Servicer for
certain taxes, the fees of the related Trustee and Indenture Trustee, if any,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering the applicable Receivables Pool.
The "Pool Balance" will equal the aggregate Principal Balance of the
Receivables. The "Principal Balance" of a Receivable as of any date will equal
the original principal balance of such Receivable minus the sum of (i) in the
case of a Precomputed Receivable, that portion of all Scheduled Payments due on
or prior to such date allocable to principal, computed in accordance with the
actuarial method, (ii) in the case of a Simple Interest Receivable, that portion
of all Scheduled Payments actually received on or prior to such date allocable
to principal, (iii) any Warranty Purchase Payment or Administrative Purchase
Payment with respect to such Receivable allocable to principal (to the extent
not included in clauses (i) and (ii) above) and (iv) any Prepayments or other
payments applied to reduce the unpaid principal balance of such Receivable (to
the extent not included in clauses (i), (ii) and (iii) above).
PAYMENTS
With respect to each series of Securities, beginning on the
Distribution Date specified in the related Prospectus Supplement, payments of
principal and interest (or, where applicable, of principal or interest only) on
each class of such Securities entitled thereto will be made by the applicable
Indenture Trustee to the Noteholders and by the applicable Trustee to the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each class of
Noteholders and all payments to each class of Certificateholders of such series
will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Distribution Date collections on
the related Receivables will be withdrawn from the related Collection Account
and will be paid to the Noteholders and/or Certificateholders to the extent
provided in the related Prospectus Supplement. Credit enhancement, such as a
Reserve Fund, will be available to cover any shortfalls in the amount available
for payment to the Securityholders on such date to the extent specified in the
related Prospectus Supplement. As more fully described in the related Prospectus
Supplement, and unless otherwise specified therein, (i) payments in respect of
principal of a class of Securities of a given series will be subordinate to
payments in respect of interest on such class; (ii) payments in respect of one
or more classes of Certificates of such series may be subordinate to payments in
respect of Notes, if any, of such series or other classes of Certificates of
such series; and (iii) payments in respect of one or more classes of Notes of
such series may be subordinated to payments in respect of other classes of Notes
of such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related Prospectus
Supplement, credit and cash flow enhancement may be in the form of subordination
of one or more classes of Securities, Reserve Funds, over-collateralization,
letters of credit, credit or liquidity facilities, surety bonds, guaranteed
investment contracts, swaps or other interest rate protection agreements,
repurchase obligations, yield maintenance agreements, other agreements with
respect to third party payments or other support, cash deposits or such other
arrangements as may be described in the related Prospectus Supplement or any
combination of two or more of the foregoing. If specified in the applicable
Prospectus Supplement, credit or cash flow enhancement for a class of Securities
may cover one or more other
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classes of Securities of the same series, and credit or cash flow enhancement
for a series of Securities may cover one or more other series of Securities.
The presence of a Reserve Fund and other forms of credit enhancement
for the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of such class or series of the full
amount of principal and interest due thereon and to decrease the likelihood that
such Securityholders will experience losses. Unless otherwise specified in the
related Prospectus Supplement, the credit enhancement for a class or series of
Securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, Securityholders of any class or
series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one class or series of Securities, Securityholders of any such
class or series will be subject to the risk that such credit enhancement will be
exhausted by the claims of Securityholders of other classes or series.
RESERVE FUND. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Seller or a third party will establish for a series or class of
Securities an account, as specified in the related Prospectus Supplement (the
"Reserve Fund"), which will be maintained with the related Trustee or Indenture
Trustee, as applicable. Unless otherwise provided in the related Prospectus
Supplement, the Reserve Fund will be funded by an initial deposit by the Seller
or a third party on the Closing Date in the amount set forth in the related
Prospectus Supplement (the "Reserve Fund Initial Deposit"). To the extent
provided in the related Prospectus Supplement, the amount on deposit in the
Reserve Fund will be increased on each Distribution Date thereafter up to the
Specified Reserve Fund Balance (as defined in the related Prospectus Supplement)
by the deposit therein of the amount of collections on the related Receivables
remaining on each such Distribution Date after the payment of all other required
payments and payments on such date. The related Prospectus Supplement will
describe the circumstances and manner under which payments may be made out of
the Reserve Fund, either to holders of the Securities covered thereby or to the
Seller or a third party.
YIELD MAINTENANCE ACCOUNT; YIELD MAINTENANCE AGREEMENT
YIELD MAINTENANCE ACCOUNT. A "Yield Maintenance Account" may be
established with respect to any class or series of Securities. The terms
relating to any such account will be set forth in the related Prospectus
Supplement. Each Yield Maintenance Account will be designed to hold funds to be
applied by the related Trustee or, if such Trust issues Notes, the Indenture
Trustee, to provide payments to Securityholders in respect of Receivables that
have APRs less than the sum of the Pass Through Rate or Interest Rate specified
in the related Prospectus Supplement plus the Servicing Fee Rate specified in
the related Prospectus Supplement (the "Required Rate"). Unless otherwise
specified in the related Prospectus Supplement, each Yield Maintenance Account
will be maintained with the same entity with which the related Collection
Account is maintained and will be created with an initial deposit in an amount
and by the Seller or other person specified in the related Prospectus
Supplement.
On each Distribution Date, the related Trustee or Indenture Trustee
will transfer to the Collection Account from monies on deposit in the Yield
Maintenance Account an amount specified in the related Prospectus Supplement
(the "Yield Maintenance Deposit") in respect of the Receivables having APRs less
than the Required Rate for such Distribution Date. Unless otherwise specified in
the related Prospectus Supplement, amounts on deposit on any Distribution Date
in the Yield Maintenance Account in excess of the "Required Yield Maintenance
Amount" specified in the related Prospectus Supplement, after giving effect to
all payments to be made on such Distribution Date, will be released to the
Seller. Monies on deposit in the Yield Maintenance Account may be invested in
Eligible Investments under the circumstances and in the manner described in the
related Pooling and Servicing Agreement or Trust Agreement. Any monies remaining
on deposit in the Yield Maintenance Account upon the termination of the Trust
also will be released to the Seller.
YIELD MAINTENANCE AGREEMENT. If a Yield Maintenance Account is
established with respect to any class or series of Securities which allows or
requires any party to make deposits therein after the Closing Date, TMCC, the
Seller, any third party responsible for such deposits and the related Trustee or
Indenture Trustee, as the case may be, will enter into a "Yield Maintenance
Agreement" pursuant to which, on each Distribution Date, such party will deposit
into the Yield Maintenance Account the difference between the amount held on
deposit in the Yield Maintenance Account as of such Distribution Date and the
Required Yield Maintenance Amount, in each case determined after giving effect
to all required withdrawals from the Yield Maintenance Account on such
Distribution Date.
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NET DEPOSITS
As an administrative convenience, unless the Servicer is required to
remit collections daily (as described in " -- Collections" above), the Servicer
will be permitted to make the deposit of collections, aggregate Advances and
Purchase Amounts for any Trust for or with respect to the related Collection
Period net of payments to be made to the Servicer for such Trust with respect to
such Collection Period. The Servicer may cause to be made a single, net transfer
from the Collection Account to the Payahead Account, if any, or vice versa. The
Servicer, however, will account to the Trustee, any Indenture Trustee, the
Noteholders, if any, and the Certificateholders with respect to each Trust as if
all deposits, payments and transfers were made individually. With respect to any
Trust that issues both Certificates and Notes, if the related Distribution Dates
are not the same for all classes of Securities, all distributions, deposits or
other remittances made on a Distribution Date will be treated as having been
distributed, deposited or remitted on the same Distribution Date for the
applicable Collection Period for purposes of determining other amounts required
to be distributed, deposited or otherwise remitted on a Distribution Date.
STATEMENTS TO TRUSTEES AND TRUST
On a Business Day in each month that precedes each Distribution Date
(each a "Determination Date" to be specified in the related Prospectus
Supplement), the Servicer will provide to the applicable Indenture Trustee, if
any, and the applicable Trustee a statement setting forth with respect to a
series of Securities substantially the same information as is required to be
provided in the periodic reports provided to Securityholders of such series
described under "Certain Information Regarding the Securities --Reports to
Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that a firm of nationally recognized independent accountants will
furnish to the related Trust and Indenture Trustee or Trustee, as applicable,
annually a statement as to compliance in all material respects by the Servicer
during the preceding twelve months (or, in the case of the first such
certificate, from the applicable Closing Date, which may be a longer or shorter
period) with certain standards relating to the servicing of the applicable
Receivables.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and Indenture Trustee or
Trustee, as applicable, substantially simultaneously with the delivery of such
accountants' statement referred to above, of a certificate signed by an officer
of the Servicer stating that the Servicer has fulfilled its obligations under
the Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, throughout the preceding twelve months (or, in the case of the first
such certificate, from the Closing Date) in all material respects or, if there
has been a default in the fulfillment of any such obligation, describing each
such default. The Servicer has agreed to give each Indenture Trustee and each
Trustee notice of certain Servicer Defaults under the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that TMCC may not resign from its obligations and duties as
Servicer thereunder, except upon determination that TMCC's performance of such
duties is no longer permissible under applicable law. No such resignation will
become effective until the related Indenture Trustee or Trustee, as applicable,
or a successor servicer has assumed TMCC's servicing obligations and duties
under such Sale and Servicing Agreement or Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will further provide that neither the Servicer nor any of its directors,
officers, employees and agents will be under any liability to the related Trust
or the related Noteholders or Certificateholders for taking any action or for
refraining from taking any action pursuant to such Sale and Servicing Agreement
or Pooling and Servicing Agreement or for errors in judgment; except that
neither the Servicer nor any such person will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of the Servicer's duties thereunder or by reason
of reckless disregard of its obligations and duties thereunder. In addition,
each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that the Servicer is under no obligation to appear in, prosecute or
defend any legal action that is not incidental to the Servicer's servicing
responsibilities under such Sale and Servicing Agreement or Pooling and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability.
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Under the circumstances specified in each Sale and Servicing Agreement
and Pooling and Servicing Agreement, any entity into which the Servicer may be
merged or consolidated, or any entity resulting from any merger or consolidation
to which the Servicer is a party, or any entity succeeding to all or
substantially all of the business of the Servicer will be the successor of the
Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of (i) any failure by the Servicer (or the
Seller, so long as TMCC is the Servicer) to deliver to the applicable Trustee or
Indenture Trustee for deposit in any of the Trust Accounts any required payment
or to direct the applicable Trustee or Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for three Business
Days after receipt by the Servicer of written notice of such failure given (A)
to the Servicer (or the Seller, so long as TMCC is the Servicer) by the
applicable Trustee or Indenture Trustee or (B) to the Seller or the Servicer, as
the case may be, and to the applicable Trustee and Indenture Trustee, by the
holders of Notes or Certificates of the related series evidencing not less than
25% in principal amount of such outstanding Notes or Certificates, acting
together as a single class; (ii) any failure by the Servicer or the Seller, as
the case may be, duly to observe or perform in any material respect any other
covenant or agreement in such Sale and Servicing Agreement or Pooling and
Servicing Agreement, which failure materially and adversely affects the rights
of the Noteholders or the Certificateholders of the related series and which
continues unremedied for 90 days after the giving of written notice of such
failure (A) to the Servicer or the Seller, as the case may be, by the applicable
Trustee or Indenture Trustee or (B) to the Servicer or the Seller, as the case
may be, and to the applicable Trustee and Indenture Trustee, by the holders of
Notes or Certificates of the related series evidencing not less than 25% in
principal amount of such outstanding Notes or Certificates, acting together as a
single class; and (iii) the occurrence of an Insolvency Event with respect to
the Servicer (or the Seller, so long as TMCC is the Servicer). "Insolvency
Event" means, with respect to any Person, any of the following events or
actions: certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings with respect to such Person and
certain actions by such Person indicating its insolvency, reorganization
pursuant to bankruptcy proceedings or inability to pay its obligations.
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 a
Servicer Default if such failure or delay is 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 Indenture Trustee,
the Seller and the Securityholders prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, as long as a Servicer Default
under a Sale and Servicing Agreement remains unremedied, the related Indenture
Trustee or holders of Notes of the related series evidencing not less than 51%
of principal amount of such Notes then outstanding, acting together as a single
class, may terminate all the rights and obligations of the Servicer under such
Sale and Servicing Agreement, whereupon such Indenture Trustee or a successor
servicer appointed by such Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale and
Servicing Agreement and will be entitled to similar compensation arrangements.
In the case of any Trust that has not issued Notes, unless otherwise provided in
the related Prospectus Supplement, as long as a Servicer Default under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement remains
unremedied, the related Trustee or holders of Certificates of the related series
evidencing not less than 51% of the principal amount of such Certificates then
outstanding (but excluding for purposes of such calculation and action all
Certificates held by the Seller, the Servicer or any of their affiliates),
acting together as a single class, may terminate all the rights and obligations
of the Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement, whereupon such Trustee or a successor servicer appointed by such
Trustee will succeed to all the responsibilities, duties and liabilities of the
Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement and will be entitled to similar compensation arrangements. If,
however, a bankruptcy trustee or similar official has been appointed for the
Servicer, and no Servicer Default other than such appointment has occurred, such
trustee or official may have the power to prevent such Indenture Trustee, such
Noteholders, such Trustee or such Certificateholders from effecting a transfer
of servicing. In the event that such Indenture Trustee or Trustee is unwilling
or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor with a net worth of at least
$50,000,000 and whose regular business includes the servicing of automobile
and/or light duty truck receivables. Such Indenture Trustee or Trustee may make
such arrangements for compensation to be paid, which in no event may be greater
than the servicing compensation to the Servicer under
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such Sale and Servicing Agreement or Pooling and Servicing Agreement.
Notwithstanding such termination, the Servicer shall be entitled to payment of
certain amounts payable to it prior to such termination for services rendered
prior to such termination.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, (i) the holders of Notes
evidencing not less than 51% of the principal amount of the then outstanding
Notes of the related series, acting together as a single class or (ii) in the
case of any Servicer Default which does not adversely affect the related
Indenture Trustee or such Noteholders, the holders of the Certificates of such
series evidencing not less than 51% of the outstanding Certificate Balance (but
excluding for purposes of such calculation and action all Certificates held by
the Seller, the Servicer or any of their affiliates), acting together as a
single class, may, on behalf of all such Noteholders or Certificateholders,
waive any default by the Servicer in the performance of its obligations under
the related Sale and Servicing Agreement and its consequences, except a Servicer
Default in making any required deposits to or payments from any of the Trust
Accounts in accordance with such Sale and Servicing Agreement. With respect to
each Trust that has not issued Notes, holders of Certificates of such series
evidencing not less than 51% of the principal amount of such Certificates then
outstanding (but excluding for purposes of such calculation and action all
Certificates held by the Seller, the Servicer or any of their affiliates),
acting together as a single class, may, on behalf of all such
Certificateholders, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, except a Servicer Default in making any required deposits
to or payments from the related Trust Accounts in accordance with such Sale and
Servicing Agreement or Pooling and Servicing Agreement. No such waiver will
impair such Noteholders' or Certificateholders' rights with respect to
subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of
the Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of such Noteholders or Certificateholders; provided that
such action will not, in the opinion of counsel satisfactory to the related
Trustee or Indenture Trustee, as applicable, materially and adversely affect the
interest of any such Noteholder or Certificateholder. Unless otherwise specified
in the related Prospectus Supplement, the Transfer and Servicing Agreements may
also be amended by the Seller, the Servicer, the related Trustee and any related
Indenture Trustee with the consent of (i) the holders of Notes evidencing not
less than 51% of the principal amount of then outstanding Notes, if any, of the
related series, acting together as a single class, or (ii) in the case of any
amendment which does not adversely affect the related Indenture Trustee or such
Noteholders, the holders of the Certificates of such series evidencing not less
than 51% of the outstanding Certificate Balance (but excluding for purposes of
such calculation and action all Certificates held by the Seller, the Servicer or
any of their affiliates), acting together as a single class, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of such Transfer and Servicing Agreements or of modifying in any
manner the rights of such Noteholders or Certificateholders; provided, however,
that no such amendment shall (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on the related
Receivables or distributions that are required to be made for the benefit of
such Noteholders or Certificateholders or (ii) reduce the aforesaid percentage
of the Notes or Certificates of such series which are required to consent to any
such amendment, without the consent of the holders of all the outstanding Notes
or Certificates of each class affected thereby.
INSOLVENCY EVENT
With respect to a trust that is not a grantor trust, if an Insolvency
Event occurs with respect to the Seller, the related Receivables of such Trust
will be liquidated and the Trust will be terminated 90 days after the date of
such Insolvency Event, unless, before the end of such 90-day period, the related
Trustee shall have received written instructions from holders of each class of
the Securities with respect to such Trust representing more than 50% of the
aggregate unpaid principal amount of each such class (but excluding for purposes
of such calculation and action all Certificates held by the Seller, the Servicer
or any of their affiliates), to the effect that each such party disapproves of
the liquidation of such Receivables and termination of such Trust. Promptly
after the occurrence of an Insolvency Event with respect to the Seller, notice
thereof is required to be given to such Noteholders and Certificateholders;
provided that any failure to give such required notice will not prevent or delay
termination of such Trust. Upon termination of any Trust, the related Trustee
shall, or shall direct the related Indenture Trustee to, promptly sell the
assets of such Trust (other than the Trust Accounts) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from any
such sale, disposition or liquidation of the Receivables of
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such Trust will be treated as collections on such Receivables and deposited in
the related Collection Account. With respect to any Trust, if the proceeds from
the liquidation of the related Receivables and any amounts on deposit in the
related Reserve Fund, if any, Yield Maintenance Account, if any, Payahead
Account, if any, and Collection Account are not sufficient to pay the Notes, if
any, and the Certificates of the related series in full, the amount of principal
returned to Noteholders and Certificateholders thereof will be reduced and some
or all of such Noteholders and Certificateholders will incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
the related Trust without the unanimous prior approval of all Certificateholders
(including the Seller) of such Trust and the delivery to such Trustee by each
such Certificateholder (including the Seller) of a certificate certifying that
such Certificateholder reasonably believes that such Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
SELLER LIABILITY
Under each Trust Agreement, the Seller will agree to be liable directly
to an injured party for the entire amount of any losses, claims, damages or
liabilities (other than those incurred by a Noteholder or a Certificateholder in
the capacity of an investor with respect to such Trust) arising out of or based
on the arrangement created by such Trust Agreement as though such arrangement
created a partnership under the Delaware Revised Uniform Limited Partnership Act
in which the Seller was a general partner.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the
Seller, the related Trustee and the related Indenture Trustee, if any, pursuant
to the Transfer and Servicing Agreements will terminate upon the earlier of (i)
the maturity or other liquidation of the last related Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust, (ii) the payment to Noteholders, if any, and Certificateholders of
the related series of all amounts required to be paid to them pursuant to the
Transfer and Servicing Agreements and (iii) the occurrence of any event
described below.
Unless otherwise provided in the related Prospectus Supplement, in
order to avoid excessive administrative expense, the Servicer and the Seller
will each have the option to purchase from each Trust, as of the end of any
applicable Collection Period, if the then outstanding Pool Balance with respect
to the Receivables held by such Trust is 10% or less of the Initial Pool
Balance, the corpus of the Trust at a price equal to the aggregate Warranty
Purchase Payments or Administrative Purchase Payments, as the case may be, for
the Receivables (including Receivables that became Defaulted Receivables in the
Collection Period preceding the Distribution Date on which such purchase is
effected) plus the appraised value of any other property held as part of the
Trust (less liquidation expenses). In the event that both the Seller and the
Servicer, or any successor to the Servicer, elect to purchase the corpus of the
Trust as described above, the party first notifying the related Trustee (based
on such Trustee's receipt of such notice) shall be permitted to purchase the
Receivables. The related Trustee and related Indenture Trustee, if any, will
give written notice of termination to each Securityholder.
As described above under "--Insolvency Event", with respect to a trust
that is not a grantor trust, if an Insolvency Event occurs with respect to the
Seller, the related Receivables of such Trust will be liquidated and the Trust
will be terminated 90 days after the date of such Insolvency Event, unless the
holders of sufficient Securities of each class direct the Trustee not to
terminate such trust. Upon termination of any Trust, the assets of such Trust
will be liquidated and the proceeds therefrom (and amounts held in related
accounts) will be applied to pay the Notes and Certificates of the related
series in full, to the extent of amounts available therefor.
As described below under "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
and the proceeds therefrom (and amounts held in related accounts) will be
applied to pay the Notes and Certificates of the related series in full, to the
extent of amounts available therefor.
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As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with any
of the events specified above and the subsequent payment to the related
Certificateholders of all amounts required to be paid to them pursuant to the
applicable Trust Agreement or Pooling and Servicing Agreement will effect early
retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
TMCC, in its capacity as administrator (the "Administrator"), will
enter into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust that issues Notes and the related
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the notices and to perform
other administrative obligations required by the related Indenture. Unless
otherwise specified in the related Prospectus Supplement with respect to any
such Trust, as compensation for the performance of the Administrator's
obligations under the applicable Administration Agreement and as reimbursement
for its expenses related thereto, the Administrator will be entitled to a
monthly administration fee of such amount as may be set forth in the related
Prospectus Supplement (the "Administration Fee"), which fee will be paid by the
Servicer.
TMCC DEMAND NOTES
The following summary describes certain terms of demand notes that may
be issued from time to time by TMCC (the "TMCC Demand Notes"). TMCC Demand Notes
will be issued under a Demand Notes Indenture (the "Demand Notes Indenture"),
between TMCC and the trustee thereunder (in such capacity, the "Demand Notes
Indenture Trustee"). The characteristics of any particular series of TMCC Demand
Notes and the provisions of any particular Demand Notes Indenture may differ
from those described in this section and will be more fully described in the
related Prospectus Supplement. In addition, this summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
provisions of any Demand Notes Indenture that is entered into by the related
trust.
GENERAL
Collections in respect of the receivables will be applied to make
payments of interest and principal of each class of Securities. If so specified
in the related Prospectus Supplement, payments of interest and/or principal of
one or more classes of Securities may be made on a quarterly, semi-annual or
annual basis, and not simply as a pass-through of collections received during a
particular month. In order to make distributions of principal and/or interest on
a basis other than monthly, the Trustee will be required to invest amounts
otherwise payable as principal or interest of the specified classes of
Securities in highly rated investments maturing on or just prior to specified
distribution dates and bearing interest at rates specified in the related
Prospectus Supplement as directed by the Servicer. The Trustee may invest some
or all such funds in TMCC Demand Notes, due to the administrative difficulties
associated with regularly obtaining highly rated investments in variable amounts
with the necessary maturities and demand features that earn a sufficient amount
of interest. Any such TMCC Demand Notes will be unsecured general obligations of
TMCC and will rank equally with all other outstanding unsecured and
unsubordinated indebtedness of TMCC.
The principal amount of the TMCC Demand Notes outstanding will change
from time to time, depending on the amount of collections invested. The
aggregate principal amount of TMCC Demand Notes that may be issued under any
Demand Notes Indenture will be set forth in the related Prospectus Supplement.
Interest on the TMCC Demand Notes will be paid at rates and on terms set forth
in the related Prospectus Supplement. Different forms of TMCC Demand Notes will
be used to represent investments of Collections relating to interest and
investments of Collections relating to principal. Interest related demand notes
will generally mature on the dates on which interest is to be paid to
Securityholders. Principal related demand notes will generally mature on the
dates on which principal is to be paid to Securityholders. In addition, the
Trustee will generally have the right to demand payment of the TMCC Demand Notes
in connection with the reduction of TMCC's rating to a level below that
specified in the related Prospectus Supplement or upon the occurrence of other
events specified in the related Prospectus Supplement. See "Risk Factors - The
swap and the demand notes may affect the ratings of the securities." The payment
terms relating to the TMCC Demand Notes will be set forth in detail in the
related Prospectus Supplement.
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. 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. TMCC Demand Notes will not be subject to
redemption by TMCC and will not have the benefit of any sinking fund.
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Any 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 Demand Notes Indenture Trustee as paying agent
by wire transfer to an account maintained by the Trustee, as the holder of the
TMCC Demand Notes.
No Securityholder will have a direct interest in any TMCC Demand Notes
or have any direct rights under the TMCC Demand Notes or the Demand Notes
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 Securityholders. In
the event any vote or other action, including action upon the occurrence of an
Event of Default under the Demand Notes Indenture, is required or permitted by
the holders of the TMCC Demand Notes under the Demand Notes 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 Securityholders before taking any such action, all
as further described in the related Prospectus Supplement. References under this
caption to "holders of the TMCC Demand Notes" and phrases of similar import
shall be to the Trustee as the holder of the TMCC Demand Notes.
REMOVAL OF DEMAND NOTES INDENTURE TRUSTEE; SUCCESSOR DEMAND NOTES INDENTURE
TRUSTEE
The Demand Notes 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 Demand Notes Indenture Trustee
by written notice thereto and to TMCC, and may appoint a successor Demand Notes
Indenture Trustee. TMCC may remove the Demand Notes Indenture Trustee in the
event that: (a) the Demand Notes Indenture Trustee fails to continue to satisfy
the criteria for eligibility to act as Demand Notes Indenture Trustee; (b) the
Demand Notes Indenture Trustee is adjudged a bankrupt or insolvent; (c) a
receiver or other public officer takes charge of the Demand Notes Indenture
Trustee or its property; or (d) the Demand Notes Indenture Trustee otherwise
becomes incapable of acting in such capacity.
If the Demand Notes Indenture Trustee resigns, is removed or is unable
to act as Demand Notes Indenture Trustee for any reason, TMCC shall promptly
appoint a successor Demand Notes Indenture Trustee, unless the Trust shall
already have done so. Within one year after a successor Demand Notes Indenture
Trustee takes office, the Trust may appoint a successor Demand Notes Indenture
Trustee to replace any successor Demand Notes Indenture Trustee appointed by
TMCC. Any resignation or removal of the Demand Notes Indenture Trustee and
appointment of a successor Demand Notes 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 Demand Notes Indenture Trustee as
set forth in the Demand Notes Indenture.
SUCCESSOR CORPORATION
The Demand Notes 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
Demand Notes Indenture Trustee of a supplemental Demand Notes Indenture in form
satisfactory thereto, all of the obligations of TMCC under the TMCC Demand Notes
and the Demand Notes 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 Demand Notes Indenture, the
Demand Notes 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 Demand Notes Indenture.
SUPPLEMENTAL DEMAND NOTES INDENTURES
Supplemental Demand Notes Indentures may be entered into by TMCC and
the Demand Notes 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 Demand
Notes 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 Securityholder and the Demand Notes 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 Securityholder, and (b) for purposes of
appointing a successor trustee hereunder 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 Demand Notes
Indenture. In addition, supplemental Demand Notes Indentures may be entered into
by TMCC and the Demand Notes Indenture Trustee
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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 Notes issued by a Trust, or, with respect to a Trust
that has not issued Notes, at least 25% in aggregate principal amount of the
outstanding Certificates (but excluding for purposes of such calculation and
action all Certificates held by the Seller, the Servicer or any of their
affiliates), for the purpose of adding any provisions to or changing in any
manner or eliminating any other provisions of the Demand Notes Indenture or of
modifying in any manner the rights with respect to the TMCC Demand Notes,
provided that no supplemental Demand Notes 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 Demand Notes Indenture, without
the consent of each Holder of Certificates affected thereby.
EVENTS OF DEFAULT UNDER THE DEMAND NOTES INDENTURE
The Demand Notes 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 Demand Notes 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 Demand Notes 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 Demand Notes 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 Demand Notes Indenture Trustee annually
an officer's certificate as to the absence of certain defaults. The Demand Notes
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 Demand Notes Indenture relating to the
duties of the Demand Notes Indenture Trustee in case an Event of Default shall
occur and be continuing, the Demand Notes Indenture Trustee will be under no
obligation to exercise any of its rights or powers under the Demand Notes
Indenture at the request or direction of any of the holders of TMCC Demand
Notes, unless such holders have offered to the Demand Notes 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 Demand Notes Indenture for the
indemnification of the Demand Notes 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 Demand Notes Indenture
Trustee, or exercising any trust or power conferred on the Demand Notes
Indenture Trustee with respect to the TMCC Demand Notes.
ABSENCE OF COVENANTS
The provisions of the Demand Notes 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 Demand Notes 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 DEMAND NOTES INDENTURE
TMCC may satisfy and discharge its obligations under the Demand Notes
Indenture by delivering to the Demand Notes Indenture Trustee for cancellation
all outstanding TMCC Demand Notes, or depositing with the Demand Notes 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 Demand Notes Indenture and the TMCC Demand
Notes, and in each case by satisfying certain additional conditions in the
Demand Notes Indenture. However, in the case of any such deposit, certain of
TMCC's obligations under the Demand Notes 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.
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REGARDING THE DEMAND NOTES INDENTURE TRUSTEE
The Demand Notes Indenture Trustee may be the applicable Trustee and/or
Indenture Trustee. The Demand Notes Indenture contains certain limitations on
the right of the Demand Notes 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
Demand Notes Indenture Trustee is permitted to engage in other transactions with
TMCC; provided, however, that if the Demand Notes Indenture Trustee acquires any
conflicting interest it must eliminate such conflict or resign.
The Demand Notes Indenture provides that, in case an Event of Default
has occurred and is continuing, the Demand Notes 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 Demand Notes 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 a swap agreement that
a Trust may enter into in order to reduce its exposure to currency and/or
interest rate risks. The provisions of any particular swap agreement may differ
from those described in this section and will be more fully described in the
related Prospectus Supplement. In addition, this summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
provisions of any swap agreement that is entered into by the related trust.
PAYMENTS UNDER THE SWAP AGREEMENT
As specified in the related Prospectus Supplement, on the Closing Date
a Trust may enter into a 1992 International Swaps and Derivatives Association,
Inc. ("ISDA") Master Agreement (Multi Currency-Cross Border) (such agreement,
the "1992 Master Agreement") with TMCC or an unaffiliated third party (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 in respect of interest and principal, as applicable, due on
each Distribution Date under the Swap Agreement and the Swap Counterparty will
generally pay to the Trust amounts equal to the interest or principal payable on
the relevant Securities. 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 specified payment date under the Swap
Agreement the amount of funds from collections and other sources available to
the Trust to make any payment owed to the Swap Counterparty is less than the
amount due to the Swap Counterparty, the obligation of the Swap Counterparty to
pay an amount equal to the interest or principal otherwise due on the relevant
Securities on that date will be reduced in the same proportion as the proportion
that the shortfall in the amount owed to the Swap Counterparty represents of the
total amount due. If on a subsequent specified payment date, amounts are
available and are paid by the Trust to the Swap Counterparty to reimburse all or
any part of the shortfall, then the obligation of the Swap Counterparty to pay
an amount equal to the interest or principal otherwise due on the Securities on
that date will be increased in the same proportion as the proportion that the
amount of the reimbursement represents of the amount otherwise owed by the Swap
Counterparty on that date.
The Trust will not be obligated to pay interest to the Swap
Counterparty on any shortfalls in payments, and, correspondingly,
Certificateholders will not be entitled to receive interest on any amounts not
paid as a result of the proportional reduction described above.
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 scheduled maturity date of the Securities and (ii) the
date on which all amounts due in respect of the Swap Agreement have been paid.
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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") will be 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),
"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 will 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 the requisite percentage of Securityholders specified in the related
Prospectus Supplement 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. A Swap Agreement will terminate on an Early Termination
Date. 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 amounts previously due but unpaid to the
Swap Counterparty are due and payable on the first Distribution Date that would
have occurred after the Early Termination Date). Any such termination payment
could, if interest or currency exchange rates have changed significantly, be
substantial.
If a 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.
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If a Swap Termination occurs, the principal of each class of Securities
will become immediately payable and the Trustee will be obligated to liquidate
the assets of the Trust. In any such event, the ability of the Trust to pay
interest and/or principal on each class of Securities will 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 Securities 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 in the related
Prospectus Supplement and the claims of the Swap Counterparty in respect of such
net proceeds will rank higher in priority than the claims of the relevant
Securities.
The applicable Pooling and Servicing Agreement or Sale and Servicing
Agreement will provide 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 the requisite percentage of the Securityholders
specified in such agreement, 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 seller or
(ii) because the Trust or the Seller becomes subject to registration as an
"investment company" under the Investment Company Act of 1940, the Trustee will
be required by the terms of such agreement to terminate the Swap Agreement.
TAXATION
Neither the Trust nor the Swap Counterparty will be 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, a
specified percentage of the Securityholders 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
will be 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 Securities
are not adversely affected as a result of such transfer. In addition, in the
event the debt rating of the Swap Counterparty is reduced to a level below that
specified in the related Prospectus Supplement, 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 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 Securities after
such assignment and release will be at least equal to the ratings assigned by
any applicable Rating Agency to the Securities 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
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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
Securityholders 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
Securities by the applicable Rating Agency will not be withdrawn or reduced.
MODIFICATION AND AMENDMENT OF SWAP AGREEMENT
The applicable Pooling and Servicing Agreement or Sale and Servicing
Agreement will contain 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 specified Securityholder. Any such amendment shall be deemed not
to adversely affect in any material respect the interests of any specified
Securityholder if the Trustee receives written confirmation from each rating
agency rating the Securities that such amendment will not cause such Rating
Agency to reduce the then current rating thereof.
THE SWAP COUNTERPARTY
TMCC may act as the Swap Counterparty. A description of TMCC is
provided under "The Servicer" herein. Information regarding TMCC is publicly
available as described under "Where You Can Find More Information About Your
Securities --TMCC" herein. Where indicated by the context, as used herein "Swap
Counterparty" includes any party that replaces the initial 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.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of the Receivables to the applicable Trustee, the
perfection of the security interests in the Receivables and the enforcement of
rights to realize on the Financed Vehicles as collateral for the Receivables are
subject to a number of federal and state laws, including the UCC as in effect in
various states. The Servicer and the Seller will take the action described below
to perfect the rights of the applicable Trustee in the Receivables. If, through
inadvertence or otherwise, another party purchases (including the taking of a
security interest in) the Receivables for new value in the ordinary course of
its business, without actual knowledge of the Trust's interest, and takes
possession of the Receivables, such purchaser would acquire an interest in the
Receivables superior to the interest of the Trust.
SECURITY INTERESTS
GENERAL. In states in which retail installment sale contracts such as
the Receivables evidence the credit sale of automobiles and/or light duty trucks
by dealers to obligors, the contracts also constitute personal property security
agreements and include grants of security interests in the vehicles under the
applicable UCC. Perfection of security interests in financed automobiles and/or
light duty trucks is generally governed by the motor vehicle registration laws
of the state in which the vehicle is located. In most states, a security
interest in automobiles and/or light duty trucks is perfected by obtaining the
certificate of title to the Financed Vehicle or notation of the secured party's
lien on the vehicles' certificate of title.
All retail installment sales contracts acquired by TMCC from Dealers
name TMCC as obligee or assignee and as the secured party. TMCC also takes all
actions necessary under the laws of the state in which the related Financed
Vehicle is located to perfect its security interest in such Financed Vehicle,
including, where applicable,
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having a notation of its lien recorded on the related certificate of title and
obtaining possession of such certificate of title. Because TMCC continues to
service the contracts as Servicer under the Sale and Servicing Agreement or the
Pooling and Servicing Agreement, as applicable, the Obligors on the contracts
will not be notified of the sale from TMCC to the Seller or the sale from the
Seller to the Trust, and no action will be taken to record the transfer of the
security interest from TMCC to the Seller or from the Seller to the Trust by
amendment of the certificates of title for the Financed Vehicles or otherwise.
PERFECTION. Pursuant to the related Receivables Purchase Agreement,
TMCC will sell and assign its security interest in the Financed Vehicles to the
Seller and, with respect to each Trust, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, the Seller will assign
its security interest in the Financed Vehicles to such Trust. However, because
of the administrative burden and expense, none of TMCC, the Seller or the
related Trustee will amend any certificate of title to identify such Trust as
the new secured party on such certificate of title relating to a Financed
Vehicle. However, UCC financing statements with respect to the transfer to the
Seller of TMCC's security interest in the Financed Vehicles and the transfer to
the Trustee of the Seller's security interest in the Financed Vehicles will be
filed. In addition, the Servicer will continue to hold any certificates of title
relating to the vehicles in its possession as custodian for the Seller and such
Trust pursuant to the related Sale and Servicing Agreement or Pooling and
Servicing Agreement. See "Description of the Transfer and Servicing Agreements
- --Sale and Assignment of Receivables".
In most states, an assignment such as that under each Receivables
Purchase Agreement or each Sale and Servicing Agreement or Pooling and Servicing
Agreement is an effective conveyance of a security interest without amendment of
any lien noted on a vehicle's certificate of title, and the assignee succeeds
thereby to the assignor's rights as secured party. Although re-registration of
the vehicle is not necessary to convey a perfected security interest in the
Financed Vehicles to the Trust, because the Trust will not be listed as legal
owner on the certificates of title, the security interest of such Trust in the
vehicle could be defeated through fraud or negligence. In such states, in the
absence of fraud or forgery by the vehicle owner or the Servicer or
administrative error by state or local agencies, the notation of TMCC's lien on
the certificates of title will be sufficient to protect such Trust against the
rights of subsequent purchasers of a Financed Vehicle or subsequent lenders who
take a security interest in a Financed Vehicle. In each Receivables Purchase
Agreement, TMCC will represent and warrant, and in each Sale and Servicing
Agreement or Pooling and Servicing Agreement, the Seller will represent and
warrant, that it has taken all action necessary to obtain a perfected security
interest in each Financed Vehicle. If there are any Financed Vehicles as to
which TMCC failed to obtain and assign to the Seller a perfected security
interest, the security interest of the Seller would be subordinate to, among
others, subsequent purchasers of the Financed Vehicles and holders of perfected
security interests therein. To the extent such failure has a material and
adverse effect on the Trust's interest in the related Receivables, however, it
would constitute a breach of the warranties of TMCC under the related
Receivables Purchase Agreement or the Seller under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement. Accordingly, pursuant to
the related Sale and Servicing Agreement or Pooling and Servicing Agreement, the
Seller would be required to repurchase the related Receivable from the Trust
and, pursuant to the related Receivables Purchase Agreement, TMCC would be
required to purchase such Receivable from the Seller, in each case unless the
breach was cured. Pursuant to each Sale and Servicing Agreement and Pooling and
Servicing Agreement, the Seller will assign such rights to the related Trust.
See "Description of the Transfer and Servicing Agreements --Sale and Assignment
of Receivables" and "Risk Factors --Certain Legal Aspects --Security Interests".
CONTINUITY OF PERFECTION. Under the laws of most states, the perfected
security interest in a vehicle would continue for four months after the vehicle
is moved to a state that is different from the one in which it is initially
registered and thereafter until the owner thereof re-registers the vehicle in
the new state. A majority of states generally require surrender of a certificate
of title to re-register a vehicle. In those states (such as California) that
require a secured party to hold possession of the certificate of title to
maintain perfection of the security interest, the secured party would learn of
the re-registration through the request from the obligor under the related
installment sales contract to surrender possession of the certificate of title.
In the case of vehicles registered in states providing for the notation of a
lien on the certificate of title but not possession by the secured party (such
as Texas), the secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicle in the state of relocation. However, these procedural
safeguards will not protect the secured party if through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require a certificate of title for registration of a motor vehicle,
re-registration could defeat perfection. In the ordinary course of servicing the
Receivables, TMCC will take steps to effect re-perfection upon receipt of notice
of re-registration or information from the obligor as to relocation. Similarly,
when an Obligor sells a Financed Vehicle, TMCC must surrender possession of the
certificate of title or will receive notice as a result of its lien noted
thereon and accordingly will have an opportunity to require
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satisfaction of the related Receivable before release of the lien. Under each
Sale and Servicing Agreement and Pooling and Servicing Agreement, the Servicer
will be obligated to take appropriate steps, at the Servicer's expense, to
maintain perfection of security interests in the Financed Vehicles and will be
obligated to purchase the related Receivable if it fails to do so and such
failure has a material and adverse effect on the Trust's interest in the
Receivable.
PRIORITY OF LIENS ARISING BY OPERATION OF LAW. Under the laws of most
states (including California), liens for repairs performed on a motor vehicle
and liens for unpaid taxes take priority over even a perfected security interest
in a financed vehicle. The Code also grants priority to certain federal tax
liens over the lien of a secured party. The laws of certain states and federal
law permit the confiscation of vehicles by governmental authorities under
certain circumstances if used in unlawful activities, which may result in the
loss of a secured party's perfected security interest in the confiscated
vehicle. TMCC will represent and warrant to the Seller in each Receivables
Purchase Agreement, and the Seller will represent and warrant to the Trust in
each Sale and Servicing Agreement and Pooling and Servicing Agreement, that, as
of related Closing Date, each security interest in a Financed Vehicle is prior
to all other present liens (other than tax liens and other liens that arise by
operation of law) upon and security interests in such Financed Vehicle. However,
liens for repairs or taxes could arise, or the confiscation of a Financed
Vehicle could occur, at any time during the term of a Receivable. No notice will
be given to the Trustee, any Indenture Trustee, any Noteholders or the
Certificateholders in respect of a given Trust if such a lien arises or
confiscation occurs which would not give rise to the Seller's repurchase
obligation under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement or TMCC's repurchase obligation under the related
Receivables Purchase Agreement.
REPOSSESSION
In the event of default by an obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. Among the UCC remedies,
the secured party has the right to perform repossession by self-help means,
unless such means would constitute a breach of the peace or is otherwise limited
by applicable state law. Unless a vehicle financed by TMCC is voluntarily
surrendered, self-help repossession is the method employed by TMCC in most
states and is accomplished simply by retaking possession thereof. In cases where
an obligor objects or raises a defense to repossession, or if otherwise required
by applicable state law, a court order must be obtained from the appropriate
state court, and such vehicle must then be recovered in accordance with that
order. In some jurisdictions, the secured party is required to notify such
obligor of the default and the intent to repossess the collateral and to give
such obligor a time period within which to cure the default prior to
repossession. In most states, under certain circumstances after any such
financed vehicle has been repossessed, the related obligor may reinstate the
related contract by paying the delinquent installments and other amounts due.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by an obligor under a retail installment sales
contract, some jurisdictions require that the obligor be notified of the default
and be given a time period within which to cure the default prior to
repossession. Generally, this right of cure may only be exercised on a limited
number of occasions during the term of the related contract.
The UCC and other state laws require the secured party to provide an
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held.
In most states, an obligor has the right to redeem the collateral prior to
actual sale by paying the secured party the unpaid principal balance of the
obligation and accrued interest thereon plus reasonable expenses for
repossessing, holding and preparing the collateral for disposition and
arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees. In some states, an obligor has the right to redeem the collateral prior
to actual sale by payment of delinquent installments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness, a deficiency judgment can be sought in those states that do not
prohibit or limit such judgments. In addition to the notice requirement, the UCC
requires that every aspect of the sale or other disposition, including the
method, manner, time, place and terms, be "commercially reasonable". Generally,
courts have held that when a sale is not "commercially reasonable", the secured
party loses its right to a deficiency judgment. However, the deficiency
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judgment would be a personal judgment against the obligor for the shortfall, and
a defaulting obligor can be expected to have very little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount or be uncollectible. In addition, the UCC permits the
debtor or other interested party to recover for any loss caused by noncompliance
with the provisions of the UCC. Also, prior to a sale, the UCC permits the
debtor or other interested person to prohibit the secured party from disposing
of the collateral if it is established that the secured party is not proceeding
in accordance with the "default" provisions under the UCC.
Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to such vehicle or if no such lienholder exists, the UCC requires
the creditor to remit the surplus to the obligor.
CERTAIN BANKRUPTCY CONSIDERATIONS
The Seller, in structuring the transactions contemplated hereby, has
taken steps that are intended to make it unlikely that the voluntary or
involuntary application for relief by TMCC under the United States Bankruptcy
Code or similar applicable state laws (collectively, "Insolvency Laws") will
result in consolidation of the assets and liabilities of the Seller with those
of TMCC. These steps include the creation of the Seller as a wholly-owned,
limited purpose subsidiary pursuant to articles of incorporation and bylaws
containing certain limitations (including requiring that the Seller must at all
times have at least one "Independent Director" and restrictions on the nature of
the Seller's business 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 each Independent Director). In addition, to the
extent that the Seller granted a security interest in the Receivables to the
Trust, and that interest was validly perfected before the bankruptcy or
insolvency of TMCC and was not taken or granted in contemplation of insolvency
or with the intent to hinder, delay or defraud TMCC or its creditors, that
security interest should not be subject to avoidance, and payments to the Trust
with respect to the Receivables should not be subject to recovery by a creditor
or trustee in bankruptcy of TMCC. If, notwithstanding the foregoing, (i) a court
concluded that the assets and liabilities of the Seller should be consolidated
with those of TMCC in the event of the application of applicable Insolvency Laws
to TMCC or following the bankruptcy or insolvency of TMCC the security interest
in the Receivables granted by the Seller to the Trust should be avoided, (ii) a
filing were made under any Insolvency Law by or against the Seller 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.
On the Closing Date, the Seller will receive the opinion of O'Melveny &
Myers LLP to the effect that, based on a reasoned analysis of analogous case law
(although there is no precedent based on directly similar facts), and, subject
to certain facts, assumptions and qualifications specified therein and applying
the principles set forth therein, in the event of a voluntary or involuntary
case in respect of TMCC under Title 11 of the United States Bankruptcy Code at a
time when TMCC and the Seller were insolvent, the property of the Seller would
not properly be substantively consolidated with the property of the estate of
TMCC. Among other things, it is assumed in such opinion that the Seller will
follow certain procedures in the conduct of its affairs, including maintaining
records and books of account separate from those of TMCC, refraining from
commingling its assets with those of TMCC, and refraining from holding itself
out as having agreed to pay, or being liable for, the debts of TMCC. The Seller
intends to follow these and other procedures related to maintaining its separate
corporate identity. However, there can be no assurance that a court would not
conclude that the assets and liabilities of the Seller should be consolidated
with those of TMCC.
TMCC will warrant in the Receivables Purchase Agreement that the sale
of the Receivables by it to the Seller is a valid sale. Notwithstanding the
foregoing, if TMCC were to become a debtor in a bankruptcy case a court could
take the position that the sale of Receivables to the Seller should instead be
treated as a pledge of such Receivables to secure a borrowing of such debtor. If
a court were to reach such conclusions, or a filing were made under any
Insolvency Law by or against the Seller, or if 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. In addition, if
the transfer of Receivables to the Seller is treated as a pledge instead of a
sale, a tax or government lien on the property of TMCC arising before the
transfer of a Receivable to the Seller may have priority over the Seller's
interest in such Receivable. In addition, while TMCC is the Servicer, cash
collections on the Receivables may be commingled with the funds of TMCC and, in
the event of the bankruptcy of TMCC, the Trust may not have a perfected interest
in such collections.
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TMCC and the Seller will treat the transactions described herein as a
sale of the Receivables to the Seller, such that the automatic stay provisions
of the United States Bankruptcy Code should not apply to the Receivables in the
event that TMCC were to become a debtor in a bankruptcy case.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer
Credit Code, state adoptions of the National Consumer Act and of the Uniform
Consumer Credit Code and state motor vehicle retail installment sales acts and
other similar laws. Also, state laws impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. These requirements impose specific
statutory liabilities upon creditors who fail to comply with their provisions.
In some cases, this liability could affect an assignee's ability to enforce
consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated by
the Uniform Consumer Credit Code, other statutes or the common law, has the
effect of subjecting a seller (and certain related creditors and their
assignees) in a consumer credit transaction to all claims and defenses which the
obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor under
the contract, and the holder of the contract may also be unable to collect any
balance remaining due thereunder from the obligor. The FTC Rule is generally
duplicated by the Uniform Consumer Credit Code, other state statutes or the
common law in certain states.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable Financed
Vehicle may assert against the seller of the Financed Vehicle. As to each
Obligor, such claims are limited to a maximum liability equal to the amounts
paid by the Obligor on the related Receivable. Under most state motor vehicle
dealer licensing laws, sellers of motor vehicles are required to be licensed to
sell motor vehicles at retail sale. Furthermore, federal odometer regulations
promulgated under the Motor Vehicle Information and Cost Savings Act require
that all sellers of new and used vehicles furnish a written statement signed by
the seller certifying the accuracy of the odometer reading. If a seller is not
properly licensed or if a written odometer disclosure statement was not provided
to the purchaser of the related financed vehicle, an obligor may be able to
assert a defense against the seller of the vehicle. If an Obligor were
successful in asserting any such claim or defense, such claim or defense would
constitute a breach of the Seller's warranties under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement and a breach of TMCC's
warranties under the related Receivables Purchase Agreement and would create an
obligation of the Seller and TMCC, respectively, to repurchase the Receivable
unless the breach is cured. See "Description of the Transfer and Servicing
Agreements --Sale and Assignment of Receivables".
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
From time to time, TMCC has been involved in litigation under consumer
protection laws. In addition, with respect to the Receivables originated in
California, a significant number may provide that such Receivables may be
rescinded by the related Dealer if such Dealer is unable to assign the
Receivable to a lender within ten days of the date of such Receivable. Although
there is authority, which is not binding on any court, providing that a
conditional sale contract containing such a provision would be unenforceable
under California law, to the knowledge of TMCC and the Seller, this
enforceability issue has not been presented before any California court.
TMCC and the Seller will represent and warrant under each Receivables
Purchase Agreement and each Sale and Servicing Agreement and Pooling and
Servicing Agreement, as applicable, that each Receivable complies with all
requirements of law in all material respects. In addition, with respect to any
Trust as to which 10% or more
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of the Receivables were originated in California, on the applicable Closing
Date, the Seller will receive an opinion of counsel to the effect that all of
the California Receivables are enforceable under California law and applicable
federal laws, subject to customary exceptions. Accordingly, if an Obligor has a
claim against such Trust for violation of any law and such claim materially and
adversely affects such Trust's interest in a Receivable, such violation would
constitute a breach of the representations and warranties of TMCC under the
Receivables Purchase Agreement and the Seller under such Sale and Servicing
Agreement or Pooling and Servicing Agreement and would create an obligation of
TMCC and the Seller to repurchase the Receivable unless the breach is cured. See
"Description of the Transfer and Servicing Agreements --Sale and Assignment of
Receivables".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a vehicle and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor as
a general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a contract or change the
rate of interest and time of repayment of the indebtedness.
Under the terms of the Soldiers' and Sailors' Relief Act of 1940, an
Obligor who enters the military service after the origination of such Obligor's
Receivable (including an Obligor who is a member of the National Guard or is in
reserve status at the time of the origination of the Obligor's Receivable and is
later called to active duty) may not be charged interest above an annual rate of
6% during the period of such Obligor's active duty status, unless a court orders
otherwise upon application of the lender. In addition, pursuant to the Military
Reservist Relief Act, under certain circumstances, California residents called
into active duty with the reserves can delay payments on retail installment
sales contracts, including the Receivables, for a period, not to exceed 180
days, beginning with the order to active duty and ending 30 days after release.
It is possible that the foregoing could have an effect on the ability of the
Servicer to collect the full amount of interest owing on certain of the
Receivables. In addition, the Relief Acts impose limitations that would impair
the ability of the Servicer to repossess an affected Receivable during the
Obligor's period of active duty status. Thus, in the event that such a
Receivable goes into default, there may be delays and losses occasioned by the
inability to exercise the Trust's rights with respect to the related Financed
Vehicle in a timely fashion.
Any such shortfall pursuant to either of the two preceding paragraphs,
to the extent not covered by amounts payable to the Securityholders from amounts
on deposit in the related Reserve Fund or from coverage provided under any other
credit enhancement mechanism, could result in losses to the Securityholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of the Notes
and the Certificates of any series, to the extent it relates to matters of law
or legal conclusions with respect thereto, represents the opinion of tax counsel
to each Trust with respect to the related series on the material matters
associated with such consequences, subject to the qualifications set forth
herein. "Tax Counsel" with respect to each Trust will be O'Melveny & Myers LLP.
The summary does not purport to deal with federal income tax consequences
applicable to all categories of investors, some of which may be subject to
special rules. For example, it does not discuss the tax treatment of Noteholders
or Certificateholders that are insurance companies, regulated investment
companies or dealers in securities. Moreover, there are no cases or Internal
Revenue Service ("IRS") rulings on similar transactions involving both debt and
equity interests issued by a trust with terms similar to those of the Notes and
the Certificates. As a result, the IRS may disagree with all or a part of the
discussion below. Prospective investors are urged to consult their own tax
advisors in determining the federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the Notes and
the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be provided
with an opinion of Tax Counsel regarding certain federal income tax matters
discussed below. An opinion of Tax Counsel, however, is not binding on the IRS
or the courts. No ruling on any of the issues discussed below will be sought
from the IRS. For purposes of the following summary, references to the Trust,
the Notes, the Certificates and related terms, parties and documents shall be
deemed to refer, unless otherwise specified herein, to each Trust and the Notes,
Certificates and
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related terms, parties and documents applicable to such Trust. The federal
income tax consequences to Certificateholders will vary depending on whether an
election is made to treat the Trust as a partnership under the Code or whether
the Trust will be treated as a grantor trust. The Prospectus Supplement for each
Series of Certificates will specify whether a partnership election will be made
or the Trust will be treated as a grantor trust.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates of a Trust for which a partnership election will be made, to the
extent it relates to matters of law or legal conclusions with respect thereto,
represents the opinion of Tax Counsel to each Trust with respect to the related
series on the material matters associated with such consequences, subject to the
qualifications set forth herein. In addition, Tax Counsel has prepared or
reviewed the statements in this Prospectus under the heading "Certain Federal
Income Tax Consequences --Trusts for Which a Partnership Election is Made," and
is of the opinion that such statements are correct in all material respects.
Such statements are intended as an explanatory discussion of the related tax
matters affecting investors generally, but do not purport to furnish information
in the level of detail or with the attention to an investor's specific tax
circumstances that would be provided by an investor's own tax advisor.
Accordingly, each investor is advised to consult its own tax advisors with
regard to the tax consequences to it of investing in Notes or Certificates.
Tax Counsel will deliver its opinion that a Trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the Related Documents
will be complied with, and on Tax Counsel's conclusions that (1) the Trust will
not have certain characteristics necessary for a business trust to be classified
as an association taxable as a corporation and (2) the nature of the income of
the Trust will exempt it from the rule that certain publicly traded partnerships
are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce cash available to make payments on
the Notes and the Certificates, and Certificateholders could be liable for any
such tax that is not paid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Seller will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Tax Counsel will, except as otherwise provided
in the related Prospectus Supplement, advise the Trust that the Notes will be
classified as debt for federal income tax purposes. The discussion below assumes
this characterization of the Notes is correct.
OID, INDEXED SECURITIES, ETC. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under Treasury regulations (the "OID regulations") relating to
original issue discount ("OID"), and that any OID on the Notes (i.e., any excess
of the principal amount of the Notes over their issue price) does not exceed a
de minimis amount (i.e., 1/4% of their principal amount multiplied by the number
of full years included in their term), all within the meaning of the OID
regulations. If these conditions are not satisfied with respect to any given
series of Notes, additional tax considerations with respect to such Notes will
be disclosed in the applicable Prospectus Supplement.
INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. A purchaser who
buys a Note for more or less than its principal amount will generally be
subject, respectively, to the premium amortization or market discount rules of
the Code.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally
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would be required to report interest income as interest accrues on a
straight-line basis or under a constant yield method over the term of each
interest period. Other cash basis holders of a Short-Term Note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term Note). However, a cash
basis holder of a Short-Term Note reporting interest income as it is paid may be
required to defer a portion of any interest expense otherwise deductible on
indebtedness incurred to purchase or carry the Short-Term Note until the taxable
disposition of the Short-Term Note. A cash basis taxpayer that is not required
to report interest income as it accrues under Section 1281 may elect to accrue
interest income on all nongovernment debt obligations with a term of one year or
less, in which case the taxpayer would not be subject to the interest expense
deferral rule referred to in the preceding sentence. Certain special rules apply
if a Short-Term Note is purchased for more or less than its principal amount.
SALE OR OTHER DISPOSITION. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any market discount, acquisition discount, OID
and gain previously included in income by such Noteholder with respect to the
Note and decreased by the amount of bond premium, if any, previously amortized
and by the amount of principal payments previously received by such Noteholder
with respect to such Note. Any such gain or loss, and any gain or loss
recognized on a prepayment of the Notes, will be capital gain or loss if the
Note was held as a capital asset, except for gain representing accrued interest
and accrued market discount not previously included in income. Capital losses
generally may be used only to offset capital gains.
FOREIGN HOLDERS. Interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest," and
generally will not be subject to United States federal income tax and
withholding tax if the interest is not effectively connected with the conduct of
a trade or business within the United States by the foreign person and (i) the
foreign person is not actually or constructively a "10 percent shareholder" of
the Trust or the Seller (including a holder of 10% of the outstanding
Certificates) or a "controlled foreign corporation" with respect to which the
Trust or the Seller is a "related person" within the meaning of the Code (ii)
the foreign person is not a bank receiving interest described in Section
881(c)(3)(A) of the Code, (iii) the interest is not contingent interest
described in Section 871(h)(4) of the Code, and (iv) the foreign person does not
bear certain relationships to any Certificateholder. To qualify for the
exemption from taxation, the foreign person must provide the applicable Trustee
or other person who is otherwise required to withhold U.S. tax with respect to
the Notes with an appropriate statement (on Form W-8 or a similar form), signed
under penalties of perjury, certifying that the beneficial owner of the Note is
a foreign person and providing the foreign person's name and address. If a Note
is held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed statement
must be accompanied by a Form W-8 or substitute form provided by the foreign
person that owns the Note and the foreign person that owns the Note must notify
the financial institution acting on its behalf of any changes to the information
on the Form W-8 (or substitute form) within 30 days of any such change. If
interest paid to a foreign person is not considered portfolio interest, then it
will be subject to United States federal income and withholding tax at a rate of
30 percent, unless reduced or eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more during the taxable year of disposition.
BACKUP WITHHOLDING. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate (on Form W-9) providing the
holder's name, address, correct federal taxpayer identification number and a
statement that the holder is not subject to backup withholding. Should a
nonexempt Noteholder fail to provide the required certification, the Trust will
be required to withhold 31 percent of the amount otherwise payable to the
holder, and remit the withheld amount to the IRS as a credit against the
Noteholder's federal income tax liability.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the
opinion of Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on Notes recharacterized as equity). Alternatively, and
most likely in the view of
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Tax Counsel, the Trust might be treated as a publicly traded partnership that
would not be taxable as a corporation because it would meet certain qualifying
income tests. Nonetheless, treatment of the Notes as equity interests in such a
publicly traded partnership could have adverse tax consequences to certain
holders. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income", income to foreign holders
may be subject to U.S. tax and U.S. tax return filing and withholding
requirements, and individual holders might be subject to certain limitations on
their ability to deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The Seller and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders (including
the Seller in its capacity as recipient of payments from the Reserve Fund), and
the Notes being debt of the partnership. However, the proper characterization of
the arrangement involving the Trust, the Certificates, the Notes, the Seller and
the Servicer is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
INDEXED SECURITIES, ETC. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, none of the
Certificates are Indexed Securities or Strip Certificates, and that a series of
Securities includes a single class of Certificates. If these conditions are not
satisfied with respect to any given series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). In the Trust Agreement, the
Certificateholders will agree that the yield on a Certificate is intended to
qualify as a "guaranteed payment" and not as a distributive share of partnership
income. A guaranteed payment would be treated by a Certificateholder as ordinary
income, but may well not be treated as interest income. The Trust Agreement will
provide that, to the extent that such treatment is not respected, the
Certificateholders of each class of Certificates will be allocated taxable
income of the Trust for each month equal to the sum of (i) the interest that
accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Pass Through Rate for such month and interest
on amounts previously due on the Certificates but not yet paid; (ii) any Trust
income attributable to discount on the Receivables that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) any other amounts of income payable to the Certificateholders
for such month. Such allocation will be reduced by any amortization by the Trust
of premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining taxable income of the
Trust will be allocated to the Seller. Except as provided below, losses and
deductions generally will be allocated to the Certificateholders only to the
extent the Certificateholders are reasonably expected to bear the economic
burden of such losses or deductions. Any losses allocated to Certificateholders
could be characterized as capital losses, and the Certificateholders generally
would only be able to deduct such losses against capital gain income, and
deductions would be subject to the limitations set forth below. Accordingly, a
Certificateholder's taxable income from the Trust could exceed the cash it is
entitled to receive from the Trust.
Based on the economic arrangement of the parties, this approach for
allocating Trust income and loss should be permissible under applicable Treasury
regulations, although no assurance can be given that the IRS would
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not require a greater amount of income to be allocated to Certificateholders.
Moreover, even under the foregoing method of allocation, Certificateholders may
be allocated income equal to the entire Pass Through Rate plus the other items
described above even though the Trust might not have sufficient cash to make
current cash payments of such amount. Thus, cash basis holders will in effect be
required to report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if they have
not received cash from the Trust to pay such taxes. In addition, because tax
allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the Trust.
For each taxable year of the Certificateholder, the Certificateholder
will be required to report items of income, loss and deduction allocated to them
by the Trust for the Trust's taxable year that ends on or before the last day of
such taxable year of the Certificateholder. The Code prescribes certain rules
for determining the taxable year of the Trust. It is likely that, under these
rules, the taxable year of the Trust will be the calendar year. However, in the
event that all of the Certificateholders possessing a 5 percent or greater
interest in the equity or profits of the Trust share a taxable year that is
other than the calendar year, the Trust would be required to use that year as
its taxable year.
A significant portion of the taxable income allocated to a
Certificateholder that is a pension, profit sharing or employee benefit plan or
other tax-exempt entity (including an individual retirement account) will
constitute "unrelated business taxable income" generally taxable to such a
holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually paid to such holder over the life of the
Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
DISCOUNT AND PREMIUM. It is believed that the Receivables were not
issued with OID, and, therefore, the Trust should not have OID income. However,
the purchase price paid by the Trust for the Receivables may be greater or less
than the remaining principal balance of the Receivables at the time of purchase.
If so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium against
interest income on the Receivables. As indicated above, a portion of such market
discount income or premium deduction may be allocated to Certificateholders.
SECTION 708 TERMINATION. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
transfer all of it assets and liabilities to a new partnership in exchange for
an interest in the new partnership, after which the Trust would be deemed to
distribute interests in the new partnership to Certificateholders (including the
purchasing partner who caused the termination) in liquidation of the terminated
partnership. The Trust will not comply with certain technical requirements that
might apply when such a constructive termination occurs. As a result, the Trust
may be subject to certain tax penalties and may incur additional expenses if it
is required to comply with those requirements. Furthermore, the Trust might not
be able to comply due to lack of data.
DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any payments received with respect to such Certificate.
In addition, both the tax basis in the Certificates and the amount realized on a
sale of a Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificates, and, upon sale or other disposition
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of some of the Certificates, allocate a portion of such aggregate tax basis to
the Certificates sold (rather than maintaining a separate tax basis in each
Certificate for purposes of computing gain or loss on a sale of that
Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would generally
be treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash payments with respect thereto, such excess will generally give rise to a
capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the
Trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Seller is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
SECTION 754 ELECTION. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the Trust were to file an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
ADMINISTRATIVE MATTERS. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be set forth in the related Prospectus Supplement. The Trustee
will file a partnership information return (IRS Form 1065) with the IRS for each
taxable year of the Trust and will report each Certificateholder's allocable
share of items of Trust income and expense to holders and the IRS on Schedule
K-1. The Trust will provide the Schedule K-1 information to nominees that fail
to provide the Trust with the information statement described below and such
nominees will be required to forward such information to the beneficial owners
of the Certificates. Generally, holders must file tax returns that are
consistent with the information return filed by the Trust or be subject to
penalties unless the holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly-owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Seller will be designated as the tax matters partner in the related
Trust Agreement and, as such, is designated to receive notice on behalf of, and
to provide notice to those Certificateholders not receiving notice from, the
IRS, and to represent the Certificateholders in any dispute with the IRS. The
Code provides for administrative
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examination of a partnership as if the partnership were a separate and distinct
taxpayer. Generally, the statute of limitations for partnership items does not
expire before three years after the date on which the partnership information
return is filed. Any adverse determination following an audit of the return of
the Trust by the appropriate taxing authorities could result in an adjustment of
the returns of the Certificateholders, and, under certain circumstances, a
Certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the Trust. As the tax matters partner, the Seller may
enter into a binding settlement on behalf of all Certificateholders with a less
than 1 percent interest in the Trust (except for any group of such
Certificateholders with an aggregate interest of 5 percent or more in Trust
profits that elects to form a notice group or Certificateholders who otherwise
notify the IRS that the Seller is not authorized to settle on their behalf). In
the absence of a proceeding at the Trust level, a Certificateholder under
certain circumstances may pursue a claim for credit or refund on his own behalf
by filing a request for administrative adjustment of a Trust item. Each
Certificateholder is advised to consult its own tax advisor with respect to the
impact of these procedures on its particular case. An adjustment could also
result in an audit of a Certificateholder's returns and adjustments of items not
related to the income and losses of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. It is not clear whether
the Trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust would be engaged in a trade or business in the United States for
such purposes, the Trust will withhold as if it were so engaged in order to
protect the Trust from possible adverse consequences of a failure to withhold.
The Trust expects to withhold on the portion of its taxable income that is
allocable to foreign Certificateholders pursuant to Section 1446 of the Code, as
if such income were effectively connected to a U.S. trade or business, at a rate
of 35% for foreign holders that are taxable as corporations and 39.6% for all
other foreign holders. Subsequent adoption of Treasury regulations or the
issuance of other administrative pronouncements may require the Trust to change
its withholding procedures. In determining a holder's withholding status, the
Trust may rely on IRS Form W-8, IRS Form W-9 or the holder's certification of
nonforeign status signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust's income. Each foreign holder must obtain
a taxpayer identification number from the IRS and submit that number to the
Trust on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the Trust, taking the
position that no taxes were due because the Trust was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust. If these interest payments are properly characterized
as guaranteed payments, then the interest will not be considered "portfolio
interest", in which case Certificateholders would be subject to United States
federal income tax and withholding tax at a rate of 30 percent, unless reduced
or eliminated pursuant to an applicable treaty. In such case, a foreign holder
would only be entitled to claim a refund for that portion of the taxes in excess
of the taxes that should be withheld with respect to the guaranteed payments.
BACKUP WITHHOLDING. Payments made on the Certificates and proceeds from
the sale of the Certificates will be subject to a "backup" withholding tax of
31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code. See "Tax Consequences to Holders of the Notes
- - Backup Withholdings."
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates of a Trust for which a partnership election will not be made, to
the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of Tax Counsel to each Trust with respect to the
related series on the material matters associated with such consequences,
subject to the qualifications set forth herein. In addition, Tax Counsel has
prepared or reviewed the statements in this Prospectus under the heading
"Certain Federal Income Tax Consequences --Trusts Treated as Grantor Trusts",
and is of the opinion that such statements are correct in all material respects.
Such statements are intended as an explanatory discussion of the possible
effects of the classification of any Trust as a grantor trust for federal income
tax purposes on investors generally and of related tax matters affecting
investors generally, but do not purport to furnish information in the level of
detail or with the attention to an investor's specific tax
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circumstances that would be provided by an investor's own tax advisor.
Accordingly, each investor is advised to consult its own tax advisors with
regard to the tax consequences to it of investing in Notes or Certificates.
If a partnership election is not made, Tax Counsel will deliver its
opinion that the Trust will not be classified as an association taxable as a
corporation and that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of Chapter 1 of Subtitle A of the Code. In
this case, owners of Certificates (referred to herein as "Grantor Trust
Certificateholders") could be considered to own either (i) an undivided interest
in a single debt obligation held by the Trust and having a principal amount
equal to the total stated principal amount of the Receivables and an interest
rate equal to the relevant Pass Through Rate or (ii) an interest in each of the
Receivables and any other Trust property. The Certificates issued by a Trust
that is treated as a grantor trust are referred to herein as "Grantor Trust
Certificates".
The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property has been made
by the IRS and the courts on the basis of numerous factors designed to determine
whether the transferor has relinquished (and the transferee has obtained)
substantial incidents of ownership in the property. Among those factors, 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.
The relevant pooling and servicing agreement will express the intent of
the Seller to sell, and the Grantor Trust Certificateholders to purchase, the
Receivables, and the Seller and each Grantor Trust Certificateholder, by
accepting a beneficial interest in a Certificate, will agree to treat the
Certificates as ownership interests in the Receivables and any other Trust
property.
TREATMENT AS DEBT OBLIGATION. If a Grantor Trust Certificateholder was
considered to own an undivided interest in a single debt obligation, the
principles described under "Trusts For Which a Partnership Election Is Made--Tax
Consequences to Holders of the Notes" would apply. Each Grantor Trust
Certificateholder, rather than reporting its share of the interest accrued on
each Receivable, would, in general, be required to include in income interest
accrued or received on the principal amount of the Certificates at the relevant
Pass Through Rate in accordance with its usual method of accounting.
The Certificates would be subject to the original issue discount
("OID") rules, described below under "Stripped Bonds and Stripped
Coupons-Original Issue Discount." In determining whether such OID is de minimus,
the weighted average life of the Certificates would be determined using a
reasonable assumption regarding anticipated prepayments (a "Prepayment
Assumption"). OID includible in income for any accrual period (generally, the
period between payment dates) would generally be calculated using a Prepayment
Assumption and an anticipated yield established as of the date of initial sale
of the Certificates, and would increase or decrease to reflect prepayments at a
faster or slower rate than anticipated. The Certificates would also be subject
to the market discount provisions of the Code to the extent that a Grantor Trust
Certificateholder purchased such Certificates at a discount from the initial
issue price (as adjusted to reflect prior accruals of OID).
The remainder of the discussion herein assumes that a Grantor Trust
Certificateholder will be treated as owning an interest in each Receivable (and
the proceeds therefrom) and any other Trust property, although the Servicer will
report information on an aggregate basis. The Certificates issued by a Trust
that is treated as a grantor trust are referred to herein as "Grantor Trust
Certificates."
CHARACTERIZATION. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption and late payment charges received by the Servicer.
Under Sections 162 or 212 each Grantor Trust Certificateholder will be entitled
to deduct its pro rata share of servicing fees, prepayment fees, assumption
fees, any loss recognized upon an assumption and late payment charges retained
by the Servicer, provided that such amounts are reasonable compensation for
services rendered to the Trust. Grantor Trust Certificateholders that are
individuals, estates or trusts will be entitled to deduct their share of
expenses only to the extent such expenses plus all other Section 212 expenses
exceed two percent of its adjusted
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gross income. A Grantor Trust Certificateholder using the cash method of
accounting must take into account its pro rata share of income and deductions as
and when collected by or paid to the Servicer. A Grantor Trust Certificateholder
using an accrual method of accounting must take into account its pro rata share
of income and deductions as they become due or are paid to the Servicer,
whichever is earlier. If the servicing fees paid to the Servicer are deemed to
exceed reasonable servicing compensation, the amount of such excess could be
considered as an ownership interest retained by the Servicer (or any person to
whom the Servicer assigned for value all or a portion of the servicing fees) in
a portion of the interest payments on the Receivables. The Receivables would
then be subject to the "coupon stripping" rules of the Code discussed below.
PREMIUM. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable based
on each Receivable's relative fair market value, so that such holder's undivided
interest in each Receivable will have its own tax basis. A Grantor Trust
Certificateholder that acquires an interest in Receivables at a premium may
elect to amortize such premium under a constant interest method. Amortizable
bond premium will be treated as an offset to interest income on such Grantor
Trust Certificate. The basis for such Grantor Trust Certificate will be reduced
to the extent that amortizable premium is applied to offset interest payments.
It is not clear whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Section 171. A Grantor Trust
Certificateholder that makes this election for a Grantor Trust Certificate that
is acquired at a premium will be deemed to have made an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder holds during the year of the
election or thereafter.
If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Grantor Trust Certificate acquired at a
premium should recognize a loss if a Receivable prepays in full, equal to the
difference between the portion of the prepaid principal amount of such
Receivable that is allocable to the Grantor Trust Certificate and the portion of
the adjusted basis of the Grantor Trust Certificate that is allocable to such
Receivable. If a reasonable prepayment assumption is used to amortize such
premium, it appears that such a loss would be available, if at all, only if
prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be required
to reflect differences between an assumed prepayment rate and the actual rate of
prepayments.
STRIPPED BONDS AND STRIPPED COUPONS. Although the tax treatment of
stripped bonds is not entirely clear, based on recent guidance from the IRS,
each purchaser of a Grantor Trust Certificate will be treated as the purchaser
of a stripped bond which generally should be treated as a single debt instrument
issued on the day it is purchased for purposes of calculating any original issue
discount. Generally, under applicable Treasury regulations (the "Section 1286
Treasury Regulations"), if the discount on a stripped bond is larger than a de
minimis amount (as calculated for purposes of the OID rules of the Code), such
stripped bond will be considered to have been issued with OID. See "Original
Issue Discount." Based on the preamble to the Section 1286 Treasury Regulations,
Tax Counsel is of the opinion that, although the matter is not entirely clear,
the interest income on the Certificates at the sum of the Pass Through Rate and
the portion of the Servicing Fee Rate that does not constitute excess servicing
will be treated as "qualified stated interest" within the meaning of the Section
1286 Treasury Regulations and such income will be so treated in the Trustee's
tax information reporting.
ORIGINAL ISSUE DISCOUNT. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through 1273
and 1275) will be applicable to a Grantor Trust Certificateholder's interest in
those Receivables meeting the conditions necessary for these sections to apply.
Generally, a Grantor Trust Certificateholder that acquires an undivided interest
in a Receivable issued or acquired with OID must include in gross income the sum
of the "daily portions," as defined below, of the OID on such Receivable for
each day on which it owns a Certificate, including the date of purchase but
excluding the date of disposition. In the case of an original Grantor Trust
Certificateholder, the daily portions of OID with respect to a Receivable
generally would be determined as follows. A calculation will be made of the
portion of OID that accrues on the Receivable during each successive monthly
accrual period (or shorter period in respect of the date of original issue or
the final Distribution Date). This will be done, in the case of each full
monthly accrual period, by adding (i) the present value of all remaining
payments to be received on the Receivable under the prepayment assumption used
in respect of the Receivables and (ii) any payments received during such accrual
period, and subtracting from that total the "adjusted issue price" of the
Receivable at the beginning of such accrual period. No representation is made
that the Receivables will prepay at any prepayment assumption. The "adjusted
issue price" of a Receivable at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of a Receivable at the beginning of a subsequent accrual
period is the "adjusted issue price" at the beginning of the immediately
preceding accrual period plus the amount of OID allocable to that accrual period
and reduced by the amount of any payment (other than "qualified stated
interest") made at the end of or during that accrual period. The OID accruing
during
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such accrual period will then be divided by the number of days in the period to
determine the daily portion of OID for each day in the period. With respect to
an initial accrual period shorter than a full monthly accrual period, the daily
portions of OID must be determined according to a reasonable method, provided
that such method is consistent with the method used to determine the yield to
maturity of the Receivables.
With respect to the Receivables, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Receivables. Subsequent purchasers that
purchase Receivables at more than a de minimis discount should consult their tax
advisors with respect to the proper method to accrue such OID.
MARKET DISCOUNT. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules of
Sections 1276 through 1278 to the extent an undivided interest in a Receivable
is considered to have been purchased at a "market discount." Generally, the
amount of market discount is equal to the excess of the portion of the principal
amount of such Receivable allocable to such holder's undivided interest over
such holder's tax basis in such interest. Market discount with respect to a
Grantor Trust Certificate will be considered to be zero if the amount allocable
to the Grantor Trust Certificate is less than 0.25% of the Grantor Trust
Certificate's stated redemption price at maturity multiplied by the weighted
average maturity remaining after the date of purchase. Treasury regulations
implementing the market discount rules have not yet been issued; therefore,
investors should consult their own tax advisors regarding the application of
these rules and the advisability of making any of the elections allowed under
Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be reduced
by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described in
the relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
Grantor Trust Certificate is issued with OID, the amount of market discount that
accrues during any accrual period would be equal to the product of (i) the total
remaining market discount and (ii) a fraction, the numerator of which is the OID
accruing during the period and the denominator of which is the total remaining
OID at the beginning of the accrual period. For Grantor Trust Certificates
issued without OID, the amount of market discount that accrues during a period
is equal to the product of (i) the total remaining market discount and (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Grantor Trust Certificates) that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing such instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Grantor Trust Certificate
purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry such Grantor Trust Certificate purchased with market discount. For
these purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
PREMIUM. To the extent a Grantor Trust Certificateholder is considered
to have purchased an undivided interest in a Receivable for an amount that is
greater than the stated redemption price at maturity of such Receivable, such
Grantor Trust Certificateholder will be considered to have purchased the
Receivable with "amortizable bond premium" equal in amount to such excess. A
Grantor Trust Certificateholder (who does not hold the Certificate for sale to
customers or in inventory) may elect under Section 171 of the Code to amortize
such premium. Under the Code, premium is allocated among the interest payments
on the Receivables to which it relates and is considered as
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an offset against (and thus a reduction of) such interest payments. With certain
exceptions, such an election would apply to all debt instruments held or
subsequently acquired by the electing holder. Absent such an election, the
premium will be deductible as an ordinary loss only upon disposition of the
Certificate or pro rata as principal is paid on the Receivables.
ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method. If such an election were to be
made with respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Certificateholder owns or acquires. See " --Premium" herein. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Grantor Trust Certificate is irrevocable except with the
approval of the IRS.
SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Such gain or loss will be
capital gain or loss to an owner for which a Grantor Trust Certificate is a
"capital asset" within the meaning of Section 1221, and will be long-term or
short-term depending on whether the Grantor Trust Certificate has been owned for
the long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the sale
of a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
NON-U.S. PERSONS. Generally, interest or OID paid by the person
required to withhold tax under Section 1441 or 1442 to (i) an owner that is not
a U.S. Person (as defined below) or (ii) a Grantor Trust Certificateholder
holding on behalf of an owner that is not a U.S. Person, as well as accrued OID
recognized by the owner on the sale or exchange of such a Grantor Trust
Certificate, will not be subject to withholding to the extent that a Grantor
Trust Certificate evidences ownership in Receivables issued after July 18, 1984
by natural persons if such Grantor Trust Certificateholder complies with certain
identification requirements (including delivery of a statement, signed by the
Grantor Trust Certificateholder under penalties of perjury, certifying that such
Grantor Trust Certificateholder is not a U.S. Person and providing the name and
address of such Grantor Trust Certificateholder). Additional restrictions apply
to Receivables where the obligor is not a natural person in order to qualify for
the exemption from withholding.
As used herein, a "U.S. Person" means (i) a citizen or resident of the
United States, (ii) a corporation or a partnership organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate,
the income of which from sources outside the United States is includible in
gross income for federal income tax purposes regardless of its connection with
the conduct of a trade or business within the United States or (iv) a trust if a
court within the U.S. is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have
authority to control all substantial decisions of the trust.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar year,
to each person who was a Grantor Trust Certificateholder at any time during such
year, such information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a payment to a recipient would be allowed as a credit
against such recipient's federal income tax liability.
67
<PAGE>
CERTAIN STATE TAX CONSEQUENCES WITH RESPECT TO TRUSTS FOR WHICH A
PARTNERSHIP ELECTION IS MADE
The activities to be undertaken by the Servicer in servicing and
collecting the Receivables will take place in California. The State of
California imposes a state individual income tax and a corporate franchise tax
on corporations, partnerships and other entities doing business in the State of
California. This discussion relates only to Trusts for which a partnership
election is made, and is based upon present provisions of California statutes
and the regulations promulgated thereunder, and applicable judicial or ruling
authority, all of which are subject to change, which change may be retroactive.
Because of the variation in each state's tax laws based in whole or in
part upon income, it is impossible to predict tax consequences to holders of
Notes and Certificates in all of the state taxing jurisdictions in which they
are already subject to tax. Noteholders and Certificateholders are urged to
consult their own tax advisors with respect to state tax consequences arising
out of the purchase, ownership and disposition of Notes and Certificates.
For purposes of the following summary, references to the Trust, the
Notes, the Certificates and related terms, parties and documents shall be deemed
to refer, unless otherwise specified herein, to each Trust for which a
partnership election is made and the Notes, Certificates and related terms,
parties and documents applicable to such Trust.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
It is expected that Tax Counsel will advise each Trust that issues
Notes that, assuming the Notes will be treated as debt for federal income tax
purposes, the Notes will be treated as debt for California income and franchise
tax purposes. Accordingly, Noteholders not otherwise subject to taxation in
California should not become subject to taxation in California solely because of
a holder's ownership of Notes. However, a Noteholder already subject to
California's income tax or franchise tax could be required to pay additional
California tax as a result of the holder's ownership or disposition of Notes.
TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY A TRUST TREATED AS A
PARTNERSHIP
Based on regulations issued by the Franchise Tax Board with respect to
the California tax characterization of an owner trust as a partnership and not
as an association taxable as a corporation or other taxable entity, Tax Counsel
will opine that a Trust for which a partnership election is to be made will not
be an association (or publicly traded partnership) treated as a corporation for
California tax purposes. In such case, the resulting constructive partnership
should not be treated as doing business in California but rather should be
viewed as a passive holder of investments and, as a result, should not be
subject to the California franchise tax (which, if applicable, could possibly
result in reduced payments to Certificateholders).
Under current law, Certificateholders that are nonresidents of
California and are not otherwise subject to California income tax may be subject
to California income tax on the income from the constructive partnership. In any
event, classification of the arrangement as a "partnership" would not cause a
Certificateholder not otherwise subject to taxation in California to pay
California tax on income beyond that derived from the Certificates.
If the Certificates are instead treated as ownership interests in an
association taxable as a corporation or a "publicly traded partnership" taxable
as a corporation, then the hypothetical entity should not be subject to the
California franchise tax (which, if applicable, could result in reduced payments
to Certificateholders). A Certificateholder not otherwise subject to tax in
California would not become subject to California tax as a result of its mere
ownership of such an interest.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON YOUR
PARTICULAR TAX SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO
THE TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES
AND CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan"), from engaging
in certain transactions involving "plan assets" with persons that are "parties
in interest" under ERISA or "disqualified persons" under the Code with
68
<PAGE>
respect to such Benefit Plan. ERISA also imposes certain duties on persons who
are fiduciaries of Benefit Plans subject to ERISA and prohibits certain
transactions between a Benefit Plan and parties in interest with respect to such
Benefit Plans. 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 an excise tax or other penalties and liabilities under ERISA and the
Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Notes or Certificates if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of a Trust would
be treated as plan assets of a Benefit Plan for the purposes of ERISA and the
Code only if the Benefit Plan acquired an "equity interest" in the Trust and
none of the exceptions contained in the Plan Assets Regulation was applicable.
An equity interest is defined under the Plan Assets Regulation as an interest
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The likely treatment in this
context of Notes and Certificates of a given series will be discussed in the
related Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements nor to Section 4975 of the Code.
However, governmental plans may be subject to state or local laws that impose
similar requirements. In addition, governmental plans and church plans that are
"qualified" under Section 401(a) of the code are subject to restrictions with
respect to prohibited transactions under Section 503(a)(1)(B) of the Code, the
section for violation being loss of "qualified" status.
Due to the complexities of the "prohibited transaction" rules and the
penalties imposed upon persons involved in prohibited transactions, it is
important that the fiduciary of any Benefit Plan considering the purchase of
Securities consult with its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a given series and an underwriting agreement
with respect to the Certificates of such series (collectively, the "Underwriting
Agreements"), the Seller will agree to cause the related Trust to sell to the
underwriters named therein and in the related Prospectus Supplement, and each of
such underwriters will severally agree to purchase, the principal amount of each
class of Notes and Certificates, as the case may be, of the related series set
forth therein and in the related Prospectus Supplement.
In each of the Underwriting Agreements with respect to any given series
of Securities, the several underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes and Certificates, as the
case may be, described therein which are offered hereby and by the related
Prospectus Supplement if any of such Notes and Certificates, as the case may be,
are purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Notes and Certificates, as the case may be, being offered thereby
will be offered to the public and any concessions that may be offered to certain
dealers participating in the offering of such Notes and Certificates or (ii)
specify that the related Notes and Certificates, as the case may be, are to be
resold by the underwriters in negotiated transactions at varying prices to be
determined at the time of such sale. After the initial public offering of any
such Notes and Certificates, such public offering prices and such concessions
may be changed.
Each Underwriting Agreement will provide that TMCC and the Seller will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from the
Seller.
Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject to
such Underwriting Agreement will be conditioned on the closing of the sale of
all other such classes of Securities of that series.
69
<PAGE>
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by O'Melveny &
Myers LLP. In addition, certain United States federal and California state tax
and other matters will be passed upon for the related Trust by O'Melveny & Myers
LLP.
EXPERTS
If the Trust invests in demand notes issued by TMCC, the
financial statements of TMCC included in TMCC's Annual Report on Form 10-K for
the year ended September 30, 1998 will be incorporated by reference herein.
These financial statements will be 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 TMCC for the three-month periods ended December 31, 1998 and
1997, which will be incorporated by reference in this Prospectus if the Trust
invests in demand notes issued by TMCC, PricewaterhouseCoopers LLP reported that
they have applied limited procedures in accordance with professional standards
for a review of such information. However, their separate report dated February
12, 1999, which will be incorporated by reference in this Prospectus if the
Trust invests in demand notes issued by TMCC, states 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 were not 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.
If the Trust does not invest in demand notes issued by TMCC,
the financial statements and unaudited financial information of TMCC will not be
incorporated by reference in this Prospectus. In such an event, neither
PricewaterhouseCoopers LLP nor TMCC will be subject to the liability provisions
of section 11 of the Securities Act for the financial statements appearing in
TMCC's Annual Report on Form 10-K for the year ended September 30, 1998 or for
PricewaterhouseCoopers' reports on the unaudited consolidated financial
information of TMCC because those financial statements and reports are not a
"report" or a "part" of the registration statement.
70
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
<C> <C>
1992 Master Agreement.........................................................53
Actuarial Receivables.........................................................17
Administration Agreement......................................................49
Administration Fee............................................................50
Administrative Purchase Payment...............................................40
Administrative Receivable.....................................................40
Administrator.................................................................49
Advances...................................................................7, 42
APR...........................................................................18
Base Rate.....................................................................24
Benefit Plan..................................................................67
Business Day..................................................................27
business partners.............................................................15
Calculation Agent.............................................................28
Calculation Date..............................................................29
CD Rate.......................................................................28
CD Rate Determination Date....................................................28
CD Rate Security..............................................................26
Cedelbank.....................................................................32
Cedelbank Participants........................................................34
Certificate Balance...........................................................20
Certificate Owners............................................................13
Certificate Pool Factor.......................................................18
Certificateholder.............................................................25
Certificates..................................................................11
class.........................................................................21
Closing Date..................................................................17
Code..........................................................................56
Collection Account............................................................39
Collection Period.............................................................41
Commercial Paper Rate.........................................................29
Commercial Paper Rate Determination Date......................................29
Commercial Paper Rate Security................................................26
Commission.....................................................................2
Cooperative...................................................................35
Cutoff Date...................................................................13
Dealer Agreements.............................................................13
Dealer Recourse............................................................8, 17
Dealers.......................................................................12
Definitive Certificates.......................................................36
Definitive Notes..............................................................36
Definitive Securities.....................................................32, 36
Depository....................................................................20
Designated LIBOR Page.........................................................31
Determination Date............................................................45
Disqualified Persons..........................................................67
Distribution Date.............................................................25
DTC...........................................................................32
DTC Participants..............................................................21
DTC Services..................................................................35
ECU...........................................................................27
Eligible Deposit Account......................................................40
Eligible Institution..........................................................40
Eligible Investments..........................................................39
embedded systems..............................................................13
ERISA..........................................................................9
Euroclear.....................................................................32
71
<PAGE>
Euroclear Operator............................................................35
Euroclear Participants........................................................35
Event of Default..............................................................22
Excess Payment................................................................42
Federal Funds Rate............................................................29
Federal Funds Rate Determination Date.........................................29
Federal Funds Rate Security...................................................26
Final Scheduled Maturity Date..................................................7
Financed Vehicles.............................................................12
Fixed Rate Securities.........................................................26
Floating Rate Securities......................................................26
Grantor Trust Certificateholders..............................................62
Grantor Trust Certificates....................................................62
Indenture.....................................................................21
Indenture Trustee.............................................................12
Index.........................................................................32
Index Currencies..............................................................32
Index Currency................................................................31
Index Maturity................................................................26
Indexed Principal Amount......................................................32
Indexed Securities............................................................32
Indirect DTC Participants.....................................................33
Industry .....................................................................35
Insolvency Event..............................................................47
Insolvency Laws...............................................................53
Interest Period...............................................................28
Interest Rate.................................................................21
Interest Reset Date...........................................................27
Interest Reset Period.........................................................27
Investment Earnings...........................................................40
IRS...........................................................................56
ISDA..........................................................................56
Issuer.........................................................................3
IT systems....................................................................14
LIBOR.........................................................................30
LIBOR Determination Date......................................................30
LIBOR Security................................................................26
London Business Day...........................................................27
Money Market Yield............................................................29
Note Pool Factor..............................................................20
Noteholders...................................................................21
Notes.........................................................................12
Obligors......................................................................12
Original Certificate Balance..................................................20
Pass Through Rate.............................................................25
Payahead Account..............................................................39
Payments Ahead................................................................37
Pool Balance..................................................................19
Pooling and Servicing Agreement...............................................12
Precomputed Advance...........................................................42
Precomputed Receivables.......................................................18
Prepayment....................................................................42
Prepayments...................................................................16
Principal Balance.............................................................43
Principal Financial Center....................................................31
Prospectus Supplement.........................................................12
Receivables...................................................................12
Receivables Pool..............................................................12
Receivables Purchase Agreement................................................17
Registration Statement........................................................16
Related Documents.............................................................22
72
<PAGE>
Required Rate.................................................................45
Required Yield Maintenance Amount.............................................45
Reserve Fund..................................................................44
Rule of 78s Receivables.......................................................18
Sale and Servicing Agreement..................................................12
Schedule of Receivables.......................................................38
SEC...........................................................................16
Securities....................................................................12
Securities Act................................................................16
Securityholders...............................................................16
Seller........................................................................12
Servicer......................................................................13
Servicer Default..............................................................46
Servicing Fee.................................................................43
Servicing Fee Rate............................................................43
Short-Term Note...............................................................57
Simple Interest Advance.......................................................42
Simple Interest Receivables...................................................18
Spread........................................................................26
Spread Multiplier.............................................................26
Strip Certificates............................................................21
Strip Notes...................................................................21
Swap Agreement................................................................53
Swap Counterparty.............................................................53
Swap Termination..............................................................50
Systems.......................................................................35
Tax Counsel...................................................................55
TMCC..........................................................................13
TMS...........................................................................13
Transfer and Servicing Agreements.............................................38
Treasury Rate.................................................................31
Treasury Rate Determination Date..............................................31
Treasury Rate Security........................................................26
Trust.........................................................................12
Trust Accounts................................................................39
Trust Agreement...............................................................12
Trustee.......................................................................12
Underwriting Agreements.......................................................68
Warranty Purchase Payment.....................................................38
Warranty Receivable...........................................................38
Weighted Average Life.........................................................16
Yield Maintenance Account.....................................................44
Yield Maintenance Agreement...................................................45
Yield Maintenance Deposit.....................................................45
</TABLE>
73
<PAGE>
Subject to completion, dated ______________
Prospectus Supplement To Prospectus Dated __________
TOYOTA AUTO RECEIVABLES ____-__ OWNER TRUST
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
$____________________ ASSET BACKED NOTES
$____________________ ASSET BACKED CERTIFICATES
YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE S-16 OF THIS SUPPLEMENT AND PAGE 9 IN THE ACCOMPANYING
PROSPECTUS.
This prospectus supplement does not contain complete information about the
offering of the securities. No one may use this prospectus supplement to offer
and sell the securities unless it is accompanied by the prospectus. If any
statements in this prospectus supplement conflict with statements in the
prospectus, the statements in this prospectus supplement will control.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The securities are asset backed securities issued by the trust. The
securities are not obligations of Toyota Motor Credit Corporation, Toyota Motor
Credit Receivables Corporation, Toyota Motor Sales, U.S.A., Inc. or any of their
respective affiliates. Neither the securities nor the receivables are insured
or guaranteed by any governmental agency.
The trust will issue the following securities:
<TABLE>
<CAPTION>
FIRST SCHEDULED FINAL
PASS INTEREST PRINCIPAL SCHEDULED
PRINCIPAL INTEREST THROUGH INTEREST PAYMENT PAYMENT DISTRIBUTION
AMOUNT RATE RATE PERIOD DATE DATE DATE
--------- -------- ------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-1 Notes(1)..
Class A-2 Notes(1)..
Class A-3 Notes(1)..
Certificates (1)....
</TABLE>
(1) The Class A-2 Notes and Class A-3 Notes are subordinated to the Class A-1
Notes and the Class A-3 Notes are subordinated to the Class A-2 Notes, in
each case to the extent described in this Prospectus Supplement. The
certificates are subordinated to the notes, as described in this prospectus
supplement.
The terms of the offering are as follows:
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT SELLER(2)
----------------- ------------ -----------
<S> <C> <C> <C>
Per Class A-1 Note..... $_____________ _______% $_____________
Per Class A-2 Note..... $_____________ _______% $_____________
Per Class A-3 Note..... $_____________ _______% $_____________
Per Certificate........ $_____________ _______% $_____________
Total.................. $_____________ _______% $_____________
</TABLE>
(1) Plus accrued interest from ____________.
(2) Before deducting expenses payable by TMCRC, as the seller, estimated to be
$___________.
[THE TRUST HAS APPLIED TO LIST THE SECURITIES ON THE LUXEMBOURG STOCK
EXCHANGE AND FOR LISTING AND PERMISSION TO DEAL IN THE SECURITIES ON THE
STOCK EXCHANGE OF HONG KONG LIMITED.]
[UNDERWRITERS]
The date of this Prospectus Supplement is _________.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the securities is provided in two separate documents that
progressively provide more detail:
- - the accompanying prospectus, which provides general information, some of
which may not apply to a particular class of securities, including your
class; and
- - this prospectus supplement, which describes the specific terms of your
class of securities.
IF THE TERMS OF YOUR SECURITIES VARY BETWEEN THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT.
Cross-references are included in this prospectus supplement and in the
prospectus which direct you to more detailed descriptions of a particular topic.
You can also find references to key topics in the Table of Contents on the back
cover of the prospectus.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Terms" beginning
on page 16 in this prospectus supplement and under the caption "Index of Terms"
beginning on page 9 in the accompanying prospectus.
S-2
<PAGE>
SUMMARY OF TERMS
THE FOLLOWING INFORMATION HIGHLIGHTS SELECTED INFORMATION FROM
THIS DOCUMENT AND PROVIDES A GENERAL OVERVIEW OF THE TERMS OF THE NOTES AND THE
CERTIFICATES. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THESE
SECURITIES, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS. BOTH DOCUMENTS CONTAIN INFORMATION YOU SHOULD CONSIDER WHEN MAKING
YOUR INVESTMENT DECISION.
RELEVANT PARTIES
ISSUER Toyota Auto Receivables Owner Trust ____-__.
The trust will be established by a trust
agreement.
SELLER Toyota Motor Credit Receivables Corporation.
SERVICER Toyota Motor Credit Corporation.
INDENTURE TRUSTEE [____________________]
OWNER TRUSTEE [____________________]
RELEVANT AGREEMENTS
INDENTURE The indenture between the issuer and the
indenture trustee. The indenture provides for
the terms relating to the notes.
TRUST AGREEMENT The trust agreement between the seller and the
owner trustee. The trust agreement provides
for the terms relating to the certificates.
SALE AND SERVICING The sale and servicing agreement between the
AGREEMENT servicer and the seller. The sale and
servicing agreement governs the transfer of
the receivables by the seller to the trust and
the servicing of the receivables by the
servicer.
ADMINISTRATION AGREEMENT The administration agreement between Toyota
Motor Credit Corporation as the administrator
and the indenture trustee. The administration
agreement governs the provision of reports by
the administrator and the performance by the
administrator of other administrative duties
for the trust.
RECEIVABLES PURCHASE The receivables purchase agreement between
AGREEMENT Toyota Motor Credit Corporation and the
seller. The receivables purchase agreement
governs the sale of the receivables from
Toyota Motor Credit Corporation to the seller.
RELEVANT DATES
CLOSING DATE On or about [__________].
CUTOFF DATE [__________]
S-3
<PAGE>
DISTRIBUTION DATES The trust will pay interest and principal on
the securities on the fifteenth day of each
month. If the fifteenth day of the month is
not a business day, payments on the securities
will be made on the next business day. The
date that any payment is made is called a
distribution date. The first distribution
date is __________.
A "business day" is any day except:
- a Saturday or Sunday;
- a day on which banks in New York or
San Francisco are closed; or
- [for payments on the securities made
in Luxembourg or Hong Kong by a
paying agent, a day on which banks
in Luxembourg or Hong Kong are
closed.]
FINAL SCHEDULED The final principal payment for each class of
DISTRIBUTION DATES securities is scheduled to be made on the
final scheduled distribution dates specified
on the front cover of this prospectus
supplement.
RECORD DATE So long as the securities are in book-entry
form, the trust will make payments on the
securities to the holders of record on the day
immediately preceding the distribution date.
If the securities are issued in definitive
form, the record date will be the last day of
the month preceding the distribution date.
DESCRIPTION OF THE SECURITIES
TERMS The trust is offering the following classes of
securities by way of this prospectus
supplement:
<TABLE>
<CAPTION>
Final
Aggregate Pass- Scheduled
Principal Original Interest Through Distribution
Amount Balance Rate* Rate* Date
--------- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Class A-1
Notes $ $ % % %
Class A-2
Notes
Class A-3
Notes
Certificates
-----------
Total
</TABLE>
* Calculated based on a 360-day year consisting
of twelve 30-day months.
The notes will be secured by the assets of the
trust pursuant to the indenture. The
certificates will represent undivided ownership
interests in the trust.
The outstanding principal amount of each class
of notes and the certificate balance of the
certificates will be reduced by the payment of
principal to the holders of those securities.
S-4
<PAGE>
INTEREST AND PRINCIPAL
PAYMENTS In general, securityholders are entitled to
receive payments of interest and principal from
the trust only to the extent that collections
from trust assets and funds resulting from
credit enhancements are sufficient to make those
payments. Interest and principal collections
from trust assets will be divided among the
various classes of securities in specified
proportions. The trust will pay interest and
principal to securityholders of record as of the
preceding record date.
INTEREST ON NOTES. The amount of interest due
on each distribution date for any class of notes
will equal the product of:
- the outstanding principal balance of the
notes of that class as of the preceding
distribution date (or in the case of the
first distribution date, as of the
closing date); and
- one-twelfth of the interest rate for that
class on a per annum basis.
Interest on the notes will be determined on the
basis of a 360-day year consisting of twelve
30-day months. The interest rate for each class
of notes is set forth on the front cover of this
prospectus supplement.
If noteholders of any class do not receive all
interest owed to them on a distribution date,
the trust will make payments of interest on
later distribution dates to make up the
shortfall, to the extent funds from specified
sources are available to cover the shortfall.
FOR MORE DETAILED INFORMATION CONCERNING
PAYMENTS OF INTEREST ON THE NOTES, SEE
"DESCRIPTION OF THE NOTES--PAYMENTS OF INTEREST"
IN THIS PROSPECTUS SUPPLEMENT.
INTEREST ON CERTIFICATES. The amount of
interest due on each distribution date for the
certificates will equal the product of:
- the outstanding certificate balance as of
the preceding distribution date (or in
the case of the first distribution date,
as of the closing date); and
- one-twelfth of the pass through rate, on
a per annum basis.
Interest on the certificates will be determined
on the basis of a 360-day year consisting of
twelve 30-day months. The pass through rate for
the certificates is set forth on the front cover
of this prospectus supplement.
If certificateholders do not receive all
interest owed to them on a distribution date,
the trust will make payments of interest on
later distribution dates to make up the
shortfall, to the extent funds from specified
sources are available to cover the shortfall.
S-5
<PAGE>
FOR MORE DETAILED INFORMATION REGARDING PAYMENTS
OF INTEREST ON THE CERTIFICATES, SEE
"DESCRIPTION OF THE CERTIFICATES--PAYMENTS OF
INTEREST" IN THIS PROSPECTUS SUPPLEMENT.
PRINCIPAL. Principal on the securities will be
paid from collections on the receivables from:
- the portion of all scheduled monthly
payments on receivables allocable to
principal during the preceding calendar
month;
- the portion of all prepayments on
receivables allocable to principal
received by the servicer during the
preceding calendar month;
- the principal balance of each receivable
that was purchased by the servicer or
repurchased by the seller, in either case
under an obligation that arose during the
preceding calendar month; and
- the principal balance of each receivable
that became a defaulted receivable during
the preceding calendar month.
The receivables owned by the trust are
classified as either precomputed receivables or
simple interest receivables. The portion of the
scheduled monthly payments and prepayments that
will be allocable to principal is different for
each of the two types of receivables. These
receivables are described in more detail in "The
Receivables Pools" in the accompanying
Prospectus.
Before each distribution date, the servicer will
calculate the amount of principal to be paid to
the noteholders and certificateholders for that
distribution date. These amounts are referred
to as the "noteholders' principal distributable
amount" and the "certificateholders' principal
distributable amount". The servicer will
calculate these amounts based on the percentage
of certain amounts due or collected on the
receivables that are allocable to the notes and
certificates.
More specifically, the noteholders' principal
distributable amount will equal the noteholders'
percentage of scheduled payments on precomputed
receivables, principal collections on simple
interest receivables and certain other principal
amounts due or collected on the receivables.
The certificateholders' principal distributable
amount will equal the certificateholders'
percentage of those amounts. The noteholders'
percentage is equal to ___% and represents the
principal amount of the notes on the cutoff date
as a percentage of all securities issued by the
trust. The certificateholders' percentage is
equal to ___% and represents the principal
amount of the certificates on the cutoff date as
a percentage of all securities issued by the
trust.
S-6
<PAGE>
Principal collections available to make payments
to noteholders and certificateholders will be
reduced by any payments made to the servicer to
reimburse the servicer for any principal
advances. Principal collections allocable to
pay the noteholders' principal distributable
amount will be paid sequentially to the Class
A-1 Notes, the Class A-2 Notes and the Class A-3
Notes. This means that the trust will generally
pay the noteholders' principal distributable
amount to the holders of the Class A-1 Notes
until they have been paid in full. The trust
will then pay the noteholders' principal
distributable amount to the holders of the Class
A-2 Notes until they have been paid in full.
Finally, the trust will pay the noteholders'
principal distributable amount to the holders of
the Class A-3 Notes until they have been paid in
full.
Until the earlier of the distribution date on
____________, or the distribution date on which
the Class A-1 Notes have been paid in full, the
trust will also use principal collections
allocable to pay the certificateholders'
principal distributable amount to pay principal
of the Class A-1 Notes. During this period, the
trust will not pay principal on the
certificates. Following this period, the
certificateholder's principal distribution
amount will be paid to certificateholders,
subject to the subordination features described
below under "PAYMENTS TO NOTEHOLDERS AND
CERTIFICATEHOLDERS--PAYMENT OF DISTRIBUTABLE
AMOUNTS".
A principal shortfall will exist on a
distribution date if the noteholders receive
less than the noteholders' principal
distributable amount on that date. Similarly, a
principal shortfall will exist on a distribution
date if the certificateholders receive less than
the certificateholders' principal distributable
amount on that date. If a principal shortfall
occurs, the trust will make payments of
principal on later distribution dates to make up
the shortfall, to the extent funds from
specified sources are available.
FOR A MORE DETAILED DESCRIPTION OF THE PAYMENT
OF PRINCIPAL, YOU SHOULD REFER TO THE SECTIONS
OF THIS PROSPECTUS SUPPLEMENT ENTITLED
"DESCRIPTION OF THE NOTES--PAYMENTS OF
PRINCIPAL", "DESCRIPTION OF THE
CERTIFICATES--PAYMENTS OF PRINCIPAL" AND
"PAYMENTS TO NOTEHOLDERS AND
CERTIFICATEHOLDERS".
[LISTING The trust has applied to list the Class A-1
Notes on the Luxembourg Stock Exchange and The
Stock Exchange of Hong Kong Limited. The trust
has requested that the listings and be made
effective on or about _______________.]
MINIMUM DENOMINATIONS The securities will be issued only in
denominations of $1,000 or more. Securities
will be issued in multiples of $1 for amounts in
excess of $1,000.
S-7
<PAGE>
REGISTRATION OF THE
SECURITIES You will generally hold your interests in the
securities through The Depository Trust Company
in the United States, or Cedelbank or the
Euroclear System in Europe or Asia. This is
referred to as book-entry form. As long as the
securities are held in book-entry form, you will
not receive a definitive certificate
representing your securities.
FOR MORE DETAILED INFORMATION, YOU SHOULD REFER
TO "ANNEX A: GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES" IN THIS PROSPECTUS
SUPPLEMENT AND "CERTAIN INFORMATION REGARDING
THE SECURITIES--BOOK-ENTRY REGISTRATION" IN THE
ACCOMPANYING PROSPECTUS.
TAX STATUS It is a condition to the issuance of the
securities that O'Melveny & Myers LLP, special
tax counsel to the trust, deliver its opinion
that:
- the notes will be characterized as debt; and
- the trust will not be characterized as an
association or a publicly traded partnership
taxable as a corporation for federal income
and California income and franchise tax
purposes.
If you purchase the notes, you will agree to
treat the notes as debt. If you purchase
certificates, you will agree to treat the trust
as a partnership in which the certificateholders
are partners for federal income and California
income and single business tax purposes.
YOU SHOULD REFER TO "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" AND "--CERTAIN STATE TAX
CONSEQUENCES WITH RESPECT TO TRUSTS FOR WHICH A
PARTNERSHIP ELECTION IS MADE" IN THE
ACCOMPANYING PROSPECTUS FOR ADDITIONAL
INFORMATION CONCERNING THE APPLICATION OF
FEDERAL INCOME AND CALIFORNIA TAX LAWS TO THE
TRUST AND THE SECURITIES.
ERISA CONSIDERATIONS The notes are generally eligible for purchase by
employee benefit plans, subject to certain
considerations discussed under "ERISA
Considerations" in this document and in the
accompanying prospectus. The certificates may
not be acquired by any employee benefit plan or
by an individual retirement account.
YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN
THIS PROSPECTUS SUPPLEMENT AND IN THE
ACCOMPANYING PROSPECTUS. IF YOU ARE A BENEFIT
PLAN FIDUCIARY CONSIDERING PURCHASE OF THE
SECURITIES YOU SHOULD, AMONG OTHER THINGS,
CONSULT WITH YOUR COUNSEL IN DETERMINING WHETHER
ALL REQUIRED CONDITIONS HAVE BEEN SATISFIED.
[ELIGIBILITY FOR PURCHASE
BY MONEY MARKET FUNDS The Class A-1 Notes will be eligible securities
for purchase by money market funds under Rule
2a-7 under the Investment Company Act of 1940,
as amended.]
S-8
<PAGE>
RATINGS It is a condition to the issuance of the
securities that:
- the Class A Notes must be rated "AAA" by
Standard and Poor's, a division of the
McGraw Hill Companies and at least "Aaa"
by Moody's Investors Service, Inc.; and
- the Certificates must be rated at least
"___" by Standard & Poor's and at least
"__" by Moody's.
A SECURITY RATING IS NOT A RECOMMENDATION TO
BUY, SELL OR HOLD SECURITIES. THE RATINGS OF
THE SECURITIES ADDRESS THE LIKELIHOOD OF THE
PAYMENT OF PRINCIPAL AND INTEREST ON THE
SECURITIES IN ACCORDANCE WITH THEIR TERMS.
EITHER RATING AGENCY MAY SUBSEQUENTLY LOWER OR
WITHDRAW ITS RATING OF THE SECURITIES. IF THIS
HAPPENS, NO PERSON OR ENTITY WILL BE OBLIGATED
TO PROVIDE ANY ADDITIONAL CREDIT ENHANCEMENT FOR
THE SECURITIES. NO OTHER RATING AGENCY HAS BEEN
ASKED TO RATE ANY CLASS OF CERTIFICATES.
HOWEVER, ANOTHER RATING AGENCY MAY RATE THE
CERTIFICATES AND, IF SO, THE RATING MAY BE LOWER
THAN THE RATINGS DESCRIBED ABOVE.
STRUCTURAL SUMMARY Purchasers of Toyota and Lexus cars and light
duty trucks often finance their purchases by
entering into retail installment sales contracts
with Toyota and Lexus dealers who then resell
the contracts to Toyota Motor Credit
Corporation. The purchasers of the vehicles are
referred to as the "obligors" under the
contracts. Toyota Motor Credit Receivables
Corporation will purchase a specified amount of
these contracts from Toyota Motor Credit
Corporation and on the closing date will sell
them to the trust in exchange for the
securities. The contracts will have a total
outstanding principal balance of $___________ as
of ______, the cutoff date. These contracts are
referred to as the "receivables."
Toyota Motor Credit Receivables Corporation will
sell the certificates to investors for cash to
pay for its purchase of the receivables. The
chart below represents the flow of funds
provided by investors for the securities and the
receivables sold by Toyota Motor Credit
Corporation.
[Chart depicting the transfer of receivables
from Toyota Motor Credit Corporation to seller
in exchange for the cash net proceeds of the
offering; the transfer of receivables from the
seller to the trust in exchange for the
securities; and the issuance of the securities
to investors in exchange for the proceeds.]
S-9
<PAGE>
ASSETS OF THE TRUST The assets of the trust will primarily consist
of the receivables. In addition, the assets of
the trust will also include:
- certain monies due or received under the
receivables on and after the cutoff date;
- security interests in the vehicles
financed under the contracts;
- certain bank accounts and the proceeds of
those accounts; and
- proceeds from claims under certain
insurance policies relating to the
financed vehicles or the obligors under
the contracts and certain rights under
the pooling and servicing agreement. For
a more detailed description of the assets
of the trust, see "The Trust--General" in
this prospectus supplement.
THE RECEIVABLES On the closing date, the trust will purchase
receivables having the following characteristics
as of the cutoff date:
- Total Cutoff Date Principal Balance..........
- Number of Receivables........................
- Average Cutoff Date Principal Balance........
- Average Original Amount Financed.............
Range of Original Amounts Financed.......
- Weighted Average APR(1)......................
Range of APRs............................
- Weighted Average Original Number of Scheduled
Payments(1)..............................
Range of Original Number of Scheduled
Payments.................................
- Weighted Average Remaining Number of
Scheduled Payments(1)....................
Range of Remaining Number of Scheduled
Payments.................................
-------------------
(1) Weighted by principal balance as of the
cutoff date.
S-10
<PAGE>
SERVICING Toyota Motor Credit Corporation will be
appointed to act as servicer for the receivables
owned by the trust. The servicer will handle
all collections, administer defaults and
delinquencies and otherwise service the
contracts. The trust will pay the servicer a
monthly fee equal to 1/12 of 1.00% of the total
principal balance of the receivables as of the
first day of the preceding month. The servicer
will also receive additional servicing
compensation in the form of investment earnings,
late fees and other administrative fees and
expenses or similar charges received by the
servicer during such month.
The servicer will be obligated to advance to the
trust interest on any receivable that is due but
unpaid by the obligor. In addition, the
servicer will be obligated to advance to the
trust principal on any receivables that are
classified as precomputed receivables rather
than simple interest receivables. However, the
servicer will not be required to make an advance
if it determines that the advance will not
ultimately be recoverable. The trust will
reimburse the servicer from later collections on
the delinquent receivable. If the servicer
determines that the advance will not ultimately
be recoverable, the trust may also reimburse the
servicer from collections on other receivables.
FOR MORE DETAILED INFORMATION, YOU SHOULD REFER
TO "TRANSFER AND SERVICING AGREEMENTS SERVICING
COMPENSATION AND PAYMENT OF EXPENSES" IN THE
ACCOMPANYING PROSPECTUS, AND TO "TRANSFER AND
SERVICING AGREEMENTS--ADVANCES" IN THIS
PROSPECTUS SUPPLEMENT.
OPTIONAL REDEMPTION The servicer or the seller may redeem any
outstanding securities when the outstanding
aggregate principal balance of the receivables
declines to 10% or less of the original total
principal balance of the receivables on the
cut-off date.
FOR MORE DETAILED INFORMATION REGARDING THIS
OPTION, YOU SHOULD REFER TO "TRANSFER AND
SERVICING AGREEMENTS--OPTIONAL PURCHASE" IN THIS
PROSPECTUS SUPPLEMENT.
S-11
<PAGE>
PAYMENTS ON DISTRIBUTION
DATES TMCC will identify collections on the
receivables as either interest or principal
depending on the terms of the related contracts.
Collections allocable to interest are sometimes
referred to as "interest collections".
Collections allocable to principal are sometimes
referred to as "principal collections".
Principal advances made by the servicer will be
included in principal collections. Interest
advances made by the servicer will be included
in interest collections. Any reimbursements of
interest advances paid to the servicer will be
deducted from interest collections before those
collections are used to pay noteholders and
certificateholders. Similarly, any
reimbursements of principal advances paid to the
servicer will be deducted from principal
collections before those collections are used to
pay noteholders and certificateholders.
PAYMENTS FROM PRINCIPAL COLLECTIONS - Each
month, the trust will distribute principal
collections received during the prior calendar
month (after any reimbursements of principal
advances) in the following order of priority:
- PRINCIPAL ON THE NOTES - principal due on the
notes for that distribution date, including
any principal due from prior distribution
dates, to be paid sequentially to the Class
A-1 Notes, Class A-2 Notes and Class A-3
Notes until each class of notes has been paid
in full;
- INTEREST ON THE NOTES -interest due on the
notes, including any interest due from prior
distribution dates, that has not already been
paid out of interest collections; and
- PRINCIPAL ON THE CERTIFICATES - principal due
on the certificates for that distribution
date, including any principal due from prior
distribution dates. Certificateholders will
not receive any principal payments until the
earlier of the distribution date on ____, or
the distribution date on which the Class A-1
Notes have been paid in full.
If principal collections are not sufficient to
pay all principal owed to noteholders or
certificateholders on any distribution date, the
trust will pay the shortfall from the following
sources in the following order of priority:
- NOTES - first, from interest collections
remaining after payment of the servicing fee
and interest owed to the noteholders, and,
second, if there is still a shortfall, from
amounts on deposit in the reserve fund
described below; and
- CERTIFICATES - first, from (i) interest
collections remaining after payment of the
servicing fee, (ii) interest owed to the
noteholders and (iii) interest owed to the
Certificateholders, and second, if there is
still a shortfall, from amounts on deposit
in the reserve fund described below.
S-12
<PAGE>
If certain events of default occur and the
indenture trustee declares the entire amount of
the notes to be due immediately, the payment
priorities outlined above will change. In that
circumstance, the trust will pay principal to
each class of notes on a pro rata basis, based
on the outstanding principal amount of that
class as of the cutoff date, until the notes
have been paid in full. The trust will then pay
any remaining principal to the
certificateholders.
The outstanding unpaid principal amount of any
class of securities will be payable on the final
scheduled distribution date for that class of
securities as specified on the cover page of
this prospectus supplement.
PAYMENTS FROM INTEREST COLLECTIONS- Each month,
the trust will distribute interest collections
received during the prior calendar month (after
any reimbursement of interest advances) in the
following order of priority:
- SERVICING FEE - the monthly servicing fee
payable to the servicer;
- INTEREST ON THE NOTES - interest due on the
notes, including any unpaid interest from
prior distribution dates, payable ratably to
each class of notes;
- PRINCIPAL ON THE NOTES - principal due on the
notes, including any unpaid principal from
prior distribution dates, that has not
already been paid out of principal
collections;
- INTEREST ON THE CERTIFICATES - interest due
on the certificates, including any unpaid
interest from prior distribution dates; and
- PRINCIPAL ON THE CERTIFICATES - principal due
on the certificates, including any unpaid
principal from prior distribution dates, that
has not already been paid out of principal
collections.
If interest collections are not sufficient to
pay all interest owed to a class of noteholders
or to certificateholders on any distribution
date, the trust will pay the shortfall from the
following sources in the following order of
priority:
- NOTES - first from principal collections
otherwise allocable to pay principal to
certificateholders, and, if there is still a
shortfall, from amounts on deposit in the
reserve fund described below; and
- CERTIFICATES -from amounts on deposit in the
reserve fund described below.
Unpaid interest on any class of the notes will
accrue interest at the interest rate for that
class. Unpaid interest on the certificates will
accrue interest at the pass-through rate.
S-13
<PAGE>
Excess collections remaining on any distribution
date after the above interest and principal
payments have been made will be deposited in the
reserve fund or distributed to the seller.
FOR MORE DETAILED INFORMATION CONCERNING
PAYMENTS ON THE NOTES AND CERTIFICATES AND
PAYMENT PRIORITIES, YOU SHOULD REFER TO
"DESCRIPTION OF THE NOTES", "DESCRIPTION OF THE
CERTIFICATES" AND "PAYMENTS TO NOTEHOLDERS AND
CERTIFICATEHOLDERS" IN THIS PROSPECTUS
SUPPLEMENT.
CREDIT ENHANCEMENT The indenture and the trust agreement include
certain features designed to provide protection
against losses and delays in payments to the
noteholders and, to a lesser extent, the
certificateholders. These features are referred
to as "credit enhancement". Losses on the
receivables or other shortfalls of cash flow
will be covered by allocating available cash
flow to the notes before making allocations to
the certificates and by withdrawing amounts on
deposit in the reserve fund. The reallocation
of funds to the notes is referred to as
"subordination".
The credit enhancement for the securities will
be as follows:
NOTES
- subordination of the certificates, as
described below; and
- the reserve fund.
CERTIFICATES
- the reserve fund.
SUBORDINATION OF INTEREST AND PRINCIPAL
- CLASS A-2 NOTES - Principal payments on the
Class A-2 Notes will be subordinated to
principal payments on the Class A-1 Notes.
- CLASS A-3 NOTES - Principal payments on the
Class A-3 Notes will be subordinated to
principal payments on the Class A-1 Notes and
Class A-2 Notes.
- CERTIFICATES - Interest payments on the
certificates for any distribution date will
be subordinated to interest payments on the
notes for that distribution date. Principal
payments on the certificates for any
distribution date will be subordinated to
interest and principal payments on the notes
for that distribution date.
S-14
<PAGE>
Principal collections will be used to make
principal payments due to noteholders and, if
there is a shortfall in the amount of interest
collections, interest payments due to
noteholders before being allocated to pay
amounts due to certificateholders. Interest
collections will be used to make interest
payments due to noteholders and, if there is a
shortfall in the amount of principal
collections, principal payments due to
noteholders, before being allocated to pay
amounts due to certificateholders. As a
consequence, certificateholders may receive
reduced principal and interest payments, or no
principal and interest payments, on distribution
dates when there are shortfalls in principal or
interest collections payable to the noteholders.
RESERVE FUND
On each distribution date, if collections on the
receivables are insufficient to pay the amounts
due to the servicer and securityholders as
described above, the owner trustee will withdraw
from the reserve fund, to the extent available,
the amount necessary to make the required
payments.
The trust agreement specifies the balance that
is required to be maintained for the reserve
fund. On the closing date, the seller will
deposit $________ into the reserve fund, which
is less than the required balance. On each
distribution date, after the trust makes the
required payments to the servicer and
securityholders from collections on the
receivables and servicer advances:
- any remaining amounts will be deposited
into the reserve fund to the extent
necessary to maintain the specified
reserve fund balance; or
- amounts remaining in the reserve fund in
excess of the specified balance will be
paid to the seller.
The trust and certificateholders will have no
right to payment or recapture of any amounts
released from the trust or reserve fund and paid
to the seller. The seller will have no
obligation to deposit funds into the reserve
fund except for the initial deposit on the
closing date.
FOR MORE DETAILED INFORMATION CONCERNING THE
CREDIT ENHANCEMENT PROVISIONS, YOU SHOULD REFER
TO "TRANSFER AND SERVICING
AGREEMENTS--SUBORDINATION; RESERVE FUND" IN THIS
PROSPECTUS SUPPLEMENT.
S-15
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS (AND THE FACTORS SET FORTH
UNDER "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS) IN DECIDING WHETHER TO
PURCHASE THE SECURITIES OF ANY CLASS.
THE ABSENCE OF A SECONDARY MARKET FOR THE SECURITIES COULD LIMIT YOUR
ABILITY TO RESELL THE SECURITIES.
The absence of a secondary market for the securities could limit your
ability to resell them. This means that if you want to sell your securities in
the future before they mature, you may have difficulty finding a buyer. If you
find a buyer, the selling price may be less than it would have been if a
secondary market existed for the securities. There is currently no secondary
market for the securities. Although the underwriters have stated that they
intend to make a market in each class of securities, they are not obligated to
do so. A secondary market may not ever develop for the securities. Even if
such a market does develop, it may not provide sufficient liquidity or continue
for the life of your securities.
PREPAYMENTS ON RECEIVABLES MAY CAUSE PREPAYMENTS ON THE SECURITIES,
RESULTING IN REINVESTMENT RISK TO YOU.
You may receive payment of principal on your securities earlier than you
expected. If that happens, you may not be able to reinvest the principal you
receive at a rate as high as the rate on your securities. Prepayments on the
receivables will shorten the life of the securities to an extent that cannot be
predicted. Prepayments may occur for a number of reasons. Some prepayments may
be caused by the obligors under the receivables. For example, obligors may:
- make early payments, since receivables will generally be prepayable at
any time without penalty;
- default, resulting in the repossession and sale of the financed
vehicle; or
- damage the vehicle or become unable to pay due to death or disability,
resulting in payments to the trust under any existing physical damage,
credit life or other insurance.
Some prepayments may be caused by the seller or the servicer.
For example, the seller will make representations and warranties regarding the
receivables, and the servicer will agree to take or refrain from taking certain
actions with respect to the receivables. If the seller or the servicer breaches
its representation or agreement and the breach is material and cannot be
remedied, it will be required to purchase the affected receivables from the
trust. This will result, in effect, in the prepayment of the purchased
receivables. In addition, the seller and the servicer have the option to
purchase the receivables from the trust when the total outstanding principal
balance of the receivables is 10% or less of the total outstanding principal
balance as of the cutoff date.
The rate of prepayments on the receivables may be influenced by a variety
of economic, social and other factors. The seller has limited historical
experience with respect to prepayments. In addition, the seller is not aware of
publicly available industry statistics that detail the prepayment experience for
contracts similar to the receivables. For these reasons, the seller cannot
predict the actual prepayment rates for the receivables. The seller, however,
believes that the actual rate of prepayments will result in the weighted average
life of the receivables being shorter than the period from the closing date to
the final scheduled maturity date for the related class. If this is the case,
the weighted average life of each class of securities will be correspondingly
shorter.
SUBORDINATION FEATURES INCREASE RISK OF LOSS OR DELAY IN PAYMENT
TO CLASS A-2 NOTES, CLASS A-3 NOTES AND THE CERTIFICATES.
If you buy Class A-2 Notes:
- you will not receive any principal payments on a distribution date
until all principal payable on the Class A-1 Notes has been paid.
If you buy Class A-3 Notes:
- you will not receive any principal payments until all principal
payable on the Class A-1 Notes and
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<PAGE>
Class A-2 Notes has been paid.
If you buy certificates:
- you will not receive any interest payments until all interest payable
on each class of notes on that date has been paid;
- you will not receive any principal payments until the earlier of the
distribution date on __________, or the distribution date after all
principal on the Class A-1 Notes has been paid; and
- you will not receive any principal payments on any distribution date
until all principal and interest payable on each class of notes on
that date has been paid.
The Class A-1 Notes and, to a lesser extent, the Class A-2 Notes and Class
A-3 Notes, will receive preferential allocations of principal. As a
consequence, the certificates and, to a lesser extent, the Class A-3 Notes and
Class A-2 Notes will be exposed to a greater risk of nonpayment or delayed
payment if collections fall significantly below expected levels. In addition,
because interest and principal payable on the certificates are subordinated to
amounts payable on the notes to the extent described herein, the certificates
will be further exposed to risk of nonpayment or delayed payment if collections
fall significantly below expected levels.
As a result of the subordination features described above, the yield on the
Class A-2 Notes and Class A-3 Notes will be sensitive, and the yield on the
certificates will be extremely sensitive, to losses on the receivables and the
timing of such losses. If the actual rate and amount of losses exceed your
expectations, and if amounts in the reserve fund are insufficient to cover the
resulting shortfalls, the yield to maturity on your securities may be lower than
anticipated. See "Subordination; Reserve Fund" in this prospectus supplement.
BECAUSE THE TRUST HAS LIMITED ASSETS, THERE IS ONLY LIMITED PROTECTION
AGAINST POTENTIAL LOSSES.
The only source of funds for payments on the securities is the assets of
the trust and the reserve fund. The securities are not obligations of, and will
not be insured or guaranteed by, any governmental agency or the seller, the
servicer, Toyota Motor Sales, U.S.A., Inc., any trustee or any of their
affiliates. You must rely solely on payments on the receivables and amounts on
deposit in the reserve fund for payments on the securities. Although funds in
the reserve fund will be available to cover shortfalls in payments of interest
and principal on each distribution date, the amounts deposited in the reserve
fund will be limited. If the entire reserve fund has been used, the trust will
depend solely on current collections on the receivables to make payments on the
securities. Any excess amounts released from the reserve fund to the seller
will no longer be available to securityholders on any later distribution date.
See "Subordination; Reserve Fund" in this prospectus supplement.
PERFORMANCE OF THE RECEIVABLES COULD BE AFFECTED BY ECONOMIC CONDITIONS IN
THE STATES WHERE THE RECEIVABLES WERE ORIGINATED.
If a large number of obligors are located in a particular state, economic
conditions or other factors that negatively affect that state could also
negatively affect the delinquency, credit loss or repossession experience of the
trust. As of ________________ Toyota Motor Credit Corporation's records
indicate that the billing addresses of the obligors of the receivables were in
the following states:
S-17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL PRINCIPAL BALANCE
<S> <C>
. . . . . . . . . . . . . . . . . %
. . . . . . . . . . . . . . . . . %
. . . . . . . . . . . . . . . . . %
. . . . . . . . . . . . . . . . . %
</TABLE>
No other state, by billing addresses, constituted more than 5% of the
balance of the receivables as of ____________________.
PREPAYMENTS, POTENTIAL LOSSES AND CHANGE IN ORDER OF PRIORITY OF PRINCIPAL
PAYMENTS, FOLLOWING AN EVENT OF DEFAULT UNDER INDENTURE.
Payment defaults or the insolvency or dissolution of the seller may result
in prepayment of the notes and certificates. This may cause losses and changes
in the priority of payments under the securities. If the trust fails to pay
principal of the notes when due, or fails to pay interest on the notes within
five days of the due date, the indenture trustee may declare the entire amount
of the notes to be due immediately. If this happens, the trust will pay all
principal collections to the noteholders until all principal on the notes has
been paid. This may substantially delay payments of principal on the
certificates. Also, if this happens, the holders of a majority in outstanding
principal amount of the notes may direct the indenture trustee to sell the
receivables and prepay the notes. Under these circumstances, the trust will not
pay principal or interest on the certificates until all principal and interest
on the notes has been paid. After the trust pays the notes in full, the trust
will distribute any remaining trust assets to pay the certificates.
The certificateholders will not have any right to direct the indenture
trustee or to consent to any action until the notes are paid in full. See
"Description of the Notes--The Indenture--Events of Default; Rights Upon Event
of Default" in the prospectus. A similar result will occur if the seller
becomes insolvent or is dissolved.
If you receive your principal earlier than expected, you may not be able to
reinvest the prepaid amount at a rate of return that is equal to or greater than
the rate of return on your securities. If the trust is required to sell the
receivables in the circumstances described above, the amount received from the
sale may not be sufficient to pay all amounts owed to you.
IF THERE IS A SERVICER DEFAULT, THE SERVICER MAY BE REMOVED ONLY BY THE
INDENTURE TRUSTEE AND THE NOTEHOLDERS.
The trust will pledge the property of the trust to the indenture trustee as
collateral for the payment of the notes. As a result, the indenture trustee,
acting at the direction of the holders of a majority in outstanding principal
amount of the notes, has the power to direct the trust to take certain actions
in connection with the property of the trust. The holders of a majority of the
notes, or the indenture trustee acting on behalf of the holders of notes, will
also have the right under certain circumstances to terminate the servicer
without considering how this will affect certificateholders. Certificateholders
will not be able to remove the servicer until the notes have been paid in full.
In addition, the holders of at least a majority in outstanding principal amount
of the notes will have the right to waive certain events of default involving
the servicer, without considering how this will affect certificateholders. See
"Transfer and Servicing Agreements--Rights upon Servicer Default" and "--Waiver
of Past Defaults" in the accompanying prospectus.
BECAUSE THE SECURITIES ARE IN BOOK-ENTRY FORM, YOUR RIGHTS CAN ONLY BE
EXERCISED INDIRECTLY.
Because the securities will be issued in book-entry form, you will be
required to hold your interest in the certificates through The Depository Trust
Company in the United States, or Cedelbank or the Euroclear System in Europe.
Transfers of interests in the securities within DTC, Cedelbank
S-18
<PAGE>
or Euroclear must be made in accordance with the usual rules and operating
procedures of those systems. So long as the securities are in book-entry form,
you will not be entitled to receive a definitive note or certificate
representing your interest. The securities will remain in book-entry form
except in the limited circumstances described under the caption "Certain
Information Regarding the Securities--Book-Entry Registration" in the
accompanying prospectus. Unless and until the securities in this prospectus
supplement cease to be held in book-entry form, the owner trustee will not
recognize you as a "Securityholder", as such term is used in the trust
agreement. As a result, you will only be able to exercise the rights of
Securityholders indirectly through DTC (if in the United States) and its
participating organizations, or Cedelbank and Euroclear (in Europe) and their
participating organizations. Holding the securities in book-entry form could
also limit your ability to pledge your securities to persons or entities that do
not participate in DTC, Cedelbank or Euroclear and to take other actions that
require a physical certificate representing the securities.
Interest and principal on the securities will be paid by the trust to DTC
as the record holder of the securities while they are held in book-entry form.
DTC will credit payments received from the trust to the accounts of its
participants which, in turn, will credit those amounts to securityholders either
directly or indirectly through indirect participants. This process may delay
your receipt of principal and interest payments from the trust.
THE TRUST
GENERAL
The Toyota Auto Receivables ____-__ Owner Trust (the "Trust") is
a Delaware business trust to be formed pursuant to the trust agreement (the
"Trust Agreement") between Toyota Motor Credit Receivables Corporation, as
seller (the "Seller") and ________________ as owner trustee (the "Owner
Trustee"). After its formation, the Trust will not engage in any activity other
than (i) acquiring, holding and managing the Receivables and the other assets of
the Trust and proceeds therefrom, (ii) issuing the Notes and the Certificates,
(iii) making payments on the Notes and the Certificates and (iv) engaging in
other activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with an amount equal to
the Certificate Balance of $_____________, excluding amounts deposited in the
Reserve Fund. Certificates with an original principal balance of
$______________ will be sold to the Seller and the remaining equity interest
will be sold to third party investors that are expected to be unaffiliated with
the Seller, the Servicer or their affiliates or the Trust. The equity of the
Trust, together with the net proceeds from the sale of the Notes, will be used
by the Trust to purchase the Receivables from the Seller pursuant to the Sale
and Servicing Agreement and to fund the Reserve Fund.
Toyota Motor Credit Corporation ("TMCC") will be appointed to act
as the servicer of the Receivables (the "Servicer"). The Servicer will service
the Receivables pursuant to the Sale and Servicing Agreement, the Administration
Agreement and the Trust Agreement and will be compensated for such services as
described under "Transfer and Servicing Agreements--Servicing Compensation" in
this Prospectus Supplement and "Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" in the Prospectus.
Pursuant to agreements between TMCC and the Dealers, each Dealer
will repurchase from TMCC those contracts that do not meet certain
representations and warranties made by the Dealer. These Dealer repurchase
obligations are referred to herein as "Dealer Recourse". Such representations
and warranties relate primarily to the origination of the contracts and the
perfection of the security interests in the related financed vehicles, and do
not typically relate to the creditworthiness of the related obligors or the
collectability of such contracts. Although the Dealer agreements with respect
to the Receivables will not be assigned to the Owner Trustee, the Sale and
Servicing Agreement will require that any recovery by TMCC in respect of any
Receivable pursuant to any Dealer Recourse be deposited in the Collection
Account in satisfaction of TMCC's repurchase obligations under the Agreement.
The sales by the Dealers of installment sales contracts to TMCC do not generally
provide for recourse against the Dealers for unpaid amounts in the event of a
default by an obligor thereunder, other than in connection with the breach of
the foregoing representations and warranties.
Each Certificate represents an undivided ownership interest in
the Trust. The Trust property includes the Receivables, and certain monies due
or received thereunder on or after the Cutoff Date. The Trust
S-19
<PAGE>
property also includes (i) such amounts as from time to time may be held in one
or more trust accounts established and maintained by the Servicer pursuant to
the Trust Agreement, as described below; (ii) security interests in the Financed
Vehicles and any accessions thereto; (iii) the rights to proceeds with respect
to the Receivables from claims on physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the Obligors, as the case
may be; (iv) the right to receive proceeds from any Dealer Recourse; (v) the
rights of the Seller under the Receivables Purchase Agreement; (vi) the right to
realize upon any property (including the right to receive future proceeds of
liquidation of Defaulted Receivables) that shall have secured a Receivable and
that shall have been acquired by the Owner Trustee; and (vii) any and all
proceeds of the foregoing. The Reserve Fund will be maintained by the Owner
Trustee for the benefit of the Certificateholders, but will not be part of the
Trust.
The Trust's principal offices are in _______________, in care of
______________, as Owner Trustee, at the address set forth below under "--The
Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust
as of the Closing Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:
[TABLE]
THE OWNER TRUSTEE AND INDENTURE TRUSTEE
___________________ is the Owner Trustee under the Trust
Agreement. _________________ is a _____________ and its principal executive
offices are located at ______________________________. The Seller and its
affiliates may maintain normal commercial banking relations with the Owner
Trustee and its affiliates.
___________________ is the Indenture Trustee under the Indenture.
_________________ is a _____________ and its principal executive offices are
located at ______________________________. The Seller and its affiliates may
maintain normal commercial banking relations with the Indenture Trustee and its
affiliates.
PAYING AGENTS
[Under the Trust Agreement, the Owner Trustee will appoint paying
agents in each jurisdiction in which Securities are listed on an exchange whose
rules require . For so long as any Securities are listed on the [exchange] or
[exchange], the Owner Trustee will maintain paying agents in [jurisdiction] and
[jurisdiction]. The Initial Paying Agents will be ______________ and
______________. Definitive Certificates may be presented for purposes of
payment, transfer or exchange at the offices of the paying agent in
[jurisdiction] at ___________, at the offices of the paying agent in
[jurisdiction] at _____________, or such other paying agents as may be specified
in a written notice to the holders of Securities described below.]
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth
under the captions "The Seller" and "The Servicer" in the Prospectus.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include the
Receivables purchased as of ____________ (the "Cutoff Date"). The Receivables
were originated by Dealers in accordance with TMCC's requirements and
subsequently purchased by TMCC. The Receivables evidence the indirect financing
made available by TMCC to the related purchasers (the "Obligors") of the
vehicles financed by the Receivables (the "Financed Vehicles"). On or before
the date of initial issuance of the Securities (the "Closing Date"), TMCC will
sell the Receivables to the Seller pursuant to the receivables purchase
agreement (the "Receivables Purchase Agreement") between the Seller and TMCC.
The Seller will, in turn, sell the Receivables to the Trust pursuant to the
Agreement. During the term of the Agreement, neither the Seller nor TMCC may
substitute any other retail installment sales contract for any Receivable sold
to the Trust.
S-20
<PAGE>
The Receivables in the Receivables Pool are required to meet
certain selection criteria as of the Cutoff Date. Pursuant to such criteria,
each Receivable: (i) was, at the time of origination, secured by a new or used
automobile or light duty truck; (ii) was originated in the United States; (iii)
provides for scheduled monthly payments (the "Scheduled Payments") that fully
amortize the amount financed by such Receivable over its original term (except
for minimally different payments in the first or last month in the life of the
Receivable); (iv) was originated prior to [__________]; (v) had an original
number of scheduled payments of not less than [____] and not more than [____]
and, as of the Cutoff Date, had a remaining number of scheduled payments of not
less than [____] and not more than [____]; (vi) provides for the payment of a
finance charge at an APR ranging from [____] % to [____] %; (vii) does not have
a payment that is more than [__ days] past due as of the Cutoff Date; (viii) is
not a Receivable as to which payments ahead of [__] or more scheduled payments
have been received from or on behalf of the related Obligor; (ix) is being
serviced by TMCC; (x) to the best knowledge of the Seller, is not due from any
Obligor who is presently the subject of a bankruptcy proceeding or is bankrupt
or insolvent; (xi) does not relate to a Financed Vehicle that has been
repossessed without reinstatement as of the Cutoff Date; and (xii) does not
relate to a Financed Vehicle as to which insurance has been force-placed as of
the Cutoff Date. TMCC does not originate retail installment sales contracts in
Hawaii, and retail installment sales contracts originated in Texas or Puerto
Rico will not be included in the Trust. No selection procedures believed by the
Seller to be adverse to Certificateholders will be used in selecting the
Receivables.
As noted above, the Receivables represent financing of new and
used automobiles and light duty trucks. Approximately [____] % and [____] %
(based on the Initial Pool Balance) of the Receivables represent financing of
new vehicles and used vehicles, respectively. As of the Cutoff Date, the
average Principal Balance of the Receivables was approximately $[_____________].
Based on the addresses of the originating Dealers, the Receivables have been
originated in [__] states. Except in the case of any breach of representations
and warranties by the related Dealer, the Receivables generally do not provide
for recourse against the originating Dealer.
By aggregate principal balance, approximately ___% of the
Receivables constitute Precomputed Receivables and approximately ___% of the
Receivables constitute Simple Interest Receivables. See "The Receivables Pools"
in the Prospectus for a further description of the characteristics of
Precomputed Receivables and Simple Interest Receivables. In addition, by
aggregate principal balance, approximately ___% of the Receivables, constituting
___% of the number of Receivables, as of the Cutoff Date, represent vehicles
financed at TMCC's new vehicle rates, which apply to new and certain previously
owned vehicles; the remainder represent vehicles financed at TMCC's used vehicle
rates. Approximately ___% of the aggregate principal balance of the Receivables
represent financing of vehicles manufactured or distributed by Toyota Motor
Corporation, the parent of TMS, or any of its affiliates.
The composition, distribution by APR and geographic distribution
of the Receivables as of the Cutoff Date are as set forth in the following
tables.
<TABLE>
<CAPTION>
COMPOSITION OF THE RECEIVABLES
<S> <C>
Total Cutoff Date Principal Balance $_________________
Number of Receivables $_________________
Average Cutoff Date Principal Balance $_________________
Average Original Amount Financed. $_________________
Range of Original Amount Financed $_________________ to
$_________________
Weighted Average APR(1) _________%
Range of APRs _________% to _________%
Weighted Average Original Number of Scheduled Payments(1) _________
Range of Original Number of Scheduled Payments _________ to _________
S-21
<PAGE>
Weighted Average Remaining Number of Scheduled Payments(1) _________
Range of Remaining Number of Scheduled Payments _________ to _________
- -------------------
</TABLE>
(1) Weighted by Principal Balance as of the Cutoff Date.
S-22
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF CUTOFF DATE CUTOFF DATE
RANGE OF APRS RECEIVABLES RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
------------- ----------- --------------- ----------------- -------------
<S> <C> <C> <C> <C>
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
- --------
</TABLE>
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
S-23
<PAGE>
DISTRIBUTION OF THE INITIAL RECEIVABLES BY STATE (1)
<TABLE>
<CAPTION>
PERCENTAGE OF CUTOFF DATE PERCENTAGE OF
NUMBER OF NUMBER OF PRINCIPAL CUTOFF DATE
STATE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
----- ----------------- ------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Alabama.....................
Alaska......................
Arizona.....................
Arkansas....................
California..................
Colorado....................
Connecticut.................
Delaware....................
Florida.....................
Georgia.....................
Idaho.......................
Illinois....................
Indiana.....................
Iowa........................
Kansas......................
Kentucky....................
Louisiana...................
Maine.......................
Maryland....................
Massachusetts...............
Michigan....................
Minnesota...................
Mississippi.................
Missouri....................
Montana.....................
Nebraska....................
Nevada......................
New Hampshire...............
New Jersey..................
New Mexico..................
New York....................
North Carolina..............
North Dakota................
Ohio........................
Oklahoma....................
Oregon......................
Pennsylvania................
Rhode Island................
South Carolina..............
South Dakota................
Tennessee...................
Utah........................
Vermont.....................
Virginia....................
Washington..................
West Virginia...............
Wisconsin...................
Wyoming.....................
Total (2)...............
</TABLE>
(1) Based solely on the addresses of the originating Dealers.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
S-24
<PAGE>
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning TMCC's
experience with respect to its portfolio of new and used automobile and/or light
duty truck retail installment sales contracts which it has funded and is
servicing. The information set forth below does not include retail
installment sales contracts serviced by an independent finance company
conducting business in five southeastern states of the United States for the
years of ____, ____ and ____.
The data presented in the following tables are for illustrative
purposes only. There is no assurance that TMCC's delinquency, credit loss and
repossession experience with respect to automobile and/or light duty truck
retail installment sales contracts in the future, or the experience of the Trust
with respect to the Receivables, will be similar to that set forth below.
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
At September 30,
At March 31, ---------- ---------- --------- ---------- ---------
1999 1998 1997 1996 1995 1994
----------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Outstanding at End of
Period................
Delinquencies as a
Percentage of Contracts
Outstanding
31-60 Days............
61-90 Days............
Over 90 Days..........
</TABLE>
- --------------------------------------------------------------------------------
S-25
<PAGE>
NET LOSS AND REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
At or for the Six At or for the Fiscal Year Ended September 30,
Months Ended -----------------------------------------------------------------------------------
March 31, 1999 1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Receivables
Outstanding.......
Average Net
Receivables
Outstanding.......
Number of Contracts
Outstanding.......
Average Number of
Contracts
Outstanding
Number of
Repossessions.....
Number of
Repossessions as a
Percentage of the
Contracts Outstanding
Number of
Repossessions as a
Percentage of the
Average Number of
Contracts Outstanding
Gross Charge-Offs
Recoveries........
Net Losses........
Net Losses as a
Percentage of Net
Receivables
Outstanding.......
Net Losses as a
Percentage of
Average Net
Receivables
Outstanding.......
</TABLE>
S-26
<PAGE>
USE OF PROCEEDS
The Seller will use the net proceeds from the sale of the
Securities (approximately $____________) to purchase the Receivables from TMCC
pursuant to the Receivables Purchase Agreement and to fund the Reserve Fund.
PREPAYMENT AND YIELD CONSIDERATIONS
Information regarding certain maturity and prepayment
considerations with respect to the Securities is set forth under "Weighted
Average Life of the Securities" in the Prospectus and "Risk Factors--Prepayments
on receivables may cause prepayments on the securities, resulting in
reinvestment risk to you" in this Prospectus Supplement. Except as otherwise
provided in this Prospectus Supplement, no principal payments will be made on
the Class A-2 Notes until the Class A-1 Notes have been paid in full and no
principal payments will be made on the Class A-3 Notes until the Class A-2 Notes
have been paid in full. In addition, except as otherwise provided, (i) no
payments of principal with respect to the Certificates will be made until the
earlier to occur of the Distribution Date on which the Class A-1 Notes have been
paid in full or the __________, Distribution Date; and (ii) no payment of
principal with respect to Certificates will be made on a Distribution Date until
all payments of principal and interest with respect to Notes due on that
Distribution Date have been paid. See "Description of the Notes--Payments of
Principal" and "Description of the Certificates--Payments of Principal" in this
Prospectus Supplement.
Because the rate of payment of principal of each class of Notes
and the Certificates depends primarily on the rate of payment (including
prepayments) of the principal balance of the Receivables, final payment of any
class of Notes and the final payment in respect of the Certificates could occur
significantly earlier or later than their respective final scheduled
Distribution Dates. Securityholders will bear the risk of being able to
reinvest principal payments on the Securities at yields at least equal to the
yield on their respective Securities. No prediction can be made as to the rate
of prepayments on the Receivables in either stable or changing interest rate
environments.
The Certificates will provide limited protection against losses
on the Receivables. Accordingly, the yield on the Certificates will be
extremely sensitive to the loss experience of the Receivables and the timing of
any such losses. If the actual rate and amount of losses experienced by the
Receivables exceed the rate and amount of such losses assumed by an investor,
the yield to maturity on the Certificates may be lower than anticipated.
[Although the Receivables have different APRs, each Receivable's
APR exceeds the sum of (i) the weighted average of the Interest Rates for each
class of Notes and the Pass Through Rate for the Certificates plus (ii) the
Servicing Fee Rate. Therefore, disproportionate rates of prepayments between
Receivables with higher and lower APRs should not affect the yield to
Securityholders on the outstanding principal balance of a particular class of
Securities.]
POOL FACTORS AND TRADING INFORMATION
The "Pool Factor" with respect to any class of Notes or the
Certificates will be a seven-digit decimal indicating the principal amount of
such class of Notes or the Certificate Balance of the Certificates as of the
close of business on the Distribution Date in such month as a fraction of the
respective principal amount thereof as of the Closing Date or the Initial
Certificate Balance, as the case may be. The Servicer will compute the Pool
Factor each month. Each Pool Factor will initially be 1.0000000 and thereafter
will decline to reflect reductions in the principal amount of each class of
Notes or the Certificate Balance, as the case may be. Each such principal
amount and Certificate Balance will be computed by allocating payments in
respect of the Receivables to principal and interest using the actuarial method
for the Precomputed Receivables and using the simple interest method for the
Simple Interest Receivables. The portion of the principal amount of any class
of Notes or the portion of the Certificate Balance for a given month allocable
to a Noteholder or Certificateholder, as the case may be, can be determined by
multiplying the original denomination of the holder's Note or Certificate by the
related Pool Factor for that month.
Pursuant to the Agreement, the Securityholders will receive
monthly reports concerning the payments received on the Receivables, the Pool
Balance, the related Pool Factors and various other items of
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<PAGE>
information pertaining to the Trust. Securityholders during each calendar year
will be furnished information for tax reporting purposes not later than the
latest date permitted by law. See "Certain Information Regarding the
Securities--Reports to Securityholders" in the Prospectus.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture,
a form of which has been filed as an exhibit to the Registration Statement. A
copy of the Indenture will be filed with the SEC [and the Luxembourg and the
Hong Kong Stock Exchanges] following the issuance of the Securities. The
following summary describes certain terms of the Notes and the Indenture. The
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Notes and the Indenture.
Where particular provisions or terms used in the Indenture are referred to, the
actual provisions (including definitions of terms) are incorporated by reference
as part of such summary. The following summary supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the Notes of any given series and the related Indenture set forth
in the Prospectus, to which description reference is hereby made.
PAYMENTS OF INTEREST
Each class of Notes will constitute Fixed Rate Securities, as
such term is defined under "Certain Information Regarding the Securities--Fixed
Rate Securities" in the Prospectus. Interest on the principal balances of the
classes of the Notes will accrue at the respective per annum interest rates set
forth on the front cover of this prospectus supplement (each, an "Interest
Rate") and will be payable to the Noteholders monthly on the fifteenth of each
month (or, if such date is not a Business Day, on the next succeeding Business
Day) (each such date, a "Distribution Date") commencing ______________. A
"Business Day" is any day except a Saturday or Sunday, a day on which banks in
New York or San Francisco are closed; or [for payments on the Securities made in
Luxembourg or Hong Kong by a paying agent, a day on which banks in Luxembourg or
Hong Kong are closed.]
Interest will accrue from the Closing Date to _______________, in
the case of the first Distribution Date, and during the calendar month preceding
the related Distribution Date with respect to each subsequent Distribution Date
(each an "Interest Period"). Interest on each class of Notes will be calculated
on the basis of a 360-day year consisting of twelve 30-day months. Interest
accrued as of any Distribution Date but not paid on such Distribution Date will
be due on the next Distribution Date, together with interest on such amount at
the applicable Interest Rate (to the extent lawful). Interest payments on the
Notes will generally be made from Available Interest remaining after payment of
the Servicing Fee, from the portion of Available Principal remaining after
payment of the Noteholders' Principal Distributable Amount and from funds
available in the Reserve Fund. See "Subordination; Reserve Fund--Reserve Fund"
and "Payments to Noteholders and Certificateholders" in this Prospectus
Supplement.
Interest payments to all classes of Noteholders will have the
same priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date, in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes.
PAYMENTS OF PRINCIPAL
Principal payments generally will be made to the Noteholders on
each Distribution Date commencing ___________, in an aggregate amount equal to
the Noteholders' Principal Distributable Amount subject to the limits of
Available Principal and the credit enhancement described below. Prior to the
earlier to occur of (i) the Distribution Date on which the principal amount of
the Class A-1 Notes is reduced to zero or (ii) the Distribution Date in _______,
principal payments will be made to the Noteholders in
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<PAGE>
an aggregate amount equal to the sum of the Noteholders' Principal Distributable
Amount and the Certificateholders' Principal Distributable Amount subject to the
limits of Available Principal and the credit enhancement described below.
Also, following the occurrence of certain Events of Default, principal payments
will be made to the Noteholders in an aggregate amount equal to the sum of the
Noteholders' Principal Distributable Amount and the Certificateholders'
Principal Distributable Amount subject to the limits of Available Principal and
the credit enhancement described below. Principal payments on the Notes
generally will be made from Available Principal, from Available Interest
remaining after the payment of the Servicing Fee and the Noteholders' Interest
Distributable Amount and from funds available in the Reserve Fund. See
"Transfer and Servicing Agreements--Credit and Cash Flow Enhancement" and
"Subordination; Reserve Fund--Reserve Fund" in the Prospectus.
On the second Business Day immediately preceding each
Distribution Date (a "Determination Date" the Indenture Trustee will determine
the amount in the Collection Account allocable to interest and the amount
allocable to principal on the basis described under "Transfer and Servicing
Agreements Payments" in the Prospectus, and payments to Securityholders on the
related Distribution Date will be based on such allocations.
Principal payments on the Notes will be applied on each
Distribution Date, first, to the principal balance of the Class A-1 Notes until
such principal balance is reduced to zero, then second, to the principal balance
of the Class A-2 Notes until such principal balance is reduced to zero and then
third, to the principal balance of the Class A-3 Notes until such principal
balance is reduced to zero. The principal balance of each class of Notes will
be due on the final scheduled distribution date indicated on the front cover of
this Prospectus Supplement (each, the "Class A-1 Final Scheduled Distribution
Date," the "Class A-2 Final Scheduled Distribution Date", and the "Class A-3
Final Scheduled Distribution Date"). The actual date on which the aggregate
outstanding principal amount of any class of Notes is paid may be earlier than
the respective Final Scheduled Distribution Dates set forth above based on a
variety of factors, including those described under "Weighted Average Life of
the Securities" in this Prospectus Supplement and in the Prospectus.
NOTICES
Noteholders will be notified in writing by the Indenture Trustee
of any Event of Default or termination of, or appointment of a successor to, the
Servicer promptly upon a Responsible Officer (as defined in the Agreement)
obtaining actual knowledge thereof.
[For so long as any Notes are listed on the [exchange] and the
rules of the exchange so require, notices to Noteholders will be given by
publication in a leading daily newspaper of general circulation in
[jurisdiction] [or, if publication in [jurisdiction] is not practical, in
Europe]. Such publication is expected to be made in the [publication]. In
addition, if Notes are issued other than in book-entry form, such notices
will be mailed to the addresses of Noteholders as they appear in the register
maintained by the Indenture 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 Noteholder shall not surrender its Notes
for retirement within six months after the date specified in written notice
given by the Indenture Trustee of the date for final payment thereof, the
Indenture Trustee shall give a second written notice to the remaining
Noteholders to surrender their Notes for retirement and receive the final
payment with respect thereto. If within one year after such second notice any
Notes shall not have been surrendered, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Noteholders concerning surrender of their Notes, and the cost thereof shall be
paid out of the funds and other assets that remain subject to the Indenture.
Any funds remaining unclaimed after exhaustion of such remedies shall be paid by
the Indenture Trustee to a charity specified in the Indenture.
GOVERNING LAW
The Indenture and the Notes are governed by and shall be construed in
accordance with the laws of the State of New York applicable to agreements made
in and to be performed wholly within such jurisdiction.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the
Trust Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the Trust Agreement will be filed with the
SEC [and the Luxembourg and Hong Kong Stock Exchanges] following the issuance
of the Securities. The Certificates will evidence undivided ownership
interests in the Trust created pursuant to the Trust Agreement. The following
summary describes certain terms of the Certificates and the Trust Agreement.
The summary does not purport to be complete and is subject to, and qualified
in its entirety by reference to, all the provisions of the Certificates and
the Trust Agreement. The following summary supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the Certificates of any given series and the related Trust
Agreement set forth in the Prospectus, to which description reference is
hereby made.
PAYMENTS OF INTEREST
On each Distribution Date, commencing ___________, the
Certificateholders will be entitled to interest payments in an amount up to the
amount of interest that accrued on the Certificate Balance for the related
Interest Period at the Pass Through Rate. The Certificates will constitute
Fixed Rate Securities, as such term is defined under "Certain Information
Regarding the Securities--Fixed Rate Securities" in the Prospectus. Interest in
respect of a Distribution Date will accrue during the related Interest Period
and will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Interest payments due for any Distribution Date but not paid on
such Distribution Date will be due on the next Distribution Date increased by an
amount equal to interest on such amount at the Pass Through Rate (to the extent
lawful). Interest payments with respect to the Certificates will generally be
funded from the portion of Available Interest remaining after payment of the
Servicing Fee and payment of the Noteholders' Distributable Amount and from
funds available in the Reserve Fund. See "Transfer and Servicing
Agreements--Payments" and "--Credit and Cash Flow Enhancement" in the
Prospectus.
PAYMENTS OF PRINCIPAL
On each Distribution Date, commencing with the earlier of (i) the
_____________ Distribution Date and (ii) the Distribution Date on which the
Class A-1 Notes are paid in full, Certificateholders will be entitled to
principal payments in an amount generally equal to the Certificateholders'
Principal Distributable Amount. Principal payments will generally be funded
from the portion of Available Principal remaining after payment of the
Noteholders' Distributable Amount, from Available Interest remaining after
payment of the Servicing Fee, the Noteholders' Distributable Amount and the
Certificateholders' Interest Distributable Amount and from funds available in
the Reserve Fund. Under certain circumstances, amounts otherwise allocable to
the Certificateholders' Principal Distributable Amount will be applied to cover
shortfalls in amounts available to make payments of interest and principal on
the Notes. In addition, following the occurrence of certain Events of Default,
principal payments will be made to the Noteholders in an aggregate amount equal
to the sum of the Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount subject to the limits of
Available Principal and the credit enhancement described below, which may result
in substantial delays in the payment of principal of the Certificates. See
"Transfer and Servicing Agreements--Credit and Cash Flow Enhancement" in the
Prospectus.
NOTICES
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Certificateholders will be notified in writing by the Trustee of
any Event of Default or termination of, or appointment of a successor to, the
Servicer promptly upon a Responsible Officer (as defined in the Agreement)
obtaining actual knowledge thereof. Except with respect to the monthly and
annual statements to Certificateholders and Servicing Reports described herein,
the Trustee is not obligated under the Agreement to forward any other notices to
the Certificateholders. There are no provisions in the Agreement for the
regular or special meetings of Certificateholders.
PRESCRIPTION
In the event that any Certificateholder shall not surrender its
Certificates for retirement within six months after the date specified in
written notice given by the Trustee of the date for final payment thereof, the
Trustee shall give a second written notice to the remaining Certificateholders
to surrender their Certificates for retirement and receive the final 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 this Agreement. Any funds remaining in the Trust after exhaustion of such
remedies shall be paid by the Trustee to a charity specified in the Agreement.
GOVERNING LAW
The Agreement and the Certificates are governed by and shall be
construed in accordance with the laws of the State of New York applicable to
agreements made in and to be performed wholly within such jurisdiction.
PAYMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
On each Determination Date, the Servicer will inform the Owner
Trustee of, among other things, the amount of funds collected on or in respect
of the Receivables, the amount of Advances to be made by and reimbursed to the
Servicer and the Servicing Fee and other servicing compensation payable to the
Servicer, in each case with respect to the immediately preceding Collection
Period. On or prior to each Determination Date, the Servicer shall also
determine the Total Distribution Amount, Noteholders' Distributable Amount and
Certificateholders' Distributable Amount and, based on the available funds and
other amounts available for payment on the related Distribution Date as
described below, the amount to be distributed to the Noteholders and
Certificateholders.
On or before each Distribution Date, the Indenture Trustee will
cause Payments Ahead previously deposited in the Payahead Account or held by the
Servicer in respect of the related Collection Period to be transferred to the
Collection Account.
The Owner Trustee will make payments to the Noteholders and
Certificateholders out of the amounts on deposit in the Collection Account. The
amounts to be distributed to the Noteholders and Certificateholders will be
determined in the manner described below.
CALCULATION OF AVAILABLE INTEREST AND AVAILABLE PRINCIPAL. The
amount of funds available for payment on a Distribution Date (without taking
account of amounts held in the Reserve Fund) will generally equal the sum of
Available Interest and Available Principal.
"Available Interest" for a Distribution Date will equal the sum
of the following amounts received or allocated by the Servicer in respect of
interest on or in respect of the Receivables during the related Collection
Period (which in the case of the Precomputed Receivables shall be computed in
accordance with the actuarial method and in the case of the Simple Interest
Receivables shall be calculated in accordance with the simple interest method):
(i) all collections on or in respect of the Receivables other than
Defaulted Receivables (including Payments Ahead being applied in such
Collection Period but excluding Payments Ahead to be applied in one or more
future Collection Periods);
(ii) any Yield Maintenance Deposit;
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(iii) all proceeds of the liquidation of Defaulted Receivables, net of
expenses incurred by the Servicer in accordance with its customary
servicing procedures in connection with such liquidation, including amounts
received in subsequent Collection Periods ("Net Liquidation Proceeds");
(iv) all Advances made by the Servicer; and
(v) all Warranty Purchase Payments with respect to Warranty Receivables
repurchased by the Seller and Administrative Purchase Payments with respect
to Administrative Receivables purchased by the Servicer, in each case in
respect of such Collection Period.
"Available Principal" for a Distribution Date will equal the sum of the
amounts described in clauses (i) through (iv) above received or allocated by the
Servicer in respect of principal on or in respect of the Receivables during the
related Collection Period (which in the case of the Precomputed Receivables
shall be computed in accordance with the actuarial method).
Available Interest and Available Principal on any Distribution Date will
exclude (i) amounts received on a particular Receivable (other than a Defaulted
Receivable) to the extent that the Servicer has previously made an unreimbursed
Advance in respect of such Receivable, (ii) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of unreimbursed Advances in
respect of such Receivable and (iii) recoveries from collections with respect to
Advances that the Servicer has determined are unlikely to be repaid.
A "Defaulted Receivable" will be a Receivable (other than an Administrative
Receivable or a Warranty Receivable) as to which (a) all or any part of a
Scheduled Payment is 150 or more days past due and the Servicer has not
repossessed the related Financed Vehicle or (b) the Servicer has, in accordance
with its customary servicing procedures, determined that eventual payment in
full is unlikely and has either repossessed and liquidated the related Financed
Vehicle or repossessed and held the related Financed Vehicle in its repossession
inventory for 90 days, whichever occurs first.
CALCULATION OF DISTRIBUTABLE AMOUNTS.
The "Total Distribution Amount" will equal the sum of the
Noteholders' Distributable Amount and the Certificateholders' Distributable
Amount.
The "Noteholders' Distributable Amount" with respect to a
Distribution Date will equal the sum of (i) the Noteholders' Principal
Distributable Amount and (ii) the Noteholders' Interest Distributable Amount.
The "Noteholders' Principal Distributable Amount" consists of the
Noteholders' Percentage of the following items: (a) in the case of Precomputed
Receivables, the principal portion of all Scheduled Payments due during the
related Collection Period, computed in accordance with the actuarial method, (b)
in the case of Simple Interest Receivables, the principal portion of all
Scheduled Payments actually received during the related Collection Period, (c)
the principal portion of all Prepayments on Simple Interest Receivables and
prepayments in full of Precomputed Receivables received during the related
Collection Period (to the extent such amounts are not included in clauses (a)
and (b) above) and (d) the Principal Balance of each Receivable that the
Servicer became obligated to purchase, the Seller became obligated to repurchase
or that became a Defaulted Receivable during the related Collection Period (to
the extent such amounts are not included in clauses (a), (b) and (c) above).
The "Noteholders Interest Distributable Amount" shall equal the
sum of the Interest Distributable Amounts for each class of Notes. The
"Interest Distributable Amount" for each class of Notes shall be an amount equal
to the interest accrued during the related Collection Period on the outstanding
principal amount of each class of Notes at the related Interest Rate as of the
immediately preceding Distribution Date (after giving effect to distributions of
principal made on such immediately preceding Distribution Date) or, in the case
of the first Distribution Date, on the initial principal amount of the related
class of Notes as of the Closing Date (each such amount, the "Class A-1 Interest
Distributable Amount", the "Class A-2 Interest Distributable Amount" and the
"Class A-3 Interest Distributable Amount").
The "Certificateholders' Distributable Amount" with respect to a
Distribution Date will be an amount equal to the sum of (i) the
Certificateholders' Principal Distributable Amount and (ii) the
Certificateholders' Interest Distributable Amount.
The "Certificateholders' Principal Distributable Amount" consists
of the Certificateholders' Percentage of the amounts set forth under clauses (a)
through (d) of the definition of the Noteholders' Principal Distributable
Amount.
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The "Certificateholders' Interest Distributable Amount" shall be
an amount equal to the interest accrued during the related Collection Period at
the Pass Through Rate on the Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to distributions of principal made on
such immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Initial Certificate Balance.
The "Noteholders' Percentage" represents the principal amount of
Notes as a percentage of the Securities, and is calculated by dividing the
principal balance of the Notes by the principal balances of the Notes plus the
Certificates as of the Cutoff Date. The "Certificateholders' Percentage"
represents the principal amount of Certificates outstanding as a percentage of
the outstanding securities, and is calculated in the same manner.
The "Initial Certificate Balance" will equal $______________ and
the "Certificate Balance", as of any Distribution Date, will equal the Initial
Certificate Balance, reduced by all amounts distributed on or prior to such
Distribution Date on the Certificates and allocable to principal.
PAYMENT OF DISTRIBUTABLE AMOUNTS. Prior to each Distribution
Date, the Servicer will calculate the amount to be distributed to the
Noteholders and Certificateholders. On each Distribution Date, the Indenture
Trustee will pay the following amounts in the following order of priority, to
the extent of funds available for payment on such Distribution Date:
(i) to the Servicer, the Servicing Fee, including any
unpaid Servicing Fees with respect to one or more prior Collection Periods,
such amounts to be paid from Available Interest;
(ii) to the Noteholders, on a pro rata basis based on the
Class A-1 Interest Distributable Amount, the Class A-2 Interest
Distributable Amount and the Class A-3 Interest Distributable Amount,
interest in an amount equal to the Noteholders' Interest Distributable
Amount together with any unpaid Class A-1 Interest Carryover Shortfalls,
Class A-2 Interest Carryover Shortfalls and Class A-3 Interest Carryover
Shortfalls, such amounts to be paid from Available Interest (after giving
effect to any reduction in Available Interest described in clause (i)
above); and if such Available Interest is insufficient, the Noteholders
will be entitled to receive such amount first, from Available Principal
(following the payment of any Noteholders' Principal Distributable Amount
pursuant to clauses (iii) through (v)) and second, if such amounts are
insufficient, from monies transferred from the Reserve Fund to the
Collection Account;
(iii) to the Class A-1 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount, and, on each Distribution Date
prior to the Distribution Date in _________, the Certificateholders'
Principal Distributable Amount, together with any unpaid Noteholders'
Principal Carryover Shortfall, such amount to be paid from Available
Principal; and if such Available Principal is insufficient, the Class A-1
Noteholders will be entitled to receive such amount first, from Available
Interest (after giving effect to any reduction in Available Interest
described in clauses (i) and (ii) above) and second, if such amounts are
insufficient, from monies transferred from the Reserve Fund to the
Collection Account, until the principal amount of the Class A-1 Notes is
reduced to zero;
(iv) to the Class A-2 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount, together with any unpaid
Noteholders' Principal Carryover Shortfall less any Noteholders' Principal
Distributable Amount distributed to the Class A-1 Noteholders on that
Distribution Date, such amount to be paid from Available Principal (after
giving effect to any reduction in Available Principal described in clause
(iii) above); and if such Available Principal is insufficient, the Class
A-2 Noteholders will be entitled to receive such amount first, from
Available Interest (after giving effect to any reduction in Available
Interest described in clauses (i) through (iii) above) and second, if such
amounts are insufficient, from monies transferred from the Reserve Fund to
the Collection Account, until the principal amount of the Class A-2 Notes
is reduced to zero;
(v) to the Class A-3 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount together with any unpaid
Noteholders' Principal Carryover Shortfall, less any Noteholders' Principal
Distributable Amount distributed to the Class A-1 Noteholders and Class A-2
Noteholders on that Distribution Date, such amount to be paid from
Available Principal (after giving effect to any reduction
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in Available Principal described in clauses (iii) and (iv) above); and if
such Available Principal is insufficient, the Class A-3 Noteholders will be
entitled to receive such amount first, from Available Interest (after
giving effect to any reduction in Available Interest described in clauses
(i) through (iv) above) and second, if such amounts are insufficient, from
monies transferred from the Reserve Fund to the Collection Account, until
the principal amount of the Class A-3 Notes is reduced to zero;
(vi) to the Certificateholders, an amount equal to the
Certificateholders' Interest Distributable Amount and any unpaid
Certificateholders' Interest Carryover Shortfall, such amount to be paid
from Available Interest (after giving effect to any reduction in Available
Interest described in clauses (i) through (v) above); and if such Available
Interest is insufficient, the Certificateholders will be entitled to
receive such amount from monies transferred from the Reserve Fund to the
Collection Account; and
(vii) to the Certificateholders, an amount equal to the
Certificateholders' Principal Distributable Amount and any unpaid
Certificateholders' Principal Carryover Shortfall, such amount to be paid
from Available Principal (after giving effect to the reduction in Available
Principal described in clauses (ii), (iii), (iv) and (v) above); and if
such Available Principal is insufficient, the Certificateholders will be
entitled to receive such amount first, from Available Interest (after
giving effect to any reductions in Available Interest described in clauses
(i) through (vi) above) and second, if such amounts are insufficient, from
monies transferred from the Reserve Fund to the Collection Account.
An "Interest Carryover Shortfall" with respect to any class of
Notes on any Distribution Date will equal the excess, if any, of (x) the related
Interest Distributable Amount for such Distribution Date and any outstanding
Interest Carryover Shortfall with respect to such class of Notes from the
immediately preceding Distribution Date plus interest on such outstanding
Interest Carryover Shortfall, to the extent permitted by law, at the related
Interest Rate from such immediately preceding Distribution Date through the
current Distribution Date, over (y) the amount of interest distributed to the
related Noteholders on such Distribution Date (each such amount, the "Class A-1
Interest Carryover Shortfall", "Class A-2 Interest Carryover Shortfall" and
"Class A-3 Interest Carryover Shortfall", as applicable).
A "Noteholders' Principal Carryover Shortfall" with respect to
any Distribution Date will equal the excess, if any, of (x) the Noteholders'
Principal Distributable Amount plus any outstanding Principal Carryover
Shortfall from the immediately preceding Distribution Date over (y) the amount
of principal distributed to the Noteholders on such Distribution Date.
The "Certificateholders' Interest Carryover Shortfall" with
respect to any Distribution Date will equal the excess, if any, of (x) the
Certificateholders' Interest Distributable Amount for such Distribution Date and
any outstanding Certificateholders' Interest Carryover Shortfall from the
immediately preceding Distribution Date plus interest on such outstanding
Certificateholders' Interest Carryover Shortfall, to the extent permitted by
law, at the Pass-Through Rate from such immediately preceding Distribution Date
through the current Distribution Date, over (y) the amount of interest
distributed to the Certificateholders on such Distribution Date.
The "Certificateholders' Principal Carryover Shortfall" with
respect to any Distribution Date will equal zero, until the earlier of (i) the
Distribution Date on which the principal amount of the Class A-1 Notes is
reduced to zero or (ii) _________. Beginning on such date, the
Certificateholders' Principal Carryover Shortfall with respect to any
Distribution Date will equal the excess, if any, of (x) the Certificateholders'
Principal Distributable Amount on such Distribution Date plus any outstanding
Certificateholders' Principal Carryover Shortfall from the immediately preceding
Distribution Date over (y) the amount of principal distributed to the
Certificateholders on such Distribution Date.
Any excess amounts in the Collection Account with respect to any
Distribution Date, after giving effect to the distributions described in clauses
(i) through (vii) of this subsection ("Excess Amounts"), will be deposited in
the Reserve Fund until the amount on deposit therein equals the Specified
Reserve Fund Balance and the remainder, if any, will be distributed to the
Seller.
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SUBORDINATION; RESERVE FUND
The rights of the Noteholders and the Certificateholders to
receive payments with respect to the Receivables will be subordinated to the
rights of the Servicer to receive the Servicing Fee, any additional servicing
compensation as described under "Transfer and Servicing Agreements--Servicing
Compensation" and the reimbursement of Advances.
SUBORDINATION. The rights of the Certificateholders to receive
payments with respect to the Receivables generally will be subordinated to the
rights of the Noteholders in the event of defaults and delinquencies on the
Receivables as provided in the Sale and Servicing Agreement. The protection
afforded to the Noteholders through subordination will be effected both by the
preferential right of the Noteholders to receive interest and principal payments
on a Distribution Date and by the establishment of the Reserve Fund. The
subordination of the Certificates is intended to enhance the likelihood of
timely receipt by Noteholders of the full amounts of interest and principal
required to be paid to them, and to afford the Noteholders limited protection
against losses in respect of the Receivables.
The Certificateholders will not receive any payment of
interest or principal with respect to a Distribution Date until the full
amount of interest due on each class of Notes on such Distribution Date has
been paid to the Noteholders. In addition, the Certificateholders will not
receive any payment of principal with respect to a Distribution Date until
the full amount of interest and principal due on each class of Notes on such
Distribution Date has been paid to the Noteholders.
RESERVE FUND. The Securityholders will have the benefit of the
Reserve Fund. The Reserve Fund will be a segregated trust account held by the
Indenture Trustee and will not be an asset of the Trust. Any amounts held on
deposit in the Reserve Fund are owned by the Seller, and any investment earnings
thereon will be taxable to the Seller for federal income tax purposes. The
Reserve Fund will be created with an initial deposit by the Seller of an amount
equal to $____________ (the "Reserve Fund Initial Deposit"). If on any
subsequent Distribution Date the amount on deposit in the Reserve Fund is less
than the Specified Reserve Fund Balance, Excess Amounts will be deposited in the
Reserve Fund until the monies in the Reserve Fund reach an amount equal to the
Specified Reserve Fund Balance.
The "Specified Reserve Fund Balance" will initially be
$______________. However, on any Distribution Date the Specified Reserve Fund
Balance will be an amount equal to the greater of (a) $_____________ or (b)
____% of the sum of the principal amounts of any outstanding Certificates as of
the close of business on such Distribution Date if either of the following tests
is met:
(i) the average of the Charge-off Rates for the three preceding
Collection Periods exceeds ____%; or
(ii) the average of the Delinquency Percentages for the three
preceding Collection Periods exceeds ____%.
The Specified Reserve Fund Balance shall in no event be more than
the sum of the principal amounts of any outstanding Securities. As of any
Distribution Date, the amount of funds actually on deposit in the Reserve Fund
may, in certain circumstances, be less than the Specified Reserve Fund Balance.
The "Charge-off Rate" with respect to a Collection Period will
equal the Aggregate Net Losses with respect to the Receivables that become
Defaulted Receivables during that Collection Period expressed, on an annualized
basis, as a percentage of the average of (i) the Pool Balance on the last day of
the immediately preceding Collection Period and (ii) the Pool Balance on the
last day of such Collection Period.
The "Aggregate Net Losses" with respect to a Collection Period
will equal the Principal Balance of all Receivables newly designated during such
Collection Period as Defaulted Receivables minus the sum of (x) Net Liquidation
Proceeds collected during such Collection Period with respect to all Defaulted
Receivables and (y) the portion of amounts subsequently received in respect of
Receivables liquidated in prior Collection Periods specified in the Agreement.
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The "Delinquency Percentage" with respect to a Collection Period
will equal (a) the number of all outstanding Receivables 61 days or more
delinquent (after taking into account permitted extensions) as of the last day
of such Collection Period (excluding Receivables as to which the Financed
Vehicle has been liquidated during that Collection Period), determined in
accordance with the Servicer's normal practices, plus (b) the number of
repossessed Financed Vehicles that have not been liquidated (to the extent the
related Receivable is not otherwise reflected in clause (a) above), expressed as
a percentage of the aggregate number of Current Receivables on the last day of
such Collection Period.
A "Current Receivable" will be a Receivable that is not a
Defaulted Receivable or a Liquidated Receivable. A "Liquidated Receivable" will
be a Receivable that has been the subject of a Prepayment in full or otherwise
has been paid in full or, in the case of a Defaulted Receivable, a Receivable as
to which the Servicer has determined that the final amounts in respect thereof
have been paid.
The Servicer may, from time to time after the date of this
Prospectus Supplement, request each Rating Agency to approve a formula for
determining the Specified Reserve Fund Balance that is different from those
described above or change the manner by which the Reserve Fund is funded. If
each Rating Agency delivers a letter to the Owner Trustee to the effect that the
use of any such new formulation will not result in a qualification, reduction or
withdrawal of its then-current rating of any class of the Notes or the
Certificates, as the case may be, then the Specified Reserve Fund Balance will
be determined in accordance with such new formula. The Agreement will
accordingly be amended, without the consent of any Noteholder or
Certificateholder, to reflect such new calculation.
Amounts held from time to time in the Reserve Fund will continue
to be held for the benefit of Noteholders and Certificateholders. On each
Distribution Date, funds will be withdrawn from the Reserve Fund up to the
Available Amount to the extent that the Total Distribution Amount (after the
payment of the Servicing Fee) with respect to any Collection Period is less than
the Noteholders' Distributable Amount. Such funds will be deposited in the
Collection Account. In addition, after giving effect to such withdrawal, funds
will be withdrawn from the Reserve Fund up to the Available Amount (as reduced
by any withdrawal pursuant to the preceding sentence) to the extent that the
portion of the Total Distribution Amount remaining after the payment of the
Servicing Fee and the deposit of the Noteholders' Distributable Amount in the
Collection Account is less than the Certificateholders' Distributable Amount and
will be deposited in the Collection Account. On each Distribution Date, the
Reserve Fund will be reinstated up to the Specified Reserve Fund Balance to the
extent of the portion, if any, of the Total Distribution Amount remaining after
payment of the Servicing Fee, the deposit of the Noteholders' Distributable
Amount into the Collection Account and the deposit of the Certificateholders'
Distributable Amount into the Collection Account.
"Available Amount" means, with respect to any Distribution Date,
the amount of funds on deposit in the Reserve Fund on such Distribution Date
(other than Investment Earnings with respect to such Distribution Date), in each
case, before giving effect to any reduction thereto on such Distribution Date.
As of the close of business on any Distribution Date on which the
amount on deposit in the Reserve Fund is greater than the Specified Reserve Fund
Balance for such Distribution Date, subject to certain limitations, the Servicer
will instruct the Indenture Trustee to release and distribute such excess,
together with any Excess Amounts not required to be deposited into the Reserve
Fund, to the Seller. Upon any distribution to the Seller of amounts from the
Reserve Fund, neither the Noteholders nor the Certificateholders will have any
rights in, or claims to, such amounts.
Funds on deposit in the Reserve Fund may be invested in Eligible
Investments. Investment income on monies on deposit in the Reserve Fund will
not be available for payment to Securityholders or otherwise subject to any
claims or rights of the Securityholders and will be paid to the Seller. Any
loss on such investments will be charged to the Reserve Fund.
After the payment in full, or the provision for such payment, of
(i) all accrued and unpaid interest on the Securities and (ii) the outstanding
principal balance of the Securities, any funds remaining on deposit in the
Reserve Fund, subject to certain limitations, will be paid to the Seller.
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TRANSFER AND SERVICING AGREEMENTS
THE TRANSFER AND SERVICING AGREEMENTS
The description of the terms of the Indenture, Sale and Servicing
Agreement, the Administration Agreement and the Trust Agreement (collectively,
the "Transfer and Servicing Agreements") in this Prospectus Supplement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements.
Forms of the Transfer and Servicing Agreements have been filed as exhibits to
the Registration Statement. A copy of the Transfer and Servicing Agreements
will be filed with the SEC [and the Luxembourg and Hong Kong Stock Exchanges]
following the issuance of the Securities. Any description of the Transfer and
Servicing Agreements herein supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Transfer and Servicing Agreements set forth in the Prospectus, to which
description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyance of the
Receivables from the Seller to the Trust on the Closing Date pursuant to the
Sale and Servicing Agreement is set forth under "Transfer and Servicing
Agreements--Sale and Assignment of Receivables" in the Prospectus.
ACCOUNTS
In addition to the accounts referred to under "Transfer and
Servicing Agreements--Accounts" in the Prospectus, the Servicer will also
establish and will maintain with the Indenture Trustee, a Payahead Account and
the Reserve Fund, each in the name of the Owner Trustee on behalf of the
Noteholders and the Certificateholders.
SERVICING COMPENSATION
The Servicing Fee with respect to the calendar month
immediately preceding any Distribution Date (a "Collection Period") will be
one-twelfth of 1.00% (the "Servicing Fee Rate") of the Pool Balance as of the
first day of the related Collection Period or, in the case of the first
Distribution Date, the Initial Pool Balance. The Servicing Fee, together
with any previously unpaid Servicing Fee, will be paid on each Distribution
Date solely to the extent of Available Interest. The Servicer will be
entitled to collect and retain as additional servicing compensation in
respect of each Collection Period any late fees, extension fees and any other
administrative fees and expenses or similar charges collected during such
Collection Period, plus any investment earnings or interest earned during
such Collection Period from the investment of monies on deposit in the
Accounts. See "Transfer and Servicing Agreements--Collections" in this
Prospectus Supplement and "Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" in the Prospectus.
COLLECTIONS
The Servicer generally may retain all payments on or in respect
of the Receivables received from Obligors and all proceeds of Receivables
collected during each Collection Period without segregation in its own accounts
until deposited in the Collection Account on the related Distribution Date.
However, if (i) TMCC ceases to be the Servicer, (ii) an Event of Default exists
and is continuing or (iii) the short-term unsecured debt of TMCC ceases to be
rated at least P-1 by Moody's and A-1 by Standard & Poor's, and alternative
arrangements acceptable to the Rating Agencies are not made, the Servicer will
deposit all such payments and proceeds into the Collection Account not later
than two Business Days after receipt. Pending deposit into the Collection
Account, the Servicer may invest collections at its own risk and for its own
benefit. Such amounts will not be segregated from its own funds. The Servicer,
at its own risk and for its own benefit, may instruct the Owner Trustee to
invest amounts held in the Collection Account in Eligible Investments from the
time deposited until the related Distribution Date. The Seller or the Servicer,
as the case may be, will remit the aggregate Warranty Purchase Payments and
Administrative Purchase Payments of any Receivables to be purchased from the
Trust into the Collection Account on or before the Business Day immediately
preceding the related Distribution Date. See "Transfer and Servicing
Agreements--Collections" in the Prospectus.
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"Eligible Investments" will be specified in the Indenture and
will be limited to investments which meet the criteria of each Rating Agency
from time to time as being consistent with its then-current ratings of the
Securities.
Collections on or in respect of a Receivable made during a
Collection Period (including Warranty Purchase Payments and Administrative
Purchase Payments) which are not late fees, extension fees or certain other
similar fees or charges will be applied first to any outstanding Advances made
by the Servicer with respect to such Receivable, and then to the related
Scheduled Payment. Any collections on or in respect of a Receivable remaining
after such applications will be considered an "Excess Payment". Excess Payments
constituting a prepayment in full of Precomputed Receivables and any Excess
Payments relating to Simple Interest Receivables will be applied as a prepayment
in respect of such Receivable (each, a "Prepayment"). All other Excess Payments
in respect of Precomputed Receivables will be held by the Servicer (or if any of
the conditions in clauses (i) through (iii) in the second preceding paragraph is
not satisfied, deposited in the Payahead Account), as a Payment Ahead. See
"Transfer and Servicing Agreements--Collections" in the Prospectus.
ADVANCES
The Servicer will be required to make Advances in respect of
Scheduled Payments that are not received in full by the end of the month in
which they are due, unless the Servicer determines, in its sole discretion, that
such Advances will not be recoverable from certain collections available to
reimburse such Advances. Under certain circumstances, if the Servicer
determines that reimbursement from such collections is unlikely, the Servicer
will be entitled to recover unreimbursed Advances from collections on or in
respect of other Receivables. See "Transfer and Servicing Agreements--Advances"
in the Prospectus.
The Servicer will make all Advances by depositing into the
Collection Account an amount equal to the aggregate of the Precomputed Advances
and Simple Interest Advances due in respect of a Collection Period on the
Business Day immediately preceding the related Distribution Date.
NET DEPOSITS
As an administrative convenience, unless the Servicer is required
to remit collections daily as described in "--Collections" above, the Servicer
will be permitted to make the deposit of collections, aggregate Advances and
amounts deposited in respect of purchases of Receivables by the Seller or the
Servicer for or with respect to the related Collection Period net of payments to
be made to the Servicer with respect to such Collection Period. The Servicer,
however, will account to the Owner Trustee and to the Certificateholders as if
all of the foregoing deposits and payments were made individually. See
"Transfer and Servicing Agreements--Net Deposits" in the Prospectus.
OPTIONAL PURCHASE
The outstanding Notes and the Certificates will be redeemed in
whole, but not in part, on any Distribution Date on which the Servicer exercises
its option to purchase the Receivables. The Seller, the Servicer, or any
successor to the Servicer may purchase the Receivables when the Pool Balance
shall have declined to 10% or less of the Initial Pool Balance, as described in
the Prospectus under "Transfer and Servicing Agreements--Termination". The
"Redemption Price" for the outstanding Notes will be equal to the unpaid
principal amount of the outstanding Notes plus accrued and unpaid interest
thereon and for the Certificates will equal the Certificate Balance on the date
of such optional purchase plus accrued and unpaid interest thereon.
REMOVAL OF SERVICER
The Indenture Trustee or Noteholders evidencing 51% of the voting
interests of Notes (voting as a single class) may terminate the rights and
obligations of the Servicer under the Sale and Servicing Agreement upon the (i)
failure by the Servicer to deliver to the Owner Trustee for payment to the
Noteholders any required payment or to deliver the related Servicer's
Certificate, which failure continues unremedied for three Business Days after
discovery of the failure by an officer of the Servicer or receipt by the
Servicer of notice thereof from the Owner Trustee or Securityholders evidencing
not less than 25% of the aggregate principal amount of the Notes and
Certificates (voting together as a single class, but excluding for purposes of
such calculation and action all Notes held by the Seller, the Servicer or any of
their affiliates); (ii) failure by the Servicer to observe or to perform in
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any material respect any other covenants or agreements set forth in the Sale and
Servicing Agreement, which failure materially and adversely affects the rights
of Noteholders or Certificateholders and is not remedied within 90 days of
written notice thereof to the Servicer; or (iii) certain events of insolvency or
bankruptcy of the Servicer occur. Under such circumstances, authority and power
shall, without further action, pass to and be vested in the Indenture Trustee or
a Successor Servicer appointed under the Sale and Servicing Agreement. Upon
receipt of notice of the occurrence of a servicer default, the Indenture Trustee
shall give notice thereof to the Rating Agencies. Upon payment in full of the
principal and interest on the Notes, the Certificateholders will succeed to the
rights of the Noteholders with respect to removal of the Servicer.
THE OWNER TRUSTEE AND INDENTURE TRUSTEE
[________________] will be the Owner Trustee under the Trust
Agreement. As a matter of [New York] law, the Trust will be viewed as a
separate legal entity, distinct from the Owner Trustee, and the Trust will be
viewed as the issuer of the Certificates. [________________] will be the
Indenture Trustee under the Indenture. The Owner Trustee, the Indenture Trustee
and any of their respective affiliates may hold Certificates in their own names
or as pledgees. For the purpose of meeting the legal requirements of certain
jurisdictions, the Servicer and the Owner Trustee acting jointly (or in some
instances, the Owner Trustee acting alone) will have the power to appoint
co-trustees or separate trustees of all or any part of the Trust. In the event
of such an appointment, all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee by the Sale and Servicing Agreement and the Trust
Agreement will be conferred or imposed upon the Owner Trustee and each such
separate trustee or co-trustee jointly, or, in any jurisdiction in which the
Owner Trustee or Indenture Trustee will be incompetent or unqualified to perform
certain acts, singly upon such separate trustee or co-trustee who will exercise
and perform such rights, powers, duties and obligations solely at the direction
of the Owner Trustee or the Indenture Trustee.
The Owner Trustee and the Indenture Trustee may resign at any
time, in which event the Servicer will be obligated to appoint a successor
thereto. The Servicer may also remove the Owner Trustee or the Indenture
Trustee if either ceases to be eligible to continue as such under the Trust
Agreement or the Indenture, as the case may be, becomes legally unable to act or
becomes insolvent. In such circumstances, the Servicer will be obligated to
appoint a successor Owner Trustee or Indenture Trustee, as applicable. Any
resignation or removal of the Owner Trustee or Indenture Trustee and appointment
of a successor thereto will not become effective until acceptance of the
appointment by such successor.
The Trust Agreement will provide that the Servicer will pay the
fees and expenses of the Owner Trustee and the Indenture Trustee in connection
with their duties under the Trust Agreement and Indenture, respectively. The
Trust Agreement and Indenture will further provide that the Owner Trustee and
Indenture Trustee will be entitled to indemnification by TMCC and the Seller
for, and will be held harmless against, any loss, liability or expense incurred
by the Owner Trustee or Indenture Trustee not resulting from its own willful
misfeasance, bad faith or negligence (other than by reason of a breach of any of
its representations or warranties to be set forth in the Trust Agreement or
Indenture, as the case may be).
DUTIES OF THE OWNER TRUSTEE AND INDENTURE TRUSTEE
The Owner Trustee will make no representations as to the validity
or sufficiency of the Trust Agreement, the Certificates (other than the
execution and authentication thereof), the Notes or of any Receivables or
related documents. The Owner Trustee will not be accountable for the use or
application by the Seller or the Servicer of any funds paid to the Seller or the
Servicer in respect of the Notes, the Certificates or the Receivables, or the
investment of any monies by the Servicer before such monies are deposited into
the Collection Account or Payahead Account. The Owner Trustee will not
independently verify the Receivables. If no Event of Default has occurred and
is continuing, the Owner Trustee will be required to perform only those duties
specifically required of it under the Trust Agreement. Generally, those duties
will be limited to the receipt of the various certificates, reports or other
instruments required to be furnished to the Owner Trustee under the Trust
Agreement, in which case it will only be required to examine them to determine
whether they conform to the requirements of the Trust Agreement. The Owner
Trustee will not be charged with knowledge of a failure by the Servicer to
perform its duties under the Trust Agreement or Sale and Servicing Agreement
which failure constitutes an Event of Default unless the Owner Trustee obtains
actual knowledge of such failure as will be specified in the Trust Agreement.
The Owner Trustee will be under no obligation to exercise any of
the rights or powers vested in it by the 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 any of the Certificateholders,
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unless such Certificateholders have offered to the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby. No Certificateholder will have any right under the
Trust Agreement to institute any proceeding with respect to the Trust Agreement,
unless such holder previously has given to the Owner Trustee written notice of
the occurrence of an Event of Default and (i) the Event of Default arises from
the Servicer's failure to remit payments when due or (ii) the holders of
Certificates evidencing not less than 25% of the voting interests of the
Certificates have made written request upon the Owner Trustee to institute such
proceeding in its own name as the Owner Trustee thereunder and have offered to
the Owner Trustee reasonable indemnity and the Owner Trustee for 30 days has
neglected or refused to institute any such proceedings.
The Indenture Trustee will make no representations as to the
validity or sufficiency of the Indenture, the Certificates, the Notes (other
than the execution and authentication thereof) or of any Receivables or related
documents, and will not be accountable for the use or application by the Seller
or the Servicer of any funds paid to the Seller or the Servicer in respect of
the Notes, the Certificates or the Receivables, or the investment of any monies
by the Servicer before such monies are deposited into the Collection Account or
Payahead Account. If no Indenture Event of Default has occurred and is
continuing, the Indenture Trustee will be required to perform only those duties
specifically required of it under the Indenture. Generally, those duties will
be limited to the receipt of the various certificates, reports or other
instruments required to be furnished to the Indenture Trustee under the
Indenture, in which case it will only be required to examine them to determine
whether they conform to the requirements of the Indenture. The Indenture
Trustee will not be charged with knowledge of a failure by the Servicer to
perform its duties under the Trust Agreement, Sale and Servicing Agreement or
Administration Agreement which failure constitutes an Indenture Event of Default
unless the Indenture Trustee obtains actual knowledge of such failure as will be
specified in the Indenture.
The Indenture Trustee will be under no obligation to exercise any
of the rights or powers vested in it by the Indenture 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 Noteholders, unless such Noteholders have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby. No Noteholder will
have any right under the Indenture to institute any proceeding with respect to
the Indenture, unless such holder previously has given to the Indenture Trustee
written notice of the occurrence of an Event of Default and (i) the Event of
Default arises from the Servicer's failure to remit payments when due or (ii)
the holders of Class A-1 Notes, Class A-2 Notes and Class A-3 Notes evidencing
not less than 25% of the voting interests of each such class of Notes, acting
together as a single class, have made written request upon the Indenture Trustee
to institute such proceeding in its own name as the Indenture Trustee thereunder
and have offered to the Indenture Trustee reasonable indemnity and the Indenture
Trustee for 30 days has neglected or refused to institute any such proceedings.
ERISA CONSIDERATIONS
THE NOTES
The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan
must determine that the purchase of a Note is consistent with its fiduciary
duties under ERISA and does not result in a nonexempt prohibited transaction as
defined in Section 406 of ERISA or Section 4975 of the Code. For additional
information regarding treatment of the Notes under ERISA, see "ERISA
Considerations" in the Prospectus.
The Notes may not be purchased with the assets of a Plan if the
Seller, the Servicer, the Indenture Trustee, the Owner Trustee or any of their
affiliates (a) has investment or administrative discretion with respect to such
Plan assets; (b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets, for a fee and pursuant to an
agreement or understanding that such advice (i) will serve as a primary basis
for investment decisions with respect to such Plan assets and (ii) will be based
on the particular investment needs for such Plan; or (c) is an employer
maintaining or contributing to such Plan.
THE CERTIFICATES
The Certificates may not be acquired by a Plan or any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity or which uses plan assets to acquire Certificates (a "Plan
Investor"). By its acceptance of a Certificate, each Certificateholder will be
deemed to have represented and
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warranted that it is not subject to the foregoing limitation. In addition, a
purchaser of Certificates other than a Plan Investor should be aware that a
prohibited Transaction could occur if a Certificateholder (or any of its
affiliates) is or becomes a party in interest or a disqualified person with
respect to a Plan Investor that purchases and holds any Notes unless covered by
one or more applicable exemptions.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Note Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Note Underwriters named below (collectively,
the "Note Underwriters"), and each of the Note Underwriters has severally agreed
to purchase, the principal amount of Notes set forth opposite its name below:
[TABLE]
In the Note Underwriting Agreement, the Note Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the Notes if any of the Notes are purchased. This obligation of the Note
Underwriters is subject to certain conditions precedent set forth in the Note
Underwriting Agreement. The Seller has been advised by the Note Underwriters
that they propose initially to offer the Notes to the public at the prices set
forth in this Prospectus Supplement, and to certain dealers at such price less
the initial concession not in excess of ___% of the denominations of the Notes
per Class A-1 Note, ___% per Class A-2 Note and ___% per Class A-3 Note. The
Note Underwriters may allow, and such dealers may reallow, a concession not in
excess of ___% per Class A-1 Note, ___% per Class A-2 Note and ___% per Class
A-3 Note to certain other dealers. After the initial public offering of the
Notes, the public offering price and such concessions may be changed.
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Certificate Underwriting Agreement"), the Seller has agreed to
cause the Trust to sell to each of the Certificate Underwriters named below (the
"Certificate Underwriters" and, together with the Note Underwriters, the
"Underwriters"), and each of the Certificate Underwriters has severally agreed
to purchase, the principal amount of Certificates set forth opposite its name
below:
[TABLE]
In the Certificate Underwriting Agreement, the Certificate
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all of the Certificates if any of the Certificates are purchased.
This obligation of the Certificate Underwriters is subject to certain conditions
precedent set forth in the Certificate Underwriting Agreement. The Seller has
been advised by the Certificate Underwriters that they propose initially to
offer the Certificates to the public at the price set forth in this Prospectus
Supplement, and to certain dealers at such price less the initial concession not
in excess of ___% per Certificate. The Certificate Underwriters may allow, and
such dealers may reallow, a concession not in excess of ___% per Certificate to
certain other dealers. After the initial public offering of the Certificates,
the public offering price and such concessions may be changed.
The Seller and TMCC have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act.
The Notes and the Certificates are new issues of securities with
no established trading markets. The Seller has been advised by the Note
Underwriters that they intend to make a market in the Notes of each class and
has been advised by the Certificate Underwriters that they intend to make a
market in the Certificates, in each case as permitted by applicable laws and
regulations. The Underwriters are not obligated, however, to make a market in
the Notes of any class or the Certificates, and such market-making may be
discontinued at any time without notice at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Notes of any class or the Certificates.
The Trust may, from time to time, invest funds in the Accounts in
Eligible Investments acquired from the Underwriters.
The Underwriters have advised the Seller that, pursuant to
Regulation M under the Securities Act, certain persons participating in this
offering may engage in transactions, including stabilizing bids, syndicate
covering transactions or the imposition of penalty bids, which may have the
effect of stabilizing or maintaining the
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market price of the Securities of any class at levels above those that might
otherwise prevail in the open market. A "stabilizing bid" is a bid for or the
purchase of the Securities of any class on behalf of the Underwriters for the
purpose of fixing or maintaining the price of such Securities. A "syndicate
covering transaction" is the bid for or the purchase of such Securities of any
class on behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with this offering. A "penalty bid" is an
arrangement permitting one of the Underwriters to reclaim the selling concession
otherwise accruing to another Underwriter or syndicate member in connection with
this offering if the Securities of any class originally sold by such other
Underwriter or syndicate member are purchased by the reclaiming Underwriter in a
syndicate covering transaction and has therefore not been effectively placed by
such other Underwriter or syndicate member.
Stabilizing bids and syndicate covering transactions may have the
effect of causing the price of the Securities of any class to be higher than it
might be in the absence thereof, and the imposition of penalty bids might also
have an effect on the price of any Security to the extent that it discouraged
resale of such Security. Neither the Seller nor the Underwriters makes any
representation or prediction as to the direction or magnitude of any such effect
on the prices for the Securities. Neither the Seller 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.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and certain
federal income tax and California state income tax and other matters will be
passed upon for the Trust by O'Melveny & Myers LLP.
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Index of Terms
<TABLE>
<CAPTION>
Page
----
<S> <C>
Aggregate Net Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Available Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Available Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Available Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Certificate Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Certificate Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . 41
Certificate Underwriting Agreement . . . . . . . . . . . . . . . . . . . . 41
Certificateholders Interest Carryover Shortfall. . . . . . . . . . . . . . 34
Certificateholders' Distributable Amount . . . . . . . . . . . . . . . . . 32
Certificateholders' Interest Distributable Amount. . . . . . . . . . . . . 33
Certificateholders' Percentage . . . . . . . . . . . . . . . . . . . . . . 33
Certificateholders' Principal Carryover Shortfall. . . . . . . . . . . . . 34
Certificateholders' Principal Distributable Amount . . . . . . . . . . . . 33
Charge-off Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Class A-1 Final Scheduled Distribution Date. . . . . . . . . . . . . . . . 29
Class A-1 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . 34
Class A-1 Interest Distributable Amount. . . . . . . . . . . . . . . . . . 32
Class A-2 Final Scheduled Distribution Date. . . . . . . . . . . . . . . . 29
Class A-2 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . 34
Class A-2 Interest Distributable Amount. . . . . . . . . . . . . . . . . . 32
Class A-3 Final Scheduled Distribution Date. . . . . . . . . . . . . . . . 29
Class A-3 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . 34
Class A-3 Interest Distributable Amount. . . . . . . . . . . . . . . . . . 32
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Collection Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Current Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Dealer Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Defaulted Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Delinquency Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Excess Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Excess Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Financed Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Initial Certificate Balance. . . . . . . . . . . . . . . . . . . . . . . . 33
Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . 34
Interest Distributable Amount. . . . . . . . . . . . . . . . . . . . . . . 32
Interest Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Liquidated Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Net Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 31
Note Underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Note Underwriting Agreement. . . . . . . . . . . . . . . . . . . . . . . . 41
Noteholders Interest Distributable Amount. . . . . . . . . . . . . . . . . 32
Noteholders' Distributable Amount. . . . . . . . . . . . . . . . . . . . . 32
Noteholders' Percentage. . . . . . . . . . . . . . . . . . . . . . . . . . 33
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . . . 34
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Penalty Bid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Pool Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . 20
Scheduled Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Specified Reserve Fund Balance . . . . . . . . . . . . . . . . . . . . . . 35
stabilizing bid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
syndicate covering transaction . . . . . . . . . . . . . . . . . . . . . . 42
Total Distribution Amount. . . . . . . . . . . . . . . . . . . . . . . . . 32
Transfer and Servicing Agreements. . . . . . . . . . . . . . . . . . . . . 37
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
<PAGE>
ANNEX A
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, Cedelbank or Euroclear. The Global Securities will be tradable 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 Cedelbank 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., three 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 Cedelbank or Euroclear and DTC
Participants holding securities will be effected on a delivery-against-payment
basis through the depositaries of Cedelbank 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, Cedelbank 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 Cedelbank 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 Cedelbank and/or Euroclear Participants. Secondary
market trading between Cedelbank Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
<PAGE>
Trading between DTC Seller and Cedelbank or Euroclear Participants.
When Global Securities are to be transferred from the account of a DTC
Participant to the account of a Cedelbank Participant or a Euroclear
Participant, the purchaser will send instructions to Cedelbank or Euroclear
through a Cedelbank Participant or Euroclear Participant at least one business
day prior to settlement. Cedelbank or Euroclear will instruct the respective
Depositary, as the case may be, to receive the Global Securities against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date, on
the basis of the actual number of days in such accrual period and a year assumed
to consist of 360 days. For transactions settling on the 31st of the month,
payment will include interest accrued to and excluding the first day of the
following month. Payment will then be made by the respective Depositary to the
DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedelbank 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 Cedelbank or Euroclear cash debt will be valued
instead as of the actual settlement date.
Cedelbank 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 Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank 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, Cedelbank 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
Cedelbank 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 Cedelbank 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 CEDELBANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Cedelbank 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 Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank 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
Cedelbank Participant or Euroclear Participant the following day, and receipt of
the cash proceeds in the Cedelbank 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 Cedelbank 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 (i.e.,
the trade fails), receipt of the cash proceeds in the Cedelbank Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
<PAGE>
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank 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 through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank 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 Cedelbank 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 Cedelbank
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are Non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY
COUNTRIES (FORM 1001). Non-U.S. Persons residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax rate
depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or
Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by the Certificate Owners or their
agents.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person though whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years,
and Form 4224 is effective for one calendar year.
As used in the foregoing discussion, the term "U.S. Person" means (i) a
citizen or resident of the United States 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
<PAGE>
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 tax advisors for specific tax advice
concerning their holding and disposing of Global Securities.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST, THE SELLER, THE SERVICER OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES OFFERED HEREBY, NOR AN OFFER OF THE SECURITIES IN ANY STATE OR
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Terms..................................................... S-3
Risk Factors......................................................... S-16
The Trust............................................................ S-20
Capitalization of the Trust.......................................... S-21
The Owner Trustee and Indenture Trustee.............................. S-21
Paying Agents........................................................ S-21
The Seller and the Servicer.......................................... S-21
The Receivables Pool................................................. S-21
Delinquencies, Repossessions and Net Losses.......................... S-25
Use of Proceeds...................................................... S-27
Prepayment and Yield Considerations.................................. S-27
Pool Factors and Trading Information................................. S-27
Description of the Notes............................................. S-28
Description of the Certificates...................................... S-29
Payments to Noteholders and Certificateholders....................... S-30
Subordination; Reserve Fund......................................... S-33
Transfer and Servicing Agreements.................................... S-35
ERISA Considerations................................................. S-39
Underwriting......................................................... S-39
Legal Opinions....................................................... S-41
Index of Terms....................................................... S-42
ANNEX A: Global Clearance, Settlement and Tax
Documentation Procedures............................................. A-1
PROSPECTUS
Summary of Terms..................................................... 1
Risk Factors......................................................... 7
The Trusts........................................................... 12
The Trustee.......................................................... 12
The Seller........................................................... 12
The Servicer......................................................... 13
Where You Can Find More Information About Your
Securities........................................................... 16
The Receivables Pools................................................ 17
Delinquencies, Repossessions and Net Losses.......................... 19
Weighted Average Life of the Securities.............................. 19
Pool Factors and Trading Information................................. 20
Use of Proceeds...................................................... 21
Description of the Notes............................................. 21
Description of the Certificates...................................... 25
Certain Information Regarding the Securities......................... 26
Transfer and Servicing Agreements.................................... 38
TMCC Demand Notes.................................................... 49
The Swap Agreement................................................... 53
Certain Legal Aspects of the Receivables............................. 56
Certain Federal Income Tax Consequences.............................. 62
ERISA Considerations................................................. 74
Plan of Distribution................................................. 75
Legal Opinions....................................................... 76
Experts.............................................................. 76
Index of Terms....................................................... 76
</TABLE>
UNTIL _______________, ____, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$_______________
TOYOTA AUTO RECEIVABLES
____-__ OWNER TRUST
$_______________ _____% ASSET
BACKED NOTES, CLASS A-1
$_____________ _____% ASSET
BACKED NOTES, CLASS A-2
$_____________ ____% ASSET
BACKED NOTES, CLASS A-3
$_____________ ____% ASSET
BACKED CERTIFICATES
TOYOTA MOTOR CREDIT
RECEIVABLES CORPORATION
SELLER
TOYOTA MOTOR CREDIT
CORPORATION SERVICER
--------------------
PROSPECTUS SUPPLEMENT
------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Subject to completion, dated _________.
Prospectus Supplement to Prospectus dated __________
TOYOTA AUTO RECEIVABLES ____-__ GRANTOR TRUST
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
SELLER
TOYOTA MOTOR CREDIT CORPORATION,
SERVICER
$____________________ ASSET BACKED CERTIFICATES
YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE S-15 OF THIS SUPPLEMENT AND PAGE 7 IN THE ACCOMPANYING
PROSPECTUS.
This prospectus supplement does not contain complete information about the
offering of the certificates. No one may use this prospectus supplement to offer
and sell the certificates unless it is accompanied by the prospectus. If any
statements in this prospectus supplement conflict with statements in the
prospectus, the statements in this prospectus supplement will control.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The certificates are asset backed securities issued by the trust. The
certificates are not obligations of Toyota Motor Credit Corporation, Toyota
Motor Credit Receivables Corporation, Toyota Motor Sales, U.S.A., Inc. or any of
their affiliates. Neither the certificates nor the receivables are insured or
guaranteed by any governmental agency.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
The trust
will issue First First Final
the Initial Pass Interest Principal Scheduled
following Principal Through Interest Payment Payment Distribution
securities: Amount Rate Period Date Date Date
----------- --------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Class A
Certificates(1)...
Class B
Certificates(1)...
Class C
Certificates(1)...
(1) The Class B Certificates and Class C Certificates are subordinated to the
Class A Certificates, and the Class C Certificates are subordinated to the
Class B Certificates, in each case to the extent described in this
prospectus supplement.
- -------------------------------------------------------------------------------------------------
</TABLE>
The terms of the Offering are as follows:
<TABLE>
- -----------------------------------------------------------------------------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT SELLER(2)
------------------- -------------- ---------------
<S> <C> <C> <C>
Per Class A Certificate. $_____________ _______% $_____________
Per Class B Certificate. $_____________ _______% $_____________
Per Class C Certificate. $_____________ _______% $_____________
Total................... $_____________ _______% $_____________
(1) Plus accrued interest from ____________.
(2) Before deducting expenses payable by TMCRC, as the seller, estimated to be
$ ____________.
- -----------------------------------------------------------------------------------------
</TABLE>
[THE TRUST HAS APPLIED TO LIST THE CERTIFICATES ON THE LUXEMBOURG STOCK EXCHANGE
AND FOR LISTING AND PERMISSION TO DEAL IN THE CERTIFICATES ON THE STOCK EXCHANGE
OF HONG KONG LIMITED.]
[UNDERWRITERS]
The date of this Prospectus Supplement is _________
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the certificates is provided in two separate documents
that progressively provide more detail:
- the accompanying prospectus, which provides general information, some
of which may not apply to a particular class of certificates,
including your class; and
<PAGE>
- this prospectus supplement, which describes the specific terms of
your class of certificates.
IF THE TERMS OF YOUR CERTIFICATES VARY BETWEEN THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT.
Cross-references are included in this prospectus supplement and in the
prospectus which direct you to more detailed descriptions of a particular topic.
You can also find references to key topics in the Table of Contents on the back
cover of the prospectus.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Terms" beginning
on page 15 in this prospectus supplement and under the caption "Index of Terms"
beginning on page 9 in the accompanying prospectus.
S-2
<PAGE>
SUMMARY OF TERMS
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT
AND PROVIDES A GENERAL OVERVIEW OF RELEVANT TERMS OF THE CERTIFICATES. TO
UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THE CERTIFICATES, YOU SHOULD READ
CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS. BOTH DOCUMENTS
CONTAIN INFORMATION YOU SHOULD CONSIDER WHEN MAKING YOUR INVESTMENT DECISION.
RELEVANT PARTIES
ISSUER Toyota Auto Receivables Grantor Trust
____-__. The trust will be
established by a pooling and servicing
agreement.
SELLER Toyota Motor Credit Receivables
Corporation.
SERVICER Toyota Motor Credit Corporation.
TRUSTEE [________________________].
RELEVANT AGREEMENTS
POOLING AND SERVICING AGREEMENT The pooling and servicing agreement
among the seller, the servicer and the
trustee. The pooling and servicing
agreement provides for the terms
relating to the certificates.
RECEIVABLES PURCHASE AGREEMENT The receivables purchase agreement
between Toyota Motor Credit
Corporation and the seller. The
receivables purchase agreement governs
the sale of the receivables from
Toyota Motor Credit Corporation to the
seller.
RELEVANT DATES
CLOSING DATE On or about [____________].
CUTOFF DATE [________________]
S-3
<PAGE>
DISTRIBUTION DATES The trust will pay interest and
principal on the certificates on the
fifteenth day of each month. If the
fifteenth day of the month is not a
business day, payments on the
certificates will be made on the next
business day. The date that any
payment is made is called a
distribution date. The first
distribution date is __________.
A "business day" is any day except:
- a Saturday or Sunday;
- a day on which banks in New York
or San Francisco are closed; or
- [for payments of the Class A
Certificates made in Luxembourg
or Hong Kong by a paying agent, a
day on which banks in Luxembourg
or Hong Kong are closed.]
FINAL SCHEDULED DISTRIBUTION DATES The final principal payment for each
class of certificates is scheduled to
be made on the final scheduled
distribution dates specified on the
front cover of this prospectus
supplement.
RECORD DATE So long as the certificates are in
book-entry form, the trust will make
payments on the certificates to the
holders of record on the day
immediately preceding the distribution
date. If the certificates are issued
in definitive form, the record date
will be the last day of the month
preceding the distribution date.
DESCRIPTION OF THE CERTIFICATES
TERMS The trust is offering the following
classes of certificates by way of this
prospectus supplement:
<TABLE>
<CAPTION>
Original Pass Through
Class Percentage Certificate Balance Rate*
---------------- ------------------- ------------
<S> <C> <C> <C>
Class A % $ %
Certificates
Class B
Certificates
Class C
Certificates
---------------- ------------------- ------------
Total 100% $
</TABLE>
-----------------
* Calculated based on a 360-day year
consisting of twelve 30-day months.
S-4
<PAGE>
Each class of certificates will have
an undivided ownership interest in the
trust equal to the class percentage
indicated above. The class percentage
will not change. The certificate
balance of each class of certificates
will be reduced by the payment of
principal to the holders of that
class.
INTEREST AND PRINCIPAL PAYMENTS In general, certificateholders are
entitled to receive payments of
interest and principal from the trust
only to the extent that collections
from trust assets and funds resulting
from credit enhancements are
sufficient to make those payments.
Interest and principal collections
will be divided among the various
classes of certificates in specified
proportions.
The trust will pay interest and
principal on a pro rata basis to
certificateholders of record as of the
preceding record date.
INTEREST. The amount of interest due
on each distribution date for any
class of certificates will equal the
product of:
- the outstanding class
certificate balance as of the
preceding distribution date
(or, in the case of the first
distribution date, as of the
closing date); and
- one-twelfth of the pass through
rate for that class, on a per
annum basis.
Interest on the certificates will be
determined on the basis of a 360-day
year consisting of twelve 30-day
months.
The pass through rate for each class
of certificates is set forth on the
front cover of this prospectus
supplement.
If certificateholders of any class do
not receive all interest owed to them
on a distribution date, the trust will
make payments of interest on later
distribution dates to make up the
shortfall, to the extent funds from
specified sources are available to
cover the shortfall.
S-5
<PAGE>
PRINCIPAL. The amount of principal
due on each distribution date for any
class of certificates will equal the
applicable class percentage, as shown
on the cover page of this prospectus
supplement, of the sum of the
following:
- the portion of all scheduled
monthly payments on
receivables allocable to
principal during the
preceding calendar month;
- the portion of all
prepayments on receivables
allocable to principal
received by the servicer
during the preceding
calendar month;
- the principal balance of
each receivable that was
purchased by the servicer or
repurchased by the seller,
in either case under an
obligation that arose during
the preceding calendar
month; and
- the principal balance of
each receivable that became
a defaulted receivable
during the preceding
calendar month.
The receivables owned by the trust are
classified as either precomputed
receivables or simple interest
receivables. The portion of the
scheduled monthly payments and
prepayments that will be allocable to
principal is different for each of the
two types of receivables. These
receivables are described in more
detail in "The Receivables Pools" in
the accompanying Prospectus. Before
each distribution date, the servicer
will calculate the amount of principal
to be paid to each class of
certificates for that distribution
date. The amount of principal to be
paid to a class will equal that class'
percentage of scheduled payments on
precomputed receivables, principal
collections on simple interest
receivables and certain other
principal amounts due or collected on
the receivables. The class percentage
for each class is detailed in the
chart under "Description of the
Certificates--Terms" above.
If certificateholders of any class do
not receive all principal owed to them
on a distribution date, the trustee will
make payments of principal on later
distribution dates to make up the
shortfall, to the extent funds from
specified sources are available to cover
such amounts.
FOR MORE DETAILED INFORMATION REGARDING
PAYMENTS OF INTEREST AND PRINCIPAL SEE
"DESCRIPTION OF THE CERTIFICATES--
PAYMENTS--CALCULATION OF DISTRIBUTABLE
AMOUNTS".
S-6
<PAGE>
LISTING [The trust has applied to list the
Class A Certificates on the Luxembourg
Stock Exchange and The Stock Exchange
of Hong Kong Limited. The trust has
requested that the listings be made
effective on or about
_______________.]
MINIMUM DENOMINATIONS Certificates will be issued only in
denominations of $1,000 or more.
Certificates will be issued in multiples
of $1 for amounts in excess of $1,000.
REGISTRATION OF THE CERTIFICATES You will generally hold your interests
in the securities through The Depository
Trust Company in the United States, or
Cedelbank or the Euroclear System in
Europe or Asia. This is referred to as
book-entry form. As long as the
certificates are held in book-entry
form, you will not receive a definitive
certificate representing your
certificates.
FOR MORE DETAILED INFORMATION, YOU
SHOULD REFER TO "ANNEX A: GLOBAL
CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES" IN THIS
PROSPECTUS SUPPLEMENT AND "CERTAIN
INFORMATION REGARDING THE
SECURITIES--BOOK-ENTRY REGISTRATION" IN
THE ACCOMPANYING PROSPECTUS.
TAX STATUS It is a condition to the issuance of the
certificates that O'Melveny & Myers LLP,
special tax counsel to the trust,
deliver its opinion that:
- the trust will be treated as a
grantor trust for United
States federal income tax
purposes; and
- will not be subject to federal
income tax.
If you purchase the certificates, you
will be required to report your pro rata
share of all income earned on the
receivables (other than amounts, if any,
treated as "stripped coupons"). In
addition if you are an individual, trust
or estate, you may deduct your pro rata
share of reasonable servicing and other
fees, subject to certain limitations.
YOU SHOULD REFER TO "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES" IN THE
ACCOMPANYING PROSPECTUS FOR ADDITIONAL
INFORMATION CONCERNING THE APPLICATION
OF UNITED STATES FEDERAL INCOME TAX LAWS
TO THE TRUST AND THE CERTIFICATES.
S-7
<PAGE>
ERISA CONSIDERATIONS The Class A Certificates are generally
eligible for purchase by employee
benefit plans, subject to certain
considerations discussed under "ERISA
Considerations" in this document and in
the accompanying prospectus.
The Class B Certificates and Class C
Certificates, however, may not be
acquired by any employee benefit plan or
an individual retirement plan. However,
under limited circumstances, Class B
Certificates may be purchased as limited
investments by persons using insurance
general accounts or separate accounts.
YOU SHOULD REFER TO "ERISA
CONSIDERATIONS" IN THIS PROSPECTUS
SUPPLEMENT AND IN THE ACCOMPANYING
PROSPECTUS. IF YOU ARE A BENEFIT PLAN
FIDUCIARY CONSIDERING PURCHASE OF THE
CERTIFICATES OF ANY CLASS YOU SHOULD,
AMONG OTHER THINGS, CONSULT WITH YOUR
COUNSEL TO DETERMINE WHETHER ALL
REQUIRED CONDITIONS HAVE BEEN SATISFIED.
RATINGS OF THE CERTIFICATES It is a condition to the issuance of the
certificates that:
- the Class A Certificates be
rated at least "AAA" by
Standard & Poor's, a division
of the McGraw Hill Companies
and at least "Aaa" by Moody's
Investors Service, Inc.;
- the Class B Certificates be
rated at least "___" by
Standard & Poor's and at least
"___" by Moody's; and
- the Class C Certificates be
rated at least "___" by
Standard & Poor's and at least
"___" by Moody's.
A SECURITY RATING IS NOT A
RECOMMENDATION TO BUY, SELL OR HOLD
SECURITIES. THE RATINGS OF THE
CERTIFICATES ADDRESS THE LIKELIHOOD OF
THE PAYMENT OF PRINCIPAL AND INTEREST ON
THE CERTIFICATES IN ACCORDANCE WITH
THEIR TERMS. EITHER RATING AGENCY MAY
SUBSEQUENTLY LOWER OR WITHDRAW ITS
RATING OF THE CERTIFICATES. IF THIS
HAPPENS, NO PERSON OR ENTITY WILL BE
OBLIGATED TO PROVIDE ANY ADDITIONAL
CREDIT ENHANCEMENT FOR THE CERTIFICATES.
NO OTHER RATING AGENCY HAS BEEN ASKED TO
RATE ANY CLASS OF CERTIFICATES. HOWEVER,
ANOTHER RATING AGENCY MAY RATE THE
CERTIFICATES AND, IF SO, THE RATING MAY
BE LOWER THAN THE RATINGS DESCRIBED
ABOVE.
S-8
<PAGE>
STRUCTURAL SUMMARY Purchasers of Toyota and Lexus cars and
light duty trucks often finance their
purchases by entering into retail
installment sales contracts with Toyota
and Lexus dealers who then resell the
contracts to Toyota Motor Credit
Corporation. The purchasers of the
vehicles are referred to as the
"obligors" under the contracts. Toyota
Motor Credit Receivables Corporation
will purchase a specified amount of
these contracts from Toyota Motor Credit
Corporation and on the closing date will
sell them to the trust in exchange for
the certificates. The contracts will
have a total outstanding principal
balance of $___________ as of ______,
the cutoff date. These contracts are
referred to as the "receivables".
Toyota Motor Credit Receivables
Corporation will sell the certificates
to investors for cash to pay for its
purchase of the receivables. The chart
below represents the flow of funds
provided by investors for the
certificates and the receivables sold by
Toyota Motor Credit Corporation.
[Chart depicting the transfer of
receivables from Toyota Motor Credit
Corporation to seller in exchange for
the cash net proceeds of the offering;
the transfer of receivables from the
seller to the trust in exchange for the
securities; and the issuance of the
securities to investors in exchange for
the proceeds.]
ASSETS OF THE TRUST The assets of the trust will primarily
consist of the receivables. In addition,
the assets of the trust will also
include:
- certain monies due or received
under the receivables on and
after the cutoff date;
- security interests in the
vehicles financed under the
contracts;
- certain bank accounts and the
proceeds of those accounts;
and
- proceeds from claims under
certain insurance policies
relating to the financed
vehicles or the obligors under
the contracts and certain
rights under the pooling and
servicing agreement. For a
more detailed description of
the assets of the trust, see
"The Trust--General".
S-9
<PAGE>
THE RECEIVABLES On the closing date, the trust will
purchase receivables having the
following characteristics as of the
cutoff date:
<TABLE>
<S> <C>
- Total Cutoff Date Principal Balance.........................
- Number of Receivables.......................................
- Average Cutoff Date Principal Balance.......................
- Average Original Amount Financed............................
Range of Original Amounts Financed..........................
- Weighted Average APR(1).....................................
Range of APRs............................................
- Weighted Average Original Number of Scheduled Payments(1)...
Range of Original Number of Scheduled Payments...........
- Weighted Average Remaining Number of Scheduled Payments(1)..
Range of Remaining Number of Scheduled Payments..........
</TABLE>
-------------------
(1) Weighted by principal balance as of
the cutoff date.
S-10
<PAGE>
SERVICING Toyota Motor Credit Corporation will be
appointed to act as servicer for the
receivables owned by the trust. The
servicer will handle all collections,
administer defaults and delinquencies
and otherwise service the contracts. The
trust will pay the servicer a monthly
fee equal to 1/12 of 1.00% of the total
principal balance of the receivables as
of the first day of the preceding month.
The servicer will also receive
additional servicing compensation in the
form of investment earnings, late fees
and other administrative fees and
expenses or similar charges received by
the servicer during such month.
The servicer will be obligated to
advance to the trust interest on any
receivable that is due but unpaid by the
obligor. In addition, the servicer will
be obligated to advance to the trust
principal on any receivables that are
classified as precomputed receivables
rather than simple interest receivables.
However, the servicer will not be
required to make an advance if it
determines that the advance will not
ultimately be recoverable. The trust
will reimburse the servicer from later
collections on the delinquent
receivable. If the servicer determines
that the advance will not ultimately be
recoverable, the trust may also
reimburse the servicer from collections
on other receivables.
FOR MORE DETAILED INFORMATION, YOU
SHOULD REFER TO "TRANSFER AND SERVICING
AGREEMENT--SERVICING COMPENSATION AND
PAYMENT OF EXPENSES" IN THE ACCOMPANYING
PROSPECTUS, AND TO "DESCRIPTION OF THE
CERTIFICATES--ADVANCES" IN THIS
PROSPECTUS SUPPLEMENT.
OPTIONAL REDEMPTION The servicer or the seller may redeem
any outstanding certificates when the
outstanding aggregate principal balance
of the receivables declines to 10% or
less of the original total principal
balance of the receivables on the
cut-off date.
FOR MORE DETAILED INFORMATION REGARDING
THIS OPTION, YOU SHOULD REFER TO
"DESCRIPTION OF THE
CERTIFICATES--OPTIONAL PURCHASE" IN THIS
PROSPECTUS SUPPLEMENT.
PAYMENTS ON DISTRIBUTION DATES TMCC will identify collections on the
receivables as either interest or
principal depending on the terms of the
related contracts. Collections
identified as interest are sometimes
referred to as "interest collections".
Collections identified as principal are
sometimes referred to as "principal
collections".
S-11
<PAGE>
Principal advances made by the servicer
will be included in principal
collections. Interest advances made by
the servicer will be included in
interest collections. Any reimbursements
of interest advances paid to the
servicer will be deducted from interest
collections before those collections are
used to pay noteholders and
certificateholders. Similarly, any
reimbursements of principal advances
paid to the servicer will be deducted
from principal collections before those
collections are used to pay noteholders
and certificateholders.
PAYMENTS FROM INTEREST COLLECTIONS. Each
month, the trust will distribute
interest collections and interest
advances received during the prior
calendar month in the following order of
priority:
- SERVICING FEE--the monthly
servicing fee payable to the
servicer;
- INTEREST ON THE CLASS A
CERTIFICATES--interest due on
the Class A Certificates,
including any unpaid interest
from prior distribution dates;
- INTEREST ON THE CLASS B
CERTIFICATES--interest due on
the Class B Certificates,
including any unpaid interest
from prior distribution dates;
and
- INTEREST ON THE CLASS C
CERTIFICATES--interest due on
the Class C Certificates,
including any unpaid interest
from prior distribution dates.
S-12
<PAGE>
If interest collections are not
sufficient to pay all interest owed to a
class of certificateholders on any
distribution date, the trust will pay
the shortfall from the following sources
in the following order of priority:
- CLASS A CERTIFICATES - from
collections otherwise
allocable to pay principal on
the Class C Certificates, from
collections otherwise
allocable to pay principal on
the Class B Certificates and
from amounts on deposit in the
reserve fund described below.
- CLASS B CERTIFICATES - from
collections otherwise
allocable to pay principal on
the Class C Certificates and
from amounts on deposit in the
reserve fund.
- CLASS C CERTIFICATES - from
amounts on deposit in the
reserve fund.
Unpaid interest on any class of
certificates will accrue interest at the
pass through rate for that class.
PAYMENTS FROM PRINCIPAL COLLECTIONS.
Each month, the trust will distribute
principal collections and principal
advances received during the prior
calendar month in the following order of
priority:
- PRINCIPAL ON THE CLASS A
CERTIFICATES--principal due on
the Class A Certificates,
including any unpaid principal
from prior distribution dates;
- PRINCIPAL ON THE CLASS B
CERTIFICATES--principal due on
the Class B Certificates,
including any unpaid principal
from prior distribution dates;
and
- PRINCIPAL ON THE CLASS C
CERTIFICATES--principal due on
the Class C Certificates,
including any unpaid principal
from prior distribution dates.
S-13
<PAGE>
If principal collections are not
sufficient to pay all principal owed to
a class of certificateholders on any
distribution date, the shortfall will be
paid from interest collections that are
not needed to pay interest to the Class
A, B and C Certificateholders on that
date, and from amounts on deposit in the
reserve fund. These amounts will be used
first to pay principal owed to the Class
A Certificateholders, second to pay
principal owed to the Class B
Certificateholders and finally to pay
principal owed to the Class C
Certificateholders.
Excess collections remaining on any
distribution date after the above
interest and principal payments have
been made will be deposited in the
reserve fund or distributed to the
seller.
FOR MORE DETAILED INFORMATION CONCERNING
PAYMENTS ON THE CERTIFICATES AND PAYMENT
PRIORITIES, YOU SHOULD REFER TO
"PAYMENTS TO CERTIFICATEHOLDERS" IN THIS
PROSPECTUS SUPPLEMENT.
CREDIT ENHANCEMENT The pooling and servicing agreement
includes certain features designed to
provide protection against losses and
delays in payments to the Class A
Certificateholders and, to a lesser
extent, the Class B and C
Certificateholders. These features are
referred to as "credit enhancement."
Losses on the receivables or other
shortfalls of cash flow will be covered
by allocating available cash flow to the
more senior classes of certificates -
that is, Class A and B Certificates -
before making allocations to subordinate
classes and by withdrawing amounts on
deposit in the reserve fund. The
reallocation of funds to the more senior
classes of certificates is referred to
as "subordination."
The credit enhancement for the
certificates will be as follows:
CLASS A CERTIFICATES
- subordination of the Class B and C
Certificates, as described below;
and
- the reserve fund.
CLASS B CERTIFICATES
- subordination of the Class C
Certificates, as described below;
and
- the reserve fund.
CLASS C CERTIFICATES
- the reserve fund.
S-14
<PAGE>
SUBORDINATION OF INTEREST AND PRINCIPAL
- CLASS B CERTIFICATES--Interest
payments on the Class B
Certificates will be subordinated
to interest payments on the Class A
Certificates. Principal payments on
the Class B Certificates will be
subordinated to principal payments
on the Class A Certificates and, in
certain circumstances, to interest
payments on the Class A
Certificates.
- CLASS C CERTIFICATES--Interest
payments on the Class C
Certificates will be subordinated
to interest payments on the Class A
Certificates and Class B
Certificates. Principal payments on
the Class C Certificates will be
subordinated to principal payments
on the Class A Certificates and
Class B Certificates and, in
certain circumstances, to interest
payments on the Class A
Certificates and Class B
Certificates.
RESERVE FUND
On each distribution date, if
collections on the receivables are
insufficient to pay the amounts due to
the servicer and certificateholders as
described above, the trustee will
withdraw from the reserve fund, to the
extent available, the amount necessary
to make the required payments.
The pooling and servicing agreement
specifies the balance that is required
to be maintained for the reserve fund.
On the closing date, the seller will
deposit $________ into the reserve fund,
which is less than the required balance.
On each distribution date, after the
trust makes the required payments to the
servicer and certificateholders from
collections on the receivables and
servicer advances:
- any remaining amounts will be
deposited into the reserve
fund to the extent necessary
to maintain the specified
reserve fund balance; or
- amounts remaining in the
reserve fund in excess of the
specified balance will be paid
to the seller.
The trust and certificateholders will
have no right to payment or recapture of
any amounts released from the trust or
reserve fund and paid to the seller. The
seller will have no obligation to
deposit funds into the reserve fund
except for the initial deposit on the
closing date.
FOR MORE DETAILED INFORMATION CONCERNING
THE CREDIT ENHANCEMENT PROVISIONS, YOU
SHOULD REFER TO "SUBORDINATION; RESERVE
FUND" IN THIS PROSPECTUS SUPPLEMENT.
S-15
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS (AND THE FACTORS SET FORTH
UNDER "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS) IN DECIDING WHETHER TO
PURCHASE THE CERTIFICATES OF ANY CLASS.
THE ABSENCE OF A SECONDARY MARKET FOR THE CERTIFICATES COULD LIMIT YOUR
ABILITY TO RESELL THE CERTIFICATES.
The absence of a secondary market for the certificates could limit your
ability to resell them. This means that if you want to sell your certificates
in the future before they mature, you may have difficulty finding a buyer. If
you find a buyer, the selling price may be less than it would have been if a
secondary market existed for the certificates. There is currently no secondary
market for the certificates. Although the underwriters have stated that they
intend to make a market in each class of certificates, they are not obligated to
do so. A secondary market may not ever develop for the certificates. Even if
such a market does develop, it may not provide sufficient liquidity or continue
for the life of your certificates.
PREPAYMENTS ON RECEIVABLES MAY CAUSE PREPAYMENTS ON THE CERTIFICATES,
RESULTING IN REINVESTMENT RISK TO YOU.
You may receive payment of principal on your certificates earlier than you
expected. If that happens, you may not be able to reinvest the principal you
receive at a rate as high as the rate on your certificates. Prepayments on the
receivables will shorten the life of the certificates to an extent that cannot
be predicted. Prepayments may occur for a number of reasons. Some prepayments
may be caused by the obligors under the receivables. For example, obligors may:
- make early payments, since receivables will generally be
prepayable at any time without penalty;
- default, resulting in the repossession and sale of the financed
vehicle; or
- damage the vehicle or become unable to pay due to death or
disability, resulting in payments to the trust under any existing
physical damage, credit life or other insurance.
Some prepayments may be caused by the seller or the servicer. For example,
the seller will make representations and warranties regarding the receivables,
and the servicer will agree to take or refrain from taking certain actions with
respect to the receivables. If the seller or the servicer breaches its
representation or agreement and the breach is material and cannot be remedied,
it will be required to purchase the affected receivables from the trust. This
will result, in effect, in the prepayment of the purchased receivables. In
addition, the seller and the servicer have the option to purchase the
receivables from the trust when the total outstanding principal balance of the
receivables is 10% or less of the total outstanding principal balance as of the
cutoff date.
The rate of prepayments on the receivables may be influenced by a variety
of economic, social and other factors. The seller has limited historical
experience with respect to prepayments. In addition, the seller is not aware of
publicly available industry statistics that detail the prepayment experience for
contracts similar to the receivables. For these reasons, the seller cannot
predict the actual prepayment rates for the receivables. The seller, however,
believes that the actual rate of prepayments will result in the weighted average
life of the receivables being shorter than the period from the closing date to
the final scheduled maturity date for the related class. If this is the case,
the weighted average life of each class of certificates will be correspondingly
shorter.
S-16
<PAGE>
SUBORDINATION FEATURES INCREASE RISK OF LOSS OR DELAY IN PAYMENT TO CLASS B
AND CLASS C CERTIFICATES.
If you buy Class B Certificates:
- you will not receive any interest payments on a distribution date
until all interest owed on the Class A Certificates on that date has
been paid; and
- you will not receive any principal payments on a distribution date
until all principal and interest owed on the Class A Certificates on
that date has been paid.
If you buy Class C Certificates:
- you will not receive any interest payments until all interest owed on
the Class A Certificates and Class B Certificates has been paid; and
- you will not receive any principal payments until all principal and
interest owed on the Class A Certificates and Class B Certificates has
been paid.
Because the Class A Certificates and, to a lesser extent, the Class B
Certificates will receive preferential allocations of interest and principal,
the Class C Certificates and, to a lesser extent, the Class B Certificates, will
be exposed to a greater risk of nonpayment or delayed payment if collections
fall significantly below expected levels.
As a result of the subordination features described above, the yield on the
Class B Certificates will be sensitive, and the yield on the Class C
Certificates will be extremely sensitive, to losses on the receivables and the
timing of such losses. If the actual rate and amount of losses exceed your
expectations, and if amounts in the reserve fund are insufficient to cover the
resulting shortfalls, the yield to maturity on your certificates may be lower
than anticipated. See "Subordination; Reserve Fund" in this prospectus
supplement.
BECAUSE THE TRUST HAS LIMITED ASSETS, THERE IS ONLY LIMITED PROTECTION
AGAINST POTENTIAL LOSSES.
The only source of funds for payments on the certificates is the assets of
the trust and the reserve fund. The certificates are not obligations of, and
will not be insured or guaranteed by, any governmental agency, the seller, the
servicer, Toyota Motor Sales, U.S.A., Inc., any trustee or any of their
affiliates. You must rely solely on payments on the receivables and amounts on
deposit in the reserve fund for payments on the certificates. Although funds in
the reserve fund will be available to cover shortfalls in payments of interest
and principal on each distribution date, the amounts deposited in the reserve
fund will be limited. If the entire reserve fund has been used, the trust will
depend solely on current collections on the receivables to make payments on the
certificates. Any excess amounts released from the reserve fund to the seller
will no longer be available to certificateholders on any later distribution
date. See "Subordination; Reserve Fund" in this prospectus supplement.
PERFORMANCE OF THE RECEIVABLES COULD BE AFFECTED BY ECONOMIC CONDITIONS IN
THE STATES WHERE THE RECEIVABLES WERE ORIGINATED.
If a large number of obligors are located in a particular state, economic
conditions or other factors that negatively affect that state could also
negatively affect the delinquency, credit loss or repossession experience of the
trust. As of ________________ ,Toyota Motor Credit Corporation's records
indicate that the billing addresses of the obligors of the receivables were in
the following states:
S-17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL PRINCIPAL BALANCE
<S> <C>
........................... %
........................... %
........................... %
........................... %
</TABLE>
No other state, by billing addresses, constituted more than 5% of the
balance of the receivables as of ____________________.
BECAUSE THE CERTIFICATES ARE IN BOOK-ENTRY FORM, YOUR RIGHTS CAN ONLY BE
EXERCISED INDIRECTLY.
Because the certificates will be issued in book-entry form, you will be
required to hold your interest in the certificates through The Depository Trust
Company in the United States, or Cedelbank or the Euroclear System in Europe.
Transfers of interests in the certificates within DTC, Cedelbank or Euroclear
must be made in accordance with the usual rules and operating procedures of
those systems. So long as the securities are in book-entry form, you will not
be entitled to receive a definitive certificate representing your interest. The
certificates will remain in book-entry form except in the limited circumstances
described under the caption "Description of the Certificates Book-Entry
Registration" in the accompanying prospectus. Unless and until the certificates
cease to be held in book-entry form, the trustee will not recognize you as a
"Securityholder", as that term is used in the pooling and servicing agreement.
As a result, you will only be able to exercise the rights of Securityholders
indirectly through DTC (if in the United States) and its participating
organizations, or Cedelbank and Euroclear (in Europe) and their participating
organizations. Holding the certificates in book-entry form could also limit your
ability to pledge your certificates to persons or entities that do not
participate in DTC, Cedelbank or Euroclear and to take other actions that
require a physical certificate representing the certificates.
Interest and principal on the certificates will be paid by the trust to DTC
as the record holder of the certificates while they are held in book-entry form.
DTC will credit payments received from the trust to the accounts of its
participants which, in turn, will credit those amounts to certificateholders
either directly or indirectly through indirect participants. This process may
delay your receipt of principal and interest payments from the trust.
THE TRUST
GENERAL
The Toyota Auto Receivables ____-__ Grantor Trust (the "Trust") will be
formed by Toyota Motor Credit Receivables Corporation (the "Seller") pursuant to
the Pooling and Servicing Agreement (the "Agreement") dated as of _____________,
among the Seller, Toyota Motor Credit Corporation ("TMCC"), as servicer (in such
capacity, the "Servicer") and ______________, as trustee (the "Trustee"). The
Seller will establish the Trust by selling and assigning the assets of the Trust
to the Trustee in exchange for the Certificates to be issued by the Trust. The
Servicer will service the Receivables pursuant to the Agreement and will be
compensated for acting as the Servicer. See "Description of the
Certificates--Servicing Compensation".
S-18
<PAGE>
Pursuant to agreements between TMCC and the Dealers, each Dealer will
repurchase from TMCC those retail installment sales contracts that do not meet
certain representations and warranties made by such Dealer. Such Dealer
repurchase obligations are referred to herein as "Dealer Recourse". Such
representations and warranties relate primarily to the origination of the
contracts and the perfection of the security interests in the related financed
vehicles, and do not typically relate to the creditworthiness of the related
obligors or the collectability of such contracts. Although the Dealer
agreements with respect to the Receivables will not be assigned to the Trustee,
any recovery by TMCC pursuant to any Dealer Recourse will be deposited in the
Collection Account in satisfaction of TMCC's repurchase obligations under the
Agreement. The sales by the Dealers of installment sales contracts to TMCC do
not generally provide for recourse against the Dealers for unpaid amounts in the
event of a default by an obligor thereunder, other than in connection with the
breach of the foregoing representations and warranties.
Each Certificate represents an undivided ownership interest in the Trust.
The Trust property includes the Receivables, and certain monies due or received
thereunder on or after the Cutoff Date. The Trust property also includes (i)
such amounts as from time to time may be held in one or more trust accounts
established and maintained by the Servicer pursuant to the Agreement, as
described below; (ii) security interests in the Financed Vehicles and any
accessions thereto; (iii) the rights to proceeds with respect to the Receivables
from claims on physical damage, credit life and disability insurance policies
covering the Financed Vehicles or the Obligors, as the case may be; (iv) the
right to receive proceeds from any Dealer Recourse; (v) the interests of the
Seller under the Receivables Purchase Agreement; (vi) the right to realize upon
any property (including the right to receive future Liquidation Proceeds) that
shall have secured a Receivable and that shall have been acquired by the
Trustee; (vii) all other assets of the Trust; and (viii) any and all proceeds of
the foregoing. The Reserve Fund will be maintained by the Trustee for the
benefit of the Certificateholders, but will not be part of the Trust.
The Trust's principal offices are in _________________________, in care of
______________________, as Trustee, at the address set forth below under "The
Trustee."
THE TRUSTEE
__________ is the Trustee under the Agreement. ____________________ is a
_________________ and its principal offices are located at ____________. The
Seller and its affiliates may maintain normal commercial banking relations with
the Trustee and its affiliates.
[Under the Agreement, for so long as any Certificates are listed on an
exchange whose rules so require, the Trustee will appoint paying agents in the
jurisdictions specified by such rules. For so long as the Class A Certificates
are listed on the [exchange] or [exchange], the Trustee will maintain paying
agents in [jurisdiction] and [jurisdiction]. The Initial Paying Agents will be
_______________ and ___________. Definitive Certificates may be presented for
purposes of payment, transfer or exchange at the offices of the paying agent in
[jurisdiction] at ___________, at the offices of the paying agent in
[jurisdiction] at ___________, or such other paying agents as may be specified
in a written notice to the holders of Certificates described below.]
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under the
captions "The Seller" and "The Servicer" in the Prospectus.
S-19
<PAGE>
THE RECEIVABLES POOL
The Receivables Pool (the "Receivables Pool") will include the Receivables
purchased as of ______________ (the "Cutoff Date"). The Receivables were
originated by Dealers in accordance with TMCC's requirements and subsequently
purchased by TMCC. The Receivables evidence the indirect financing made
available by TMCC to the related purchasers (the "Obligors") of the vehicles
financed by the Receivables (the "Financed Vehicles"). On or before the date of
the initial issuance of the Securities (the "Closing Date"), TMCC will sell the
Receivables to the Seller pursuant to the receivables purchase agreement (the
"Receivables Purchase Agreement") between the Seller and TMCC. The Seller will,
in turn, sell the Receivables to the Trust pursuant to the Agreement. During
the term of the Agreement, neither the Seller nor TMCC may substitute any other
retail installment sales contract for any Receivable sold to the Trust.
Receivables in the Receivables Pool are required to meet certain selection
criteria as of the Cutoff Date. Pursuant to such criteria, each Receivable: (i)
was, at the time of origination, secured by a new or used automobile or light
duty truck; (ii) was originated in the United States; (iii) provides for
scheduled monthly payments (the "Scheduled Payments") that fully amortize the
amount financed by such Receivable over its original term (except for minimally
different payments in the first or last month in the life of the Receivable);
(iv) was originated prior to [__________]; (v) had an original number of
scheduled payments of not less than [____] and not more than [____] and, as of
the Cutoff Date, had a remaining number of scheduled payments of not less than
[____] and not more than [____]; (vi) provides for the payment of a finance
charge at an APR ranging from [____] % to [____] %; (vii) does not have a
payment that is more than [__ days] past due as of the Cutoff Date; (viii) is
not a Receivable as to which payments ahead of [__] or more scheduled payments
have been received from or on behalf of the related Obligor; (ix) is being
serviced by TMCC; (x) to the best knowledge of the Seller, is not due from any
Obligor who is presently the subject of a bankruptcy proceeding or is bankrupt
or insolvent; (xi) does not relate to a Financed Vehicle that has been
repossessed without reinstatement as of the Cutoff Date; and (xii) does not
relate to a Financed Vehicle as to which insurance has been force-placed
as of the Cutoff Date. TMCC does not originate retail installment sales
contracts in Hawaii, and retail installment sales contracts originated in
Texas or Puerto Rico will not be included in the Trust. No selection procedures
believed by the Seller to be adverse to Certificateholders will be used in
selecting the Receivables.
As noted above, the Receivables represent financing of new and used
automobiles and light duty trucks. Approximately [____] % and [____] % (based
on the Initial Pool Balance) of the Receivables represent financing of new
vehicles and used vehicles, respectively. As of the Cutoff Date, the average
Principal Balance of the Receivables was approximately $[_____________]. Based
on the addresses of the originating Dealers, the Receivables have been
originated in [__] states. Except in the case of any breach of representations
and warranties by the related Dealer, the Receivables generally do not provide
for recourse against the originating Dealer. Approximately [____] % and [____]
% of the Receivables (based on the Initial Pool Balance) constitute Precomputed
Receivables and Simple Interest Receivables, respectively.
By aggregate principal balance, approximately % of the Receivables
constitute Precomputed Receivables and approximately % of the receivables
constitute Simple Interest Receivables. See "The Receivables Pools" in the
Prospectus for a further description of the characteristics of Precomputed
Receivables and Simple Interest Receivables. In addition, by aggregate
principal balance, approximately % of the Receivables, constituting %
of the number of Receivables, as of the Cutoff Date, represent vehicles financed
at TMCC's new vehicles rates, which apply to new and certain previously owned
vehicles; the remainder represent vehicles financed at TMCC's used vehicles
rates. Approximately % of the aggregate principal balance of the
Receivables represent financing of vehicles manufactured or distributed by
Toyota Motor Corporation, the parent of TMS, or any of its affiliates.
S-20
<PAGE>
The composition, distribution by APR and geographic distribution of the
Receivables as of the Cutoff Date are as set forth in the following tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Total Cutoff Date Principal Balance $_________________
Number of Receivables $_________________
Average Cutoff Date Principal Balance $_________________
Average Original Amount Financed. $_________________
Range of Original Amount Financed $_________________ to
$_________________
Weighted Average APR(1) _________%
Range of APRs _________% to
_________%
Weighted Average Original Number of Scheduled Payments(1) ______
Range of Original Number of Scheduled Payments ______ to ______
Weighted Average Remaining Number of Scheduled Payments(1) ______
Range of Remaining Number of Scheduled Payments ______ to ______
</TABLE>
- -------------------
(1) Weighted by Principal Balance as of the Cutoff Date.
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE
TOTAL OF CUTOFF
NUMBER OF NUMBER OF CUTOFF DATE DATE
RANGE OF APRS RECEIVABLES RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
------------- ----------- ----------- ----------------- ------------
<S> <C> <C> <C> <C>
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
</TABLE>
- ----------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
S-21
<PAGE>
DISTRIBUTION OF THE INITIAL RECEIVABLES BY STATE (1)
<TABLE>
<CAPTION>
PERCENTAGE OF CUTOFF DATE PERCENTAGE OF
NUMBER OF NUMBER OF PRINCIPAL CUTOFF DATE
STATE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
------- ----------------- ------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Alabama...............
Alaska................
Arizona...............
Arkansas..............
California............
Colorado..............
Connecticut...........
Delaware..............
Florida...............
Georgia...............
Idaho.................
Illinois..............
Indiana...............
Iowa..................
Kansas................
Kentucky..............
Louisiana.............
Maine.................
Maryland..............
Massachusetts.........
Michigan..............
Minnesota.............
Mississippi...........
Missouri..............
Montana...............
Nebraska..............
Nevada................
New Hampshire.........
New Jersey............
New Mexico............
New York..............
North Carolina........
North Dakota..........
Ohio..................
Oklahoma..............
Oregon................
Pennsylvania..........
Rhode Island..........
South Carolina........
South Dakota..........
Tennessee.............
Utah..................
Vermont...............
Virginia..............
Washington............
West Virginia.........
Wisconsin.............
Wyoming...............
Total (2).........
</TABLE>
S-22
<PAGE>
(1) Based solely on the addresses of the originating Dealers.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning TMCC's experience with
respect to its portfolio of new and used automobile and light duty truck
retail installment sales contracts which it initially funded and is
servicing. The information set forth below does not include retail
installment sales contracts serviced by an independent finance company
conducting business in five southeastern states of the United States for the
years of ____, ____ and ____.
The data presented in the following tables are provided for illustrative
purposes only. There is no assurance that TMCC's delinquency, credit loss and
repossession experience with respect to automobile and light duty truck retail
installment sales contracts in the future, or the experience of the Trust with
respect to the Receivables, will be similar to that set forth below.
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT MARCH 31, -------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Outstanding at End of
Period................
Delinquencies as a
Percentage of Contracts
Outstanding
31-60 Days............
61-90 Days............
Over 90 Days..........
</TABLE>
S-23
<PAGE>
NET LOSS AND REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED AT OR FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Thousands)
Net Receivables
Outstanding.......
Average Net
Receivables
Outstanding.......
Number of Contracts
Outstanding.......
Average Number of
Contracts
Outstanding.......
Number of
Repossessions.....
Number of
Repossessions as a
Percentage of the
Contracts Outstanding
Number of
Repossessions as a
Percentage of the
Average Number of
Contracts Outstanding
Gross Charge-Offs
Recoveries........
Net Losses........
Net Losses as a
Percentage of Net
Receivables
Outstanding.......
Net Losses as a
Percentage of Average
Net Receivables
Outstanding.......
</TABLE>
S-24
<PAGE>
USE OF PROCEEDS
The Seller will use the net proceeds from the sale of the Certificates
(approximately $____________) to purchase the Receivables from TMCC pursuant to
the Receivables Purchase Agreement and to fund the Reserve Fund.
PREPAYMENT AND YIELD CONSIDERATIONS
Information regarding certain maturity and prepayment considerations with
respect to the Certificates is set forth under "Weighted Average Life of the
Securities" in the Prospectus and "Risk Factors--Prepayments on receivables may
cause prepayments on the certificates, resulting in reinvestment risk to you" in
this prospectus supplement. Because the rate of payment of principal of each
class of Certificates depends on the rate of payment (including prepayments and
liquidations due to default) of the principal balance of the Receivables, the
final payment in respect of the Certificates could occur significantly earlier
than the Final Scheduled Distribution Date. Certificateholders will bear the
risk of being able to reinvest principal payments on the Certificates at yields
at least equal to the yield on their respective Certificates. No prediction can
be made as to the rate of prepayments on the Receivables in either stable or
changing interest rate environments.
The Class C Certificates and, to a lesser extent, the Class B Certificates,
will provide limited protection against losses on the Receivables. Accordingly,
the yield on the Class C Certificates and, to a lesser extent, the Class B
Certificates, will be extremely sensitive to the loss experience of the
Receivables and the timing of any such losses. If the actual rate and amount of
losses experienced by the Receivables exceed the rate and amount of such losses
assumed by an investor, the yield to maturity on the Class C Certificates and/or
the Class B Certificates may be lower than anticipated.
[Although the Receivables have different APRs, each Receivable's APR
exceeds the sum of (i) the weighted average of the Class A Pass Through Rate,
the Class B Pass Through Rate and the Class C Pass Through Rate plus (ii) the
Servicing Fee Rate. Therefore, disproportionate rates of prepayments between
Receivables with higher and lower APRs should not affect the yield to
Certificateholders on the outstanding principal balance of a particular Class of
Certificates.]
POOL FACTORS AND TRADING INFORMATION
The "Pool Factor" for a particular class of Certificates will be a
seven-digit decimal indicating the Class A Certificate Balance, Class B
Certificate Balance and Class C Certificate Balance as of the close of business
on the Distribution Date in such month as a fraction of the Original Class A
Certificate Balance, Original Class B Certificate Balance or Original Class C
Certificate Balance, as the case may be. The Servicer will compute the Pool
Factor for each class of Certificates each month. Each Pool Factor will
initially be 1.0000000 and thereafter will decline to reflect reductions in each
Class Certificate Balance. Each Class Certificate Balance will be computed by
allocating payments in respect of the Receivables to principal and interest
using the actuarial method for the Precomputed Receivables and using the simple
interest method for the Simple Interest Receivables. The portion of the Class
Certificate Balance for a given month allocable to each Certificateholder of a
particular class of Certificates can be determined by multiplying the original
denomination of the holder's Certificate by the related Pool Factor for that
month.
Pursuant to the Agreement, the Certificateholders will receive monthly
reports concerning the payments received on the Receivables, the Pool Balance,
the related Pool Factor and various other items of information pertaining to the
Trust. Certificateholders during each calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See "Certain
S-25
<PAGE>
Information Regarding the Securities--Reports to Securityholders" in the
Prospectus.
DESCRIPTION OF THE CERTIFICATES
The following summary describes certain terms of the Certificates and the
Agreement. The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the
Certificates and the Agreement. The following summary supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Certificates of any given series and the related Agreement set
forth in the Prospectus, to which description reference is hereby made.
GENERAL
The Certificates will be issued pursuant to the terms of the Agreement, a
form of which has been filed as an exhibit to the Registration Statement. A
copy of the Agreement will be filed with the SEC and the [Luxembourg and Hong
Kong Stock Exchanges] following the issuance of the Securities. The
Certificates will evidence undivided ownership interests in the Trust created
pursuant to the Agreement. Each class of Certificates issued by the Trust will
represent an undivided ownership interest in the Trust equal to the class
percentage set forth on the front cover of this prospectus supplement. In
general, and subject to the prior rights of any senior classes of Certificates,
it is intended that Certificateholders of each class receive, on each
Distribution Date, the related Class Principal Distributable Amount plus
interest at the related Class Pass Through Rate on the related Class Principal
Balance.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyance of the Receivables from
the Seller to the Trust on the Closing Date pursuant to the Agreement is set
forth under "Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the Prospectus.
ACCOUNTS
In addition to the Accounts referred to under "Transfer and Servicing
Agreements--Accounts" in the Prospectus, the Servicer will also establish and
will maintain with the Trustee a Payahead Account in the name of the Trustee on
behalf of the Certificateholders.
SERVICING COMPENSATION
The Servicing Fee with respect to the calendar month immediately preceding
any Distribution Date (a "Collection Period") will be one-twelfth of 1.00% (the
"Servicing Fee Rate") of the Pool Balance as of the first day of such Collection
Period or, in the case of the first Distribution Date, the Initial Pool Balance.
The Servicing Fee, together with any previously unpaid Servicing Fee, will be
paid on each Distribution Date solely to the extent of Available Interest. The
Servicer will be entitled to collect and retain as additional servicing
compensation in respect of each Collection Period any late fees, extension fees
and any other administrative fees and expenses or similar charges collected
during such Collection Period, plus any interest or investment earnings earned
during such Collection Period from the investment of monies on deposit in the
Accounts. See "--Collections" below and "Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the Prospectus.
S-26
<PAGE>
COLLECTIONS
The Servicer generally may retain all payments on or in respect of the
Receivables received from Obligors and all proceeds of Receivables collected
during each Collection Period without segregation in its own accounts until
deposited in the Collection Account on the related Distribution Date. However,
if (i) TMCC ceases to be the Servicer, (ii) an Event of Default exists and is
continuing or (iii) the short-term unsecured debt of TMCC ceases to be rated at
least P-1 by Moody's and A-1 by S&P, and alternative arrangements acceptable to
the Rating Agencies are not made, the Servicer will deposit all such payments
and proceeds into the Collection Account not later than two Business Days after
receipt. Pending deposit into the Collection Account, the Servicer may invest
collections at its own risk and for its own benefit. Such amounts will not be
segregated from its own funds. The Servicer, at its own risk and for its own
benefit, may also instruct the Trustee to invest amounts held in the Collection
Account in Eligible Investments from the time deposited until the related
Distribution Date. The Seller or the Servicer, as the case may be, will remit
the aggregate Warranty Purchase Payments and Administrative Purchase Payments of
any Receivables to be purchased from the Trust into the Collection Account on or
before the Business Day immediately preceding the related Distribution Date.
See "Transfer and Servicing Agreements--Collections" in the Prospectus.
"Eligible Investments" will be specified in the Agreement and will be
limited to investments which meet the criteria of each Rating Agency from time
to time as being consistent with its then-current ratings of each class of the
Certificates.
Collections on or in respect of a Receivable made during a Collection
Period (including Warranty Purchase Payments and Administrative Purchase
Payments) which are not late fees, extension fees or certain other similar fees
or charges will be applied first to any outstanding Advances made by the
Servicer with respect to such Receivable, and then to the related Scheduled
Payment. Any collections on or in respect of a Receivable remaining after such
applications will be considered an "Excess Payment'. Excess Payments
constituting a prepayment in full of Precomputed Receivables and any Excess
Payments relating to Simple Interest Receivables will be applied as a prepayment
in respect of such Receivable (each, a "Prepayment"). All other Excess Payments
in respect of Precomputed Receivables will be held by the Servicer (or if any of
the conditions in clauses (i) through (iii) in the second preceding paragraph is
not satisfied, deposited in the Payahead Account), as a Payment Ahead. See
"Transfer and Servicing Agreements--Collections" in the Prospectus.
ADVANCES
The Servicer will be required to make Advances in respect of Scheduled
Payments that are not received in full by the end of the month in which they are
due, unless the Servicer determines, in its sole discretion, that such Advances
will not be recoverable from certain collections available to reimburse such
Advances. Under certain circumstances, if the Servicer determines that
reimbursement from such collections is unlikely, the Servicer will be entitled
to recover unreimbursed Advances from collections on or in respect of other
Receivables. See "Transfer and Servicing Agreements--Advances" in the
Prospectus.
The Servicer will make all Advances by depositing into the Collection
Account an amount equal to the aggregate of the Precomputed Advances and Simple
Interest Advances due in respect of a Collection Period on the Business Day
immediately preceding the related Distribution Date.
S-27
<PAGE>
NET DEPOSITS
As an administrative convenience, unless the Servicer is required to remit
collections daily (as described under "--Collections" above), the Servicer will
be permitted to make the deposit of collections, aggregate Advances and amounts
deposited in respect of purchases of Receivables by the Seller or the Servicer
for or with respect to the related Collection Period net of payments to be made
to the Servicer with respect to such Collection Period. The Servicer, however,
will account to the Trustee and to the Certificateholders as if all of the
foregoing deposits and payments were made individually. See "Transfer and
Servicing Agreements--Net Deposits" in the Prospectus.
OPTIONAL PURCHASE
The outstanding Certificates will be redeemed in whole, but not in part, on
any Distribution Date on which the Servicer or the Seller exercises its option
to purchase the Receivables. The Seller, the Servicer, or any successor to the
Servicer may purchase the Receivables when the Pool Balance shall have declined
to 10% or less of the Initial Pool Balance, as described in the Prospectus under
"Transfer and Servicing Agreements--Termination". The "Redemption Price" for
the outstanding Certificates will equal the Certificate Balance on the date of
such optional purchase plus accrued and unpaid interest thereon.
REMOVAL OF SERVICER
The Trustee or Holders of Certificates evidencing 51% of the voting
interests of Certificates (voting as a single class) may terminate the rights
and obligations of the Servicer under the Pooling and Servicing Agreement upon
the: (i) failure by the Servicer to deliver to the Trustee for payment to the
Certificateholders any required payment or to deliver the related Servicer's
Certificate, which failure continues unremedied for three Business Days after
discovery of the failure by an officer of the Servicer or receipt by the
Servicer of notice thereof from the Trustee or Holders of Certificates
evidencing not less than 25% of the aggregate principal amount of the Class A
Certificates and the Class B Certificates voting together as a single class (but
excluding for purposes of such calculation and action all Certificates held by
the Seller, the Servicer or any of their affiliates); (ii) failure by the
Servicer to observe or to perform in any material respect any other covenants or
agreements set forth in the Agreement, which failure materially and adversely
affects the rights of Certificateholders and is not remedied within 90 days of
written notice thereof to the Servicer; or (iii) certain events of insolvency or
bankruptcy of the Servicer occur. Under such circumstances, authority and power
shall, without further action, pass to and be vested in the Trustee or a
Successor Servicer appointed under the Agreement. Upon receipt of notice of the
occurrence of a Servicer default, the Trustee shall give notice thereof to the
Rating Agencies.
THE TRUSTEE
[_______________________] will be the Trustee under the Agreement. As a
matter of [New York] law, the Trust will be viewed as a separate legal entity,
distinct from the Trustee, and the Trust will be viewed as the issuer of the
Certificates. The Trustee and any of its affiliates may hold Certificates in
their own names or as pledgees. For the purpose of meeting the legal
requirements of certain jurisdictions, the Servicer and the Trustee acting
jointly (or in some instances, the Trustee acting alone) will have the power to
appoint co-trustees or separate trustees of all or any part of the Trust. In
the event of such an appointment, all rights, powers, duties and obligations
conferred or imposed upon the Trustee by the Agreement will be conferred or
imposed upon the Trustee and each such separate trustee or co-trustee jointly
or, in any jurisdiction in which the Trustee will be incompetent or unqualified
to perform certain acts, singly upon such separate trustee or co-trustee who
will exercise and perform such rights, powers, duties and obligations solely at
the direction of the Trustee.
S-28
<PAGE>
The Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor Trustee. The Servicer 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 Servicer will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by such successor
Trustee.
The Agreement will provide that the Servicer will pay the Trustee's fees
and expenses in connection with its duties under the Agreement. The Agreement
will further provide that the Trustee will be entitled to indemnification by the
Servicer for, and will be held harmless against, any loss, liability or expense
incurred by the Trustee not resulting from its own willful misfeasance, bad
faith or negligence (other than by reason of a breach of any of its
representations or warranties to be set forth in the Agreement).
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or sufficiency
of the Agreement, the Certificates (other than the execution and authentication
thereof) or of any Receivables or related documents. The Trustee will not be
accountable for the use or application by the Seller or the Servicer of any
funds paid to the Seller or the Servicer in respect of the Certificates or the
Receivables, or the investment of any monies by the Servicer before such monies
are deposited into the Collection Account or Payahead Account. The Trustee will
not independently verify the Receivables. If no Event of Default has occurred
and is continuing, the Trustee will be required to perform only those duties
specifically required of it under the Agreement. Generally, those duties will
be limited to the receipt of the various certificates, reports or other
instruments required to be furnished to the Trustee under the Agreement, in
which case it will only be required to examine them to determine whether they
conform to the requirements of the Agreement. The Trustee will not be charged
with knowledge of a failure by the Servicer to perform its duties under the
Agreement which failure constitutes an Event of Default unless the Trustee
obtains actual knowledge of such failure as will be specified in the Agreement.
The Trustee will be under no obligation to exercise any of the rights 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 Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby. No Certificateholder will have any
right under the Agreement to institute any proceeding with respect to the
Agreement, unless such holder previously has given to the Trustee written notice
of the occurrence of an Event of Default and (i) the Event of Default arises
from the Servicer's failure to remit payments when due or (ii) the holders of
Certificates evidencing not less than 25% of the voting interests of the Class A
Certificates, Class B Certificates and Class C Certificates, acting together as
a single class, have made written request upon the Trustee to institute such
proceeding in its own name as the Trustee thereunder and have offered to the
Trustee reasonable indemnity and the Trustee for 30 days has neglected or
refused to institute any such proceedings.
NOTICES
Certificateholders will be notified in writing by the Trustee of any Event
of Default or termination of, or appointment of a successor to, the Servicer
promptly upon a Responsible Officer (as defined in the Agreement) obtaining
actual knowledge thereof. Except with respect to the monthly and annual
statements to Certificateholders and Servicing Reports described herein, the
Trustee is not obligated under the Agreement to forward any other notices to the
Certificateholder. There are no provisions in the Agreement for the regular or
special meetings of Certificateholders.
S-29
<PAGE>
[For so long as the Class A Certificates are listed on the Luxembourg Stock
Exchange, notices to holders of the Class A Certificates 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. For so long as the Class A
Certificates are listed on The Stock Exchange of Hong Kong Limited, notices to
holders of the Class A Certificates will be given in a leading daily newspaper
of general circulation in the English language in Hong Kong. Such publication
is expected to be made in the SOUTH CHINA MORNING POST. In addition, if
Definitive Certificates are issued, such notices will be mailed to the addresses
of holders of Definitive Certificates at the addresses therefor as they appear
in the register maintained by the Trustee prior to such mailing. Such notices
will be deemed to have been given on the date of such publication or mailing.]
PRESCRIPTION
In the event that any Certificateholder shall not surrender its
Certificates for retirement within six months after the date specified in
written notice given by the Trustee of the date for final payment thereof, the
Trustee shall give a second written notice to the remaining Certificateholders
to surrender their Certificates for retirement and receive the final 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 this Agreement. Any funds remaining in the Trust after exhaustion of such
remedies shall be paid by the Trustee to a charity specified in the Agreement.
GOVERNING LAW
The Agreement and the Certificates are governed by and shall be construed
in accordance with the laws of the State of New York applicable to agreements
made in and to be performed wholly within such jurisdiction.
PAYMENTS TO CERTIFICATEHOLDERS
GENERAL. The trust will pay interest and principal on the certificates on
the fifteenth day of each month. If the fifteenth day of the month is not a
Business Day, payments on the certificates will be made on the next business
day. The date that any such payment is made is called a "Distribution Date."
The first distribution date is __________. A "Business Day" is any day except a
Saturday or Sunday, a day on which banks in New York or San Francisco are
closed; or [for payments on the Class A Certificates made in Luxembourg or Hong
Kong by a paying agent, a day on which banks in Luxembourg or Hong Kong are
closed.]
On the second Business Day preceding each Distribution Date (each, a
"Determination Date"), the Servicer will inform the Trustee of, among other
things, the amount of funds collected on or in respect of the Receivables, the
amount of Advances to be made by and reimbursed to the Servicer and the
Servicing Fee and other servicing compensation payable to the Servicer, in each
case with respect to the immediately preceding Collection Period. On or prior
to each Determination Date, the Servicer shall also determine the Class A
Distributable Amount, the Class B Distributable Amount, the Class C
Distributable Amount and, based on the available funds and other amounts
available for payment on the related Distribution Date as described below, the
amount to be paid to Certificateholders of each Class.
On or before each Distribution Date, the Trustee will cause Payments Ahead
previously deposited in the Payahead Account or held by the Servicer in respect
of the related Collection Period to be transferred to the Collection Account.
S-30
<PAGE>
The Trustee will make payments to the Certificateholders out of the amounts
on deposit in the Collection Account. The amount to be paid to the
Certificateholders will be determined in the manner described below.
CALCULATION OF AVAILABLE AMOUNTS. The amount of funds available for
payment on a Distribution Date (without taking account of amounts held in the
Reserve Fund) will generally equal the sum of Available Interest and Available
Principal. Generally, Available Interest and Available Principal on a
particular Distribution Date consist of that portion of the following amounts
allocable to interest and principal, respectively:
(i) all collections on or in respect of the Receivables other than
Defaulted Receivables (including Payments Ahead being applied in such
Collection Period but excluding Payments Ahead to be applied in one or more
future Collection Periods);
(ii) any Yield Maintenance Deposits;
(iii) all proceeds of the liquidation of Defaulted Receivables, net of
expenses incurred by the Servicer in accordance with its customary
servicing procedures in connection with such liquidation, including amounts
received in subsequent Collection Periods ("Net Liquidation Proceeds");
(iv) all Advances made by the Servicer; and
(v) all Warranty Purchase Payments with respect to Warranty Receivables
repurchased by the Seller and Administrative Purchase Payments with respect
to Administrative Receivables purchased by the Servicer, in each case in
respect of such Collection Period.
More specifically, "Available Interest" for a Distribution Date will equal
the sum of the amounts described in clauses (i) through (iv) above received or
allocated by the Servicer in respect of interest on or in respect of the
Receivables during the related Collection Period (which in the case of the
Precomputed Receivables shall be computed in accordance with the actuarial
method and in the case of the Simple Interest Receivables shall be calculated in
accordance with the simple interest method).
"Available Principal" for a Distribution Date will equal the sum of the
amounts described in clauses (i) through (iv) above received or allocated by the
Servicer in respect of principal on or in respect of the Receivables during the
related Collection Period (which in the case of the Precomputed Receivables
shall be computed in accordance with the actuarial method).
Available Interest and Available Principal on any Distribution Date will
exclude (i) amounts received on a particular Receivable (other than a Defaulted
Receivable) to the extent that the Servicer has previously made an unreimbursed
Advance in respect of such Receivable, (ii) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of unreimbursed Advances in
respect of such Receivable and (iii) recoveries from collections with respect to
Advances that the Servicer has determined are unlikely to be repaid.
A "Defaulted Receivable" will be a Receivable (other than an Administrative
Receivable or a Warranty Receivable) as to which (a) all or any part of a
Scheduled Payment is 150 or more days past due and the Servicer has not
repossessed the related Financed Vehicle or (b) the Servicer has, in accordance
with its customary servicing procedures, determined that eventual payment in
full is unlikely and has either repossessed and liquidated the related Financed
Vehicle or repossessed and held the related Financed Vehicle in its repossession
inventory for 90 days, whichever occurs first.
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CALCULATION OF DISTRIBUTABLE AMOUNTS. The "Class Distributable Amount" for
each class of Certificates with respect to a Distribution Date will equal the
sum of (i) the related Principal Distributable Amount (each such amount, the
"Class A Principal Distributable Amount", "Class B Principal Distributable
Amount" and "Class C Principal Distributable Amount"), and (ii) the related
Interest Distributable Amount (each such amount the "Class A Interest
Distributable Amount", "Class B Interest Distributable Amount" and "Class C
Interest Distributable Amount").
The "Principal Distributable Amount" for a particular class consists of the
Class A, Class B or Class C Percentage, as applicable, of the following items:
(a) in the case of Precomputed Receivables, the principal portion of all
Scheduled Payments due during the related Collection Period, computed in
accordance with the actuarial method, (b) in the case of Simple Interest
Receivables, the principal portion of all Scheduled Payments actually received
during the related Collection Period, (c) the principal portion of all
Prepayments on Simple Interest Receivables and prepayments in full of
Precomputed Receivables received during the related Collection Period (to the
extent such amounts are not included in clauses (a) and (b) above) and (d) the
Principal Balance of each Receivable that the Servicer became obligated to
purchase, the Seller became obligated to repurchase or that became a Defaulted
Receivable during the related Collection Period (to the extent such amounts are
not included in clauses (a), (b) and (c) above).
The "Interest Distributable Amount" for a particular class consists of one
month's interest at the related Pass Through Rate on the related Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to payments of principal made on such immediately preceding Distribution Date)
or, in the case of the first Distribution Date, the related Original Class
Certificate Balance (such amounts the "Class A Interest Distributable Amount",
"Class B Interest Distributable Amount" and "Class C Interest Distributable
Amount").
The "Class A Certificate Balance" will initially equal the Original Class A
Certificate Balance and, on any Distribution Date, will equal the Original Class
A Certificate Balance, reduced by all amounts allocable to principal and paid on
or prior to such Distribution Date on the Class A Certificates. In addition, on
each Distribution Date from and including the Distribution Date on which both
the Class B Certificate Balance and the Class C Certificate Balance have been
reduced to zero, the Class A Certificate Balance will be reduced by the amount,
if any, necessary to cause it to equal the Pool Balance as of the last day of
the related Collection Period after taking account of all payments, deposits and
withdrawals to be made on such Distribution Date.
The "Class B Certificate Balance" will initially equal the Original Class B
Certificate Balance and, on any Distribution Date, will equal the Original Class
B Certificate Balance, reduced by all amounts allocable to principal and paid on
or prior to such Distribution Date on the Class B Certificates. In addition, on
each Distribution Date from and including the Distribution Date on which the
Class C Certificate Balance is reduced to zero, the Class B Certificate Balance
will be reduced by the amount, if any, necessary to cause it to equal the
excess, if any, of the Pool Balance as of the last day of the related Collection
Period over the Class A Certificate Balance after taking account of all
payments, deposits and withdrawals to be made on such Distribution Date.
The "Class C Certificate Balance" will initially equal the Original Class C
Certificate Balance and, on any Distribution Date, will equal the amount by
which the Pool Balance on the last day of the related Collection Period exceeds
the sum of the Class A Certificate Balance and the Class B Certificate Balance
on such Distribution Date after giving effect to payments in respect of
principal to Class A Certificateholders and Class B Certificateholders and all
other deposits or withdrawals required to be made on such Distribution Date.
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The Certificate Balance of a class of Certificates will be reduced as a
result of shortfalls in collections available to be paid on a Distribution Date
in respect of interest on or principal of such class or any other class of
Certificates only if available amounts on deposit in the Reserve Fund are
insufficient to cover such shortfall. See "Subordination; Reserve Fund".
PAYMENTS OF INTEREST. On each Distribution Date, commencing _________, the
Certificateholders will be entitled to interest payments in an amount up to the
amount of interest that accrued on the Certificate Balance for the related
Interest Period at the Pass Through Rate. The Certificates will constitute
Fixed Rate Securities, as such term is defined under "Certain Information
Regarding the Securities--Fixed Rate Securities" in the Prospectus. Interest in
respect of a Distribution Date will accrue during the related Interest Period
and will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Interest payments due for any Distribution Date but not paid on
such Distribution Date will be due on the next Distribution Date increased by an
amount equal to interest on such amount at the Pass Through Rate (to the extent
lawful). Interest payments with respect to a class of Certificates will
generally be funded from the portion of Available Interest and funds available
in the Reserve Fund remaining after payment of the Servicing Fee and payment
of the Interest Distributable Amount for any senior class of Certificates.
See "Transfer and Servicing Agreements--Payments" and
"--Reserve Fund" in the Prospectus.
PAYMENTS OF PRINCIPAL. On each Distribution Date, commencing _____, each
class of Certificates will be entitled to principal payments in an amount
generally equal to the Principal Distributable Amount for such class. Principal
payments for a class of Certificates will generally be funded from the portion
of Available Principal remaining after payment of the Principal Distributable
Amount for any senior class of Certificates. Under certain circumstances,
amounts otherwise allocable to pay principal on a class of Certificates will be
applied to cover shortfalls in amounts available to make payments of interest on
a more senior class of Certificates.
PAYMENT OF DISTRIBUTABLE AMOUNTS. Prior to each Distribution Date, the
Servicer will calculate the amount to be paid to the Certificateholders. On
each Distribution Date, the Trustee will pay to Certificateholders the following
amounts in the following order of priority, to the extent of funds available for
payment on such Distribution Date:
(i) to the Servicer, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods, such
amounts to be paid from Available Interest;
(ii) to the Class A Certificateholders, an amount equal to the
Class A Interest Distributable Amount and any unpaid Class A Interest
Carryover Shortfall, such amount to be paid from Available Interest (after
giving effect to any reduction in Available Interest described in clause
(i) above); and if such Available Interest is insufficient, the Class A
Certificateholders will be entitled to receive such amount first, from the
Class C Percentage of Available Principal, second from the Class B
Percentage of Available Principal and third, if such amounts are
insufficient, from monies transferred from the Reserve Fund to the
Collection Account;
(iii) to the Class B Certificateholders, an amount equal to the
Class B Interest Distributable Amount and any unpaid Class B Interest
Carryover Shortfall, such amount to be paid from Available Interest (after
giving effect to any reduction in Available Interest described in clauses
(i) and (ii) above); and if such Available Interest is insufficient, the
Class B Certificateholders will be entitled to receive such amount first,
from the Class C Percentage of Available Principal (after giving effect to
any reduction in the Class C Percentage of Available
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Principal described in Clause (ii) above) and second, if such amounts are
insufficient, from monies transferred from the Reserve Fund to the
Collection Account;
(iv) to the Class C Certificateholders, an amount equal to the
Class C Interest Distributable Amount and any unpaid Class C Interest
Carryover Shortfall, such amount to be paid from Available Interest (after
giving effect to the reduction in Available Interest described in clauses
(i) through (iii) above); and if such Available Interest is insufficient,
the Class C Certificateholders will be entitled to receive such amount from
monies transferred from the Reserve Fund to the Collection Account;
(v) to the Class A Certificateholders, an amount equal to the
Class A Principal Distributable Amount and any unpaid Class A Principal
Carryover Shortfall, such amount to be paid from Available Principal (after
giving effect to any reduction in Available Principal described in clauses
(ii) and (iii) above); and if such Available Principal is insufficient, the
Class A Certificateholders will be entitled to receive such amount first,
from Available Interest (after giving effect to any reduction in Available
Interest described in clauses (i) through (iv) above) and second, if such
amounts are insufficient, from monies transferred from the Reserve Fund to
the Collection Account;
(vi) to the Class B Certificateholders, an amount equal to the
Class B Principal Distributable Amount and any unpaid Class B Principal
Carryover Shortfall, such amount to be paid from Available Principal (after
giving effect to any reduction in Available Principal described in clauses
(ii), (iii) and (v) above); and if such Available Principal is
insufficient, the Class B Certificateholders will be entitled to receive
such amount first, from Available Interest (after giving effect to any
reduction in Available Interest described in clauses (i) through (v) above)
and second, if such amounts are insufficient, from monies transferred from
the Reserve Fund to the Collection Account; and
(vii) to the Class C Certificateholders, an amount equal to the
Class C Principal Distributable Amount and any unpaid Class C Principal
Carryover Shortfall, such amount to be paid from Available Principal (after
giving effect to any reduction in Available Principal described in clauses
(ii), (iii), (v) and (vi) above); and if such Available Principal is
insufficient, the Class C Certificateholders will be entitled to receive
such amount first, from Available Interest (after giving effect to the
reductions in Available Interest described in clauses (i) through (vi)
above) and second, if such amounts are insufficient, from monies
transferred from the Reserve Fund to the Collection Account.
An "Interest Carryover Shortfall" with respect to any class of Certificates
on any Distribution Date will equal the excess, if any, of (x) the related
Interest Distributable Amount for such class on such Distribution Date and any
outstanding related Interest Carryover Shortfall for such class from the
immediately preceding Distribution Date plus interest on such outstanding
Interest Carryover Shortfall, to the extent permitted by law, at the related
Pass Through Rate from such immediately preceding Distribution Date through the
current Distribution Date, over (y) the amount of interest paid to the related
Certificateholders on such Distribution Date (each such shortfall, the "Class A
Interest Carryover Shortfall", "Class B Interest Carryover Shortfall" and "Class
C Interest Carryover Shortfall", as applicable).
A "Principal Carryover Shortfall" with respect to any class of Certificates
on any Distribution Date will equal the excess, if any, of (x) the related
Principal Distributable Amount for such class on such Distribution Date and any
outstanding Principal Carryover Shortfall for such class from the immediately
preceding Distribution Date over (y) the amount of principal actually paid to
the related Certificateholders on such Distribution Date (each such shortfall,
the "Class A Principal
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Carryover Shortfall", Class B Principal Carryover Shortfall" and "Class C
Interest Carryover Shortfall", as applicable).
Even if the Certificate Balance of any class of Certificates is reduced to
zero prior to the termination of the Trust and prior to the final payment in
respect of amounts payable on the Certificates of all classes, any Interest or
Principal Carryover Shortfalls with respect to such class will continue as
obligations of the Trust payable from amounts on deposit in the Collection
Account or Reserve Fund, including Excess Amounts, before any further deposit of
Excess Amounts into the Reserve Fund or release of amounts therein to the
Seller.
After the above payments have been made any remaining amounts (such
amounts, "Excess Amounts") will be deposited in the Reserve Fund until the
amount on deposit therein equals the Specified Reserve Fund Balance and the
remainder, if any, will be paid to the Seller.
SUBORDINATION; RESERVE FUND
SUBORDINATION. The rights of the Certificateholders to receive payments
with respect to the Receivables will be subordinated to the rights of the
Servicer to receive the Servicing Fee, any additional servicing compensation as
described under "Description of the Certificates--Servicing Compensation" and
the reimbursement of certain unreimbursed Advances.
In addition, the rights of the Class B Certificateholders and the Class C
Certificateholders to receive payments with respect to collections on the
Receivables will be subordinated to the rights of the Class A Certificateholders
to the extent described herein, and the rights of the Class C Certificateholders
to receive payments with respect to the Receivables will be subordinated to the
Class B Certificateholders to the extent described herein. This subordination
is intended to enhance the likelihood of timely receipt by the Class A
Certificateholders and, to a lesser extent, the Class B Certificateholders, of
the full amount of interest and principal required to be paid to them, and to
afford such Certificateholders limited protection against losses in respect of
the Receivables.
The Class B Certificateholders and Class C Certificateholders will not
receive any payments of interest with respect to a Distribution Date until the
full amount of interest on the Class A Certificates relating to such
Distribution Date has been paid to the Class A Certificateholders. In addition,
the Class B Certificateholders and Class C Certificateholders will not receive
any payments of principal with respect to such Distribution Date until the full
amount of interest on and principal of the Class A Certificates relating to such
Distribution Date has been paid to the Class A Certificateholders. Payments of
interest on the Class B Certificates and Class C Certificates, to the extent of
collections on Receivables allocable to interest and certain available amounts
on deposit in the Reserve Fund, will not be subordinated to the payment of
principal on the Class A Certificates.
The Class C Certificateholders will not receive any payments of interest
with respect to a Distribution Date until the full amount of interest on the
Class A Certificates and Class B Certificates relating to such Distribution Date
has been paid to the Class A Certificateholders and the Class B
Certificateholders, respectively. In addition, the Class C Certificateholders
will not receive any payments of principal with respect to such Distribution
Date until the full amount of interest on and principal of the Class A
Certificates and Class B Certificates relating to such Distribution Date has
been paid to the Class A Certificateholders and the Class B Certificateholders,
respectively. Payments of interest on the Class C Certificates, to the extent
of collections on Receivables allocable to interest and certain available
amounts on deposit in the Reserve Fund, will not be subordinated to the payment
of principal on the Class A Certificates or the Class B Certificates.
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RESERVE FUND. The Certificateholders will also have the benefit of the
Reserve Fund. The Reserve Fund will be a segregated trust account held by the
Trustee and will not be an asset of the Trust. Any amounts held on deposit in
the Reserve Fund are owned by the Seller and any investment earnings thereon
will be taxable to the Seller for federal income tax purposes. The Reserve Fund
will be created with an initial deposit by the Seller of an amount equal to
$___________ (the "Reserve Fund Initial Deposit"). If on any subsequent
Distribution Date the amount on deposit in the Reserve Fund is less than the
Specified Reserve Fund Balance, Excess Amounts will be deposited in the Reserve
Fund until the monies in the Reserve Fund reach an amount equal to the Specified
Reserve Fund Balance.
The "Specified Reserve Fund Balance" will initially be $______________.
However, on any Distribution Date the Specified Reserve Fund Balance will be an
amount equal to the greater of (a) $_____________ or (b) ____% of the sum of the
outstanding Certificate Balances of any outstanding classes of Certificates as
of the close of business on such Distribution Date if either of the following
tests is met:
(i) the average of the Charge-off Rates for the three preceding Collection
Periods exceeds ____%; or
(ii) the average of the Delinquency Percentages for the three preceding
Collection Periods exceeds ____%.
The Specified Reserve Fund Balance shall in no event be more than the sum
of the Certificate Balances of any outstanding classes of Certificates. As of
any Distribution Date, the amount of funds actually on deposit in the Reserve
Fund may, in certain circumstances, be less than the Specified Reserve Fund
Balance.
The "Charge-off Rate" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables that become Defaulted
Receivables during that Collection Period expressed, on an annualized basis, as
a percentage of the average of (i) the Pool Balance on the last day of the
immediately preceding Collection Period and (ii) the Pool Balance on the last
day of such Collection Period.
The "Aggregate Net Losses" with respect to a Collection Period will equal
the Principal Balance of all Receivables newly designated during such Collection
Period as Defaulted Receivables minus the sum of (x) Net Liquidation Proceeds
collected during such Collection Period with respect to all Defaulted
Receivables and (y) the portion of amounts subsequently received in respect of
Receivables liquidated in prior Collection Periods specified in the Agreement.
The "Delinquency Percentage" with respect to a Collection Period will equal
(a) the number of all outstanding Receivables 61 days or more delinquent (after
taking into account permitted extensions) as of the last day of such Collection
Period (excluding Receivables as to which the Financed Vehicle has been
liquidated during that Collection Period), determined in accordance with the
Servicer's normal practices, plus (b) the number of repossessed Financed
Vehicles that have not been liquidated (to the extent the related Receivable is
not otherwise reflected in clause (a) above), expressed as a percentage of the
aggregate number of Current Receivables on the last day of such Collection
Period.
A "Current Receivable" will be a Receivable that is not a Defaulted
Receivable or a Liquidated Receivable. A "Liquidated Receivable" will be a
Receivable that has been the subject of a Prepayment in full or otherwise has
been paid in full or, in the case of a Defaulted Receivable, a Receivable as to
which the Servicer has determined that the final amounts in respect thereof have
been paid.
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The Servicer may, from time to time after the date of this Prospectus
Supplement, request each Rating Agency to approve a formula for determining the
Specified Reserve Fund Balance that is different from those described above or
change the manner by which the Reserve Fund is funded. If each Rating Agency
delivers a letter to the Trustee to the effect that the use of any such new
formulation will not result in a qualification, reduction or withdrawal of its
then-current rating of any class of Certificates, then the Specified Reserve
Fund Balance will be determined in accordance with such new formula. The
Agreement will accordingly be amended, without the consent of any
Certificateholder, to reflect such new calculation.
As of the close of business on any Distribution Date on which the amount on
deposit in the Reserve Fund is greater than the Specified Reserve Fund Balance,
the Trustee will release and distribute such excess, together with any Excess
Amounts not required to be deposited into the Reserve Fund, to the Seller. Upon
any such release of amounts from the Reserve Fund, the Certificateholders will
have no further rights in, or claim to, such amounts.
Amounts held from time to time in the Reserve Fund will continue to be held
for the benefit of the Certificateholders. Funds on deposit in the Reserve Fund
may be invested in Eligible Investments. Investment income on monies on deposit
in the Reserve Fund will not be available for payment to Certificateholders or
otherwise subject to any claims or rights of the Certificateholders and will be
paid to the Seller. Any loss on such investments will be charged to the Reserve
Fund.
If on any Distribution Date the Class C Certificate Balance equals zero and
amounts on deposit in the Reserve Fund have been depleted as a result of losses
in respect of the Receivables, the protection afforded to the Class A
Certificateholders and the Class B Certificateholders by the subordination of
the Class C Certificates and by the Reserve Fund will be exhausted and the Class
B Certificateholders will bear directly the risks associated with ownership of
the Receivables. From and after such date, all such losses realized during a
Collection Period will be allocated first to the Class B Certificates, resulting
in the reduction of the Class B Certificate Balance, and second, if the Class B
Certificate Balance is reduced to zero thereby, to the Class A Certificates. If
on any Distribution Date the Class B Certificate Balance equals zero and amounts
on deposit in the Reserve Fund have been depleted as a result of losses in
respect of the Receivables, the protection afforded to the Class A
Certificateholders by the subordination of the Class B Certificates, the Class C
Certificates and by the Reserve Fund will be exhausted and the Class A
Certificateholders will bear directly the risks associated with ownership of the
Receivables. From and after such date, all such losses realized during a
Collection Period will be allocated to the Class A Certificates and such
allocation will result in the reduction of the Class A Certificate Balance on
the related Distribution Date.
ERISA CONSIDERATIONS
THE CLASS A CERTIFICATES
Subject to the considerations set forth below and under "ERISA
Considerations" in the Prospectus, the Class A Certificates may be purchased by
an employee benefit plan or an individual retirement account (a "Benefit Plan")
subject to ERISA or Section 4975 of the United States Internal Revenue Code of
1986, as amended (the "Code"). A fiduciary of a Benefit Plan must determine
that the purchase of a Class A Certificate is consistent with its fiduciary
duties under ERISA and does not result in a nonexempt prohibited transaction as
defined in Section 406 of ERISA or Section 4975 of the Code.
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The United States Department of Labor (the "DOL") has granted to
_____________________ and ________________________ administrative exemptions
(Prohibited Transaction Exemptions _____ and _____ (the "Exemptions")) from
certain of the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of certificates
representing interests in asset backed pass-through trusts that consist of
certain receivables, loans and other obligations that meet the conditions and
requirements of the Exemptions. The receivables covered by the Exemptions
include motor vehicle installment obligations such as the Receivables. The
Exemptions also apply to transactions in connection with the servicing,
management and operation of the Trust which might otherwise constitute
prohibited transactions.
Among the conditions that must be satisfied for either of the Exemptions to
apply to the acquisition by a Benefit Plan of the Class A Certificates are the
following:
(i) The acquisition of the Class A Certificates by a Benefit Plan
is on terms (including the price for the Class A Certificates) that are at
least as favorable to the Benefit Plan as they would be in an arm's-length
transaction with an unrelated party.
(ii) The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the Trust.
(iii) The Class A Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from Standard & Poor's, Moody's,
Duff & Phelps Inc. or Fitch Investors Service LP.
(iv) The Trustee is not an affiliate of any member of the
Restricted Group (as defined below).
(v) The sum of all payments made to and retained by the
Underwriters in connection with the payment of the Class A Certificates
represents not more than reasonable compensation for underwriting the Class
A Certificates. The sum of all payments made to and retained by the Seller
pursuant to the sale of the Receivables to the Trust represents not more
than the fair market value of such Receivables. The sum of all payments
made to and retained by the Servicer represents not more than reasonable
compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection
therewith.
(vi) The Benefit Plan investing in the Class A Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act.
The Trust must also meet the following requirements:
(a) The corpus of the Trust must consist solely of assets of the
type that have been included in other investment pools.
(b) Certificates in such other investment pools must have been
rated in one of the three highest generic rating categories of S&P,
Moody's, Duff & Phelps Inc. or Fitch Investors Service LP. for at least one
year prior to the Benefit Plan's acquisition of certificates.
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(c) Certificates evidencing interests in such other investment
pools must have been purchased by investors other than Benefit Plans for at
least one year prior to any Benefit Plan's acquisition of Class A
Certificates.
The Exemptions do not apply in all respects to Benefit Plans sponsored by
the Seller, the Underwriters, the Trustee, the Servicer, any Obligor with
respect to the Receivables included in the Trust constituting more than 5% of
the aggregate unamortized principal balance of the assets in the Trust or any
affiliate of such parties (the "Restricted Group"). As of the date hereof, no
Obligor with respect to the Receivables included in the Trust constitutes more
than 5% of the aggregate unamortized principal balance of the Trust (i.e., the
initial principal amount of the Certificates). Moreover, each Exemption
provides relief from certain self-dealing/conflict of interest prohibited
transactions only if, among other requirements, (i) in the case of the
acquisition of Class A Certificates in connection with the initial issuance, at
least 50% of each class of Certificates in which Benefit Plans have invested is
acquired by persons independent of the Restricted Group and at least 50% of the
aggregate interest in the Trust is acquired by persons independent of the
Restricted Group, (ii) a Benefit Plan's investment in the Class A Certificates
does not exceed 25% of all of the Class A Certificates outstanding at the time
of the acquisition and (iii) immediately after the acquisition, no more than 25%
of the assets of a Benefit Plan with respect to which a person has discretionary
authority or renders investment advice are invested in certificates representing
interests in trusts containing assets sold or serviced by the same entity.
The Seller believes that the Exemptions will apply to the acquisition,
holding and resale of the Class A Certificates by a Benefit Plan and that all
conditions of the Exemptions other than those within the control of investors
will be met. However, there can be no assurance that the DOL or the Internal
Revenue Service will not take a contrary position, nor that such position will
be sustained. One or more alternative exemptions may be available with respect
to certain prohibited transactions to which the Exemptions are not applicable,
depending in part upon the type of Benefit Plan's fiduciary making the decision
to acquire the Class A Certificates and the circumstances under which such
decision is made, including, but not limited to, (a) Prohibited Transactions
Class Exemption ("PTCE") 91-38, regarding investments by bank collective
investment funds or (b) PTCE 90-1, regarding investments by insurance company
pooled separate accounts. Before purchasing the Class A Certificates, a Benefit
Plan's fiduciary should consult with its counsel to determine whether the
conditions of the Exemption or any other exemption would be met. A purchaser of
the Class A Certificates should be aware, however, that even if the conditions
specified in one or more exemptions are met, the scope of the relief provided by
the applicable exemption or exemptions might not cover all acts that might be
construed as prohibited transactions.
As described above, the acquisition of a Class A Certificate by a Benefit
Plan could result in various unfavorable consequences for the Benefit Plan or
its fiduciaries under the regulations unless one of the exceptions in the
regulations or an exemption is available. See "ERISA Considerations" in the
Prospectus.
Prospective Benefit Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemptions
or any other exemptions, and the potential consequences of any purchase in their
specific circumstances, prior to making an investment in a Class A Certificate.
Any Benefit Plan which acquires a beneficial ownership interest in Class A
Certificates will be deemed, by virtue of the acceptance and acquisition of such
ownership interest, to have represented to the Seller and the Trustee that such
Benefit Plan is an "accredited investor" for purposes of Rule 501(a)(1) of
Regulation D under the Securities Act.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Code Section 4975. However, such a governmental plan may be subject to
federal, state or local law which is to a material extent similar to the
provisions of ERISA or Code Section 4975 ("Similar
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Law"). A fiduciary of a governmental plan should make its own determination as
to the need for and availability of any exemptive relief under Similar Law.
The Exemptions will not apply to the acquisition, holding or resale of the
Class B Certificates or Class C Certificates.
THE CLASS B CERTIFICATES AND CLASS C CERTIFICATES
Class B Certificates and Class C Certificates may not be acquired by an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title I of ERISA or Section 4975(e)(1) of the Code or any
person acting on behalf of such a plan or using the assets of such a plan to
acquire the Class B Certificates or Class C Certificates or any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity, except as provided below with respect to insurance company general
accounts. By its acceptance of a Class B Certificate or Class C Certificate,
each holder thereof will be deemed to have represented and warranted that it is
not subject to the foregoing limitation.
In 1995, the DOL issued PTCE 95-60. Section III of PTCE 95-60 exempts from
the application of the prohibited transaction provisions of Sections 406(a),
406(b) and 407(a) of ERISA and Section 4975 of the Code transactions in
connection with the servicing, management and operation of a trust (such as the
Trust) in which an insurance company general account has an interest as a result
of its acquisition of certificates issued by the trust, provided that certain
conditions are satisfied. If these conditions are met, insurance company
general accounts would be allowed to purchase classes of Certificates (such as
the Class B Certificates or Class C Certificates) which do not meet the
requirements of the Exemptions solely because they (i) are subordinated to other
classes of Certificates in the Trust and/or (ii) have not received a rating at
the time of the acquisition in one of the three generic highest rating
categories from Standard & Poor's, Moody's, Duff & Phelps, Inc. or Fitch
Investors Service LP. All other conditions of the Exemptions would have to be
satisfied in order for PTCE 95-60 to be available. Before purchasing Class B
Certificates or Class C Certificates, an insurance company general account
seeking to rely on Section III of PTCE 95-60 should itself confirm that all
applicable conditions and other requirements have been satisfied.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement relating
to the Certificates (the "Underwriting Agreement"), the Seller has agreed to
sell to each of the Underwriters named below, and each of the Underwriters has
severally agreed to purchase, the principal amount of Class A Certificates,
Class B Certificates and Class C Certificates set forth opposite its name below:
S-40
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
UNDERWRITER CERTIFICATES CERTIFICATES CERTIFICATES
----------------------- ---------------------- -------------------------
<S> <C> <C> <C>
----------------------- ---------------------- -------------------------
Total...............
----------------------- ---------------------- -------------------------
----------------------- ---------------------- -------------------------
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Certificates if
any of the Certificates are purchased. Such obligation of the Underwriters is
subject to certain conditions precedent set forth in the Underwriting Agreement.
The Seller has been advised by the Underwriters that they propose to offer the
Certificates of each class to the public at the respective public offering
prices set forth on the cover page of this Prospectus Supplement and to certain
dealers at such price less a concession not in excess of [_____]% of the Class A
Certificate denominations, [_____]% of the Class B Certificate denominations and
[_____]% of the Class C Certificate denominations and that the Underwriters may
allow and such dealers may reallow a discount not in excess of [_____]% of the
Class A Certificate denominations, [_____]% of the Class B Certificate
denominations and [_____]% of the Class C Certificate denominations to certain
other dealers. After the initial public offering, the public offering prices
and such concessions and discounts to dealers may be changed by the
Underwriters.
The Seller and TMCC have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
The Certificates are new issues of securities with no established trading
markets. The Seller has been advised by the Underwriters that the Underwriters
intend to make a market in the Certificates of each class, as permitted by
applicable laws and regulations. The Underwriters are not obligated, however,
to make a market in the Certificates of any class and 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 Certificates of any class.
The Trust may, from time to time, invest funds in the Accounts in Eligible
Investments acquired from the Underwriters.
The Underwriters have advised the Seller that, pursuant to Regulation M
under the Securities Act, certain persons participating in this offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Certificates of any class
at levels above those that might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of the Certificates of any
class on behalf of the Underwriters for the purpose of fixing or maintaining
the price of such Certificates. A "syndicate covering transaction" is the
bid for or the purchase of such Certificates of any class on behalf of the
Underwriters to reduce a short position incurred by the Underwriters in
connection with this offering. A "penalty bid" is an arrangement permitting
one of the Underwriters to
S-41
<PAGE>
reclaim the selling concession otherwise accruing to another Underwriter or
syndicate member in connection with this offering if the Certificates of any
class originally sold by such other Underwriter or syndicate member are
purchased by the reclaiming Underwriter in a syndicate covering transaction and
has therefore not been effectively placed by such other Underwriter or syndicate
member.
Stabilizing bids and syndicate covering transactions may have the effect of
causing the price of the Certificates of any class to be higher than it might be
in the absence thereof, and the imposition of penalty bids might also have an
effect on the price of any Certificate to the extent that it discouraged resale
of such Certificate. Neither the Seller 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 Seller 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.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Certificates and certain federal income tax and
other matters will be passed upon for the Trust by O'Melveny & Myers LLP.
S-42
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Aggregate Net Losses..........................................................38
Available Interest............................................................32
Available Principal...........................................................32
Benefit Plan..................................................................39
Charge-off Rate...............................................................37
Class A Interest Distributable Amount.........................................33
Class A Principal Distributable Amount........................................33
Class B Interest Distributable Amount.........................................33
Class B Principal Distributable Amount........................................33
Class C Certificate Balance...................................................34
Class C Interest Distributable Amount.........................................33
Class C Principal Distributable Amount........................................33
Class Distributable Amount....................................................33
Current Receivable............................................................38
Cutoff Date...................................................................20
Dealer Recourse...............................................................19
Defaulted Receivable..........................................................33
Delinquency Percentage........................................................38
DOL...........................................................................39
Excess Amounts................................................................36
Excess Payment................................................................28
Exemptions....................................................................39
Interest Carryover Shortfall..................................................36
Interest Distributable Amount.................................................33
Liquidated Receivable.........................................................38
Net Liquidation Proceeds......................................................32
Pool Factor...................................................................26
Prepayment....................................................................28
Principal Carryover Shortfall.................................................36
Principal Distributable Amount................................................33
Receivables Purchase Agreement................................................20
Restricted Group..............................................................40
Scheduled Payments............................................................20
Specified Reserve Fund Balance................................................37
Underwriting Agreement........................................................42
</TABLE>
S-43
<PAGE>
ANNEX A
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, Cedelbank 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 Cedelbank 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., three 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 Cedelbank or Euroclear and DTC Participants holding
securities will be effected on a delivery-against-payment basis through the
depositaries of Cedelbank 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, Cedelbank 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 Cedelbank 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.
<PAGE>
Trading between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDELBANK OR EUROCLEAR PARTICIPANTS. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedelbank Participant or a Euroclear Participant, the purchaser
will send instructions to Cedelbank or Euroclear through a Cedelbank Participant
or Euroclear Participant at least one business day prior to settlement.
Cedelbank or Euroclear will instruct the respective Depositary, as the case may
be, to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date, on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. Payment
will then be made by the respective Depositary to the DTC Participant's account
against delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Cedelbank
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 Cedelbank or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedelbank 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 Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank 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, Cedelbank 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
Cedelbank 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 Cedelbank 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 CEDELBANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Cedelbank 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 Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank or Euroclear
<PAGE>
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 Cedelbank Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedelbank 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 Cedelbank 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 (i.e., the trade fails), receipt of
the cash proceeds in the Cedelbank Participant's or Euroclear Participant's
account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank 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 through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank 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 Cedelbank 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 Cedelbank
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are Non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption
<PAGE>
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
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 tax advisors for specific tax advice
concerning their holding and disposing of Global Securities.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST, THE SELLER, THE SERVICER OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES OFFERED HEREBY, NOR AN OFFER OF THE SECURITIES IN ANY STATE OR
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary of Terms ........................................................ S-3
Risk Factors ............................................................ S-15
The Trust ............................................................... S-18
The Trustee ............................................................. S-18
The Seller and the Servicer ............................................. S-19
The Receivables Pool .................................................... S-19
Delinquencies, Repossessions and Net Losses ............................. S-23
Use of Proceeds ......................................................... S-25
Prepayment and Yield Considerations ..................................... S-25
Pool Factors and Trading Information .................................... S-25
Description of the Certificates ......................................... S-26
Payments to Certificateholders .......................................... S-30
Subordination; Reserve Fund ............................................. S-33
ERISA Considerations .................................................... S-36
Underwriting ............................................................ S-38
Legal Opinions .......................................................... S-40
Index of Terms .......................................................... S-41
ANNEX A: Global Clearance, Settlement and Tax
Documentation Procedures ................................................ A-1
PROSPECTUS
Summary of Terms ........................................................ 1
Risk Factors ............................................................ 7
The Trusts .............................................................. 12
The Trustee ............................................................. 12
The Seller .............................................................. 12
The Servicer ............................................................ 13
Where You Can Find More Information About Your Securities................ 16
The Receivables Pools ................................................... 17
Delinquencies, Repossessions and Net Losses ............................. 19
Weighted Average Life of the Securities ................................. 19
Pool Factors and Trading Information .................................... 20
Use of Proceeds ......................................................... 21
Description of the Notes ................................................ 21
Description of the Certificates ......................................... 25
Certain Information Regarding the Securities ............................ 26
Description of the Transfer and Servicing Agreements ................... 38
TMCC Demand Notes ....................................................... 49
The Swap Agreement ...................................................... 53
Certain Legal Aspects of the Receivables ................................ 56
Certain Federal Income Tax Consequences ................................. 62
ERISA Considerations .................................................... 74
Plan of Distribution .................................................... 75
Legal Opinions .......................................................... 76
Experts ................................................................. 76
Index of Terms .......................................................... 77
</TABLE>
UNTIL ___________, 1999, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE [NOTES OR]
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
TOYOTA AUTO RECEIVABLES
1999-A GRANTOR TRUST
$_______________ _____% ASSET
BACKED CERTIFICATES, CLASS A
$_____________ _____% ASSET
BACKED CERTIFICATES, CLASS B
$_____________ ____% ASSET
BACKED CERTIFICATES, CLASS C
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION SELLER
TOYOTA MOTOR CREDIT CORPORATION SERVICER
------------------
PROSPECTUS SUPPLEMENT
------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OR ISSUANCE AND DISTRIBUTION*
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . $ 695,000.
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . $ 15,000.
Printing Expenses. . . . . . . . . . . . . . . . . . . . . . . . $ 300,000.
Trustee Fees and Expenses. . . . . . . . . . . . . . . . . . . . $ 60,000.
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . . $ 350,000.
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . $ 200,000.
Rating Agencies' Fees. . . . . . . . . . . . . . . . . . . . . . $ 600,000.
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000.
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,250,000.
* All amounts except registration fee are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Toyota Motor Credit Corporation ("TMCC") and Toyota Motor Credit
Receivables Corporation ("TMCRC") 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 TMCRC's Bylaws authorize TMCC and TMCRC 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.
[Remainder of Page Intentionally Left Blank]
II-I
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
a. Exhibits:
<S> <C>
4.1 Form of Trust Agreement between the Registrant, the Servicer and the
Owner Trustee *
4.2 Form of Indenture between the Trust and the Indenture Trustee *
4.3 Form of Sale and Servicing Agreement among the Registrant, the Servicer
and the Owner Trustee *
4.4 Form of Pooling and Servicing Agreement among the Registrant, the
Servicer and the Trustee *
4.5 Form of Receivables Purchase Agreement between TMCC and the
Registrant *
4.6 Form of Administration Agreement among the Trust, the Administrator and
the Indenture Trustee *
4.7 Form of Demand Note Indenture between TMCC and the Demand Note
Indenture Trustee
4.8 Form of ISDA Master Agreement between TMCC and the Trust
5.1 (a) Opinion of O'Melveny and Myers L.L.P. regarding Notes
5.1 (b) Opinion of O'Melveny and Myers L.L.P. regarding Certificates
8.1 Opinion of O'Melveny and Myers L.L.P. with respect to tax matters
23.1 Consent of O'Melveny and Myers L.L.P. (included as part of Exhibits
5.1 (a) and (b))
23.2 Consent of O'Melveny and Myers L.L.P. (included as part of
Exhibit 8.1)
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney of Directors and Officers of the Registrant (included
on Pages II-5, II-6 and II-7) *
25.1 (a) Statement of Eligibility on Form T-1 of Trustee under the Indenture
25.1 (b) Statement of Eligibility on Form T-1 of Trustee under the Demand Note
Indenture
</TABLE>
- ----------------
* Previously filed with the initial Registration Statement on April 16, 1999.
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, 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, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this registration
statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement.
II-2
<PAGE>
PROVIDED, HOWEVER, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, 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.
(b) As to documents subsequently filed that are incorporated by reference: The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, as amended, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) As to indemnification: Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the registrant pursuant to the provisions
described under Item 15 above, 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 Securities Act of
1933, as amended, 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 such Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
(d) 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.
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-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Torrance, State of California, on June 4, 1999
TOYOTA AUTO RECEIVABLES TRUSTS
By: TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION,
as originator of Toyota Auto Receivables Trusts
By: /s/ Lloyd Mistele
-----------------------------------------------
Lloyd Mistele,
DIRECTOR AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ Lloyd Mistele Director and Principal Executive Officer June 4, 1999
- --------------------
Lloyd Mistele
/s/ Nobukazu Tsurumi * Director and Principal Financial Officer June 4, 1999
- -------------------- and Principal Accounting Officer
Nobukazu Tsurumi
/s/ Donald J. Puglisi * Director June 4, 1999
- --------------------
Donald J. Puglisi
* By: /s/ Gregory Willis June 4, 1999
------------------
Gregory Willis
ATTORNEY-IN-FACT
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-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Torrance, State of California, on June 4, 1999
TOYOTA MOTOR CREDIT CORPORATION,
solely as issuer of the TMCC Demand Notes
By: /s/ George E. Borst
-----------------------------------------------
George E. Borst
SENIOR VICE PRESIDENT AND
GENERAL MANAGER
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ George E. Borst Director, Senior Vice President and June 4, 1999
- -------------------- General Manager of TMCC
George E. Borst (principal executive officer)
/s/ Robert Pitts * Director and Secretary of TMCC June 4, 1999
- --------------------
Robert Pitts
/s/ Nobukazu Tsurumi * Director, Group Vice President and June 4, 1999
- -------------------- Treasurer of TMCC (principal financial
Nobukazu Tsurumi officer)
/s/ Douglas West * Director of TMCC June 4, 1999
- --------------------
Douglas West
/s/ Yale Gieszl * Director of TMCC June 4, 1999
- --------------------
Yale Gieszl
/s/ Gregory Willis * Vice President of Finance and June 4, 1999
- -------------------- Administration of TMCC (principal
Gregory Willis accounting officer)
* By: /s/ Gregory Willis
------------------
Gregory Willis
ATTORNEY-IN-FACT
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Torrance, State of California, on June 4, 1999
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION
By: /s/ Lloyd Mistele
-----------------------------------------------
Lloyd Mistele,
DIRECTOR AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ Lloyd Mistele Director and Principal Executive Officer June 4, 1999
- --------------------
Lloyd Mistele
/s/ Nobukazu Tsurumi * Director and Principal Financial Officer June 4, 1999
- -------------------- and Principal Accounting Officer
Nobukazu Tsurumi
/s/ Donald J. Puglisi * Director June 4, 1999
- --------------------
Donald J. Puglisi
* By: /s/ Gregory Willis
------------------
Gregory Willis
ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
4.1 Form of Trust Agreement between the Registrant, the Servicer and the
Owner Trustee *
4.2 Form of Indenture between the Trust and the Indenture Trustee *
4.3 Form of Sale and Servicing Agreement among the Registrant, the Servicer
and the Owner Trustee *
4.4 Form of Pooling and Servicing Agreement among the Registrant, the
Servicer and the Trustee *
4.5 Form of Receivables Purchase Agreement between TMCC and the
Registrant *
4.6 Form of Administration Agreement among the Trust, the Administrator and
the Indenture Trustee *
4.7 Form of Demand Note Indenture between TMCC and the Demand Note
Indenture Trustee
4.8 Form of ISDA Master Agreement between TMCC and the Trust
5.1 (a) Opinion of O'Melveny and Myers L.L.P. regarding Notes
5.1 (b) Opinion of O'Melveny and Myers L.L.P. regarding Certificates
8.1 Opinion of O'Melveny and Myers L.L.P. with respect to tax matters
23.1 Consent of O'Melveny and Myers L.L.P. (included as part of Exhibits
5.1 (a) and (b))
23.2 Consent of O'Melveny and Myers L.L.P. (included as part of
Exhibit 8.1)
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney of Directors and Officers of the Registrant (included
on Pages II-5, II-6 and II-7)
25.1 (a) Statement of Eligibility on Form T-1 of Trustee under the Indenture
25.1 (b) Statement of Eligibility on Form T-1 of Trustee under Demand Note
Indenture
</TABLE>
- ----------------
* Previously filed with the initial Registration Statement on April 16, 1999.
<PAGE>
TOYOTA MOTOR CREDIT CORPORATION
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
---------------
FORM OF
INDENTURE
dated as of _____ __, ____
$[----------]
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>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <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
i
<PAGE>
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
ii
<PAGE>
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
iii
<PAGE>
EXHIBITS
Annex I - Definitions........................................................................................I-1
Exhibit A - Form of Security.................................................................................A-1
Exhibit B - Form of Demand...................................................................................B-1
</TABLE>
v
<PAGE>
INDENTURE dated as of _____ __, ____, 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 or a Securityholder.
"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.
1
<PAGE>
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
2
<PAGE>
"Securities" 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 [_____]
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 [specify relevant Noteholders' or
Certificateholders' Account] in respect of the following amounts: (1) one
certificate representing amounts allocated as [specify relevant Interest
Distributable Amounts], [specify relevant Interest Carryover Shortfall Amounts],
(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 Outstanding Amount of the [specify relevant
Classes of Notes or Certificates] in a maximum aggregate principal amount equal
to $[__________]; 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 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.
3
<PAGE>
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.
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
4
<PAGE>
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 [Owner Trustee][Trustee] of the Toyota Auto Receivables
[Owner][Grantor] 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.
(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
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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.
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.
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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.
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
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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.
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.
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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 Class of [Notes][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
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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 O RAGENCY; 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
(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
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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.
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
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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 amount of the
outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
of money sufficient to pay:
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(A) all 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.
If the Company fails to pay the money it is required to pay the Trustee
pursuant to the preceding paragraph forthwith upon the demand of the Trustee,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the money so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
money adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities wherever
situated.
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If an Event of Default with respect to Securities occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Securities by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or such Securities or in aid of the exercise of any power granted
herein or therein, or to enforce any other proper remedy.
SECTION 6.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any overdue principal and/or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities, of the
principal 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 thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding.
SECTION 6.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or any of the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the
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Trustee shall be brought in its own name as trustee of an express trust,
and any recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security in respect of which such judgment has been recovered.
SECTION 6.06. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest,
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee 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;
(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
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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 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
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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
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.
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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.
(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.
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(e) Whether or not expressly so provided, every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b), (c)
and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Trustee reasonable
security or indemnity 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.
(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.
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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 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
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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.
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.
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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).
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.
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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;
(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.
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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
(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.
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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 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
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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 [Note][Certificate]
Owner with respect to the [Notes][Certificates] issued pursuant to the
[Indenture][Trust Agreement][Pooling and Servicing Agreement] or of the [Owner
Trustee or Indenture Trustee][Trustee] to (i) reflect changes necessary or
appropriate in 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.
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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 [Noteholders] [Certificateholders] of at least 25% in
aggregate principal amount of the [specify relevant class or classes of Notes or
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
[Noteholder][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;
(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;
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(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.
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.
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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 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;
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(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 meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
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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 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.
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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 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
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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.
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:
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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.
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);
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(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.
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,
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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 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.
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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 _____ ___, ____, 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 _____ ___, ____, 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 _____ __, ____
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 [relevant Indenture or Trust
Agreement or Pooling and Servicing Agreement] dated as of _____ __, ____, among
[the relevant parties]. In the event of any conflict between a definition set
forth both herein and in the Annex of 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 Toyota Auto Receivables Trust (and the
[Indenture Trustee][Owner Trustee][Trustee] on behalf of the 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.
"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
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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.
"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
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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 _____ __, ____ 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.
"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.
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<PAGE>
"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 Outstanding Amount of the relevant class or classes of
[Notes][Certificates], at ____% per annum; in each case for the number of days
in each Interest Period (as defined in the [specify relevant Indenture or Trust
Agreement or Pooling and Servicing 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. 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.
"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 [Note][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
[Outstanding Amount of the relevant class or classes of Notes or Certificates],
the Business Day preceding the [specify relevant Final Scheduled Distribution
Date], as applicable.
I-4
<PAGE>
"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.
<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 [OWNER TRUSTEE][INDENTURE TRUSTEE][TRUSTEE] OF THE TOYOTA AUTO
RECEIVABLES 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 [specify relevant Interest Distributable Amounts],
[specify relevant Interest Carryover Shortfalls]
For amounts allocated to make applications in reduction of the Outstanding
Amount of [specify relevant classes of Notes or Certificates]
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 Toyota Auto Receivables
[Owner Trustee][Indenture Trustee][Trustee] under the [specify relevant
Indenture or Trust Agreement or Pooling and Servicing Agreement] dated as of
_____ __, ____, or registered assigns, the principal sum of U.S. Dollars as
shall be set forth on the Schedule attached hereto as of the date of Maturity,
and to pay interest on the outstanding amount of principal, as set forth on the
Schedule from time to time, from the date such principal amount is originally
issued and outstanding to the Business Day next preceding the relevant
[Note][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
- ------------------------
(1) Insert for TMCC Demand Notes issued in
connection with the investment of amounts allocated in reduction of the
Outstanding Amount of [specify relevant Classes of Notes or Certificates].
A-1
<PAGE>
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 [specify relevant classes of Notes or Certificates(3) ]
the [Note][Certificate] Payment Date immediately following the related Date
of Investment(4), (y) 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 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.
- -----------------------
(2) Insert for TMCC Demand Notes issued in connection with the
investment of any [specify relevant Interest Distributable Amounts],
[specify relevant Interest Carryover Shortfall Amounts].
(3) Insert for TMCC Demand Notes issued in connection with the
investment of amounts allocated in reduction of the Outstanding Amount of
[specify relevant Classes of Notes or Certificates].
(4) Insert for TMCC Demand Notes issued in connection with the
investment of any [specify relevant Interest Distributable Amounts],
[specify relevant Interest Carryover Shortfall Amounts].
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _____ __, ____ TOYOTA MOTOR CREDIT CORPORATION
By:
--------------------------------------------
Name: 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 _________ ___, ____ (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: TreasuryDepartment.
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-4
<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-5
<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-6
<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-7
<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-8
<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 _____
__, ____ (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)
FORM OF
[LOGO]
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.
<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 each 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 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(i) 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)).
(c) 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 practical.
(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,
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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) of (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
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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
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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 then 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(e)(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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<PAGE>
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, authorization, 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, as 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 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 seat, (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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"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
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<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 effect from the date specified on the first page
of this document.
____________________________________ ____________________________________
(Name of Party) (Name of Party)
By: By:
_________________________________ __________________________________
Name: Name:
Title: Title:
Date: Date:
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<PAGE>
(MULTICURRENCY--CROSS BORDER)
ISDA-REGISTERED TRADEMARK-
INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.
SCHEDULE
TO THE
MASTER AGREEMENT
DATED AS OF_______________________________________________
BETWEEN ________________________________ AND __________________________________
("PARTY A") ("PARTY B")
PART 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:--
Section 5(a)(v), _________________________________________________________
Section 5(a)(vi), ________________________________________________________
Section 5(a)(vii), _______________________________________________________
Section 5(b)(iv), ________________________________________________________
AND IN RELATION TO PARTY B FOR THE PURPOSE OF:--
Section 5(a)(v), _________________________________________________________
Section 5(a)(vi), ________________________________________________________
Section 5(a)(vii), _______________________________________________________
Section 5(b)(iv), ________________________________________________________
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
of this Agreement unless another meaning is specified here _______________
__________________________________________________________________________
__________________________________________________________________________
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi)
will/will not * apply to Party A
will/will not * apply to Party B
If such provisions apply:--
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14
of this Agreement unless another meaning is specified here _______________
__________________________________________________________________________
_______________
* Delete as applicable.
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"THRESHOLD AMOUNT" means ________________________________________________
_________________________________________________________________________
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will/will not * apply to Party A
will/will not * apply to Party B
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will/will not * apply to Party A
will/will not * apply to Party B
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:--
(i) Market Quotation/Loss * will apply.
(ii) The First Method/The Second Method * will apply.
(g) "TERMINATION CURRENCY" means_____________________, if such currency is
specified and freely available, and otherwise United States Dollars.
(h) ADDITIONAL TERMINATION EVENT will/will not apply*. The following shall
constitute an Additional Termination Event:-- ___________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
For the purpose of the foregoing Termination Event, the Affected Party
or Affected Parties shall be:-- _________________________________________
_________________________________________________________________________
PART 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A will/will not* make the following representation and
Party B will/will not* make 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
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 REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below,
if any:
(i) The following representations will/will not* apply to Party A and
will/will not* apply to Party B:--
It is fully eligible for the benefits of the "Business Profits" or
"Industrial and Commercial Profits" provision, as the case may be, the
"Interest" provision or the "Other Income" provision (if any) of the
Specified Treaty with respect to any payment described in such provisions
and received or to be received
_______________
* Delete as applicable.
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<PAGE>
by it in connection with this Agreement and no such payment is
attributable to a trade or business carried on by it through a permanent
establishment in the Specified Jurisdiction.
If such representation applies, then:--
"SPECIFIED TREATY" means with respect to Party A ______________________________
"SPECIFIED JURISDICTION" means with respect to Party A ________________________
"SPECIFIED TREATY" means with respect to Party B ______________________________
"SPECIFIED JURISDICTION" means with respect to Party B ________________________
(ii) The following representation will/will not* apply to Party A
and will/will not* apply to Party B:--
Each payment received or to be received by it in connection with
this Agreement will be effectively connected with its conduct of a trade
or business in the Specified Jurisdiction.
If such representation applies, then:--
"SPECIFIED JURISDICTION" means with respect to Party A ________________________
"SPECIFIED JURISDICTION" means with respect to Party B ________________________
(iii) The following representations will/will not* apply to Party
A and will/will not* apply to Party B:--
(A) It is entering into each Transaction in the ordinary course of
its trade as, and is, either (1) a recognised U.K. bank or (2) a
recognised U.K. swaps dealer (in either case (1) or (2), for purposes of
the United Kingdom Inland Revenue extra statutory concession C17 on
interest and currency swaps dated March 14, 1989), and (B) it will bring
into account payments made and received in respect of each Transaction in
computing its income for United Kingdom tax purposes.
(iv) Other Payee Representations:-- _____________________________________
__________________________________________________________________________
__________________________________________________________________________
N.B. The above representations may need modification if either party
is a Multibranch Party.
_______________
* Delete as applicable.
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PART 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Sections 4(a)(i) and (ii) 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 Form/Document/ Date by which
deliver document Certificate to be delivered
___________________ __________________________ __________________________
___________________ __________________________ __________________________
___________________ __________________________ __________________________
___________________ __________________________ __________________________
___________________ __________________________ __________________________
(b) Other documents to be delivered are:--
Party required to Form/Document/ Date by which Covered by
deliver document Certificate to be delivered Section 3(d)
Representation
Yes/No*
___________________ ________________________ _________________
Yes/No*
___________________ ________________________ _________________
Yes/No*
___________________ ________________________ _________________
Yes/No*
___________________ ________________________ _________________
Yes/No*
___________________ ________________________ _________________
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: ______________________________________________________________
Attention: ______________________________________________________________
Telex No.: ______________________________ Answerback: _________________
Facsimile No.: __________________________ Telephone No.: ______________
Electronic Messaging System Details: _____________________________________
Address for notices or communications to Party B:--
Address: ______________________________________________________________
Attention: ______________________________________________________________
Telex No.: ______________________________ Answerback: _________________
_______________
* Delete as applicable.
22
<PAGE>
Facsimile No.: __________________________ Telephone No.: ______________
Electronic Messaging System Details: _____________________________________
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:--
Party A appoints as its Process Agent ____________________________________
Party B appoints as its Process Agent ____________________________________
(c) OFFICES. The provisions of Section 10(a) will/will not* apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:--
Party A is/is not* a Multibranch Party and, if so, may act through the
following Offices:--
___________________ __________________________ _________________________
___________________ __________________________ _________________________
Party B is/is not* a Multibranch Party and, if so, may act through the
following Offices:--
___________________ __________________________ _________________________
___________________ __________________________ _________________________
(e) CALCULATION AGENT. The Calculation Agent is _____________________ unless
otherwise specified in a Confirmation in relation to the relevant
Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:-- ______
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A __________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Credit Support Provider means in relation to Party B _____________________
__________________________________________________________________________
__________________________________________________________________________
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with English law/the laws of the State of New York (without
reference to choice of law doctrine)*.
_______________
* Delete as applicable.
23
<PAGE>
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to the following Transactions or groups of
Transactions (in each case starting from the date of this Agreement/in
each case starting from _______________________ *)________________________
__________________________________________________________________________
__________________________________________________________________________
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement unless another meaning is specified here _______________________
__________________________________________________________________________
PART 5. OTHER PROVISIONS.
_______________
* Delete as applicable.
24
<PAGE>
Exhibit 5.1(a)
to the Registration Statement
June 8, 1999
Toyota Motor Credit Receivables Corporation
Toyota Motor Credit Corporation
Toyota Auto Receivables 1999-A Owner Trust
19001 South Western Avenue
P.O. Box 2958
Torrance, California 90509
Re: Toyota Motor Credit Receivables Corporation
Toyota Motor Credit Corporation
Toyota Auto Receivables Trusts
Registration Statement on Form S-3
Registration No. 333-76505
Ladies and Gentlemen:
We have acted as special counsel to Toyota Motor Credit Receivables
Corporation ("TMCRC"), a California corporation and a wholly owned limited
purpose subsidiary of Toyota Motor Credit Corporation ("TMCC"), a California
corporation and certain trusts, all of the beneficial ownership of which will
initially be owned by TMCRC (together with TMCRC, each an "Issuer"), in
connection with the proposed issuance of $2,500,000,000 aggregate principal
amount of asset-backed notes (the "Notes") to be offered pursuant to a
registration statement on Form S-3 (such registration statement as amended, the
"Registration Statement") relating to the Notes. 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. The Notes will be issued under and pursuant to the indenture for
each series, each between the applicable Issuer and the Indenture Trustee (as
defined therein). The indenture in the form filed with the Securities and
Exchange Commission on April 16, 1999, as an exhibit to the Registration
Statement, is herein referred to as the "Indenture".
We have examined originals or copies, certified or otherwise identified to
our satisfaction of the organizational documents of the Issuers', the form of
Indenture included as an exhibit to the Registration Statement, the form of
Notes included in the Registration Statement, and such other records, documents
and certificates of the Issuers and public officials and other instruments as we
have deemed necessary for the purpose of this opinion. In addition, we have
assumed that the Indenture as completed for each series will be duly executed
and delivered by the parties thereto; that the Notes as completed for each
series will be duly executed and delivered substantially in the forms
contemplated by the Indenture; and the Notes for each series will be sold as
described in the Registration Statement.
Based upon the foregoing, we are of the opinion that:
<PAGE>
The Notes are in due and proper form and, assuming the due authorization,
execution and delivery of the Indenture, as applicable by the applicable Issuer
and the Indenture Trustee, and the due authorization of the Notes for each
series by all necessary action on the part of the applicable Issuer, when the
Notes for each series have been validly executed, authenticated and issued in
accordance with the applicable Indenture and delivered against payment therefor,
the Notes for each series will be valid and binding obligations of the
applicable Issuer, enforceable against the applicable Issuer in accordance with
their 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.
The opinions expressed above are limited to the federal laws of the
United States of America and the laws of the State of New York (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 Opinions"
in the Prospectus and the Prospectus Supplement, 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 5.1(b)
to the Registration Statement
June 8, 1999
Toyota Motor Credit Receivables Corporation
Toyota Motor Credit Corporation
Toyota Auto Receivables 1999-A Owner Trust
19001 South Western Avenue
P.O. Box 2958
Torrance, California 90509
Re: Toyota Motor Credit Receivables Corporation
Toyota Motor Credit Corporation
Toyota Auto Receivables Trusts
Registration Statement on Form S-3
Registration No. 333-76505
Ladies and Gentlemen:
We have acted as special counsel to Toyota Motor Credit Receivables
Corporation ("TMCRC"), a California corporation and a wholly owned limited
purpose subsidiary of Toyota Motor Credit Corporation ("TMCC"), a California
corporation and certain trusts, all of the beneficial ownership of which will
initially be owned by TMCRC (together with TMCRC, each an "Issuer"), in
connection with the proposed issuance of $2,500,000,000 aggregate principal
amount of certificates (the "Certificates") to be offered pursuant to a
registration statement on Form S-3 (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. The Certificates will be issued under and
pursuant to a pooling and servicing agreement or sale and servicing agreement
for each series, each between the applicable Issuer, the administrator (as
defined therein, the "Administrator") and the trustee (as defined therein, the
"Trustee"). The pooling and servicing agreement in the form filed with the
Securities and Exchange Commission on April 16, 1999, as an exhibit to the
Registration Statement, is herein referred to as the "Pooling and Servicing
Agreement". The sale and servicing agreement in the form filed with the
Securities and Exchange Commission on April 16, 1999, as an exhibit to the
Registration Statement, is herein referred to as the "Sale and Servicing
Agreement".
We have examined originals or copies, certified or otherwise identified to
our satisfaction of the organizational documents of the Issuers', the form of
Pooling and Servicing Agreement included as an exhibit to the Registration
Statement, the form of Sale and Servicing Agreement included as an exhibit to
the Registration Statement, the form of Certificates included in the
Registration Statement, and such other records, documents and certificates of
the Issuers and public officials and other instruments as we have deemed
necessary for the purpose of this opinion. In addition, we have assumed that
each of the Pooling and Servicing Agreement and
<PAGE>
the Sale and Servicing Agreement, as applicable, as completed for each series
will be duly executed and delivered by each of the respective parties thereto;
that the Certificates as completed for each series will be duly executed and
delivered substantially in the forms contemplated by the Pooling and Servicing
Agreement and the Sale and Servicing Agreement, as applicable; and the
Certificates for each series will be sold as described in the Registration
Statement.
Based upon the foregoing, we are of the opinion that:
The Certificates are in due and proper form and, assuming the due
authorization, execution and delivery of the Pooling and Servicing Agreement and
Sale and Servicing Agreement, as applicable by the applicable Issuer,
Administrator and the Trustee, and the due authorization of the Certificates for
each series by all necessary action on the part of the applicable Issuer, when
the Certificates for each series have been validly executed, authenticated and
issued in accordance with the Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable and delivered against payment therefor, the
Certificates for each series will be validly issued and outstanding, fully paid
and nonassesable, and entitled to the benefits of the Pooling and Servicing
Agreement or Sale and Servicing Agreement, as applicable, 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.
The opinions expressed above are limited to the federal laws of the
United States of America and the laws of the State of New York (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 Opinions"
in the Prospectus and the Prospectus Supplement, 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
to the Registration Statement
June 8, 1999
Toyota Motor Credit Receivables Corporation
Toyota Motor Credit Corporation
Toyota Auto Receivables 1999-A Owner Trust
19001 South Western Avenue
P.O. Box 2958
Torrance, California 90509
Re: Toyota Motor Credit Receivables Corporation
Toyota Motor Credit Corporation
Toyota Auto Receivables Trusts
Registration Statement on Form S-3
Registration No. 333-76505
Ladies and Gentlemen:
We have acted as special counsel to Toyota Motor Credit Receivables
Corporation ("TMCRC"), a California corporation and a wholly owned limited
purpose subsidiary of Toyota Motor Credit Corporation ("TMCC"), a California
corporation and certain trusts, all of the beneficial ownership of which will
initially be owned by TMCRC (together with TMCRC, each an "Issuer"), in
connection with the proposed issuance of $2,500,000,000 aggregate principal
amount of asset-backed notes (the "Notes") and/or asset-backed certificates (the
"Certificates") to be offered pursuant to a registration statement on Form S-3
(such registration statement as amended, the "Registration Statement") relating
to the Notes and 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.
The Notes will be issued under and pursuant to the indenture for each series,
each between the applicable Issuer and the Indenture Trustee (as defined
therein). The indenture in the form filed with the Securities and Exchange
Commission on April 16, 1999, as an exhibit to the Registration Statement, is
herein referred to as the "Indenture". The Certificates will be issued under
and pursuant to a pooling and servicing agreement or sale and servicing
agreement for each series, each between the applicable Issuer, the administrator
(as defined therein, the "Administrator") and the trustee (as defined therein,
the "Trustee"). The pooling and servicing agreement in the form filed with the
Securities and Exchange Commission on April 16, 1999, as an exhibit to the
Registration Statement, is herein referred to as the "Pooling and Servicing
Agreement". The sale and servicing agreement in the form filed with the
Securities and Exchange Commission on April 16, 1999, as an exhibit to the
Registration Statement, is herein referred to as the "Sale and Servicing
Agreement".
In connection with this opinion letter, we have examined originals or
copies, certified or otherwise identified to our satisfaction of the
organizational documents of the Issuers', the form of Indenture included as an
exhibit to the Registration Statement, the form of Pooling and
<PAGE>
Page 2
Servicing Agreement included as an exhibit to the Registration Statement, the
form of Sale and Servicing Agreement included as an exhibit to the Registration
Statement, the form of Certificates included in the Registration Statement, and
such other records, documents and certificates of the Issuers and public
officials and other instruments as we have deemed necessary for the purpose of
this opinion. In addition, we have assumed that each of the Indenture, Pooling
and Servicing Agreement and the Sale and Servicing Agreement, as applicable, as
completed for each series will be duly executed and delivered by each of the
respective parties thereto; that the Notes and Certificates as completed for
each series, as applicable, will be duly executed and delivered substantially in
the forms contemplated by the Indenture or Pooling and Servicing Agreement or
the Sale and Servicing Agreement, as applicable; and the Notes and Certificates
for each series will be sold as 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 TMCRC and the Trust, we have advised TMCRC and
the Trust with respect to certain federal income tax aspects of the proposed
issuance of the Notes and 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 Notes
and Certificates that appears under the heading "Certain 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
Notes and 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 "Certain 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>
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 30, 1998 appearing on page 29 of the Toyota Motor Credit
Corporation's Annual Report on Form 10-K for the year ended September 30,
1998. We also consent to the references to us under the heading "Experts" in
such Prospectus.
PricewaterhouseCoopers LLP
Los Angeles, California
June 9, 1999
<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)
<TABLE>
<S> <C> <C>
111 EAST WACKER DRIVE, SUITE 3000
CHICAGO, ILLINOIS 60601 47-0417860
(Address of principal executive offices) (Zip Code) I.R.S. Employer Identification No.
</TABLE>
Steven E. Charles
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Telephone (312) 228-9418
(Name, address and telephone number of agent for service)
TOYOTA AUTO RECEIVABLES TRUSTS
(ISSUER WITH RESPECT TO THE SECURITIES)
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<C> <C>
CALIFORNIA 33-036836
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
19001 SOUTH WESTERN AVENUE
TORRANCE, CA 90509
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
ASSET BACKED SECURITIES
(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 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 to Item 16
of Form T-1, Registration No. 333-30939*.
2. A copy of the certificate of authority of the Trustee to commence
business, incorporated herein by reference to Exhibit 2 to Item
16 of Form T-1, Registration No. 333-30939.*
3. A copy of the certificate of authority of the Trustee to exercise
corporate trust powers, incorporated herein by reference to
Exhibit 3 to Item 16 of Form T-1, Registration No. 333-30939.*
4. A copy of the existing bylaws of the Trustee, as now in effect,
incorporated herein by reference to Exhibit 4 to Item 16 of Form
T-1, Registration No. 333-30939*.
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. 333-30939.*
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, filed herewith.
8. Not applicable.
9. Not applicable.
*See * at top of page 3.
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 TRUST 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 7th day of
June, 1999.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Steven E. Charles
--------------------------------------
Steven E. Charles
Vice President and Assistant Secretary
3
<PAGE>
U.S. Bank National Association Call Date: 03/31/1999 ST-BK: 27-4037 FFIEC 031
601 Second Avenue South Page RC-1
Minneapolis, MN 55402 Vendor ID: D CERT: 05134 11
Transit Number: 09100002
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for March 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
C400 -
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1)--------------------------------- 0081 ... 3,942,759 1.a
b. Interest-bearing balances (2) --------------------------------------------------------- 0071 ... 4,943 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)----------------------------- 1754 ... 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)--------------------------- 1773 ... 5,314,559 2.b
3. Federal funds sold and securities purchased under agreements to resell-------------------- 1350 ... 370,296 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCFD
----
(from Schedule RC-C----------------------------- 2122 ... 57,331,504 .......... 4.a
b. LESS: Allowance for loan and lease losses------- 3123 ... 908,715 .......... 4.b
c. LESS: Allocated transfer risk reserve----------- 3128 ... 0 .......... 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)------------------------------------ 2125 ...56,422,789 4.d
5. Trading assets (from Schedule RC-D)------------------------------------------------------- 3545 ... 35,476 5.
6. Premises and fixed assets (including capitalized leases)---------------------------------- 2145 ... 523,403 6.
7. Other real estate owned (from Schedule RC-M)---------------------------------------------- 2150 ... 12,307 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)---------------------------------------------------------------------------- 2130 ... 607,289 8.
9. Customers' liability to this bank on acceptances outstanding------------------------------ 2155 ... 151,523 9.
10. Intangible assets (from Schedule RC-M)---------------------------------------------------- 2143 ... 1,372,912 10.
11. Other assets (from Schedule RC-F)--------------------------------------------------------- 2160 ... 1,022,769 11.
12. Total assets (sum of items 1 through 11)-------------------------------------------------- 2170 ...69,781,025 12.
</TABLE>
- --------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
U.S. Bank National Association Call Date: 03/31/1999 ST-BK: 27-4037 FFIEC 031
601 Second Avenue South Page RC-2
Minneapolis, MN 55402 Vendor ID: D CERT: 05134 12
Transit Number: 09100002
Schedule RC - Continued
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
----
columns A and C from Schedule RC-E, part 1)-------------------------------------------- 2200 ...47,663,334 13.a
RCON
----
(1) Noninterest-bearing (1) -------------------- 6631 ... 12,125,661 .......... 13.a.1
(2) Interest-bearing --------------------------- 6636 ... 35,537,673 .......... 13.a.2
RCFN
----
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II) --------------------------------------------------------------- 2200 ... 722,006 13.b
RCFN
----
(1) Noninterest-bearing ------------------------ 6631 ... 0 .......... 13.b.1
(2) Interest-bearing --------------------------- 6636 ... 722,006 .......... 13.b.2
RCFD
----
14. Federal funds purchased and securities sold under agreements to repurchase---------------- 2800 ... 2,878,456 14.
RCON
----
15. a. Demand notes issued to the U.S. Treasury----------------------------------------------- 2840 ... 413,496 15.a
b. Trading liabilities (from Schedule RC-D)----------------------------------------------- 3548 ... 28,855 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized (leases):
a. With a remaining maturity of one year or less------------------------------------------ 2332 ... 2,523,298 16.a
b. With a remaining maturity of more than one year through three years-------------------- A547 ... 3,002,461 16.b
c. With a remaining maturity of more than three years------------------------------------- A548 ... 2,797,592 16.c
17. No applicable.
18. Bank's liability on acceptances executed and outstanding---------------------------------- 2920 ... 151,523 18.
19. Subordinated notes and debentures (2)----------------------------------------------------- 3200 ... 2,427,450 19.
20. Other liabilities (from Schedule RC-G)---------------------------------------------------- 2930 ... 983,961 20.
21. Total liabilities (sum of items 13 through 20)-------------------------------------------- 2948 ...63,592,432 21.
22. Not applicable.
EQUITY CAPITAL
RCFD
----
23. Perpetual preferred stock and related surplus--------------------------------------------- 3838 ... 0 23.
24. Common stock------------------------------------------------------------------------------ 3230 ... 310,004 24.
25. Surplus (exclude all surplus related to preferred stock)---------------------------------- 3839 ... 2,857,896 25.
26. a. Undivided profits and capital reserves------------------------------------------------- 3632 ... 2,975,597 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities----------------- 8434 ... 45,096 26.b
c. Accumulated net gains (losses) on cash flow hedges------------------------------------- 4336 ... 0 26.c
27. Cumulative foreign currency translation adjustments--------------------------------------- 3284 ... 0 27.
28. Total equity capital (sum of items 23 through 27)----------------------------------------- 3210 ... 6,188,593 28.
29. Total liabilities and equity capital (sum of items 21 and 28)----------------------------- 3300 ...69,781,025 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes RCFD Number
the most comprehensive level of auditing work performed for the bank by independent ---- ------
external auditors as of any date during 1998---------------------------------------------- 6724 ... 2 M.I
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ---------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<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)
<TABLE>
<S> <C> <C>
111 EAST WACKER DRIVE, SUITE 3000
CHICAGO, ILLINOIS 60601 47-0417860
(Address of principal executive offices) (Zip Code) I.R.S. Employer Identification No.
</TABLE>
Steven E. Charles
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Telephone (312) 228-9418
(Name, address and telephone number of agent for service)
TOYOTA MOTOR CREDIT CORPORATION
(ISSUER OF THE TMCC DEMAND NOTES)
TOYOTA MOTOR CREDIT RECEIVABLES CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 95-3775816
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
19001 SOUTH WESTERN AVENUE
TORRANCE, CA 90509
(Address of Principal Executive Offices) (Zip Code)
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DEMAND NOTES
(Title of the Indenture Securities)
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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 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 to Item 16
of Form T-1, Registration No. 333-30939*.
2. A copy of the certificate of authority of the Trustee to commence
business, incorporated herein by reference to Exhibit 2 to Item
16 of Form T-1, Registration No. 333-30939.*
3. A copy of the certificate of authority of the Trustee to exercise
corporate trust powers, incorporated herein by reference to
Exhibit 3 to Item 16 of Form T-1, Registration No. 333-30939.*
4. A copy of the existing bylaws of the Trustee, as now in effect,
incorporated herein by reference to Exhibit 4 to Item 16 of Form
T-1, Registration No. 333-30939*.
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. 333-30939.*
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, filed herewith.
8. Not applicable.
9. Not applicable.
*See * at top of page 3.
2
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* 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 TRUST 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 7th day of
June, 1999.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Steven E. Charles
--------------------------------------
Steven E. Charles
Vice President and Assistant Secretary
3
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U.S. Bank National Association Call Date: 03/31/1999 ST-BK: 27-4037 FFIEC 031
601 Second Avenue South Page RC-1
Minneapolis, MN 55402 Vendor ID: D CERT: 05134 11
Transit Number: 09100002
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for March 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
C400 -
Dollar Amounts in Thousands
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ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1)--------------------------------- 0081 ... 3,942,759 1.a
b. Interest-bearing balances (2) --------------------------------------------------------- 0071 ... 4,943 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)----------------------------- 1754 ... 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)--------------------------- 1773 ... 5,314,559 2.b
3. Federal funds sold and securities purchased under agreements to resell-------------------- 1350 ... 370,296 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCFD
----
(from Schedule RC-C----------------------------- 2122 ... 57,331,504 .......... 4.a
b. LESS: Allowance for loan and lease losses------- 3123 ... 908,715 .......... 4.b
c. LESS: Allocated transfer risk reserve----------- 3128 ... 0 .......... 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)------------------------------------ 2125 ...56,422,789 4.d
5. Trading assets (from Schedule RC-D)------------------------------------------------------- 3545 ... 35,476 5.
6. Premises and fixed assets (including capitalized leases)---------------------------------- 2145 ... 523,403 6.
7. Other real estate owned (from Schedule RC-M)---------------------------------------------- 2150 ... 12,307 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)---------------------------------------------------------------------------- 2130 ... 607,289 8.
9. Customers' liability to this bank on acceptances outstanding------------------------------ 2155 ... 151,523 9.
10. Intangible assets (from Schedule RC-M)---------------------------------------------------- 2143 ... 1,372,912 10.
11. Other assets (from Schedule RC-F)--------------------------------------------------------- 2160 ... 1,022,769 11.
12. Total assets (sum of items 1 through 11)-------------------------------------------------- 2170 ...69,781,025 12.
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(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
U.S. Bank National Association Call Date: 03/31/1999 ST-BK: 27-4037 FFIEC 031
601 Second Avenue South Page RC-2
Minneapolis, MN 55402 Vendor ID: D CERT: 05134 12
Transit Number: 09100002
Schedule RC - Continued
Dollar Amounts in Thousands
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LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
----
columns A and C from Schedule RC-E, part 1)-------------------------------------------- 2200 ...47,663,334 13.a
RCON
----
(1) Noninterest-bearing (1) -------------------- 6631 ... 12,125,661 .......... 13.a.1
(2) Interest-bearing --------------------------- 6636 ... 35,537,673 .......... 13.a.2
RCFN
----
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II) --------------------------------------------------------------- 2200 ... 722,006 13.b
RCFN
----
(1) Noninterest-bearing ------------------------ 6631 ... 0 .......... 13.b.1
(2) Interest-bearing --------------------------- 6636 ... 722,006 .......... 13.b.2
RCFD
----
14. Federal funds purchased and securities sold under agreements to repurchase---------------- 2800 ... 2,878,456 14.
RCON
----
15. a. Demand notes issued to the U.S. Treasury----------------------------------------------- 2840 ... 413,496 15.a
b. Trading liabilities (from Schedule RC-D)----------------------------------------------- 3548 ... 28,855 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized (leases):
a. With a remaining maturity of one year or less------------------------------------------ 2332 ... 2,523,298 16.a
b. With a remaining maturity of more than one year through three years-------------------- A547 ... 3,002,461 16.b
c. With a remaining maturity of more than three years------------------------------------- A548 ... 2,797,592 16.c
17. No applicable.
18. Bank's liability on acceptances executed and outstanding---------------------------------- 2920 ... 151,523 18.
19. Subordinated notes and debentures (2)----------------------------------------------------- 3200 ... 2,427,450 19.
20. Other liabilities (from Schedule RC-G)---------------------------------------------------- 2930 ... 983,961 20.
21. Total liabilities (sum of items 13 through 20)-------------------------------------------- 2948 ...63,592,432 21.
22. Not applicable.
EQUITY CAPITAL
RCFD
----
23. Perpetual preferred stock and related surplus--------------------------------------------- 3838 ... 0 23.
24. Common stock------------------------------------------------------------------------------ 3230 ... 310,004 24.
25. Surplus (exclude all surplus related to preferred stock)---------------------------------- 3839 ... 2,857,896 25.
26. a. Undivided profits and capital reserves------------------------------------------------- 3632 ... 2,975,597 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities----------------- 8434 ... 45,096 26.b
c. Accumulated net gains (losses) on cash flow hedges------------------------------------- 4336 ... 0 26.c
27. Cumulative foreign currency translation adjustments--------------------------------------- 3284 ... 0 27.
28. Total equity capital (sum of items 23 through 27)----------------------------------------- 3210 ... 6,188,593 28.
29. Total liabilities and equity capital (sum of items 21 and 28)----------------------------- 3300 ...69,781,025 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes RCFD Number
the most comprehensive level of auditing work performed for the bank by independent ---- ------
external auditors as of any date during 1998---------------------------------------------- 6724 ... 2 M.I
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1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
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(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
